Hybrid models dominate plans firms making for return to office

Money managers like to say that finance is a "people business." The best deals get done in person over lunch or hashing out details around a conference table. The relationship building that happens over client dinners or during site visits can determine who is the first call for a new piece of business.

The pandemic upended all that and for the past 15 months, the faces of finance have mainly only been seen via Zoom. Now, with vaccines widely available and lower transmission rates of COVID-19 — at least in the U.S. — money managers are deciding how much face time is really necessary. It's early yet, but a consensus is building around continuing work from home. A recent survey from the CFA Institute reported that 81% of finance employees want to work from home at least part of the time.

When money managers shifted to remote work in response to the pandemic, it wasn't easy. There were business continuity considerations, cybersecurity issues and technology needs that all came into play. Some firms had already experimented with virtual teams and flexible work environments. The lessons learned from those trials informed plans that eventually became the day-to-day playbook for remote work during the COVID-19 pandemic.

For others, it was a trial by fire. Now, more than a year in, firms have gotten into a routine and few employees are willing to give it up to go back to eating a $16 salad in Midtown five days a week.

Every firm that Pensions & Investments spoke to for this story has said they intend to maintain a flexible in-office requirement for employees — at least over the near term. Money managers cited overwhelming feedback from employees and leadership that flexibility was not just desired but expected going forward.

"We have learned a lot over the past year," said Claudine Gallagher, New York-based chief human resources officer for the corporate and institutional bank Americas at French banking group BNP Paribas SA. "Working from home worked really well for us. The firm did well, everyone is in a rhythm with it now."

BNP Paribas did a number of employee surveys and focus groups throughout the year to understand how teams were responding to remote work globally, including its BNP Paribas Asset Management unit. Recent requests for feedback also included questions about how teams wanted work arrangements to look going forward. The resulting plan will allow for a voluntary return to the office through the summer and a more formalized hybrid plan in the fall, Ms. Gallagher said. Under the hybrid plan, employees are asked to be in the office one to three days per week depending on need, but not until October.

"We're waiting until October because we wanted to give people the ability to get their kids back in school if that is available and just get back into the world," Ms. Gallagher said.

Global investment management firm Conning is operating on a similar schedule. Employees are returning worldwide on a voluntary basis starting this summer in line with various local guidelines. By fall, Conning hopes to have a slightly more codified hybrid arrangement in place where employees are in for part of the week and home for part of the week, but Harford, Conn.-based CEO Woody E. Bradford isn’t pushing too hard. “What we have right now is working,” he said about remote working. “We want to be flexible region by region in case things change with the pandemic over the near term. But also, our staff has a strong desire to keep at least a hybrid model in place, and we think that makes sense.”

Global asset manager BlackRock Inc., which is on a flexible schedule over the summer where employees can generally work a few days from home per week, plans to launch a "Future of Work" pilot project starting in September, according to a staff update reviewed by Pensions & Investments. In the pilot, employees will have the flexibility to work from home up to two days per week, on average. BlackRock will be using the pilot project to refine its approach to flexible work schedules with an eye toward formalizing a policy in 2022, according to the memo.

Paris-based asset manager Amundi will be moving forward with its hybrid plan a bit sooner than firms in the U.S. According to Freddie Barber, a spokesman for Amundi, the firm plans to start what it calls an "agile" schedule in June for U.K. employees. The agile schedule will give employees the option of working from home up to two days per week. Line managers will be tasked with managing the needs of a given team and keeping overall in-person head count in line with the indoor capacity limits in the U.K. Those limits are slated to increase starting in June. Amundi is evaluating its policies for workers in other regions.

It's much of the same at Federated Hermes Inc. Spokesman Edward Costello said for July and August, the firm plans to take a hybrid approach — combining aspects of remote and in-office work — in accordance with regulatory requirements. "We will continue to assess regulatory requirements and conditions as we plan for the fall," he said.

In emailed statements, spokespeople at The Bank of New York Mellon Corp.; Fidelity Investments Inc.; State Street Corp.; and Wilmington Trust, through its parent company M&T Bank Corp., all affirmed that remote work had been going relatively well and said they were in the process of defining hybrid plans. Timelines will be finalized in coordination with staff and per U.S. Centers for Disease Control and Prevention and global public health guidelines.

While vaccines enable a return to relative normality, money managers aren't going as far as requiring employees to get them to return to work. However, it is strongly encouraged. Many firms that P&I spoke with plan to maintain some level of masking in order to remain in compliance with various global public health requirements as well as a desire to make congregate indoor settings safer given the likelihood that vaccinated and non-vaccinated people will be in spaces together. Other measures including temperature checks, more space between desks, and occupancy limits in meeting areas and buildings overall will continue for the foreseeable future.

In addition to ongoing indoor safety protocols, BNP Paribas has created an internal awareness campaign that provides employees with information on the vaccines and resources for getting in touch with health-care providers if they have additional questions, Ms. Gallagher said.

State Street is providing employees that voluntarily disclose their vaccination status with a special credential. Employees that choose not to disclose their vaccination status will have to comply with stricter protocols, which include masking.

Business travel is likely to be the last component of any return to normalcy for money managers. For firms in the U.S., travel is starting to pick up, albeit slowly. International travel isn't back yet, and travel requests within the U.S. are still well below pre-pandemic levels, firms said. BNP Paribas' Ms. Gallagher said travel in the U.S. for the firm's staff is beginning to increase as more states lift restrictions, but it is unclear when that will happen internationally.

Amundi's Mr. Barber said the same is true for the firm's U.K. team. Restrictions within the U.K. and European Union have started to loosen, but travel is still broadly limited.

Firms may find that they don't need to travel at the same rates as they did pre-pandemic. Deals still got done in 2020, even if it happened over a Zoom call.

Looking ahead, the second half of this year will be dominated by in-office experimentation that could lead to lasting change. None of the money managers P&I spoke to were willing to say that hybrid schedules will be permanent officially, but it could be hard to do away with them. Existing employees want the freedom and some, like Conning's Mr. Bradford, think they'll be able to compete for talent more competitively if flexible scheduling becomes the new normal.

"I think you're seeing a shift in management," Mr. Bradford said. "We have a year of track record with people out of the office. I think we have the ability now to attract and motivate people in different ways. It's beneficial for our diversity, equity and inclusion initiatives as well. We are committed to working through this over the next 12-18 months and creating a new model."