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Leadership at Goldman-Sachs

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REV: MARCH 22, 2007


Leadership Development at Goldman Sachs
Our people have driven Goldman Sachs’ success for 130 years through sustained, superb execution across a range of markets and products. The best way to maintain that advantage is by recruiting, training and mentoring people as we always have—one at a time, with great care. We want Goldman Sachs to be a magnet for the very best people in the world—from new graduates to senior hires. At the same time, we are focusing on developing our very deep bench of talented people and improving and extending our skills. We are, for instance, placing young leaders in demanding positions that stretch their abilities. We are also devoting more time and attention to the formal training and development of leaders, particularly senior leaders.
— Henry M. Paulson, “Letter to Shareholders,” Goldman Sachs, 1999 Annual Report
Late on the evening of November 7, 1999, a small cadre of senior leaders huddled around a conference table on the 22nd floor of 85 Broad Street, deep in the heart of New York City’s financial district. The heady atmosphere and high-octane blend of intensity, anticipation, and quiet professionalism were not unusual for one of the world’s most storied investment banks. Tonight, however, eleven of Goldman Sachs’ finest were working not on a major acquisition or IPO, but on a revolutionary leadership development plan for the firm.
In June 1999, Goldman’s Management Committee had selected a diverse, experienced group to form the Leadership Development Advisory Committee (see Exhibit 1). Their official charter was to
“assess the future training and development needs of Goldman Sachs, with particular focus on the need for a more systematic and effective approach to developing managing directors (MDs).” After six months of brainstorming, discussions with Goldman Sachs colleagues, interviewing experts, and benchmarking best practices, the Committee was scheduled to outline its plan for the Management
Committee the next morning. Tonight’s meeting was a final opportunity to review their work, edit the presentation, and personally commit to the plan. They all had every reason to be confident about the presentation. However, as they pored over each slide, they couldn’t help wondering how their ideas would be received by Goldman Sachs’ most senior leadership group.
Each recommendation was based on an appreciation of the firm’s rich history and culture, combined with an understanding of its evolving business strategy and insights from the extensive research the Leadership Development Advisory Committee had done. Even so, no one sitting on the
Management Committee had relied on a formal leadership program to reach the top. How skeptical might they be? And while the timing seemed right to introduce such an initiative, everyone in the
Professors Boris Groysberg and Scott Snook and Senior Researcher David Lane, Global Research Group, prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
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Leadership Development at Goldman Sachs

room knew that they probably had only one chance to get it right. If this proposal was rejected, it was unlikely that an alternative leadership development plan would be implemented anytime soon.

Investment Banking in the 1990s
Two key trends shaped the investment banking world in the late 1990s. The booming IPO markets were generating tremendous fees for banks; and the banking industry itself was rapidly consolidating. Customers were increasingly price-sensitive, and banks were betting that competitiveness correlated directly with scale and scope. Accordingly, acquisitions in the financialservices industry increased from 62 in 1994 to 86 in 1995, 96 in 1996, and 100 in 1997.1 In 1997 alone,
Morgan Stanley, a long-time rival of Goldman Sachs, merged with Dean Witter; Merrill Lynch doubled its assets under management by purchasing Mercury Asset Management; Union Bank of
Switzerland merged with Swiss Bank Corp.; Travelers merged with Salomon and then Citicorp in
1998, becoming the world’s largest financial services firm by assets.2 Also in 1997, ING’s purchase of
Furman signaled the start of a wave of European acquisitions of U.S. firms. Though traditionally reliant on organic growth, Goldman Sachs likewise embarked on a series of small acquisitions during the 1990s, tripling its assets under management from about $40 billion in 1993 to $125 billion in 1997.
Even so, Goldman ranked fifth in size behind J.P. Morgan, Merrill Lynch, Morgan Stanley, and Smith
Barney (which soon became part of Citigroup) that year.3
The sustained bull market not only boosted overall market capitalization, but it also encouraged a flood of new companies to go public. In particular, the dot-com boom and the emergence of new media, telecommunications, and technology industries fueled investment bank growth. Yet this boom had a downside for the banks: “hot” new industries placed additional stress on an already tight labor market by wooing skilled workers away from more traditional fields. The ensuing “war for talent” threatened to put a damper on the growth of professional service firms as bankers, lawyers and consultants all sought opportunity in these new industries. Many firms turned to unconventional sources to fill the staffing void, eventually hiring Ph.D. graduates, medical doctors, scientists, and others with non-traditional business backgrounds. The increasingly diverse workforce challenged the strong cultures of professional service firms that historically had preferred to grow their own talent.
Time-honored, organic models of leader development were put to the test.

Goldman Sachs
Though Goldman Sachs remained an employer of choice for many graduates, it was not immune to broader industry dynamics. The company’s objective was growth on all fronts, both to take advantage of new opportunities and to maintain and extend its competitive position among leading full-service investment banks. The firm hired heavily to sustain U.S. growth, while continuing to develop its presence in Europe and Asia. By 1999, almost half of all Goldman Sachs employees were domiciled outside the United States, and a substantial number had been with the firm for two years or less. (See Exhibit 2 for selected financial data.)
Goldman’s business activities in 1999 were divided into three segments: investment banking, trading and principal investments, and asset management and securities services. Investment banking activities comprised financial advisory and underwriting. Financial advisory entailed advising companies on mergers and acquisitions, divestitures, corporate defense activities, restructurings, and spin-offs. Underwriting included public offerings and private placements of equity and debt securities. Trading and principal investments facilitated client transactions, but also


