LEADERSHIP

DEVELOPMENT AT
GOLDMAN SACHS
HRMT

Submitted By Group P2
Akshay Gupta 13303
Omkar 13334
Payal Datta Chowdhury 13335
Praveen Kumar Singh 13339
Sri Ramya Allani - 13353

Problem Statement:
The non-existence of a formal leadership training program to groom the business leaders out
of managing directors left Goldman Sachs with few possible candidates for posts having
business challenges.
PESTC Analysis:
Political environment:
The political leadership was set to go in for a long campaign for the elections of year 2000. It
created uncertainty about the policies that might be adapted by the new President.
The scandals about current President created a question about the leadership of United States
of America.
Economic environment:
There were numerous Initial Public Offerings of companies. The investment banking industry
had mergers and acquisitions.
The US economy had grown at amazing rate of nearly 6% during last quarter of previous
financial year. The gas prices were among the lowest for the decade but they went on
increasing spiral over the quarters. The Dow Jones Industrial Average gained a 15% in first
quarter itself against 20% on an average for the year. Thus there was threat of a stock bubble
in the financial assets domain.
The interest rate cut on Federal level lead to very low interests for US consumers.
Social Environment:
The stock market was on rise. People could earn more from the stocks. This resulted in a
steep decline in personal savings of people. Unemployment levels were consistently low.
Technological Environment:
The world was on the verge of dealing with Y2K bug. Various companies had to spend
substantial amount of money to ensure their information systems were capable of bypassing
the Y2K threat. Certain technological investments like satellite phones were need of the day
to ensure business continuance if the traditional telecommunication network fails due to Y2K.

Cultural Environment:
Retirement funds and households displayed a shift in terms of preference of financial
instrument from bonds to equities. A society was more open to the risk factors posed by
equity instruments.
Industries involving highly specialised work were taking in a diverse workforce from various
educational background. The new business models based on dot coms were preferred as
workplaces by bright talents.
SWOT ANALYSIS
Goldman Sachs:
Strengths
Weakness
1. Goldman Sachs (GS) had a rich
1. The
history

and

culture

which

its

of

organization

changed at the leaders initiative.

2. People had concerns about IPO and

employees could look up to.

2. GS believed in recruiting, training

were unhappy with that decision.

3. The size and complexity made it

and motivating people with great

difficult to groom enough number of

care.
3. GS was employer of choice for

leaders.
4. Everyone was expected to lead

many graduates. The division of

which might have resulted in some

business into units was very apt.

4. GS ranked among the very best in

decision making in haste.

5. The increase in size of business and

mergers and acquisitions, IPO and

common stock offerings.
5. Emphasis was laid on

structure

boost in headcount made it difficult

client

for senior leaders to share their time

servicing. The business principles

to mentor and guide new hires.

6. Divisional human resource practices

were clearly identified.

6. GS had early adoption of 360 degree

were stronger than centralized ones.

performance review system.

7. Lateral hiring was initiated to keep

Divisions were disinterested to send

employees happy and retain them.

their personnel for central training.

7. Most productive revenue generating

There were significant efforts to link

personnel were not always the best

partners

compensation

to

leaders.
8. Firm seldom

performance.
8. Organization structure evolved and

leadership

undertook

training.

formal

Systematic

adjusted

to

changing

requirements.
9. There
were

business

approach to leadership development

was lacking. Formalized leadership

restrictions

on

development program was lacking.

9. Leadership principles were not

withdrawal of partners capital.

10. GS was named a general partner.

ingrained

The individual partners and equity

culture.
12. There was no sense of urgency

provided substantial pre-tax profits.

13. The growth in staff came mainly

towards establishing a pool of

from entry level hires.

14. The post of Managing Director

leaders.
13. The number of people who could

(giving all benefits of partnership

lead new business challenges was

except ownership) was created to

very limited for a large bank.

14. New initiatives had to supplement

vice-presidents

responsibility

and

the mentorship practices prevalent.

15. People were too focused on work

develop into leaders.

15. The need for permanent capital was

that they did not necessarily like idea

met with IPO to safeguard against

sudden withdrawal of partners.
16. Committee driven approach

best

among the existing team based

was faster in 1990s. Overseas office

understand

of

of

processes was not adequate.

11. There was no leadership culture

product, geography and people front.

12. GS had steady global expansion. It

the

philosophy

organization.
10. The institutionalization

holders were limited partners.

11. GS embraced diversity on earnings,

ensure

in

of committing time to activities not

for

related to revenue generation.

16. Inspiring people to be trained as

training and decision making on

leaders and to train future leaders

strategic issues ensured line people

was difficult as people demanded

focus on broader issues. It also

business reasons behind it.

17. The ways to measure the leadership

helped in developing and retaining

firms senior talent.
17. Dual
line
managers

program were not defined and tough

ensure

to quantify in terms of financial

complementary skills and smooth

goals.
18. There was opportunity cost involved

transition. Leadership opportunities

in having people as trainers rather

arise and help in development and

than

transfer of skills.
18. Culture is nurtured with fervour.

them

clinching

deals

for

organization.
19. Senior management did not devote

New aspect of culture inclusion is in

sufficient time for people issues and

line with existing measures.

