The world’s top merger adviser will promote all analysts to associates after two years, and let them switch to different teams in their third year to broaden skills, said David Solomon, co-head of the firm’s investment bank. Top workers will be able to advance from associate to vice president in 3 1/2 years, cutting the previous timetable by 12 months, he said.
The moves mean higher pay for many junior bankers and earlier conversations with managers about future roles at the firm. Once Wall Street banks hire young employees, the biggest threats to retaining them typically come from their buy-side clients, such as investment funds, that start recruitment efforts within months to pick up talent fresh from two-year training programs.
“We’re really trying to develop people for a longer period of time than two years because, candidly, it takes more than two years to figure out” whether banking is the right career, Solomon said in an interview at the firm’s Manhattan headquarters. “By getting people on the track of becoming an associate, we’re basically just matching what’s going on in the world with other opportunities that are out there.”
‘Trying to Evolve’
Investment banks have said they have no issues finding talented employees, even as fewer students at elite US colleges are choosing Wall Street over other industries like technology. President Gary Cohn said this week that his firm, which hired just 3% of more than 267,000 job applicants last year, has “absolutely no problem” attracting talent. Still, banks have cited a desire to present themselves as a viable option for long-term careers and avoid burnout or defections from recent graduates.
To that end, Goldman Sachs has developed technology that handles many of the most rote tasks for analysts, Solomon said. The firm already rolled out an internal search engine that cut down on e-mailed inquiries to and from junior bankers and a program that takes an hour to pull together calendar and fee information for clients in initial public offerings, a process that used to take analysts 12 hours, he said. The firm also is encouraging more focused pitchbooks that take less time.
“We’re trying to evolve from a culture where more information that’s generic is better, to less information that actually is value-added and relevant,” Solomon said. “That’s a big cultural shift, and clients prefer it.”
The April death of a 22-year-old Wharton grad working as a tech banker for Goldman Sachs in San Francisco fueled the debate over whether banks have done enough to ease grueling demands on their youngest workers. Many firms have enacted policies to limit hours of junior bankers in recent years, prompted in part by the 2013 death of an intern at Bank of America Corp.
Banks have tried a variety of approaches to keep more of their promising new hires, who are often courted for roles at private-equity and hedge-fund firms as early as six months into their first jobs. Two years ago, Morgan Stanley rescinded a short-lived policy that had banned its analysts from hunting for work in their first year after junior employees complained about the rule.
In 2012, Goldman Sachs stopped offering two-year contracts to investment-banking analysts, instead making them full-time employees from the start to encourage longer careers at the firm. The next year, the company developed a “junior banker task force” and made changes including discouraging younger employees from working weekends. The bank also hired a larger number of entry-level bankers to spread the workload and aimed to give them more predictable hours.
Last year, Goldman Sachs boosted salaries for analysts in the US by about 20%, bringing many first-year employees’ base pay to about $85,000. At major Wall Street firms, such employees typically are paid $70,000 to $90,000 in salary, with bonuses bringing total compensation to as much as $140,000, according to New York-based consultant Johnson Associates Inc.
The latest efforts, which were announced to staff in a memo Thursday, include adding permanent managers within investment banking that will help enact the changes. The firm also has a task force looking at the roles and experience for vice presidents, which may make recommendations by the end of the first quarter, Solomon said. The moves to this point have improved retention among analysts, and the firm hopes to see more gains from the latest changes, he said, declining to specify a goal.
“Races aren’t won by 100 yards, races are won by steps,” Solomon said. “You’ve got to make sure that your relative performance is a little bit better.”
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