Leadership Development at Goldman Sachs


included taking proprietary positions through market-making in, and trading of, fixed-income and equity products, currencies, commodities, swaps and other derivatives. Principal investments primarily represented revenue from merchant-banking investments. Asset management and securities-service activities fell into three categories: asset management, securities services, and commissions. In asset management, Goldman provided a broad array of investment advisory services to a diverse client base. Securities services included prime brokerage, financing services and securities lending, and matched-book business.a Commissions included agency transactions for clients on major stock and futures exchanges, revenues from the increased share of the income, and gains derived from merchant-banking funds.4

Founded in 1869 on lower Manhattan’s Pine Street as a broker of promissory notes, Goldman
Sachs grew its capital from $100,000 in 1880 to $1.0 million in 1904. In 1906, the firm entered the underwriting business. Sidney Weinberg, who rose from the position of porter’s assistant in 1907 to senior partner in 1930, spent the Depression and early postwar decades rebuilding from the huge losses of the 1929 crash by cultivating contacts and pursuing only America’s leading corporations as clients. His efforts paid off with the $650 million Ford Motor Company IPO in 1956, at that time the largest public offering on record. This and subsequent high-profile transactions sustained Goldman’s reputation as the leading U.S. investment bank, with performance consistently at or near the top of the league tables. In 1998, for example, Goldman ranked first in worldwide completed mergers and acquisitions, with 335 deals worth $958 billion. Goldman ranked third in common stock offerings, with 75 issues worth $16 billion, and third also in IPOs, with 26 issues worth $3.4 billion.
Sidney Weinberg was succeeded in 1969 by Gus Levy, who pioneered block trading on Wall
Street. Levy died in 1976 without a named successor, and the two leading candidates for the position—John Weinberg and John Whitehead—agreed to run the firm jointly. On their watch,
Goldman returned to many of the senior Weinberg’s central principles: long-term relationships (over short-term profits) and steady, safe growth (over risk-taking). Whitehead reinstated Monday morning Management Committee meetings to discuss leading strategic issues, and instituted as
Goldman’s corporate code a list of fourteen business principles emphasizing teamwork, integrity, reputation, talent, and quality (see Exhibit 3). Whitehead and Weinberg also led the globalization of the firm. Finally, Weinberg stressed client service as the firm’s overarching purpose. Burgeoning egos were kept in check by his familiar remark, “Clients are simply in your custody. Somebody before you established the relationships, and somebody after you will carry them on.”6
Upon Whitehead’s departure for government service in 1984, Weinberg promoted Stephen
Friedman and Robert Rubin to co-head Goldman’s fixed-income division. The pair became co-chairs of the firm in 1990, where they distinguished themselves by making partners’ compensation more dependent upon performance and by initiating Goldman’s first lateral hiring efforts in order to offset employee defections to the booming hedge-fund business. In an effort to further link partners’ pay to their performance, and to create a new source of developmental feedback, Goldman instituted 360degree performance reviews in the early 1990s.
The early 1990s also saw Goldman Sachs venture beyond its role as corporate agent to risk its own capital for high returns. This approach returned early dividends—earnings nearly doubled between
1990 and 1992, funding the opening of new offices in Frankfurt, Milan, and Seoul. But in 1994, substantial investment and trading losses, along with Friedman’s departure (Rubin had left in 1992),

a Books were matched when the distribution of maturities of assets and liabilities were equal.



Leadership Development at Goldman Sachs

precipitated the loss of about 45 partners and their capital. Jon Corzine was elevated from head of fixed income to senior partner and named the head of investment banking, Henry M. (Hank)
Paulson, as president. Corzine and Paulson immediately reduced employee headcount and costs by slashing pay and bonuses, stabilizing the firm by the end of 1995. They also put restrictions on the withdrawal of partners’ capital, and replaced Goldman’s traditional partnership structure of unlimited liability with one that named the firm as general partner and named individual partners and equity holders as limited partners.
This upheaval and other periodic crises obscured Goldman’s secular growth through the 1980s and 1990s. This growth was multi-faceted—by product, geography, earnings, and headcount. As one long-time employee recalled:
When I came to Goldman Sachs [in the 1970s], we had no business outside the United
States. We had no non-U.S. passport holders. We were totally a New York firm with 1,400 people, 40 partners, and $40 million in capital. When I became partner in 1984, there was only one partner outside the United States, and that was the American who ran the London office.
In the early 1980s, Goldman Sachs’ staff grew at an annual rate of about eight percent. Over 90% of that new growth came from entry-level hires. During the same period, annual turnover averaged only about five percent, compared to typical industry turnover rates of around 20%. As hiring grew in the mid-1990s, however, Goldman’s annual turnover rose to between 20% and 25%—split about evenly between entry-level and experienced hires. (The rule of thumb among professional-service firms was that it cost about one year’s salary to replace a professional.) Rob Kaplan, global co-head of investment banking and a Management Committee member in 1999, pointed out:
Most of the divisions—certainly investment banking—literally were becoming as big as the entire firm was 10 years before. Someone running a department within a division had a job as big as running a full division a decade earlier. We also were a primarily domestic firm up until the early 1980s. We really started building a substantial presence in Europe and Asia during the mid-1980s and into the 1990s.
And whereas Goldman did not earn a substantial amount from its investment in overseas offices in 1995, by mid-1998, overseas offices generated 40% of Goldman’s annual pretax profit.7 Naturally, there were some growing pains. “As we globalized,” recalled one longtime staff executive, “We learned you can’t run Japan from New York. God knows we tried. But when you’re the U.S. Army, you realize that when your division commander is 12,000 miles from the Pentagon, you’ve got to let him make the decisions. That was a hard lesson to learn.”
By 1996, the 172 partners concluded that they needed to increase their competitive strength by creating a new title of managing director (MD) for hundreds of vice presidents (as well as all partners), to convey the responsibility and leadership being asked of this group. MDs who were not partners received all the benefits of partnership—equal salaries and offices, for example—with the exception of an ownership stake in the firm.8 As part of their compensation, non-partner MDs received “participation shares,” the value of which was tied to the overall profitability of the firm, not to individual or department performance.9 In only a few years, the number of MDs exceeded 1,000
(see Exhibit 4, Goldman Sachs Growth).
Goldman’s explosive growth and setback in 1994 led to a discussion about going public that lasted from 1996 until the eventual IPO in 1999. Arguments for going public rested primarily on the need for permanent capital. When partners retired, they took their equity in the company with them.
Should a significant block of partners elect to withdraw their equity simultaneously, the firm’s capital structure could be at risk. “If you’re going to grow a big, diverse, and sprawling firm,” argued

