The investment bank is getting rid of its nine-point performance rating system in response to an in-house survey finding that employees wanted more continuous feedback, Jeanne Sahadi reports for CNN Money:
“We strive to create an environment where our people can perform to their fullest potential. … Providing high-quality and ongoing feedback is at the heart of our culture, and is an important investment we make in our people,” CEO Lloyd Blankfein and COO Gary Cohn said in a memo to employees.
Not that Goldman Sachs is ditching labels altogether. It will ask managers to not only provide a written performance summary but also provide a rating of “outstanding” “good” or “needs improvement.” Like a lot of other companies, Goldman also is trying to streamline the notoriously laborious process of performance reviews. It is keeping its 360-degree review system, in which managers and their direct reports review each other. But it’s reducing the number of people who review them from 10 to 6. The firm also said it would collect and deliver its feedback earlier in the year.
Goldman will begin using the new system in June. Lindsay Gellman and Justin Baer at the Wall Street Journal put the change in context:
Anne Fisher at Fortune pulls an interesting highlight from Accenture’s annual survey of US college graduates:
The number of new college grads who say they want to work for a big company has been steadily declining, from 20% in Accenture’s 2013 annual survey to just 14% this year. The rest are aiming to work for medium-sized and small companies or, better yet, startups. Why? “New grads now are ‘digital natives’ who are used to forging their own path,” says David Smith, a senior managing partner at Accenture Strategy. “They want to have a direct impact right away, on companies and customers, and they’re afraid a big employer won’t let them do that.”
They may have a point. In this year’s survey, 51% of 2015 grads told Accenture they’re “underemployed” — meaning working in jobs that do require a four-year degree, but that don’t use all, or even most, of their skills. That, too, has risen steadily since 2013, when 41% of recent grads said the same.
This came up in a meeting I had this week with a head of HR at a financial institution. This organization has a very strong reputation, is on lists of the best companies to work for, and can easily find people, but that reputation is also a curse: People consider it a great company, but because no one thinks of it as a digital leader, they can’t get the right talent. A lot of big, established companies have this problem right now.
They are now reworking their employment brand to better align with their strategic priorities so they can attract the right people to the company. I think a lot of companies with great brands need to rethink whether they have the right employment brands to attract digital and other transformational talent.
Everyone knows that investment banking is a stressful, high-pressure field with high rates of burnout, which is why some major Wall Street firms are growing more sensitive to their employees’ work-life balance needs, encouraging them to take weekends off or introducing parental leave benefits. An obvious motivation for these changes is retention: These banks stand to make more money if they can avoid burning their young analysts out in a matter of two or three years.
Wall Street may have another new attrition problem on its hands, though, this time regarding star talent at higher levels. “Investment bankers are increasingly leaving Wall Street to work for the companies they advise,” Portia Crowe writes at Business Insider, “and it’s starting to hurt the banking industry in more ways that one”:
JPMorgan’s Alejandro Vicente, a managing director in consumer goods, is the latest to make the jump. … But he’s not the only one. Earlier this year, former Morgan Stanley banker Alban de La Sabliere joined the French drug maker Sanofi, which is now bidding to buy the pharmaceutical company Medivation. …
The departures are a double-edged sword for banks. Not only are they losing top talent, but they could begin to miss out on deals as companies turn to in-house experts rather than hire on teams of bankers.
Power in the workplace depends to a significant extent on which people has access to what information, and a tyrannical boss can assert dominance by controlling that access. Writing from her own experience with bosses who deliberately shut her out of decision-making and withhold information from her, Margery Weinstein at Training Magazine wonders whether this sort of thing happens to women more often than it does to men:
Access to information is what people need to advance and prove themselves. When employees are brought into important conversations early, they have the opportunity to contribute ideas and influence how plans are implemented. When they are brought in at the last minute, they are left in a helpless position. The decisions have already been made, and the plans are in place, with the employee’s job at that point to just smile, nod, and say, “Yes.”
