Like most firms, hedge funds have made a generally smooth transition to both the digital environment and the hybrid office/home work model since the first wave of the pandemic hit in March 2020. As the hybrid model becomes the “new normal,” however, some of these companies have begun to take a harder look at some of the challenges they now face in a highly decentralized environment.
To get a sense of where firms actually stand when it comes to preferred work location, KPMG and the Alternative Investment Management Association surveyed 162 hedge fund managers representing approximately $1 trillion in assets under management. The results, published in a report entitled, “Global Hedge Fund Industry: Accelerating Out of the Pandemic,” show that 46 percent of hedge fund managers expect to spend two to four days a week in the office. Ten percent said they would continue to work from home full time, while 21 percent said they would return to the office five days a week.
According to the report, about three quarters of the managers surveyed raised issues over the high penetration rate of the hybrid model. One of the biggest concerns expressed in the survey is the effect that the model will have on corporate culture. More than half of the surveyed managers said that with so many employees working from a remote setting, it would be difficult to maintain a cohesive, positive company setting due to a lack of team-building events. This kind of cohesive company culture, the report explains, is “essential to ensuring a low turnover of staff,” which is a key factor for every company as the war for talent heats up.
“The COVID-19 pandemic temporarily stifled much of the hiring demand, but that pressure has now been released, meaning the war for talent is now more intense than any time in recent years,” said Tom Kehoe, global head of research and communications at AIMA. “As such, competition for talent is fierce, in all functions.”
Joseph Fisher, senior lead partner at KPMG’s alternative investments management practice, told Institutional Investor that despite concerns about the lack of in-person corporate interaction and events, one way to retain employees is to provide them with the flexibility of remote working. “You’ve heard about the great resignation, [but] I consider it more of a great reshuffle because there is a war for talent out there,” Fisher said. “You want to do what’s best to keep employees happy.”
Thirty percent of participants in the KPMG and AIMA survey also identified the lack of real-time decision-making collaboration as the most significant concern in a remote environment. “If some people are in the office and some are out, just coordinating calendars is a big challenge,” said Fisher. Even for those who have no difficulties scheduling calls with colleagues, “semi-regular video calls can stifle spontaneous innovation,” according to the report. This is because, as one manager commented on the report, “it’s not practical to ask your team to come up with that light-bulb moment at 3 p.m. on Thursday next week.”
Nevertheless, thanks to technology, it appears that most corporate communications needs can be handled in a remote setting. Sixty-one percent of the surveyed hedge fund managers said technology growth had helped their firms make a seamless transition to the hybrid work model, and many have been inspired by the tech solutions for remote work and have begun to invest in front-office technologies such as alternative data, expanding research tools, and risk-management tools.
“[In March 2020], the hedge fund industry was thrust into executing disaster plans in an environment that many [people] had not completely envisioned, with employees across all sectors and roles working from home in a completely decentralized setting,” said Jim Suglia, national sector leader of investment management at KPMG. “Yet they expanded their communication channels, utilized technology in an ever-increasing fashion, and reworked normal operating patterns to adapt to the circumstances.”