LEADERSHIP DEVELOPMENT AT GOLDMAN SACHS HRMT
Submitted By – Group P2 Akshay Gupta – 13303 Omkar – 1333 Paya! Datta Ch"#$hury – 1333% Pra&''( )umar S*(+h – 1333, Sr* Ramya A!!a(* - 133%3
Problem Statement :
The non-existence of a formal leadership training program to groom the business leaders out of managing directors left Goldman Sachs with few possible candidates for posts having business challenges.
PESTC Analysis:
Political environment:
The political leadership was set to go in for a long campaign for the elections of year 2000. t created uncertainty about the policies that might be adapted by the new !resident. The scandals about current !resident created a "uestion about the leadership of #nited States of $merica.
Economic environment:
There were numerous nitial !ublic %fferings of companies. The investment ban&ing industry had mergers and ac"uisitions. The #S economy had grown at ama'ing rate of nearly () during last "uarter of previous financial year. The gas prices were among the lowest for the decade but they went on increasing spiral over the "uarters. The *ow +ones ndustrial $verage gained a ,) in first "uarter itself against 20) on an average for the year. Thus there was threat of a stoc& bubble in the financial assets domain. The interest rate cut on ederal level lead to very low interests for #S consumers.
Social Environment:
The stoc& mar&et was on rise. !eople could earn more from the stoc&s. This resulted in a steep decline in personal savings of people. #nemployment levels were consistently low.
Technological Environment:
The world was on the verge of dealing with /2 bug. 1arious companies had to spend substantial amount of money to ensure their information systems were capable of bypassing the /2 threat. ertain technological investments li&e satellite phones were need of the day to ensure business continuance if the traditional telecommunication networ& fails due to /2.
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Cultural Environment:
3etirement funds and households displayed a shift in terms of preference of financial instrument from bonds to e"uities. $ society was more open to the ris& factors posed by e"uity instruments. ndustries involving highly specialised wor& were ta&ing in a diverse wor&force from various educational bac&ground. The new business models based on dot coms were preferred as wor&places by bright talents.
SWOT ANALYSIS
ol!man Sachs:
Strengths Wea"ness ,. Goldman Sachs 4GS5 had a rich ,. The
history
and
culture
which
its
of
organi'ation
changed at the leader
employees could loo& up to. 2. GS believed in recruiting6 training
were unhappy with that decision. 7. The si'e and complexity made it
and motivating people with great
difficult to groom enough number of
care. 7. GS was employer of choice for
leaders. 8. 9veryone was expected to lead
many graduates. The division of
which might have resulted in some
business into units was very apt. 8. GS ran&ed among the very best in
decision ma&ing in haste. . The increase in si'e of business and
mergers and ac"uisitions6 !% and common stoc& offerings. . 9mphasis was laid on
structure
boost in headcount made it difficult client
for senior leaders to share their time
servicing. The business principles
to mentor and guide new hires. (. *ivisional human resource practices
were clearly identified. (. GS had early adoption of 7(0 degree
were stronger than centrali'ed ones.
performance review system. . ;ateral hiring was initiated to &eep
*ivisions were disinterested to send
employees happy and retain them.
their personnel for central training. . >ost productive revenue generating
There were significant efforts to lin&
personnel were not always the best
partners<
compensation
to
leaders. =. irm seldom
performance. =. %rgani'ation structure evolved and
leadership
.
undertoo&
training.
formal
Systematic
ad?usted
to
changing
re"uirements. @. There were
business
approach to leadership development was lac&ing. ormali'ed leadership
restrictions
on
development program was lac&ing. @. ;eadership principles were not
withdrawal of partners< capital. ,0. GS was named a general partner.
