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00:00Do you think flexibility is going to be a competitive advantage when it comes to luring talent. And if so what role is it going to play. I absolutely do. I think that we have shown that we can work effectively remotely. We also know that we can work effectively in office. The key thing is to figure out how to do that both at the same time. And so what we have decided to do is be in office Tuesday Wednesday Thursday and work remotely on Mondays and Fridays. And that will be up and down. Everyone from Ken Jacobson me down to including analysts. We think this combination is the most attractive. They get the best of both worlds and it follows the evidence. For example there's a new Stanford paper out by Nick Blum demonstrating that something like this three days a week looks like it's probably the best approach because it's coordinated. You're getting the best of both worlds but you're doing it on a coordinated basis where you don't have to worry about the logistics of who's in office who's not that kind of mixed model. Instead it's everyone's in and then everyone's remote. And I think this is part of being a modern workplace. Peter how much of this is about retention as well. A guy had made the point to me earlier that it seems like it's a banker a day moving to a different firm. What is the environment like now out there and how are you taking advantage of it. Well we think this is great for people who are at Lazard and people who want to come to Lazard. So it's both a retention approach and a recruitment approach. And as you noted there is a lot of competition for bankers right now. So we want to stand out as the place where it's this is not your grandfather's Lazard. We are modern along this dimension. We are investing in data analytics and automation. We're hiring people like Bill McRaven. We're doing a lot of things to make Lazard a dynamic and interesting place to work. Peter alongside this you're seeing significant wage inflation at the moment for bankers or for overall. Overall no. Sorry. No it's all right. Yeah. Bankers what are you seeing in your business. Most of what happens in advisory businesses is that when the client work picks up that spills over into compensation. I would expect that that will occur. It's occurring to some degree already. And that's just another reflection of how hot the market is both in terms of our underlying business for everyone and in terms of the labor market for various. These are very skilled professionals. Yeah it's amazing. It seems like the cost of rank bankers is rising across the industry. I think the main headlines you see is for that you know analyst level one hundred thousand dollar salary at JP Morgan now Barclays. But is this happening at the most senior levels to. Well as you know at the most senior levels the compensation tends to be very tilted towards year end bonuses. So we have to see how the year plays out before reaching any conclusions on that. But but what do you make of what is happening. Can this industry attract talent as you say. These are these are super skilled people but you need to bring them into the bottom end. You need to train them. These people are created. And while they move around within the industry keeping them within the industry is obviously a challenge. But at the bottom the talent war is now not just within the financial sector but also within the tech sector as well. Other industries are looking to attract talent. What do you make of what is happening with these big banks looking at junior bankers trying to figure out how they keep them particularly with the heavy workloads they're dealing with right now. Is that a sustainable situation. Is that just going to have to be the new normal in order to keep these people and attract these people to this industry. I think there are a couple of pieces to this. First you need to make that work as interesting as possible. It's one thing to work long hours on menial mundane stuff. It's another to be doing really interesting work. And so I mentioned earlier the automation and data analytics. I think that's a key part because it takes some of the menial mundane pieces out of the equation. And it's always going to be the case that investment banking involves hard work but it needs to be interesting hardware. That's the first part. Second part is this comes back a little bit to the work from home and work from the office piece. Creative people want different kinds of environments and sometimes you know taking out the commute and making it more convenient making things fit within the rest of your lives. It doesn't mean you're not working hard. It just means you're working in a different way. Ultimately with talented people you have to trust and empower them. And I fear that if. Well I don't fear what we're what we're doing is embodying that. And then finally I think we need to be investing in the next generation of people who might be interested in things like advisory and investment banking. One of the exciting new things we're doing is we formed something called the Lazard New Visions Academy. It's going on this summer taking high school kids from new visions for public schools in New York and putting them through a program in which they learn financial skills basic kind of interviewing skills and what have you. That's another exciting thing to try to build the workforce of the future for everyone. So this is multi-dimensional. It doesn't involve one solution. Peter I'd love some specifics about your plans at Lazard. What are you going to do for the next couple months in terms of hiring in the U.S. senior level dealmakers in Europe. What what can we expect. We are very actively hiring people will have more to say when we can. When we when we can as the garden leaves expire etc. But we are very actively in the marketplace. And as you noted before it's a very fluid labor market right now. So there's a there's a lot of opportunity. Peter can I ask you to put your economists hats on your macro hats on. I want to know whether or not you think we are at or close to peak growth. We're at work clearly at a very elevated growth rate and we should expect some deceleration as we go into next year which is one reason why at least in my opinion if I had to put my chips down I would say that the inflation spike is temporary and not permanent because growth will decelerate growth will decline next year as the fiscal impulse comes off and as many of the reopening effects attenuate. Peter also for your economist hat. This inflation debate is you know befuddling so many people. How do you think it plays out and how you think it will most meaningfully impact markets and activity among your clients. Look they're just a very limited number of sectors that are very clearly related to reopening and to. Supply side constraints that are dramatically elevating the overall inflation rate. If you look at a very limited number of sectors things like cars and others that are affected by the semiconductor shortages etc. they're adding about 100 basis points to inflation now. I would expect that that will not only come down from one hundred but perhaps turn negative in 2022. And so you see a very significant kind of temporary bump. The other thing I'd say that is really important is that for the people who are arguing that sort of what's happening is we've overfilled the bathtub and that's what's causing inflation in the United States. Look around the world there are lots of other countries that have not done as much fiscal relief as the United States. And we've seen significant rises in inflation as the economies have opened up for example in Europe despite the most recent inflation reading coming down a little bit. Inflation has picked up a lot in Europe also. And they've done much less fiscal relief. So I think a lot of this is a temporary phenomenon associated with both the supply chokeholds and with reopening that will resolve themselves. But we do need to be watchful and it's a particularly uncertain period for the economy both because of that phenomenon and because look the virus has a mind of its own. And I think we're all declaring mission accomplished a little too early. So we have to be very watchful along that dimension also. Can you just extrapolate a little bit on that thoughts as you say the financial markets seem to be seeing the virus in the rearview mirror. Others would argue certainly some of the scientists that I'm listening to that could be a mistake. Do you think it is a mistake. I think it is a mistake. I'm not I'm not trying to be too dire here. And it may turn out to be not a concern at all. But I don't think that concern is just the Delta variant which is where all the focus is. The core point is instead that the vast majority of the world is not vaccinated. And that means that new variants can breed in other places and then come back to the places even with higher vaccination rates. And so I think the biggest concern is how effective even in the vaccinated areas those vaccines will be against a virus that is mutating and that has variants that may be more effective. Not to say that that will happen but the people are saying we're kind of done. Does seem premature to me. I am hopeful. I think it's very good that we've had such high rates of vaccination for accelerated vaccination both in the United States and in Europe. We're not where we should be but it's it's promising. And the vaccine seemed to be especially then RNA ones seem to be particularly effective against the new variant but that doesn't mean they will be effective against all variants. And what this all says is the sooner we can get the entire world vaccinated the better off we're going to be. At that point we can declare mission accomplished. But until we hit that point it's premature.

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Lazard's Orszag on Flexible Work, Wall Street Hiring, Inflation

Peter Orszag, chief executive officer of financial advisory at Lazard and a Bloomberg Opinion columnist, discusses Wall Street's adoption of flexible work policies to retain and attract talent, financial firm compensation, and the path of U.S. inflation on “Bloomberg Markets.” His opinions are his own. (Source: Bloomberg)

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