Leadership Development at Goldman Sachs


Kaplan, “You can’t be preoccupied with capital concerns every two years when people retire.”b
Paulson defined the IPO even more broadly: “The public offering was one way of helping us manage that growth by giving us permanent capital and letting everyone be an owner of the firm. By helping us manage growth, the public offering also strengthened our culture, including the mentoring or apprenticeship process for training leaders that we’ve had for years.”
But after so many years as a successful partnership, not everyone was convinced that the IPO was a good idea. As one senior executive recalled, “I thought it would radically change the culture. I had a vision that when alarm clocks went off around the world at 5:45 a.m. on May 10, 1999, 221 partners would hit the ‘off’ button on their clock radios. Why should they get up? They don’t have to work for another nanosecond.” In reality, fewer Goldman partners left than had been expected, particularly when compared to attrition rates in other investment banks that went public.

As the number of partners increased—the firm named 60 new partners between 1996 and 1998 alone—the decision making structure evolved as well. In 1995, Goldman replaced the 12-member
Management Committee with a new, six-member Executive Committee whose members spoke for the firm as a whole. The Executive Committee’s charter extended to all issues that did not require a vote by the full partnership or a partner’s individual consent. In addition, two new 18-person committees were formed to broaden partner representation and oversee matters of strategic importance to the firm. The Operating Committee focused on promoting strategic and operational cohesion and coordination among the firm’s various divisions and locations. The Partnership
Committee oversaw partnership policy, selection and practices, as well as the firm’s capital structure.10 Paulson emphasized the important role that the Partnership Committee played in dealing with cultural issues connected to the firm’s managing directors and partners. In January 1999, however, the Executive Committee was dismantled and a 15-member Management Committee was restored as the firm’s seniormost leadership group.
Specific management topics were addressed by ad hoc committees. As Paulson explained,
“Everybody has a day job. The committees are a night job. It may sound bureaucratic but it’s just a way of taking line people and having them focus on broader issues important to the firm.” The
Training Committee, for example, defined by one influential partner as “a working group charged with considering how best to develop and retain the firm’s senior talent,” was an offshoot of the
Partnership Committee.
Far more than other investment banks, Goldman relied on teams of two or even three line managers to jointly lead departments and divisions. This relatively unusual practice offered several significant advantages. First, it allowed the firm to maximize the benefit of complementary skill sets.
Second, having multiple “co-heads” with different lengths of service made transitions easier by guaranteeing built-in overlap. Finally, small leadership teams increased representation and ownership, and the extra leadership opportunities helped retain top players. One manager noted that
Goldman was often able to field more than one senior executive to meet clients and win business:
“Virtually all of the leaders of the firm spend a big part of their time in execution, in meetings with clients, working on specific fields. Having co-heads allows each to play an active business role and still have capacity to handle core management tasks.” At a more junior level, co-headships supported the development and transfer of skills. As one HR professional noted, “There’s always this handoff,

b The IPO contained provisions preventing insider sale of Goldman shares for up to five years.



Leadership Development at Goldman Sachs

this apprenticeship, this kind of cordial approach to how we hand the business over. We take a lot of time and we try to do it carefully.”

