Leadership Development at Goldman Sachs

Case: Leadership Development at Goldman Sachs

1. The reasons for Goldman’s success during the 1990’s were as follows:

a. Overall bullish industry trends – booming IPO markets and consolidation in banking industry. Goldman Sachs thrived in this market and they too made a few acquisitions, despite traditionally choosing to grow organically. Emergence of new businesses (in technology, new media, telecommunications and internet) also fuelled the growth for investment banks.

b. The company grew their business in Europe & Asia by setting up new offices in Frankfurt, Milan and Seoul in early 1990’s, which enabled them to significantly increase their offshore revenues by the end of the decade. By mid-1998 Goldman’s overseas offices contributed 40% of the total pre-tax profit of the company.

c. When hit by significant trading losses and leadership exodus in mid-1990’s, Goldman demonstrated agility in stemming the loss through cost cutting initiatives and employee base rightsizing.

d. Another reason for their superlative growth during the 1990’s was due to their organizational culture that had been imbibed by every professional. Their culture of striving for the best, via collaboration, enabled them to deliver as per customer requirements. Also, the fact that they were relatively small until that time resulted in far lesser organizational complexities, which enabled them to be agile. Their apprenticeship mode of training and development also ensured that Goldman Sachs had a steady stream of leaders to drive growth and profitability.

2. The reasons as to why Goldman Sachs were considering a systematic Leadership Development program were as follows.

a. Goldman Sachs had traditionally relied on apprenticeship mode of training and developing leaders for the future. It worked for them until they were geographically at a single location as new recruits worked closely with experienced professionals and learnt from them on the job, which was getting increasingly difficult to sustain across geographies.

b. Having grown tremendously outside the USA with presence across the European and Asian continents Goldman Sachs’ workforce became increasingly diverse in terms of their origin and culture, which made it difficult for the organization to sustain their core culture of self-learning through apprenticeship.

c. The increasing diversity of Goldman Sachs’ product and service portfolio also meant that each business function followed their own sets of learning and development practices, which were mostly focussed on the division’s business functions and products. These training and development programs were managed by the respective HR function of the divisions. And, it was widely believed by the central teams that domain expertise didn’t necessarily translate into leadership skills.

d. The geographical and product diversity also meant that there was need for a sufficiently large pool of potential leaders to lead these diverse businesses in the future. It was also important that the pool be replenished at a brisk rate so as to keep pace with the organizational growth and the loss of senior leadership, via retirement and attrition. It was felt that a formal leadership development program would help hasten the development process of the professionals.

e. The booming economy and the emergence of new age businesses contributed to a talent war and Goldman Sachs no longer had sole access to the best talent on offer hence, it made sense to have a firm