ingrained
The individual partners and e"uity
culture. ,2. There was no sense of urgency
provided substantial pre-tax profits. ,7. The growth in staff came mainly
towards
from entry level hires. ,8. The post of >anaging *irector
a
pool of
lead new business challenges was
except ownership5 was created to
very limited for a large ban&. ,8. Aew initiatives had to supplement
vice-presidents and
the mentorship practices prevalent. ,. !eople were too focused on wor&
develop into leaders. ,. The need for permanent capital was
that they did not necessarily li&e idea
met with !% to safeguard against sudden withdrawal of partners. ,(. ommittee driven approach
establishing
leaders. ,7. The number of people who could
4giving all benefits of partnership
responsibility
best
among the existing team based
was faster in ,@@0s. %verseas office
understand
of
of
processes was not ade"uate. ,,. There was no leadership culture
product6 geography and people front. ,2. GS had steady global expansion. t
the
philosophy
organi'ation. ,0. The institutionali'ation
holders were limited partners. ,,. GS embraced diversity on earnings6
ensure
in
of committing time to activities not
for
related to revenue generation. ,(. nspiring people to be trained as
training and decision ma&ing on
leaders and to train future leaders
strategic issues ensured line people
was difficult as people demanded
focus on broader issues. t also
business reasons behind it. ,. The ways to measure the leadership
helped in developing and retaining firm
program were not defined and tough ensure
to "uantify in terms of financial
complementary s&ills and smooth
goals. ,=. There was opportunity cost involved
transition. ;eadership opportunities
in having people as trainers rather
arise and help in development and
than
transfer of s&ills. ,=. ulture is nurtured with fervour.
them
clinching
deals
for
organi'ation. ,@. Senior management did not devote
Aew aspect of culture inclusion is in
sufficient time for people issues and
line with existing measures.
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,@. ocus remained on hiring high achievers
to
ensure
talent development
excellent
other industries. 20. There was no standard integrated
execution and "uality of wor&. 20. ulture encouraged feedbac&6 self-
development experience provided to
criticism. !eople set high standards for themselves. 2,. ulture encouraged
compared to
groom leaders.
collaborative
practices. $ combined wor& effort gave better ways to loo& at problem. 22. Senior leadership was committed to reinforce the culture and supported the partners. 27. Buman capital was recogni'ed as important asset. There was C9 approach to wor&. There were no prima donnas. ;eadership was part of wor&. 28. $pprenticeship model of learning was followed. Senior leaders were expected to mentor new hires. 2. Tric&s of trade were learnt by employees
on
the
?ob
itself.
Aevertheless there were orientation programs for analysts and new >*s. 2(. Dusiness units had their own learning and development initiatives. They created additional courses6 unit specific orientation and trainings and culture
building
events
or
conferences. O##ortunities Threats ,. The boom in dot com business ,. The new business models of dot models was easy way of ma&ing "uic&
buc&s
by
ta&ing
coms were attracting the brightest
those
talents. 2. nfusion of people from varied
companies on stoc& mar&ets. 2. $sian and >iddle 9ast mar&ets and businesses
were
showing
bac&grounds could result in cultural
good
clashes among people and of people
stability and growth. 7. Software services
firms
with respect to organi'ation. 7. There were many mergers
from
developing countries were loo&ing
ac"uisition
to get listed on A$S*$E.
industry
in
financial
which
could
and
service empower
competitors.
Lea!ershi# $evelo#ment Program:
A!vantages Obstacles ,. t would provide a formal structured ,. The
way to groom future leaders. 2. t will help develop firm
form
and
problematic
to
location
were
decide.
$ new monumental building to
and &eep them happy and excited
conduct training would instil a sense
with a steep learning curve. 7. t will accelerate professional
of achievement among employees. 9xisting space utili'ation would not
development and help GS win the
motivate employees as they come to
war of talent. 8. t will help build an array of
the same building almost daily. 2. The selection of faculty was posing
outstanding leaders as bac&up to
issues. Talented ban&ers were not
help in firm
always best teachers. #se of senior
approach to reinforce the culture and
leaders would mean in continuing
"uality
new
current practices and reinforcing
employees. (. t would be benchmar&ed against
them. The external faculties might
of
GS
among
be too generic and their content
best practices from world
would not be suitable for GS as they
companies. t too& into account
would fail to understand intricacies
internal and external perspectives
of businesses of GS. 7. The content and format of leadership
along with extensive research. . t would be focussed on building
was a difficult decision. GS needed
upon the ideas of leadership existent
to decide whether to approach an
in GS. =. The program can serve as basis for
existing plan of leadership model or develop one of its own. The topics to
succession planning initiatives.
be covered had to be challenging and of finest "uality.