Culture, the Special Ingredient
Goldman Sachs prized its rich corporate culture. According to managing director John Rogers:
Our bankers travel on the same planes as our competitors. We stay in the same hotels. In a lot of cases we have the same clients as our competition. So when it comes down to it, it is a combination of execution and culture that makes the difference between us and other firms.
Behavior is shaped by it. People who think culture is just a bunch of bacteria in yogurt set a tone that strips values from a company. That’s why our culture is necessary—it’s the glue that binds us together. We hold onto the values, symbols and rituals that have guided us for years, and anything new that we add to the culture always supports what already exists.
Lloyd Blankfein, then a member of the Management Committee, summarized the culture as “an interesting blend of confidence and commitment to excellence, and an inbred insecurity that drives people to keep working and producing long after they need to. We cringe at the prospect of not being liked by a client. People who go on to other commercial pursuits frequently self-identify as a former
Goldman Sachs employee long after they have left the firm. Alumni take a lot of pride in having worked here.”
High standards were a natural by-product of hiring so many high achievers. “Execution, the ability to turn around a product and do it flawlessly, is paramount at Goldman,” said one manager.
“This is an environment where people expect successes and they remember failures for a long, long time,” added another. “Things have to be done in a very high-end way. People at Goldman Sachs are pretty intolerant of weak execution and weak quality, even of things most people might think of as trivial. Word of mouth about how good something is spreads in about seven seconds. If it’s a bust, you’ve got no second swing at the ball. It’s one strike and you’re out.”
With the relentless drive for excellence came a strong norm of “feedback seeking” behavior and an openness to critique, added one senior manager: “We’re harshest on ourselves, competitively. Once you’re here, you’re in. So the question becomes how to make ourselves better every single day.
People say to each other, ‘That was a good argument. But next time, it would actually be really interesting if you also added these three things.’” More so than at most financial services firms,
Goldman employees were known for their collaborative practices. According to Management
Committee member Bob Steel:
We were always taught that the odds are high you’ll have better outcomes with a shared work effort than with that of a single individual. At Goldman Sachs it’s pretty rare that an additional perspective doesn’t give you a better outcome. As problems become more complex, the ability for a single individual to have the best perspective declines dramatically. We now serve clients all over the world with multiple products. If a client wants to accomplish something and there are 10 different ways to finance it, you aren’t offering the client the optimum solution if you don’t get the benefit of all the different ways of financing it across all markets, and no one person can do that. So in a meeting you say, “Before we make a left turn here, let’s call Mary or Fred and check it off with them.” It’s leaders who say that, and doing so sets the tone.
Many anecdotes illustrated the senior leaders’ commitment to reinforcing the culture by personal example. In the 1980s, John Weinberg was hosting a dinner for 25 partners. The firm had recently


Leadership Development at Goldman Sachs


suffered a significant loss of $100 million in fixed income. Not surprisingly, this incident generated a major buzz among the partners. During a question-and-answer session, one partner asked Weinberg,
“What are you doing about this loss? What have you done to the partners managing and the trader responsible for it?” Weinberg reportedly replied, “Look. We’re a partnership. The partners responsible were in my office today in tears. We are all in this together. We will support our partners, because that’s the essence of a partnership. Next question.”

Human Capital
As a long-time employer of choice for elite undergraduates and MBAs, Goldman was able to select from a broad array of talented applicants for the traits it preferred. Overwhelmingly, the firm chose smart high achievers. As Paulson put it, “Our people are what my wife calls gold-star types.
They want the gold star, to get the A on the test. They want to be told they’re doing a good job, and they want to get good feedback. We all do.” Steel agreed: “We get an unusually large personal benefit from accomplishment—people here really care a lot about doing things right and doing them well.
That doesn’t make us bad people. It’s just a characteristic of ours.”
Yet there were no prima donnas. Steel told how a firm with so much talent kept egos in check:
We have what we call “pronoun education.” Someone would come to me and say, “I just did so and so.” I say, “Excuse me?” “I just did a big trade,” they’d repeat. I would say, “Stop.
Wrong pronoun. We just did a big trade. Try again.” First-person singular is only used to describe a mistake, not an accomplishment. People will correct you in introductory programs.
It sounds stupid, but little things like that are quite significant. I’ve never heard a boss at
Goldman Sachs say, “I just did this.” If I ever did, I’d be embarrassed.
Despite the emphasis on teamwork, Goldman Sachs also stressed the importance of leadership.
Everyone, no matter how junior, was expected to lead. As Paulson put it, “We’re global and multicultural like other professional service firms, but we also have huge capital commitments and risks to manage. It takes many, many leaders. Goldman Sachs is leaders working with leaders.”
Blankfein supported this notion by citing typical career choices made by departing Goldman partners: “A fair number of people who leave Goldman Sachs go into public service, whether as leader of the NYSE or as head of the BBC in London.“ But as Goldman Sachs grew in size and complexity, it became increasingly difficult to cultivate enough leaders to meet the demand, let alone facilitate productive interaction among so many of them.

Leadership Development and the Apprenticeship Model
Historically, Goldman Sachs managers learned how to lead by apprenticeship, by working closely with other senior leaders within the firm. Support for this mentorship model was atypical even by
Wall Street standards. Goldman managers described as “unusual” the willingness of senior leaders to share their time teaching recent hires. “As a small firm,” recalled one senior partner, “we passed on our shared ideals and culture in an avuncular style. Everyone sat next to someone who was very experienced and had been there a long time. We were very small, concentrated in a few offices around the United States, so it was easy to do.” He continued:
Goldman Sachs when I started was a fantastic place to be planted and grow. They treated me the right way, encouraged me the right way. Every boss I ever had worked harder than I did. It was really a great place to be, and that’s what I learned. This is a really good business and it’s also a pleasant place to work, if you select the right people on the way in. It’s a


Leadership Development at Goldman Sachs

Socratic, collaborative style. Bouncing things off each other is fun, and you encourage that at every turn.
Throughout the 1980s and well into the 1990s, professional development happened almost entirely on the job. With the exception of firm-wide formal orientations and narrowly focused skilltraining programs designed and run by the Learning and Professional Development (LPD) arm of
Goldman’s human resource function—the Human Capital Management Division—most development was handled informally and decentralized across business units. Most formal programs targeted employees at or below the rank of vice-president. Analysts (undergraduate hires) and associates (MBAs) took an intense week of centralized orientation to Goldman’s organization, practices, and culture. New MDs participated in a two-day orientation program (see Exhibit 5 for a sample agenda), and experienced hires learned the ropes mostly on the job.
Most business units also offered their own orientation programs for analysts and associates. Such training typically lasted for about a month, though in some areas formal training went on for an additional three months to prepare new hires for the unique demands of their new jobs. Most of these courses emphasized specific skills and product knowledge particularly germane to their businesses
(e.g., sessions on negotiating or on the likely impact of impending regulatory changes). Some business units organized their own culture-building events and conferences as well.
During this period, the firm seldom undertook formal leadership training, outside of a few limited-scale programs created during the 1990s by the divisional human resources groups for the unique training requirements of individual business units. For example, investment banking offered several Business Unit Leaders Summits for its senior leaders, and created additional courses in performance delivery, review delivery, and ongoing technical skills training. By the late 1990s, the divisional HR units had grown to the point that the various division-oriented training efforts reached more employees than firm-wide programs. One manager explained why: “Divisions resisted sending their people to the center. Investment bankers and traders had little interest in training in the same programs. Neither group felt it had much in common with the other. Their challenges were different and what they did for the firm was different. Why train them the same way?”

