Case: Leadership development at Goldman Sachs

By: Group E2

Leadership development at Goldman Sachs By Group E2

Problem Statement: How to develop the effective leadership development plan across the organization to cultivate future leaders? Environmental Trends (PESTC) Political

Europeans acquiring various US firms.

Economic Trends

Booming IPO markets, generating continuous revenues. Manifold increase in the acquisitions in the financial services industry. Boom in the financial sector. Surge of companies going public.

Social Staffing void, resulting in hiring of diverse business backgrounds. High attrition rate in the financial sector.

Technological Dot Com Boom Emergence of new media, telecommunication & technology industry.

Cultural The takeover by a European company brought in changes in the work culture.

Leadership development at Goldman Sachs By Group E2

War for talent. Customers getting price sensitive.

SWOT Analysis for Goldman Sachs

Strengths

Weaknesses

High Profitability & Margins. One of the top leaders in investment banking. High Brand equity. Recruitment of best talent Very Low attrition rate as compared to industry. Talent from varied diversities Decentralized organization Culture. Minimum chain of command. Customer oriented business principles. Performance based compensation framework. Use of 360o performance review system. Unique performance management system Maintaining high level of Integrity and Honesty. Leader in new products & processes. Been a public organization would enable permanent capital Strong norms of feedback seeking. High team cohesion.

Lack of any leadership plan in place for the ranks of MDs in the organization. No organization level orientation or cultural training standard. Reluctance of Managers to go for leadership programs.

Leadership development at Goldman Sachs By Group E2

Opportunities Expanding in the global markets. Cutthroat competition, constantly pushing for continuous improvement. High industry standards and expectations of performance are ever-increasing. Recruitment of abled talent from premier Graduate and undergraduate schools. Whole Wall Street industry lacked any formal mentorship program. Massive changes required in current traditional model of professional development.

Threats Competition on the world stage Volatile/vulnerable financial sectors. High attrition rate in the financial sector. Scarcity of talent.

SWOT Analysis for implementing Leadership program

Strengths Would help grooming future leaders Provide the essential skills that distinguish a successful leader from a manager. Provide tools that can be applied across the organisation. Help standardise and maintain best practices of the organization. Improve leadership competences.

Weaknesses

Would not be billable in the short term. Require initial setup cost.

Leadership development at Goldman Sachs By Group E2

Opportunities Aligning a leadership program with the Goldman Sachs culture and goals. Provide long term gains. Whole Wall Street industry lacked any formal mentorship program so may provide competitive advantage in implementing it.

Threats Reluctance of people to go for such program. Engaging individual in this programme might result in loss of business opportunity.

Leadership development at Goldman Sachs By Group E2

Factors impacting the implementation of Leadership at Goldman Sachs

1. Form & Location 2. Faculty. 3. Content & Format 4. Method

5. 6. 7.

Target Audience. Governance & sponsorship. Decision making alignment

8. Stakeholder Alignment 9. Leadership Alignment

Critical factor

10. Organizations culture alignment

11. Perceived value of Leadership Learning

Discussion of Factors Decision making alignment: The decision to go ahead for Leadership programme should be aligned to the flat Organization structure and values of GS. The work environment at GS is collaborative so decision making for this shouldnt be authoritative. The alignment of these factors would determine how successfully the leadership development will be implemented.

Leadership development at Goldman Sachs By Group E2

The employees must be considered as organizational stakeholders and their premises should be included in the decision making process. This must be addressed before a corporate paradigm shift can successfully take place.

Stakeholder Alignment Stakeholder Alignment Model, developed at Cornell University focuses on: Developing the organization by developing each individual; Engaging all employees in actively managing their own performance and professional development; Providing supervisors and managers with resources and tools to create and develop processes that work for their staff; and consciously focusing on continuous improvement. To develop the Leadership plan at GS, Business heads should be called upon to consider the processes and tools available to make changes at an organizational level, and will strive to develop best practices that result in excellence for individuals, units, and the whole organization.

Organization culture model

Leadership development at Goldman Sachs By Group E2

According to Schein theory of Organizational Culture, the culture of an organization reflects the ultimate problems every group inevitably faces, including survival, growth, adaptation to the environment and internal integration.

Leadership Alignment The key factor to implement the leadership programme is to take the consensus of all management leaders involved in the decision making. Perceived value of Leadership Learning The perceived value of the leadership learning by the employees pays a pivotal role in deciding on the structure of Leadership development.

Options While forming the Leadership development program at Goldman Sachs following options can be used

Implementing the Leadership Plan pan organization by the following variants: 1. Variant 1 a. Form & location: Forming a new space within 30 Hudson. b. Faculty: Imparting the lectures from outside elite academicians. c. Content& Format: Customizing the learning module as per the GS. d. Method: Class room Sessions

Leadership development at Goldman Sachs By Group E2

e. Target audience: Initially all the MDs and then imparting the same to all VPs f. Governance & Sponsorship: Forming a unique separate entity apart from HCM. Advantages: 1. A new location and entity would encourage movement for learning. 2. By calling the experts for imparting the lectures would in itself a scope of motivation for employees. 3. The learning module would be customized based in the GS business units.

Disadvantages: 1. Forming a new building would involve a lot of initial cost. And without been sure of the success of the program, so much investment will not be advisable. 2. Limited audience of all DMs can limit the learning for others. 3. There could be availability and cost concerns in regularly calling the expert academicians.

2.

Variant2: a. Form & location: Reusing the existing space at Manhattan office. b. Faculty: Imparting the lectures from outside elite academicians and then asking the target audience to impart same knowledge transfer in the next session. c. Content& Format: Customizing the learning module as per the GS.

Leadership development at Goldman Sachs By Group E2

d.

Method: Class room Sessions and job structure, rotation and role modeling.

e. Target audience: All the top management to set the benchmark for all to employees. f. Governance & Sponsorship: Forming a unique separate entity apart from HCM.

Advantages: 1. Reusing existing location would be cost effective. 2. By cyclically asking Top management to impart reverse knowledge transfer could be both cost effective and great learning experience. 3. The learning module would be customized based in the GS business units. 4. Involve more involvement from the individuals.

Disadvantages:

1.

An existing building may not provide an ideal ambience for learning.

Action Plan

1.

Cascade the program down through the organization to include additional layers of the organizational hierarchy. The first wave of the program began with the highest hierarchical level of the organization, referred to as the Pilot Group. This team consisting of 5 most senior leaders.

2.

Leadership development at Goldman Sachs By Group E2

3.

Targeting the next level down in the organization for imparting the programme and asking the senior leaders to impart to conduct the training to other batches.

4. Call the audience in a batch from the different batches.

5.

After every batch commences its training conduct the review using the Kirkpatricks framework. This will evaluate program outcomes and would provide insights of improving the program further.

References: 1. Human Resource Management, 12 e, Gary Dessler, Biju Varkey (Chapter 9 pages

Leadership development at Goldman Sachs By Group E2

2. McMillan, J, & Shea, T 1983, 'Why many management incentive plans

don't work--and how to develop ones that do', Management Review, 72, 11, p. 47

3. EVALUATION OF A LEADERSHIP DEVELOPMENT by THE STATE UNIVERSITY

OF NEW JERSEY

Leadership development at Goldman Sachs By Group E2