Goldman Lead Leadership Development at Goldman Sachs:

Goldman Lead

Leadership Development at Goldman Sachs: A Case Study and Program Strategy Recommendation

Goldman Sachs is a company that had more than a century of long-standing respect and authority in the financial world up until the recent economic crisis, which ultimately resulted in allegations of fraud being levied against the company and many of its executives. One creative journalist compared the banking and finance institution to a "vampire squid," and the name and image have stuck as the degree to which the Goldman Sachs lied to and profited from its stakeholders while also becoming involved in any number of nefarious schemes. In short, Goldman Sachs has in many ways become the company that people love to hate, and the scapegoat for the financial and banking sector's culpability in the recent global recession.

This image is not entirely fair, however, and the hundred and forty years of Goldman Sachs' operation before this crisis stand as evidence that in addition to its more squid-like moments, the company really has paved the way for enormous growth and success for other businesses and its own shareholders. In addition, the case study examined as background material for the leadership recommendations herein demonstrates the degree to which the company focused on its internal integrity and success in its drive to be a true leader in its industry and in the international community of banking and finance. This is not a company that can be defined in terms of its reputation in the media or its admittedly dastardly actions in the past few years, but rather this period must be seen as a hiccup in a much more respectable history.

This paper will begin with an examination of Goldman Sachs and its leadership style and development program as it stood in 1999, the period detailed and discussed in Groysberg and Snook's (2007) case study, "Leadership Development at Goldman Sachs." A leadership program based on the peer mentoring strategy is discussed as the most effective alternative for the refocusing and strengthening of the many leaders at the company's increasingly diverse and substantial divisions and departments and their interrelationships with each other. An examination of more recent events in the company and its leadership's decisions will also be provided, with comment on how the situation might have been -- and could still be -- assisted by the adoption of the specific leadership development program described. It is hoped that this will lead to a better understanding both of the issues that evolved at Goldman Sachs and the importance of leadership development generally.

Program Design

Towards the end of 1999, as the leadership committee at Goldman Sachs was readying themselves for their presentation of their own leadership development program to the bulk of the company's actual leaders, the company was in a fairly hectic state. Growth ha taken place on an exponential basis over the past decade, yet with a major shake-up only five years prior due to heavy investment and capital losses (Groysberg & Snook 2007). There were now literally thousands of people in leadership positions at the company, which had offices and divisions in numerous countries spanning the hemispheres.

Organizing let alone convincing this many people is a task in and of itself, and doing so with a group of leaders -- people who already had authority within the company and most of whom had at least some track record that warranted this authority -- can be all but impossible. Any leadership development strategy employed at the company would have to be immediately empowering and somewhat self-directed if it was to be adopted by the company's "A-players" (HMM 2011). It is for this reason that a mentorship strategy of development that is made an outgrowth of existing peer relationships that exist amongst the company's leaders is the recommended strategy for the deployment of this development plan. With effective initial integration from the members of the leadership committee, the objectives and styles of leadership identified as desirable both implicitly and explicitly by Groysberg & Snook (2007) can be communicated and embodied by other leaders as well (HMM 0211).

Specifically, Groysberg & Snook (2007) note that teamwork and collaboration were considered essential elements at Goldman Sachs, while at the same time decentralization and a certain lack of expertise due to the rapidity of the company's growth were also becoming problems. Effective peer mentoring provides an official system by which increased centralization can be achieved while directly encouraging peer-to-peer communication and advice/perspective-seeking (HMM 2011). In this manner, the desired values and culture can be transmitted throughout the company's leadership, while at the same time the culture will be able to develop cohesively as the collective leadership begins to operate in a more closely linked manner.

This focus on interpersonal relationships and communication is likely to be ill-received by many bankers and time-pressured financiers, so the returns on this investment must be made abundantly clear to involved individuals in s quantitative a manner as possible. Improving the cohesiveness and cooperation/collaboration among Goldman Sachs' leaders would decrease the loss in capital resulting from partner departure, decrease the loss of investment income due to a standardization of risk analysis procedures across the many disparate countries of the company's operations; provide greater access and interaction between different levels of leadership within the company, increasing the effectiveness (and for the right individuals, the likelihood) of promotions; and increase the level of input the lower level leaders had on company decisions without diluting the ultimate decision making power of higher level leaders. These expected effects are all measurable, and all beneficial to pretty much all leaders at the company -- especially to the ones the company has the strongest desire to keep.

Retraining the Vampire Squid

In light of recent events, it is clear that some sort of leadership development (or at least ethics training) was definitely advisable for Goldman Sachs. The company actually had a program in place, providing a training facility with a variety of short- and longer-term programs for its managing directors (O'Connell 2010). The growth of the organization described in the case study continued throughout the irst decade of the new millennia, however, and this program was not enough to truly sustain the cohesiveness of leadership (O'Connell 2010).