Limits of the Historic Approach
Goldman’s most productive revenue producers were not necessarily its best leaders. Not surprisingly, the skills required to close a deal and those needed to manage an increasingly complex and globally diverse organization differed. As Goldman’s rapid expansion continued, some executives came to believe that a more systematic approach to leader development was required.
“[Whitehead] had codified our business principles,” said one. “But maybe we needed to get some of the leadership principles codified too, so that people who are going to lead big, growing businesses could develop some skills they did not naturally acquire while rising through the ranks in investment banking, asset management, equities trading, or fixed-income sales.” As one vice president explained the shift, “Particularly in the ‘war for talent’ dot-com boom, a consensus began to emerge among senior managers that represented a transition from the existing team culture to a recognition that everything really starts with outstanding leadership. So the question became how to establish a leadership culture within what is already a well-established team culture.” Paulson, who succeeded Corzine as chairman in 1999, elaborated: “The key to managing the growth was choosing the right people and training leaders. One of the things that I asked in 1999 was how to institutionalize some of the processes without becoming bureaucratic—and to do it in a way that made sense within the Goldman Sachs culture. So I asked our co-COO’s, Thain and Thornton, to undertake this project.”

Leadership Development at Goldman Sachs


Any changes needed to supplement rather than substitute for the legacy of mentorship that had become such a critical element of Goldman’s DNA. A senior investment banker saw the need for a more formalized development program “almost exclusively an issue of size. The firm got so big that there was a need to find a way to keep the culture consistent and find a way to maintain best practices given the Goldman Sachs culture.” Said Blankfein, “You can make people better, and you can make people better more quickly than they would have gotten on their own. Then you have a much higher-caliber leadership group driving our firm, and that’s very valuable.” Another manager described the challenge this way:
We had very lofty growth objectives as a firm. Those objectives demanded more people able to drive those businesses. There might be a great opportunity to build a business in Korea but we had only 15 people on a list who could do it. Why in this huge organization of talented people were there only 15 who could do this? Why shouldn’t there be 59 people or 120 people who can scope out the business opportunity, recruit the right people, get them to move to
Korea to work with them, and drive the thing forward?
Not everyone shared the same view. “The firm was very successful, did many things well, and was very profitable,” recalled Mark Schwartz, head of Goldman Sachs in Asia, member of the
Management Committee, and co-Chair of the Leadership Development Advisory Committee. “There was certainly no urgent groundswell to create a more formalized management and leadership training program. There was general satisfaction that the firm was well-managed, growing appropriately, and responding strategically to the growth of markets overseas. If anything, there was a lot of skepticism.”
Even strong advocates for a more systematic approach recognized the inherent reluctance of
Goldman managers to divert their attention from line work, even for a worthy cause like growing leaders. “Anything in this firm that doesn’t have a P&L is subject to skepticism,” said Kaplan.
Another senior manager concurred: “There will always be skeptics who say you’re wasting time if the cash register isn’t ringing.” Abby Cohen, Goldman’s Chief U.S. Investment Strategist and a senior figure at the firm, summarized the challenge this way: “The issue was never the money, but rather the time commitment. Our people are usually extremely busy and we needed to consider how much time we were going to use, not just with the firm’s most senior leaders, but with all program participants. People had to feel that there was a business reason that they wanted to do this, and the results had to be palpable. Now this is a tough standard, because how do you measure whether a program like this is successful? And how do you compare those results with the business opportunities that might have been lost while the individual was in a program?”
Co-COO John Thornton had admired Jack Welch’s success at General Electric. He was particularly impressed with GE’s ability to grow leaders through innovations such as “workouts” (intensive team-based problem-solving sessions) and creative developmental programs at GE’s Crotonville training center. GE’s approach to leadership development aimed not only to train managers, but to align individual and team practice with company strategy and to reward good performance.
Together with Thain and Thornton, a small group of senior Goldman leaders began to build a case internally for a new initiative, one that might function for Goldman Sachs in much the same way
Crotonville did for GE. Thornton and Thain were passionate about the cause, and—at Paulson’s direction—came to advocate enhanced leadership training for Goldman’s senior managers. But exactly how this initiative might look in Goldman’s strong traditional culture was anyone’s guess.



Leadership Development at Goldman Sachs

The Leadership Development Advisory Committee
Early in June 1999, the Committee determined that Goldman’s approach to professional development should be guided by four key objectives:

Developing the firm’s key asset: With the firm’s people representing our most critical asset and competitive advantage, the task of keeping our talent excited and moving up a steep learning curve has become mission-critical.


Winning the “War for Talent”: Accelerated professional development is a key element in the overall “value proposition” to the most talented people.


Building a cadre of outstanding leaders: The firm’s growth and ambitious business objectives demand a larger group of outstanding, well-rounded leaders.