19. Focus remained on hiring high

achievers

to

ensure

talent development compared to

excellent

other industries.
20. There was no standard integrated

execution and quality of work.

20. Culture encouraged feedback, self-

development experience provided to

criticism. People set high standards

for themselves.
21. Culture encouraged

groom leaders.

collaborative

practices. A combined work effort

gave better ways to look at problem.
22. Senior leadership was committed to
reinforce the culture and supported
the partners.
23. Human capital was recognized as
important asset. There was WE
approach to work. There were no
prima donnas. Leadership was part
of work.
24. Apprenticeship model of learning
was followed. Senior leaders were
expected to mentor new hires.
25. Tricks of trade were learnt by
employees

on

the

job

itself.

Nevertheless there were orientation

programs for analysts and new MDs.
26. Business units had their own
learning and development initiatives.
They created additional courses, unit
specific orientation and trainings and
culture

building

events

or

conferences.
Opportunities
Threats
1. The boom in dot com business
1. The new business models of dot
models was easy way of making
quick

bucks

by

taking

coms were attracting the brightest

those

talents.
2. Infusion of people from varied

companies on stock markets.

2. Asian and Middle East markets and
businesses

were

showing

backgrounds could result in cultural

good

clashes among people and of people

stability and growth.

3. Software services

firms

with respect to organization.

3. There were many mergers and

from

developing countries were looking

acquisition

to get listed on NASDAQ.

industry

in

financial

which

could

service
empower

competitors.

Leadership Development Program:

Advantages
Obstacles
1. It would provide a formal structured
1. The
way to groom future leaders.
2. It will help develop firms key assets

form

and

problematic

to

location

were

decide.

A new monumental building to

and keep them happy and excited

conduct training would instil a sense

with a steep learning curve.

3. It will accelerate professional

of achievement among employees.

Existing space utilization would not

development and help GS win the

motivate employees as they come to

war of talent.
4. It will help build an array of

the same building almost daily.

2. The selection of faculty was posing

outstanding leaders as backup to

issues. Talented bankers were not

help in firms growth.

5. It would entail a more structured

always best teachers. Use of senior

approach to reinforce the culture and

leaders would mean in continuing

quality

new

current practices and reinforcing

employees.
6. It would be benchmarked against

them. The external faculties might

of

GS

among

be too generic and their content

best practices from worlds top

would not be suitable for GS as they

companies. It took into account

would fail to understand intricacies

internal and external perspectives

of businesses of GS.
3. The content and format of leadership

along with extensive research.

7. It would be focussed on building

was a difficult decision. GS needed

upon the ideas of leadership existent

to decide whether to approach an

in GS.
8. The program can serve as basis for

existing plan of leadership model or

develop one of its own. The topics to

succession planning initiatives.

be covered had to be challenging and

of finest quality.

4. The

program

stimulating

needed

enough

to

to

be

convince

existing leaders to devote their time.

The length of program could not be
very long due to demanding nature
of jobs in GS. It needed to have a
common platform for leadership
development.

The

frequency

of

program and career stage of its

chosen participants was a matter of
deliberation.
5. The program had to weigh the pros
and cons of traditional classroom
teaching versus other methods which
were rated high by GS employees.
6. The program had to take into
account the size of GS, the business
units and their needs, the various
experience levels of MDs and
content expected by MDs of varied
background.
7. The program had to be suitable for a
set of extreme high achievers who
were used to being the dominant
person.

The

program

had

to

communicate consistent message of

leadership across firms.
8. GS needed a transparent process to
select the individuals suitable for the
program.
9. The ownership of program was
undecided. The program needed full
support from business leaders of
various units. The Human Capital
Management division could own the

program but it would create a feeling

of program being generic in nature
among business units.
10. The absence of Chief Learning
Officer

(CLO)

establishing

an

would
entire

mean
support

mechanism and integrating with

existing hierarchy and structure.
This was a time taking and tough
task.
11. The

program

had

to

have

quantifiable measurable to evaluate

its success. It had to inspire the top
leadership to invest time to develop
the new rung.
12. The leadership program had to fit the
current set of cultural values of GS
and answer the demands of business
for leaders to run new initiatives in
different countries or domains.

Factors:
1.
2.
3.
4.
5.
6.

There was a lack of formal leadership training initiative at GS.

The talent crunch in terms of leadership positions was pretty acute.
GS had to decide on means to evaluate tangible effects of leadership program.
GS had to tailor the leadership program for a geographical, cultural, domain spread.
GS had to ensure transparency of selection of individuals for leadership program.
GS had to take into account the form, faculty, content, format, method and target

audience of leadership program.

7. GS had to evaluate opportunity cost associated with top leaders taking training
sessions.
8. GS had to understand the perceived effectiveness of leadership program and the
psychological impact on individuals.

Critical Factor:
1. GS had to take into account the form, faculty, content, format, method and target
audience of leadership program to conduct a suitable formal leadership training
program.
Explanation:

GS had to establish a formal training program for leaders as it needed new leaders to
lead new initiatives. The cost of hiring new leader from another company was

tremendous compared to grooming internal employees for leadership role.

GS can follow classical Lewins Model of Leadership Styles. It can assess the type
of leadership it requires.
Autocratic Leadership is when leader tells his followers what needs to be done. He
also informs them the expected manner of execution and timelines.
Delegative Leadership is when leader leaves the decision making to group members
or sub-ordinates.
Participative Leadership also known as democratic leadership is the best style of
leadership as it allows individual group members to provide inputs and participate in
decision making by stating their ideas.
The leadership development program can focus on assessing the traits required from a
leader to be Participative to large extent and Delegative to some extent. A scale can be
designed to measure impact on these three styles. The leader trained can be evaluated
as per profits of his unit and the category to which he belongs can be analysed for its

effectiveness.
GS can also follow the Fiedlers Contingency Model for leadership. It states that
there is no single best way for a leader to lead as it is context specific. This theory
classifies leaders as Task Oriented Leader or Relationship Oriented Leader.
Leader Member Relations determine the compatibility quotient of manager and his
team members.
The Task Structure determines how manager should lead or react in a situation based
on nature of tasks repetitive, rapidly changing, demanding, etc.
Position Power determines the extent of say the leader has in his business unit or the
organization and degree of autonomy he can exercise.
Currently at GS there are task oriented leaders even when the tasks are unstructured.

The program has to ensure that they become relationship oriented.

GS could not err on any of the form, faculty, content, format and needs of target
audience as it would defeat the very purpose of motivating people towards leadership
roles if they feel disconnected or discontent during the training stage itself.

Decision Criteria:
GS had to take into account opportunity cost of leaders time and maintain sufficient
interest levels of program to attract the trainers and trainees.
Alternatives available for GS:
1. GS can establish a new venue for training the leaders. This venue can be used to train
managing directors who can lead various venues across the globe. GS can have
faculty from leading business schools teach the nuances of leadership through tested
models using classroom approach to a broad base of MDs irrespective of experience
and type of business unit they represent.
2. GS can establish the very specific aspects of leadership found lacking in current MDs
to lead global business challenges. These aspects can be developed by short training
programs instead of a comprehensive leadership training program. The leadership
training institutes of repute can undertake this activity acting on guidelines provided
by GS about quality and content expectations. This can be administered on and asand-when need basis.
3. GS can develop the leadership training program and administer it in same company
headquarter premises. It can tailor the content to a mix of alternatives among format,
content, method and diversity of target audience.
Recommendations:
GS can go with alternative number three.

It is advisable to have details about your internal talent and succession planning
staying within your organization. GS can exercise more control, flexibility and gain
more acceptance for the program due to location. Senior leaders can interact easily

with MDs.
GS can have debriefing sessions after the training sessions to gauge the reaction of

trainer and trainees towards the program in order to improve it on a continuous basis.
GS can have an optimum group size ensuring everyone gets individual attention along

with quality and cost factor of conducting the training.

GS can have a mix of faculty among the world class thought leaders and senior line

managers to provide the best of both worlds to MDs.

GS can tailor the programs to various sets of MDs as per the VUCA requirements of
business i.e. volatility, uncertainty, complexity and ambiguity.

The establishment of a new Chief Learning Officer and supporting structure can be
done gradually. This is important to be a Learning Organization and reap benefits of

knowledge of existing leaders for sustainable business continuance.

The trainings can be administered to global locations via interactive communicating
mediums like teleconferencing for discussions of prescribed readings over a topic.
Trainees from various locations can be invited to headquarters to take part in program
and should receive ample time from senior leadership like COOs. This is key to GS as

they depend a lot on human assets.

The establishment of new training centre would be costly. This would also waste

valuable time of senior leaders in travelling. Hence, alternative two is ruled out.
It is also not advisable to outsource a key activity of business. Hence, alternative one
is ruled out.

Plan of Action:
1. The leadership traits to be developed would be established. The type of leadership
(Participative, Delegative, Task Oriented or Relationship Oriented) to be stressed
upon would be established.
2. The content and material would be finalised after discussions between leading internal
experts in form of senior leaders and though leaders around the world.
3. The innovative ways to deliver the classroom training would be discussed and
finalised in order to provide certain variation in traditional methods of training.
4. GS would focus on an existing accepted standard of leadership. It would work upon
fine-tuning that model as per the trends in own organization and industry.
5. The target audience would be carefully chosen for the leadership program to ensure
some sort of pattern in terms of manageable heterogeneity of participating MDs.
6. The ownership of leadership development program would be with the Human Capital
Management Division. The business units can provide timely inputs about quality and
expectations from the program based on experiences of MDs from their business units
who attended the program. These inputs would be used to further improve the
program.
7. The participating trainers have to be acknowledged about their contribution. The
thought leaders from outside universities or companies would be given a token of
appreciation in form of certificate.
8. There would be constant feedback about the program. This will be used to iterate the
program based on quality and execution excellence of participating MDs before and
after the program.

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9. There would be special initiatives to concentrate on developing women leadership.

There would be special emphasis on developing regional leadership.

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