%
8. The
program
stimulating
needed
enough
to
to
be
convince
existing leaders to devote their time. The length of program could not be very long due to demanding nature of ?obs in GS. t needed to have a common platform for leadership development.
The
fre"uency
of
program and career stage of its chosen participants was a matter of deliberation. . The program had to weigh the pros and cons of traditional classroom teaching versus other methods which were rated high by GS employees. (. The program had to ta&e into account the si'e of GS6 the business units and their needs6 the various experience
levels
of
>*s
and
content expected by >*s of varied bac&ground. . The program had to be suitable for a set of extreme high achievers who were used to being the dominant person.
The
program
had
to
communicate consistent message of leadership across firms. =. GS needed a transparent process to select the individuals suitable for the program. @. The ownership of program was undecided. The program needed full support from business leaders of various units. The Buman apital >anagement division could own the
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program but it would create a feeling of program being generic in nature among business units. ,0. The absence of hief ;earning %fficer
4;%5
establishing
an
mechanism and
would entire
mean support
integrating with
existing hierarchy and
structure.
This was a time ta&ing and tough tas&. ,,. The
program
had
to
have
"uantifiable measurable to evaluate its success. t had to inspire the top leadership to invest time to develop the new rung. ,2. The leadership program had to fit the current set of cultural values of GS and answer the demands of business for leaders to run new initiatives in different countries or domains.
%actors:
,. 2. 7. 8. . (.
There was a lac& of formal leadership training initiative at GS. The talent crunch in terms of leadership positions was pretty acute. GS had to decide on means to evaluate tangible effects of leadership program. GS had to tailor the leadership program for a geographical6 cultural6 domain spread. GS had to ensure transparency of selection of individuals for leadership program. GS had to ta&e into account the form6 faculty6 content6 format6 method and target
audience of leadership program. . GS had to evaluate opportunity cost associated with top leaders ta&ing training sessions. =. GS had to understand the perceived effectiveness of leadership program and the psychological impact on individuals.
Critical %actor:
,. GS had to ta&e into account the form6 faculty6 content6 format6 method and target audience of leadership program to conduct a suitable formal leadership training program. E&#lanation: •
GS had to establish a formal training program for leaders as it needed new leaders to lead new initiatives. The cost of hiring new leader from another company was
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tremendous compared to grooming internal employees for leadership role. GS can follow classical Le'in(s )o!el o* Lea!ershi# Styles . t can assess the type of leadership it re"uires. Autocratic Leadership is when leader tells his followers what needs to be done. Be also informs them the expected manner of execution and timelines. Delegative Leadership is when leader leaves the decision ma&ing to group members or sub-ordinates. Participative Leadership F also &nown as democratic leadership is the best style of leadership as it allows individual group members to provide inputs and participate in decision ma&ing by stating their ideas. The leadership development program can focus on assessing the traits re"uired from a leader to be !articipative to large extent and *elegative to some extent. $ scale can be designed to measure impact on these three styles. The leader trained can be evaluated as per profits of his unit and the category to which he belongs can be analysed for its
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effectiveness. GS can also follow the %ie!ler(s Contingency )o!el for leadership. t states that there is no single best way for a leader to lead as it is context specific. This theory classifies leaders as Tas" Oriente! Lea!er or +elationshi# Oriente! Lea!er . Leader Member Relations determine the compatibility "uotient of manager and his team members. The Task Structure determines how manager should lead or react in a situation based on nature of tas&s F repetitive6 rapidly changing6 demanding6 etc. Position Power determines the extent of say the leader has in his business unit or the organi'ation and degree of autonomy he can exercise. urrently at GS there are tas& oriented leaders even when the tas&s are unstructured.