Maintaining quality and cultural strength amidst rapid growth: 42% of GS employees have less than two years’ experience at the firm. Our expanded scale dictates that our traditional
“apprenticeship” model of professional development be supplemented with more structural measures.11 For six months, committee members gathered extensive data by focusing on four areas of research. First, using both internal surveys and in-depth interviews, they solicited a broad range of opinions from Goldman Sachs leaders and employees about professional development issues.
Second, they analyzed the status quo within Goldman: How much professional development was currently taking place within the firm and how effective were these investments at meeting the firm’s needs? Third, committee members traveled extensively to benchmark 14 “best-of-class” firms around the world to learn how they developed their leaders. (See Exhibit 6 for a list of companies studied by the Committee and Exhibit 7 for the training assets of selected companies.) Finally, they worked with a select group of external consultants to learn their opinions about current best practices in seniorlevel executive development and corporate universities.
Several broad themes emerged from this research (see Exhibit 8). In the most successful firms, senior management devoted significant energy to people issues and held senior line managers accountable for talent development. These companies focused more on boosting high-potential groups than on bringing slow learners up to minimum standards. Only about 10% of leadership development happened in formal classroom settings. The best-in-class companies preferred to have teams working on real projects as the primary vehicle for development, relying on multiple integrated developmental experiences to grow leaders.

Key Design Issues
Rather than simply adopting what worked for other companies, the Committee decided to synthesize the best practices research with what Goldman managers themselves defined as the most important elements of leadership, and build the program from the ground up. They would not begin with a predetermined definition of “leadership,” but rather systematically elicit a working concept from practicing managers within Goldman itself. To arrive at a final proposal, however, they had to resolve a broad array of critical design issues.

Form and location Perhaps the most concrete decision concerned the issue of “bricks and mortar.” Where would the program be physically located? By 2000, the United States alone boasted over 1,600 corporate universities. Founded in 1955, GE’s Leadership Development Center at
Crotonville was among the oldest. The physical venue sent an important message: formal leadership

Leadership Development at Goldman Sachs


training was deeply rooted at GE. Executives there viewed the opportunity to attend as an honor and signal of their future potential, not as some HR diversion from the more urgent task of making money. But formal leadership training had never been part of Goldman Sachs’ culture. The question was how to encourage movement in that direction. Perhaps creating a distinct physical location for leader development would communicate a message of status and commitment.
One option was to house the programs in brand new space within 30 Hudson, a Goldman facility being built just across the Hudson River in New Jersey. The Center could accommodate 75,000 square feet of state-of-the-art training, conference, and meeting space adjoining Goldman’s offices there. The logic was that this stand-alone facility, perhaps complemented by hotel space for residential programs, could become—as Crotonville had for GE—a physical symbol of Goldman’s culture and commitment to professional development. On the other hand, many questioned how readily senior leaders would travel across the river to attend training programs, especially multi-day residential programs. At GE, if Jack Welch said, “You need to send your leaders to Crotonville at least once every quarter,” people saluted smartly and off they went. But Goldman was not GE. According to one executive, “At General Electric, if Welch likes something, everybody wants it. Here you have an interesting balance where the division and business heads are given a great deal of autonomy regarding how they run their businesses and what their people are asked to do.” Therefore, the main question facing committee members was, “If we build it, will they come?” A second option was to utilize existing space within the Goldman Sachs offices in lower Manhattan. While this would certainly be cheaper and more convenient for Manhattan-based employees, the space itself would be inferior and would not signal any special commitment to the cause of leadership development.

Faculty No matter where programs were held, someone had to do the teaching. Determining the appropriate mix of faculty was no simple task. Some Committee members proposed inviting elite academics and inspirational leaders to shoulder the bulk of the teaching load. Others countered that outside professors wouldn’t have the nuanced understanding of Goldman Sachs that they would need in order to really connect with participants, and that inspirational speakers would offer little more than entertainment. Moreover, even the most accomplished and content-rich outside speakers could be off-target, presenting material that was either too generic, too repetitive, or not sufficiently focused on the particulars of Goldman’s needs. Yet relying on internal trainers, either dedicated staff or existing line managers, would increase the risk of institutionalizing existing practices. It was by no means clear that preservation and recirculation of existing Goldman practices would meet the emerging leadership and talent development needs for which the program was being designed in the first place. Finally, there was always the fundamental question: Can those who do, teach? Talented bankers weren’t necessarily talented teachers.
Content and format Closely related to the question of faculty mix were fundamental issues of content. What topics should be covered? What types of interventions are most effective? Whose model of leadership should be adopted? Airport bookshelves proffered rows of potential answers to these questions. Should Goldman simply “buy a popular model off the shelf,” customize a blend of existing approaches or design one from scratch? Deciding on an appropriate mix of content for
Goldman’s senior leaders was no easy task. Aside from training on general leadership skills such as succession planning, evaluation, and giving feedback, many Committee members felt it was essential that these initiatives also create a common language of leadership, to reinforce the “special sauce” that was uniquely Goldman. While there were many ways to pass along corporate culture, formal training programs would require a significant time commitment from senior leaders. This was perhaps the biggest obstacle to institutionalizing leader development within a bank like Goldman
Sachs. What could the Committee offer that would convince successful producers to leave their desks and their clients to invest time in developing their softer skills? What was a reasonable length for a formal program? Many Committee members felt that multi-day sessions, let alone the two- and three11


Leadership Development at Goldman Sachs

week programs such as Crotonville’s, would never fly at Goldman Sachs. Also, how frequently could sessions be run? And at what stage in a person’s career would such initiatives be most effective?

