Given the public drubbing Wall Street has taken over the past year or two, you may be surprised to learn that Goldman Sachs (GS) made Hay Group and Bloomberg BusinessWeek.com's Best Companies for Leadership list. But the survey isn't a popularity contest. It's an objective assessment of the culture for leadership development. In that area, as in so many others, Goldman Sachs is a true innovator.
Like other survey respondents from the Best Companies for Leadership, those from Goldman Sachs said that leadership development isn't a nice-to-have option. It's embedded in the culture. "As soon as people become good managers, we want them to be good coaches too," says George Parsons, chief learning officer for Goldman Sachs. "You have to be good at getting and giving feedback so you can help individuals fully contribute."
Until 15 or 20 years ago, every new person at Goldman Sachs had a coach. Leaders routinely mentored those who were coming through the ranks. Getting and giving feedback through one-on-one coaching at a small firm is fairly uncomplicated. But as Goldman Sachs has grown—it currently has some 30,000 employees around the world—the challenge became one of how to scale mentorship. "How do we keep the best practices alive so there is a demonstrated, ongoing effort to ensure that people are helped in navigating their careers?" asks Parsons.
The answer for more than a decade has been Pine Street, Goldman Sachs' innovative virtual senior academy serving 1,800 managing directors across the globe. The multifaceted program offers classroom activities, outside assignments, executive coaching, one-day seminars, and experience-based learning through the Leadership Acceleration Initiative, an annual six-month program for a group of managing directors around the globe selected by their leaders. (Unlike many other investment banks, managing directors at Goldman Sachs are not automatically considered high-potential.)
An "insane" distraction?
Leadership Acceleration Initiative participants perform their regular jobs during the day. Additionally, they complete a number of projects, such as serving on a global task force so they can do work with a global impact. The board of directors reviews this work and the developing leaders meet regularly with executive coaches and senior management during the six-month period. According to Vincent Milich, a Hay Group senior consultant, Goldman's dedication to leadership development sets it apart from its peers. Senior leaders at Goldman Sachs develop and participate in these programs in an industry where, according to Milich, "a lot of people don't spend any time training." Milich says that throughout the industry, the idea of taking someone from his or her desk for leadership development, "even for 15 minutes, is insane."
According to Parsons, leadership development has in recent years emphasized results as the firm works its way through the economic recovery. But in spite of the current environment, Goldman Sachs was able to preserve the core of its leadership development efforts (i.e., managers also being good coaches).
While Goldman Sachs is well-known for giving generous bonuses to high performers, Hay Group's Milich says that from a cultural perspective, leadership at Goldman Sachs believes that the team is more valuable than the individual, and that the firm is more important than the team. That commitment to the team over the individual star performer also sets the firm apart from its peers. "Breaking down silos is something Goldman Sachs does well," observes Milich.
As an example of silo-breaking and team commitment, Parsons cites what Goldman Sachs calls its "stockpicking college" for young research analysts. While the goal is to help the analysts perform more effectively, it's also about getting people to work together as a team. The emphasis, he says, is on how to get the right diversity across a portfolio. That requires a diversity of thinking—and a diversity of backgrounds. "How do you get from that diversity to a clear, quality outcome?" Parsons asks. "You create an environment in which people can speak from the heart—and where leaders know how to direct traffic, facilitate dynamic exchanges."
The collaborative culture and the matrixed environment help Goldman Sachs' managing directors make better decisions, says Parsons, by enabling more interaction across business lines, more freedom to consult in different directions, and more business being developed from scratch. He cites the accessibility of senior management as another plus. "People work more closely with multiple senior leaders [than they have in the past], says Parsons. "There is an abiding commitment to the next generation and to the success of these endeavors. You can't maintain that commitment if you're not available."