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.

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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
1. Goldman Sachs (GS) had a rich
history and culture which its
employees could look up to.
2. GS believed in recruiting, training
and motivating people with great
care.
3. GS was employer of choice for many
graduates. The division of business
into units was very apt.
4. GS ranked among the very best in
mergers and acquisitions, IPO and
common stock offerings.
5. Emphasis was laid on client
servicing. The business principles
were clearly identified.
6. GS had early adoption of 360 degree
performance review system.
7. Lateral hiring was initiated to keep
employees happy and retain them.
There were significant efforts to link
Weakness
1. The structure of organization
changed at the leader’s initiative.
2. People had concerns about IPO and
were unhappy with that decision.
3. The size and complexity made it
difficult to groom enough number of
leaders.
4. Everyone was expected to lead which
might have resulted in some decision
making in haste.
5. The increase in size of business and
boost in headcount made it difficult
for senior leaders to share their time
to mentor and guide new hires.
6. Divisional human resource practices
were stronger than centralized ones.
Divisions were disinterested to send
their personnel for central training.

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 partners’ compensation to 7. Most productive revenue generating
performance. personnel were not always the best
8. Organization structure evolved and leaders.
adjusted to changing business 8. Firm seldom undertook formal
requirements. leadership training. Systematic
9. There were restrictions on approach to leadership development
withdrawal of partners’ capital. was lacking. Formalized leadership
10. GS was named a general partner. The development program was lacking.
individual partners and equity 9. Leadership principles were not
holders were limited partners. ingrained in philosophy of
11. GS embraced diversity on earnings, organization.
product, geography and people front. 10. The institutionalization of best
12. GS had steady global expansion. It processes was not adequate.
was faster in 1990s. Overseas office 11. There was no leadership culture
provided substantial pre-tax profits. among the existing team based
13. The growth in staff came mainly culture.
from entry level hires. 12. There was no sense of urgency
14. The post of Managing Director towards establishing a pool of
(giving all benefits of partnership leaders.
except ownership) was created to 13. The number of people who could lead
ensure the vice-presidents understand new business challenges was very
responsibility and develop into limited for a large bank.
leaders. 14. New initiatives had to supplement the
15. The need for permanent capital was mentorship practices prevalent.
met with IPO to safeguard against 15. People were too focused on work that
sudden withdrawal of partners. they did not necessarily like idea of
16. Committee driven approach for committing time to activities not
training and decision making on related to revenue generation.
strategic issues ensured line people 16. Inspiring people to be trained as
focus on broader issues. It also helped leaders and to train future leaders was
in developing and retaining firm’s difficult as people demanded
senior talent. business reasons behind it.

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17. Dual line managers ensure 17. The ways to measure the leadership
complementary skills and smooth program were not defined and tough
transition. Leadership opportunities to quantify in terms of financial
arise and help in development and goals.
transfer of skills. 18. There was opportunity cost involved
18. Culture is nurtured with fervour. New in having people as trainers rather
aspect of culture inclusion is in line than them clinching deals for
with existing measures. organization.
19. Focus remained on hiring high 19. Senior management did not devote
achievers to ensure excellent sufficient time for people issues and
execution and quality of work. talent development compared to
20. Culture encouraged feedback, self- other industries.
criticism. People set high standards 20. There was no standard integrated
for themselves. development experience provided to
21. Culture encouraged collaborative groom leaders.
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.

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 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 coms
models was easy way of making were attracting the brightest talents.
quick bucks by taking those 2. Infusion of people from varied
companies on stock markets. backgrounds could result in cultural
2. Asian and Middle East markets and clashes among people and of people
businesses were showing good with respect to organization.
stability and growth. 3. There were many mergers and
3. Software services firms from acquisition in financial service
developing countries were looking to industry which could empower
get listed on NASDAQ. competitors.

Leadership Development Program:

Advantages Obstacles
1. It would provide a formal structured
way to groom future leaders.
2. It will help develop firm’s key assets
and keep them happy and excited
with a steep learning curve.
3. It will accelerate professional
development and help GS win the
war of talent.
4. It will help build an array of
outstanding leaders as backup to help
in firm’s growth.
1. The form and location were
problematic to decide.
A new monumental building to
conduct training would instil a sense
of achievement among employees.
Existing space utilization would not
motivate employees as they come to
the same building almost daily.
2. The selection of faculty was posing
issues. Talented bankers were not
always best teachers. Use of senior

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5. It would entail a more structured
approach to reinforce the culture and
quality of GS among new employees.
6. It would be benchmarked against best
practices from world’s top
companies. It took into account
internal and external perspectives
along with extensive research.
7. It would be focussed on building
upon the ideas of leadership existent
in GS.
8. The program can serve as basis for
succession planning initiatives.
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leaders would mean in continuing
current practices and reinforcing
them. The external faculties might be
too generic and their content would
not be suitable for GS as they would
fail to understand intricacies of
businesses of GS.
3. The content and format of leadership
was a difficult decision. GS needed to
decide whether to approach an
existing plan of leadership model or
develop one of its own. The topics to
be covered had to be challenging and
of finest quality.
4. The program needed to be
stimulating enough to 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) would mean
establishing an entire 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

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 for leaders to run new initiatives in
different countries or domains.

Factors:

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

2. The talent crunch in terms of leadership positions was pretty acute.
3. GS had to decide on means to evaluate tangible effects of leadership program.
4. GS had to tailor the leadership program for a geographical, cultural, domain spread.
5. GS had to ensure transparency of selection of individuals for leadership program.
6. 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 Lewin’s 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.

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 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 Fiedler’s 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 leader’s 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

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 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 as-and-
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.

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  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.
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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