Income inequality is a big topic in American politics today, but what’s not getting as much press is that inequality is growing among businesses, not just among households. In the Harvard Business Review, Walter Frick observes that “the majority of the increase in income inequality in the U.S. and elsewhere is driven by differences in how well different firms pay,” and that this gap between high-performing, high-paying organizations and the rest is still widening:
That pay gap seems to be linked to rising inequality in corporate performance. But there are two explanations of why it is happening. It could be that different companies are paying more generously or less generously for the exact same sort of work. For an extreme example, take Chobani. In April the yogurt company’s CEO decided to reward full-time employees by giving them stock, based on tenure and other factors, amounting to an average of $150,000 each. If you’re, say, an HR manager who happened to take a job at Chobani early on, your compensation suddenly looks considerably better than many of your peers.
It could also be that more-productive, higher-paying companies are hiring better workers. Engineers at Google might be getting paid more than engineers elsewhere because they’re better engineers. If these highly sought-after workers are increasingly clustered at top companies, that could explain the rising pay gap between firms. It’s safe to say that a significant part of the growing gap in how well different firms pay can be attributed to the latter “talent sorting” effect — but exactly how much continues to be debated.
A couple of our team members found this concept of “corporate inequality” fascinating, and Frick’s article got us to thinking about the impact it might have on how organizations compete for talent:
Companies affected by a scandal at the top of the corporate pyramid can’t undo the damage to its reputation simply by firing the offending CEO. A new analysis shows that it can take years to regain investors’ confidence, Jeff Green explains at Bloomberg:
The fallout from a lying, cheating, embezzling or offensive CEO can linger to soil the reputation of a company by an average of five years after an incident has passed, according to a Stanford University analysis, being released this week, that studied 38 examples of bosses behaving badly from 2000 to 2015. …
The offenses reviewed in the Stanford study, which included 13 examples of lying, eight sexual affairs and six incidences of questionable finances, resulted in an average of 258 news articles that spanned 4.9 years, the study found. Six of the CEOs expressed objectionable language or behavior, and five others aired controversial views in public.
Share prices declined an average of 3.1 percent as well, according to the study. The analysis noted that Hewlett Packard Co. stock dropped almost 9 percent in the three-day period following reports in 2010 that CEO Mark Hurd had a personal relationship with a female contractor.
This is an interesting perspective. In some of our previous work on employee engagement, we looked at the impact of scandals and found a strong initial dip of engagement as the scandal rages (12 percent on average) and then a relatively quick boost back to normal levels of engagement in about 21 months. So they do have a long tail, but employees seem to quit punishing the company for them a little faster than investors do, if the Stanford analysis is correct.
Experiments in Sweden and other European countries have found that organizations can get more productivity out of their employees by prescribing a shorter, more focused workday. If these findings are replicated and the practice becomes more prevalent, Bloomberg’s Rebecca Greenfield wonders whether six-hour workdays could catch on in the US. Her conclusion? Don’t count on it anytime soon:
Even with encouraging results, it’s unlikely that the U.S. will soon shift to shorter days. Americans work around 38.6 hours per week, according to the Organization for Economic Cooperation and Development. They get, on average, fewer than eight paid vacation days a year; only about three-quarters of workers get any paid time off at all, according to the U.S. Bureau of Labor and Statistics. “The Swedish model will not be easily accepted in the U.S. because we are a nation of workaholics,” said Rao. …
In the U.S., companies have sought to show flexibility by adopting a four-day workweek, albeit with the same total amount of hours. In a sort of workplace sleight-of-hand, the prospect of perpetual long weekends keeps people motivated. “It helps them stay more focused,” said Rao.
Frankly, even the four-day workweek seems to me like an ambitious goal for American work culture. Currently, the US workweek stretches to six days for many employees, owing to the additional work they feel compelled to do because of mobile technologies. In this environment, it’s hard to keep employees off their work email on Saturdays and Sundays, much less limit them to four workdays. If you mandated it, you might actually lose more than a day, if you count the extra time as well.
I think the more important productivity enhancer in the US would be to actually enforce the five-day week, softly persuading employees to leave work at work and let weekends be weekends.