What drives long hours in a job?

Investment banking is famous for long hours – going up to 120 hours a week at times. Meanwhile, consulting works around 60-80 hours, far fewer than investment banking but also takes up twelve hours a day at the minimum. While it’s easy to dismiss the hours as something analysts deserve for the pay they get, I think the higher hours drive the higher pay and not the other way around.

Level of customer service required

Customer service means that you are constantly on standby waiting for the client to hand over work to your superiors and give tight timelines, so that pressure cascades down to the junior levels. The pressure is driven by 1) the client imposing artificially short timelines and 2) the long chain of checks needed – you need to factor in time for each level of the chain to check and enhance output before it is finally delivered to the client. While you can enjoy the downtime while waiting for further directions, there is a limit to the amount of rest you can expect while working in the office. This is what needs to be compensated for, although working from home has alleviated some of that suffering.

Level of speed required

The speed at which employees are required to move is a key factor in compensation. Tighter deadlines mandate long hours, where the marginal cost per hour of leisure time increases (when it hits less than 6 hours, sleep is highly impacted).

Speed naturally increases when teams are in direct competition in a zero sum game with a singular rival instead of the entire market. For instance, investment banks and their sponsor PE firms are fighting to win an acquisition, so each side is forced to work their teams to the bone. Similarly, law firms have to work within timelines set by the court judges and when their clients are able to provide inputs.

Consulting projects timelines are often fixed based on a cost-benefit analysis with the client – transformation cases are unlikely to have a hard deadline, especially for non-listed companies, and can afford to proceed at a sustainable pace without paying a wage premium for speed. 

Customisability

The higher the customisation to a particular customer, the higher the pay. Customisation and human interaction are factors that curb the use of automation – which decreases downward wage pressure from technology but also demands higher hours.

Investment banking and consulting often try their best to industrialise as much of the process as possible. There are template slides and models that individuals rely heavily on. Yet, each client is varied to some extent and it becomes a routine to solve completely new problems and fight unknown fires on a daily basis. This is very different from an established role in a company, where there are standard operating procedures and a very clear process in place for daily work. Customisability hence contributes to stress and the need to work until a solution is derived.