Leadership Development at Goldman Sachs – Case Summary
Background In November 1999, 11 of Goldman Sachs' finest gathered to put the final touches on a revolutionary leadership development plan. Following Goldman's explosive growth during the 1990s and its eventual IPO in 1999, a diverse group of leaders from across the firm were selected to "assess the future training and development needs of Goldman Sachs, with a particular focus on the need for a more systematic and effective approach to developing managing directors. After six months of brainstorming, holding discussions with Goldman Sachs colleagues, interviewing experts, and benchmarking best practices, it was finally time to present their findings to the management committee. The briefing contained an integrated leader development plan with concrete recommendations on how to resolve several critical design issues, including: location, faculty, content, format, method, target audience, governance, and sponsorship. No one sitting on the management committee had relied on a formal leadership program to reach the top.
The need for a systematic approach The 90’s boom had a downside for the banks: “hot” new industries placed additional stress on an already tight labor market by wooing skilled workers away from more traditional fields. The ensuing “war for talent” threatened to put a damper on the growth of professional service firms as bankers, lawyers and consultants all sought opportunity in these new industries. Many firms turned to unconventional sources to fill the staffing void, eventually hiring Ph.D. graduates, medical doctors, scientists, and others with non-traditional business backgrounds. The increasingly diverse workforce challenged the strong cultures of professional service firms that historically had preferred to grow their own talent. Time-honoured, organic models of leader development were put to the test.
The Apprenticeship Model – Need for a change Historically, Goldman Sachs managers learned how to lead by apprenticeship, by working closely with other senior leaders within the firm. Throughout the 1980’s and well into the 1990’s, professional development happened almost entirely on the job. Most formal programs targeted employees at or below the rank of vice-president. During this period, the firm seldom undertook formal leadership training. As Goldman’s rapid expansion continued it brought with itself a need for a more systematic and formal approach to leader development was felt. Due to this tremendous growth in size as well as complexity, it became increasingly difficult to cultivate enough leaders to meet the demand, let alone facilitate productive interaction among many of them.
Leadership Development Advisory Committee Goldman’s approach to professional development should be guided by four key objectives: Developing the firm’s key asset: With the firm’s people representing our most critical asset and competitive advantage, the task of keeping our talent excited and moving up a steep learning curve has become mission-critical. Winning the “War for Talent”: Accelerated professional development is a key element in the overall “value proposition” to the most talented people. Building a cadre of outstanding leaders: The firm’s growth and ambitious business objectives demand a larger group of outstanding, well-rounded leaders. Maintaining quality and cultural strength amidst rapid growth: 42% of GS employees have less than two years’ experience at the firm. Our expanded scale dictates that our traditional “apprenticeship” model of professional development be supplemented with more structural measures.
Questions to be addressed
Location - Where would the program be physically located? Faculty Mix - What would be the Faculty mix-outside and internal? Content - What topics should be covered? Method- classroom instruction, other types of developmental experiences should be included in the Leadership Development Advisory Committee’s proposal Target Audience - Who should be developed, with whom, and why? Governance and sponsorship – Who should own the leadership development within Goldman Sachs and how should it be organized
