In an announcement that went out on Tuesday to the roughly 36,000 staff of Goldman Sachs, the bank’s new CEO David Solomon, CFO Stephen Scherr, and COO John Waldron indicated that employees would now have more flexibility in deciding what to wear to work, joining a growing number of financial and professional services firms that have embraced less formal dress codes:
Given our firm philosophy and the changing nature of workplaces generally in favor of a more casual environment, we believe this is the right time to move to a firmwide flexible dress code. Goldman Sachs has a broad and diverse client base around the world, and we want all of our clients to feel comfortable with and confident in our team, so please dress in a manner that is consistent with your clients’ expectations.
Of course, casual dress is not appropriate every day and for every interaction and we trust you will consistently exercise good judgment in this regard. All of us know what is and is not appropriate for the workplace. We hope this approach will provide flexibility for our people and create a welcoming environment for all.
The trend of “white-shoe” firms going business casual took its last big step forward in the summer of 2016, when JPMorgan Chase and PwC both relaxed their policies. Reuters characterizes Goldman Sachs’ decision to follow suit as “a move once considered unimaginable for the Wall Street firm’s leagues of monk-shoed partners and bankers in bespoke suits”:
Historically known as a white-shoe investment bank, Goldman Sachs traditionally required formal business attire. But since 2017, the bank began relaxing its dress code for employees in the technology division and other new digital businesses. This created a divide in the workforce as clear as denim versus pinstripes.
The “fiduciary rule,” which the US Department of Labor announced this week will go into effect on June 9 as scheduled, will require financial advisors to act in their clients’ best interests when advising them about retirement—or in other words, it will forbid them from steering clients toward products that would maximize the advisor’s own commission or fee. Financial firms and business groups like the US Chamber of Commerce oppose the rule, which they say will hurt growth, lead to a deluge of frivolous lawsuits, and limit the options of employee investors.
Another reason financial institutions may dislike the impending rule, Bloomberg’s Hugh Son explains, is that it is forcing them to change their recruiting practices. Morgan Stanley, Merrill Lynch, and UBS have all said they are cutting back on the use of signing bonuses based on the revenue brokers generated in their previous jobs, which the government had warned them might go against the rule:
Last year, the Department of Labor briefed banks that the industry’s typical signing bonuses could run afoul of the agency’s incoming fiduciary rule. Upon joining a new firm, star brokers were often granted awards of more than three times the revenue they generated in the past year, with the bonus structured as a loan that’s forgiven as the employee stayed with the company and hit targets.
The briefing prodded firms including Morgan Stanley and Merrill Lynch to restructure their enticements, and now brokerages are moving to make more permanent changes.
Goldman Sachs Tower (Andrew Cribb/iStock)
In its latest innovation to its performance management process, Goldman Sachs is introducing a system of ongoing feedback in which employees’ annual performance reviews will be augmented with regular check-ins with their managers and peers. Edith Cooper, the investment bank’s head of human capital management, tells the Wall Street Journal’s Liz Hoffman that annual reviews will remain central to determining promotions, compensation, and bonuses, but with more frequent feedback, the company hopes to make these reviews somewhat less nerve-wracking and more productive:
Goldman’s new system is based on software the firm already used in a few divisions last year. It is now being extended to the rest of Goldman’s 35,000 employees. … The idea is that after a big client pitch or product launch, employees can get quick feedback instead of waiting until year-end, Ms. Cooper said. A real-time sense of where they stand allows employees to make improvements and avoid feeling blindsided later on, she added.
Goldman has been on a mission to retool performance management since last year, when it rolled out an updated version of its performance rating system and announced other changes meant to make feedback more timely and descriptive, and the process of giving it less laborious for managers and peer reviewers. Many companies, including competitors of Goldman Sachs such as Morgan Stanley and JPMorgan Chase, have adjusted their approaches to performance reviews over the past two years, and building more continuous feedback systems has been a key component of many of these changes, enabled by new technologies that make feedback easier to deliver.