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The program has to ensure that they become relationship oriented. GS could not err on any of the form6 faculty6 content6 format and needs of target audience as it would defeat the very purpose of motivating people towards leadership roles if they feel disconnected or discontent during the training stage itself.
$ecision Criteria:
GS had to ta&e into account opportunity cost of leader
Alternatives available *or S:
,. GS can establish a new venue for training the leaders. This venue can be used to train managing directors who can lead various venues across the globe. GS can have faculty from leading business schools teach the nuances of leadership through tested models using classroom approach to a broad base of >*s irrespective of experience and type of business unit they represent. 2. GS can establish the very specific aspects of leadership found lac&ing in current >*s to lead global business challenges. These aspects can be developed by short training programs instead of a comprehensive leadership training program. The leadership training institutes of repute can underta&e this activity acting on guidelines provided by GS about "uality and content expectations. This can be administered on and asand-when need basis. 7. GS can develop the leadership training program and administer it in same company head"uarter premises. t can tailor the content to a mix of alternatives among format6 content6 method and diversity of target audience. +ecommen!ations:
GS can go with alternative number three. •
t is advisable to have details about your internal talent and succession planning staying within your organi'ation. GS can exercise more control6 flexibility and gain more acceptance for the program due to location. Senior leaders can interact easily
•
with >*s. GS can have debriefing sessions after the training sessions to gauge the reaction of
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trainer and trainees towards the program in order to improve it on a continuous basis. GS can have an optimum group si'e ensuring everyone gets individual attention along
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with "uality and cost factor of conducting the training. GS can have a mix of faculty among the world class thought leaders and senior line
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managers to provide the best of both worlds to >*s. GS can tailor the programs to various sets of >*s as per the 1#$ re"uirements of business i.e. volatility6 uncertainty6 complexity and ambiguity.
,
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The establishment of a new hief ;earning %fficer and supporting structure can be done gradually. This is important to be a ;earning %rgani'ation and reap benefits of
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&nowledge of existing leaders for sustainable business continuance. The trainings can be administered to global locations via interactive communicating mediums li&e teleconferencing for discussions of prescribed readings over a topic. Trainees from various locations can be invited to head"uarters to ta&e part in program and should receive ample time from senior leadership li&e %%s. This is &ey to GS as
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they depend a lot on human assets. The establishment of new training centre would be costly. This would also waste
•
valuable time of senior leaders in travelling. Bence6 alternative two is ruled out. t is also not advisable to outsource a &ey activity of business. Bence6 alternative one is ruled out.
Plan o* Action:
,. The leadership traits to be developed would be established. The type of leadership 4!articipative6 *elegative6 Tas& %riented or 3elationship %riented5 to be stressed upon would be established. 2. The content and material would be finalised after discussions between leading internal experts in form of senior leaders and though leaders around the world. 7. The innovative ways to deliver the classroom training would be discussed and finalised in order to provide certain variation in traditional methods of training. 8. GS would focus on an existing accepted standard of leadership. t would wor& upon fine-tuning that model as per the trends in own organi'ation and industry. . The target audience would be carefully chosen for the leadership program to ensure some sort of pattern in terms of manageable heterogeneity of participating >*s. (. The ownership of leadership development program would be with the Buman apital >anagement *ivision. The business units can provide timely inputs about "uality and expectations from the program based on experiences of >*s from their business units who attended the program. These inputs would be used to further improve the program. . The participating trainers have to be ac&nowledged about their contribution. The thought leaders from outside universities or companies would be given a to&en of appreciation in form of certificate. =. There would be constant feedbac& about the program. This will be used to iterate the program based on "uality and execution excellence of participating >*s before and after the program.
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,2 There would be special initiatives to concentrate on developing women leadership.
There would be special emphasis on developing regional leadership.
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