Method Beyond specific topical considerations lay an even broader “content” question: In addition to classroom instruction, what other types of developmental experiences should be included in the Leadership Development Advisory Committee’s proposal? One study revealed that many executives ranked “traditional training” experiences well down the list when it came to professional development and impact on company effectiveness. Job structure and rotation, special projects, role modeling, coaching, mentoring, and feedback all rated higher than classroom sessions for personal development and organizational performance.12 (See Exhibit 9.)
Many Committee members argued that the most effective learning happened on the job, through day-to-day interaction with more experienced colleagues, in the context of “real work.” This sentiment echoed concerns that any training be used to reinforce, not replace, Goldman’s traditional apprenticeship model of developing leaders. One possible approach involved offering systematic project- or action-based learning opportunities, in which senior executives would give small groups of MDs from across the firm real business problems to solve, and provide concrete feedback on the substance of their recommendations as well as the process they used to accomplish their task.

Target Audience Related to these design issues was the important question of audience composition. Who should be developed, with whom, and why? Committee members knew that their primary focus was to be on Goldman’s managing directors, a relatively new but rapidly growing and increasingly diverse group of senior leaders. However, even within the MD community, there were several trade-offs to consider. Should MD courses be broad, large-group programs consisting of managing directors from across the firm, or should they be deeper, more customized offerings for smaller groupings of officers? Larger classes could provide unifying experiences that would help transmit the Goldman Sachs culture, but smaller ones could offer more individualized coaching and attention. Second, should classes bring together leaders from different business units, or should various divisions have their own unique offerings? Those who favored integration argued that assembling managers from multiple divisions promoted dialogue, networking, trust, and ultimately smoother and more efficient client service across business units. Moreover, cross-unit training would also deepen the shared culture of the firm. On the other hand, combining leaders from multiple businesses further muddied the content question: How could you offer material that was equally stimulating and relevant to a diverse group of MDs, each potentially facing very different leadership challenges? Finally, should separate classes be offered for MDs with varying levels of experience, or should classes be taught to groups with mixed tenure levels? Some supported integrated classes, while others countered that, on the basis of their experience elsewhere, senior managers could easily dominate such programs, with less-tenured officers automatically deferring to their more experienced colleagues. As one influential Goldman executive put it: “Among the difficult hurdles was the fact that we were aiming straight for the top, often at the really tough nuts—the guys who were already very successful, who felt they didn’t need any help in anything, and who were not comfortable in any setting in which they were not the dominant player.”
Governance and sponsorship Regardless of content and design, who should own leadership development within Goldman Sachs and how should it be organized? The obvious traditional answer was to fold such activities under the existing Human Capital Management (HCM) function. Such an approach would increase the likelihood of communicating a consistent message from senior leadership to all strata of the firm. It would also facilitate the firm-wide integration of leadership development tools, exercises, and personnel themes with existing HR metrics and objectives (e.g., performance appraisal, succession planning, and more traditional training programs).


Leadership Development at Goldman Sachs


The issue of governance was also linked to perhaps the most essential design requirement of the proposed initiative: full partnership and support from senior business executives. Early on, committee members recognized that staying as close as possible to line leaders would be key to their success. The challenge was how to increase the likelihood that senior line leaders would not only recognize the initiative’s importance, but actually feel ownership of its future. Some Committee members felt that being separate from HCM was critical for the new venture to be seen as special, unique, and distinct. Credibility, they argued, hinged largely on visible, structural support and participation from the senior leadership as well as key business leaders throughout the firm. Such a task, many felt, would be more challenging if new programs were folded into existing HCM structures. Others argued that, if it were housed within HCM, partners and managing directors might regard leadership development and its associated programs as a generic offering rather than something special, tailored to meet their unique needs.
If the Committee recommended creating a stand-alone office for leadership development, new mechanisms and structures would have to be devised for staffing, oversight, structure, and support.
No existing committees at Goldman Sachs seemed appropriate for or able to fill this role. Many large corporations formalized such initiatives around a chief learning officer (CLO), but Goldman Sachs had never had a CLO, and rarely filled positions at such a senior level with outside talent.
The challenge remained: What was the best way to position this new initiative for success within the Goldman Sachs organization?

Management Committee Briefing
Resolving each individual design question was one thing. Proposing an integrated and systematic leadership development approach—one that the Management Committee would support—was quite another. Whatever the Leadership Development Advisory Committee proposed, it would have to meet the ultimate test: Would the program be perceived as worthwhile enough to compel an extremely accomplished and demanding group of Goldman Sachs MDs to attend? Would it persuade hard-nosed bankers to leave their desks and invest precious time focusing on what many perceived as “soft” issues? How do you measure the return on investment of such a program?
These fundamental questions were running through everyone’s mind on the evening of
November 7, 1999. Having spent nearly six months on the leadership development agenda, the team was pleased with its proposal. But as each member of the Committee signed off on the briefing and filed out of the conference room, no one knew for sure what the morning would bring.



Leadership Development at Goldman Sachs

Exhibit 1

Leadership Development Advisory Committee Members, November 1999

Head of Goldman Sachs Europe and Management Committee member
Head of Goldman Sachs Asia and Management Committee member
Managing Director, Equities Division
Managing Director, Head of Global Human Resources
COO of Global Investment Research
Managing Director, Equities Division
Managing Director, Asset Management
Co-Controller, Managing Director, Finance Division
Head of Training and Development
Consultant, Training and Development
Vice President, Equities Division



Goldman Sachs.

