Morgan Stanley CEO apologises for forcing staff back to the office in June by threatening pay cuts: ‘I was wrong’

Rise of Covid-19 variants delays return to office of many companies

Morgan Stanley chief executive James Gorman admitted on Monday that he “was wrong” to demand that staff return to the office or risk a cut to their pay.

Speaking on CNBC, Mr Gorman said he had believed that the US would be through the Covid-19 pandemic by Labor Day.

He now believes that the end to the pandemic is still a way off.

“I think we’ll still be in it through most of next year,” said Mr Gorman in an interview on Closing Bell on Monday.

“Everybody’s still finding their way and then you get the omicron variant. Who knows, we’ll have pi, we’ll have theta and epsilon, and we’ll eventually run out of letters of the alphabet. It’s continuing to be an issue.”

His views on the pandemic have shifted since June when he made his threat to cut the pay of those who did not return to the office after the end of the summer — most heeded the warning and came back to their desks.

At the firm’s New York headquarters, 65 per cent of vaccinated employees have returned, and 95 per cent of employees have received their shots.

Speaking at the company’s annual US Financials, Payments & CRE conference in June, Mr Gorman said: “Make no mistake about it. We do our work inside Morgan Stanley offices, and that’s where we teach, that’s where our interns learn, that’s how we develop people.”

He added: “If you can go into a restaurant in New York City, you can come into the office.”

His threat to dock the pay of workers was targeted at those who had left the city completely.

“If you want to get paid New York rates, you work in New York. None of this, ‘I’m in Colorado and work in New York and am getting paid like I’m sitting in New York City,’” said Mr Gorman.

“Sorry, that doesn’t work.”

The rapid spread of the omicron variant of Cvoid-19 has caused many companies to push back plans to return to the office.

Apple, Facebook, Ford, GE, and Google have all pushed back planned workforce returns. Complicating matters further in New York is the return of a mask mandate for all indoor areas that do not check vaccination status.

Dr Vin Gupta, critical care pulmonologist and affiliate faculty member at the University of Washington School of Medicine, recommends keeping current work-from-home arrangements in place until April or May.

Speaking during a virtual town hall for members of the CNBC Workforce Executive Council, Dr Gupta said: “I see no reason, no scientific justification, certainly no psychological reason, to bring your workforce back before 1 April, at the earliest, into a workplace setting.”