The executive order issued by President Trump on Friday, which temporarily barred refugees and citizens of seven designated countries—Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen—from entering the US, has been met with some criticism from the ranks of America’s corporate leaders. In statements to employees and to the press, many CEOs have expressed concern that either the order itself or the new administration’s more restrictive approach to immigration in general will be disruptive to business and harmful to their ability to hire and retain talent, as well as their diversity and inclusion initiatives. The Washington Post’s Jena McGregor gives an overview of corporate America’s reaction to the president’s polarizing order:
“Employees do hold their CEOs and leadership accountable for defending those values when the line has been crossed,” said Leslie Gaines-Ross, Weber-Shandwick’s chief reputation strategist. After years of communicating and focusing on diversity and inclusion as a corporate value, she says, CEOs “do feel under a lot of pressure right now, and are trying to figure out what to say about Trump’s ban and how to speak to their employees. They’ve set a high bar and an expectation that diversity really matters. That is adding a lot of firepower to getting CEOs to speak up.”
Some of the statements from CEOs have included not only concerns but personal reflections. “I am deeply concerned, as many of you are, with this fracture in our society,” wrote MasterCard CEO Ajay Banga, who was born in India. “I am an immigrant into this wonderful country. I came here midway through my career and have over the past years made this my home and pledged my allegiance to all that the Constitution stands for.” …
In a New York Times op-ed published on Tuesday, JPMorgan Chase CEO Jamie Dimon revealed that the bank would raise the minimum wage of its retail banking employees from $10.15 today to between $12 and $16.50, “depending on geographic and market factors,” over the next three years:
A pay increase is the right thing to do. Wages for many Americans have gone nowhere for too long. Many employees who will receive this increase work as bank tellers and customer service representatives. Above all, it enables more people to begin to share in the rewards of economic growth. And it’s good for our company, helping us attract and retain talented people in a competitive environment. While businesses, including ours, are understandably cautious when it comes to expenses, there are good expenses (investments that will pay off in the long run) and bad expenses (waste and inefficiencies). We have never hesitated to invest aggressively if we thought it would improve our long-term prospects.
While a higher wage is important, so are benefits. Our lower-compensated employees receive a medical plan — subsidized up to 90 percent by the company — as well as dental, vision and other coverage. Many of these and other benefits, including a 401(k), pension, a special annual award, paid family leave, paid vacation and bereavement, have been increased in recent years. In total, the annualized value of all of our benefits for these employees is on average approximately $11,000 a year above their existing wages.
It is true that some businesses cannot afford to raise wages right now. But every business can do its part through whatever ways work best for it and its community.
Dimon’s announcement comes as other large employers are moving to raise wages for their lowest-paid staff.
HSBC in London (Chris WarhamShutterstock.com)
While the overall economic impact has been decidedly negative, the Brexit is expected to have a variety of effects, making its mark on various sectors to different degrees and hurting (or helping) some firms more than others. One of the biggest victims is the financial sector, for which London serves as a global capital. Reuters‘ Olivia Oran, Anjuli Davies and John O’Donnell look into how banks are responding to the vote:
Bank executives have been making contingency plans for months, but many were still surprised by the outcome of a British vote on Thursday evening to leave the European Union (EU). Even with those plans, huge uncertainties remain about when Britain will formally exit the EU, and what cities could replace London as New York’s transatlantic counterpart. … Among the questions being asked in C-suites across Wall Street: What’s the best European city to house a broker-dealer, if not London? Does Frankfurt have the capacity to house tens of thousands of bankers and their families? Will language be an issue in cities where English is not the primary tongue? Will American bankers abroad be able to find schools for their kids?
Frankfurt, Paris, Amsterdam and Dublin are all in contention for relocation. Even with all that uncertainty – and a timetable of at least two years for Britain to formally exit the EU – U.S. banks appeared to be moving quickly to respond to the Brexit decision. JPMorgan Chase & Co is considering changes to its legal entity structure in Europe, as well as moving some of its 16,000 U.K.-based employees, according to a staff memo signed by Chief Executive Officer Jamie Dimon and other senior executives.
Goldman Sachs Group Inc has been planning for the possibility of a Brexit vote for “many months,” Chief Executive Officer Lloyd Blankfein said in a memo. The bank has been building a new European headquarters in London, and is now considering what to do with all the space, a source familiar with the matter said.
For a fuller picture of how banks are responding, Portia Crowe at Business Insider has compiled a helpful roundup of the memos major finance CEOs sent to their employees in the wake of the Brexit referendum. Stephen Gandel at Fortune counts how many jobs Brexit might cost the City of London: