NEW YORK (Reuters Breakingviews) - Goldman Sachs partnerships are a lot like any other kind of luxury item. To be effective, they must be scarce enough to be coveted, but not so much that they’re unobtainable. The Wall Street bank’s biennial list of new partners, published on Wednesday, suggests new boss David Solomon is tinkering with the balance of supply and demand. He needs to go further, though, to elicit more of what the company needs.
Goldman named just 69 staff to its club of elite employees who get a number of perks including access to a special bonus pool, some extra ambassadorial duties - and kudos. That’s the lowest number since 1998, when the company’s workforce was just one-third the size it is now. It’s not a reflection of poor financial performance: The $85 billion firm’s return on equity is likely to be 13 percent this year, according to Refinitiv, its best since 2010.
Two things could explain the change of tack. First, Solomon wants to reinforce, as he puts it, “the aspirational nature of the partnership.” He talks often about work-life balance and has an active sideline as a DJ. But being top of the league tables in mergers and equity capital markets, for example, requires elbow grease. Making the partnership a bit more exclusive would be a crafty way of making staff work harder because they want to rather than because they’re told to.
Goldman’s move is also a smart way to tweak its workforce. Internal promotions to the partnership are falling, but over the past two years the company made 15 of its new outside hires partners from the get-go, according to the Wall Street Journal; some were in areas like technology and data. It makes sense to use the partnership as a hiring tool as well as a retention strategy – and reflects the fact that data scientists and programmers are in extremely short supply.
The partnership is getting more accessible for some people – such as women – but only by some measures. In 1998, Goldman elevated just three, where this year the number is 18. Only one woman in every 820 or so employed by Goldman made partner, though, according to a Breakingviews calculation. That’s worse than two years ago – and also worse than the one-in-480 odds faced by their male colleagues. That may reflect the skew toward women holding more junior roles. Whatever the cause, it suggests that one man’s scarcity is not yet one woman’s opportunity.
- Goldman Sachs on Nov. 7 admitted 69 employees to its partnership, meaning 484 people now hold the coveted title. The Wall Street firm names a number of staff to the group every other year, conferring on them access to a special bonus pool and other benefits. Of the new partners, 18 were women.
- Goldman had 39,800 employees at the end of September, according to its third-quarter financial report. A governance report for the year 2017 showed that 37.8 percent of the company’s employees were women.
(Editing by Antony Currie and Martin Langfield)
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