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.
New York, NY, USA - August 2, 2014: Entrance to Goldman Sachs Headquarters (200 West Street) in Manhattan in Summer.
Goldman Sachs has joined the ranks of high-profile employers hit with major litigation over allegations of gender bias in pay, promotions, and performance reviews. On Friday, a federal judge in New York certified the eight-year-old case as a class action lawsuit, ruling that women who believed the investment bank had discriminated against them on the basis of their gender could pursue their claims as a group, Reuters reported.
US District Judge Analisa Torres ruled that employees and former employees could participate in the suit if they had worked as associates or vice presidents in Goldman’s investment banking, investment management, and securities divisions since September 2004, or since July 2002 for employees in New York City. Plaintiffs’ attorney Kelly Dermody told Reuters that the certified class encompassed an estimated 2,000 people.
This lawsuit is one of several brought against major financial firms over the past decade alleging gender discrimination in this male-dominated sector, where women make up about half the workforce but only a quarter of senior-level positions. Gender pay data from the UK shows that the world’s leading banks have substantial gender pay gaps, owing to the much lower representation of women in senior roles with higher earning and bonus potential—a deliberate imbalance, the litigants in these suits claim. A study last year also found that women in finance are routinely punished more harshly than their male colleagues for misconduct, even when that misconduct is less costly and less likely to be repeated.
Goldman Sachs on Friday reported its gender pay gap data in the UK in accordance with the law requiring most employers to do so by next month. According to Reuters, the bank reported a mean gender pay gap of 55.5 percent at its international business, with a bonus gap for that unit of 72.2 percent. The company’s data showed that within the international unit, 83 percent of those earning the highest hourly pay were men, while 62.4 percent of those earning the lowest hourly pay were women.
The median gaps were smaller than the mean, the BBC adds, coming in at 36.4 percent for hourly pay and 67.7 percent for bonuses. Goldman Sachs UK, a smaller unit that employs people in non-revenue positions, reported much smaller, though still significant, mean gaps of 16.1 percent in hourly pay and 32.5 percent in bonus pay. As other banks have reported, the disparity in bonuses widens the overall gender pay gap significantly and reflects the underrepresentation of women in senior roles with greater bonus potential.
Perhaps in anticipation of this disclosure, Goldman announced a plan last week to improve its gender balance. In a memo, Chief Executive Officer Lloyd Blankfein and President David Solomon stressed that men and women at the company are paid equally for equal work, but acknowledged that women are underrepresented, particularly in senior roles. The bank’s leaders declared a long-term goal of having women make up exactly half of the company’s workforce, Bloomberg reported on Thursday. They did not set a timeline for this ambitious goal, but as a first step, will ensure a 50/50 gender split in each class of fresh graduates Goldman hires by 2021:
Goldman Sachs has put more than a dozen of its London-based bankers, salespeople, and traders on notice that their roles will be relocated to Frankfurt in the coming months, Reuters reports, amid uncertainty over the ability of banks to conduct continental European business from the UK after it leaves the EU:
After months of patience and private lobbying, the U.S. investment bank has decided it can no longer wait for clarity from lawmakers on how its business might be impacted by Britain’s exit from the trading bloc and is taking the steps to minimize disruption to clients.
It has informed members of its London-based derivatives and debt capital markets teams working on German accounts that their activities will be relocated to its base in Frankfurt and to make the necessary preparations to move to those offices by end-June, the sources told Reuters.
A source tells Financial News that these transfers are part of a broader strategy to move staff closer to their clients and not part of Goldman’s Brexit contingency planning. However, the report comes just days after UK Prime Minister Theresa May that the divorce agreement would not retain the existing arrangement of “passporting” rights that allow financial firms to sell their services across the EU upon being licensed to do so in just one member country. The financial sector and industry groups have lobbied the government to maintain the passporting agreement, but May said Britain would not become a “rule taker” deferring to the authority of Brussels and would instead seek “a new relationship on financial services based on this concept of mutual recognition.”
The investment bank Goldman Sachs is incorporating a personality test in its recruiting for summer interns in the US next year, Matt Jahansouz, the company’ global head of recruiting, tells Olivia Oran at Reuters:
He said future job candidates would be given the test before their second round of interviews at the bank. Their answers will be compared with those of current Goldman employees, who have already been identified as exhibiting traits that mark high performance such as teamwork, analytical thinking and judgment, Jahansouz said. …
“We’re shifting from a world where you just used to look at a GPA and resume and walk out with a feeling about an individual that you might want to hire,” Jahansouz said. “We can now capture characteristics and data that might not be as obvious to make smarter hiring decisions.”
Goldman has been in a process of reviewing and revising its hiring process for two years; in June 2016, the bank announced a major overhaul in which it would no longer conduct first-round on-campus interviews at elite universities. The move was intended to modernize the process, increase diversity, and find better and more committed employees.
Other companies have also experimented with personality tests in recruiting. The most famous example of this is Bridgewater Associates, the world’s largest hedge fund, where candidates sit through five hours of assessment including the Myers-Briggs Type Indicator and several other personality tests. Heineken also included a personality test based on the Enneagram model in an innovative recruiting campaign launched last year.
Entrance to Goldman Sachs HQ in New York (Maria Ermolova/iStock)
Most employers shy away from asking their candidates about their sexual orientation—after all, the less you know about your employees’ sexual lives, the better—but at a time when LGBT Americans are more visible than ever before and courts are increasingly inclined to extend civil rights protections to them, diversity-conscious employers who want to avoid discriminating against this vulnerable group could benefit from that knowledge. To that end, the investment bank Goldman Sachs has added a voluntary query about sexual orientation to the demographic questions asked on its job application, Lucinda Shen reports at Fortune:
After the typical questions about a job applicant’s gender and race, Goldman Sachs asks candidates to indicate their sexual orientation via a drop-down menu including the choices bisexual, gay man, gay woman, heterosexual, lesbian, other, and “prefer not to say.” Following that, the application also queries: “Please indicate if you identify as Transgender.” Goldman’s questions—neither of which typically pop up in polite conversation—may seem shocking at first. But it has a reason for asking.
” We ask for this data because we want to keep ourselves accountable,” says Anilu Vazquez-Ubarri, Goldman’s chief diversity officer and global head of talent. In other words, she says, the bank wants to make sure it is not unfairly discriminating against LGBT applicants. …
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.