Companies that aren’t ready to embrace work flexibility are typically skeptical about whether the work will actually get done if their employees are given the freedom to work from home or set their own schedules.

But when people are given that kind of autonomy in a workplace, it turns out we may have to worry less about them shirking their duties and more about them falling prey to overwork.

Investment banks operate differently from traditional industries. There’s very little top-down management or hierarchy, and investment bankers are—theoretically—given full control over when and where they choose to work. And yet even though they have that control, investment bankers are known for consistently putting in 100-hour weeks.

Alexandra Michel is a Professor at Penn’s Graduate School of Education and an ethnographer who has studied the work practices of investment bankers for fifteen years. Instead of asking whether work gets done when people have autonomy over their schedules, she’s been looking at why overwork occurs—and what the consequences are. She recently spoke with 1 Million for Work Flexibility about her research.

Investment bankers are typically hired in their twenties, often straight out of college. They are highly motivated and highly skilled, but often without any specific financial expertise —they may be physicists, athletes, or concert pianists. They are also typically very well rounded.

But then they enter the culture of investment banks, which Michel describes as “total institutions”, meaning that the people involved are immersed in an isolated way of life, cut off from their friends, families, and communities. It’s actually term that stems from places like sanitariums, nursing homes, and even prisons—but in the case of investment banks, employees are theoretically given the autonomy to choose how long, where, and when they do their work—and have the freedom to walk away at any time.

And yet, they don’t; instead, they rack up ever longer hours, prioritizing work (and facetime) above all else. And so Michel wondered, what happens to them over time in these environments? And what happens to their work product?

Quite a lot, it turns out. After just six months, Michel explains that there are empirically observable changes in psychology from socialization. Bankers at various banks begin to think, feel, and act differently from their cohorts at other banks, depending on each bank’s distinct work practices. It’s also not long before physical changes appear as well: weight gain and hair loss. Yet performance doesn’t decline—not yet.

The real impacts of those 100-hour weeks set in after four or five years. At that point, Michel has found, this immersion and overwork causes significant physical breakdowns to set in, including insomnia, chronic pain, mysterious endocrine disorders, chronic fatigue, and addictions. And crucially as well, work product declines—not when it comes to math, calculations, or technical expertise, but rather, creativity, judgement, and ethical sensitivity all suffer. These are all critical components of a knowledge-based economy.

This decline has limited impact on the banks themselves, since the average tenure of an investment banker is seven years. Banks hire in cohorts, and there’s always a new group of young professionals coming in. (This despite multiple reports in recent years of overwork leading to an epidemic of suicide among young bankers).

But the folks who leave typically go on to leadership roles in other places: they become CEOs, they become senior officials in government. And they take their attitudes toward work with them. Michel shares, “This is where the research on banking has implications for everyone.”

When these former bankers restructure the work practices of their new organizations in ways that resemble investment banks, the effects are far-reaching. Michel warns, “Now these practices aren’t only affecting young graduates in their twenties, who have signed up for a brief stint of hard work, but people in their forties and fifties, who suffer much more severe consequences from the ‘always-on’ work mentality.”

Michel’s findings are a wake-up call for flex nay-sayers and advocates alike. To the skeptics: investment banks serve as a clear counterpoint to concerns that offering flexibility will lead to absent staff. And to the advocates: flexibility is only good as the culture behind it. For employees and employers both to reap its benefits, it’s critical to set clear expectations—and boundaries.

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