Leadership Development at Goldman Sachs

Problem statement:
SWOT
PESTC
Factors:
 Goldman’s business activities in 1999 were divided into three segments i.e.
investment banking, trading and principal investments and asset management security
services.
 Talent crunch during 1990’s.
 In 1997 a wave of acquisitions started with ING’s purchase of Furman
 Goldman hired only the best talent from the industry as well as new recruits from the
top institutes.
 Alumni took great pride in having worked at Goldman.
 The culture encourages more of “we” rather than “I”.
 They only hired people who were “smart high achievers”, who wanted to win. Hence,
every individual was considered to have a leadership trait.
 The predicament was to establish a leadership culture within a well-established team
culture.

Critical Factors:
 Initially during 1990’s Goldman Sachs, individual business units offered their own
development programs. This worked fine when the entire workforce was all
American. However, as they entered different countries and began to hire a
multinational workforce, it became increasingly important to help identify the
competencies of a future leader.
 COO John Thorton admired Jack Welch greatly. Since Thorton was a part of the
Leadership Development Advisory Committee, most of the critical factors considered
important were based on Jack Welch’s leadership principals.
 The location of the leadership program, whether it had to be located within the
Goldman facility or a separate facility where people would actually take pride in
attending the training was an important factor.
 The faculty who would implement the training, could include either industry wide
academicians or inspirational leaders not belonging to Goldman. Else, it could be in-
house leaders who know the existing practices of Goldman, however which would
risk institutionalizing existing practises. This wouldn’t allow any innovative ideas
important for adaptation in the changing dynamic industry to be included in the
program.
  Involving the existing senior employees in the leadership program, would involve
serious time commitments from leaders from across different segments.
 Deciding on the content of the programs, which had to include general leadership
skills along with programs to inculcate the Goldman culture, was not a easy task. The
curriculum had to be such that employees took it seriously, rather than an unnecessary
HR exercise.
 Deciding the career stage of the employee on which training had to be implemented
also proved to be a dilemma. Including it too soon could mean, employees never
really got a chance to implement their learnings. On the other hand, senior, successful
employees would not be comfortable being in a position where they were not
dominating.
 Many committee members had made it to the team without any formal training, hence
they were of the belief that effective learning happened only on the job with day to
day interaction with experienced colleagues. This belief would in turn hamper the
implementation of such a program.
 Another critical aspect was the decision, of who would own the program. Making a
single unit such as HCM own it entirely would mean, standardising the process for all
the units, this would take of the impact of personalisation. Too much generalisation
meant, employees belonging to different segments would not consider it important to
learn things not relevant to them.
 Creating a standalone office for leadership development, would trigger the need for
devising the staffing, recruitment, structure and support. They would also need a CLO
for the same, however Goldman never had such a position before.

Alternate recommendations
1. To create a new leadership division outside their headquarters. This would make
employees more motivated to take the training more seriously rather than dismiss it as
an HR gimmick. This centre, would also act a centre of pride for developing future
leaders.
2. Provide incentives to attend the training program. Inculcate the importance of the
training program from the new recruit level, associate a sense of achievement with
being asked to attend the programs. Business Unit Heads, could be asked to
recommend a few potential leaders under them to attend the program .This would
ensure that employees would be motivated in earning such a recommendation.
3. Develop separate training centre for each Country, this would make it possible to
deliver country specific trainings. Since, the case explicitly mentions the irrationality
of trying to run Japan from America, each country ought to have its own leadership
training.

Plan of Action
Analysing the situation presented in the case, we recommend a Plan of Action including a
combination of the above recommendation.
1. Create/Establish Country specific training centres outside the organisations main
building.
2. Identify a mix of faculty including industry specialists, academicians and in house
leaders for each centre. Cross country training of faculty could be implemented for
knowledge sharing.
3. Establish a set of standards to be included in the training. Here recommendation 2
could be standardised for each country. This would also help them retain the crux of
the Goldman Sachs leadership.