Leadership Development at Goldman Sachs

Exhibit 2

Selected Goldman Sachs Financial Data, 1997–1999

Net Revenues of Global Capital Markets and Asset
Management Securities Services (in $ millions)
Financial Advisory
Investment Banking
Principal Investments
Trading and Principal Investments
Total Global Capital Markets
Asset Management
Securities Services
Total Asset Management and Securities Services
Total Net Revenues
Net Revenues and Pretax Earnings, by Region
(in $ millions)
Net Revenues
United States
Other Americas
United Kingdom
Other Europe
Total net revenues
Pretax Earningsa
United States
Other Americas
United Kingdom
Other Europe
Total pretax earnings
Compensation and benefits
Other operating expenses
Pre-tax earnings
(Benefit)/provision for taxes
Net earnings
Earnings per share


Year Ended November





Year Ended November


$ 13,345

$ 5,133
$ 8,520


$ 2,878
$ 1,992
$ 2,708



$ 2,270




-$ 2,921
$ 3,838
$ 2,428

-$ 3,014
$ 3,097
$ 2,746



Goldman Sachs Annual Report 1999, pp. 33, 47, 72, 73.

aThe pretax earnings of the firm in 1999 reflect payments for services rendered by managing directors who, prior to the firm’s

conversion to corporate form, were profit-participating limited partners. In prior years, these payments were accounted for as distributions of partners’ capital rather than as compensation and benefits expense. As a result, these payments are not reflected in the firm’s operating expenses in 1998 and 1997 and, therefore, the pretax earnings in these years are not comparable with 1999. bIncludes the following expenses that have not been allocated to the firm’s geographic regions: (i) nonrecurring employee initial public offering awards of $2.26 billion, (ii) the ongoing amortization of employee initial public offering awards of $268 million and (iii) the charitable contribution to The Goldman Sachs Foundation of $200 million made at the time of the firm’s initial public offering. cReflects eliminations and certain assets that are not allocable to a particular geographic region.



Leadership Development at Goldman Sachs

Exhibit 3

Goldman Sachs’ Business Principles


Our clients’ interests always come first. Our experience shows that if we serve our clients well, our own success will follow.


Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard. 3.

Our goal is to provide superior returns to our shareholders. Profitability is critical to achieving superior returns, building our capital, and attracting and keeping our best people. Significant employee stock ownership aligns the interest of our employees and our shareholders.


We take great pride in the professional quality of our work. We have an uncompromising determination to achieve excellence in everything we undertake. Though we may be involved in a wide variety and heavy volume of activity, we would, if it came to a choice, rather be best than biggest.


We stress creativity and imagination in everything we do. While recognizing that the old way may still be the best way, we constantly strive to find a better solution to a client’s problems. We pride ourselves on having pioneered many of the practices and techniques that have become standard in the industry.


We make an unusual effort to identify and recruit the very best person for every job. Although our activities are measured in billions of dollars, we select our people one by one. In a service business, we know that without the best people, we cannot be the best firm.


We offer our people the opportunity to move ahead more rapidly than is possible at most other places.
We have yet to find limits to the responsibility that our best people are able to assume. Advancement depends solely on ability, performance, and contribution to the firm’s success without regard to race, color, religion, sex, age, national origin, disability, sexual orientation, or any impermissible criterion or circumstance. 8.

We stress teamwork in everything we do. While individual creativity is always encouraged, we have found that team effort often produces the best results. We have no room for those who put their personal interests ahead of the interests of the firm and its clients.


The dedication of our people to the firm and the intense effort they give their jobs are greater than one finds in most other organizations. We think that this is an important part of our success.

10. We consider our size an asset that we try hard to preserve. We want to be big enough to undertake the largest project that any of our clients could contemplate, yet small enough to maintain the loyalty, the intimacy and the esprit de corps that we all treasure and that contribute greatly to our success.
11. We constantly strive to anticipate the rapidly changing needs of our clients and to develop new services to meet those needs. We know that the world of finance will not stand still and that complacency can lead to extinction.
12. We regularly receive confidential information as part of our normal client relationships. To breach a confidence or use confidential information improperly or carelessly would be unthinkable.
13. Our business is highly competitive, and we aggressively seek to expand our client relationships.
However, we must always be fair competitors and must never denigrate other firms.
14. Integrity and honesty are at the heart of our business. We expect our people to maintain high ethical standards in everything they do, both in their work for the firm and in their personal lives.


Goldman Sachs Annual Report, 1999, p. 82.

Leadership Development at Goldman Sachs


Goldman Sachs Growth

Exhibit 4

Number of Employees at Goldman Sachs

Number of Employees





1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Number of Partners and Managing Directors at
Goldman Sachs

Number of Partners/MDs

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Note: All numbers are estimates. 1989-1995 include partners only. 1996-1999 include new class of MDs.

Source: Case writer created from publicly available sources.



Exhibit 5

Leadership Development at Goldman Sachs

Goldman Sachs, New Managing Directors Orientation Program, November 12–13, 1998

Thursday, November 12
12:30–1:30 p.m.

Registration and Optional Lunch

1:30–2:00 p.m.

Introduction Remarks

Jon Corzine

2:00–2:15 p.m.

Program Introduction

Rob Kaplan,
Jon Winkelreid

2:15–2:30 p.m.


2:30–4:30 p.m.

Case Studies: Dilemmas of a New Managing Director

4:30–4:45 p.m.


4:45–5:45 p.m.

The Value of Leadership

5:45–6:00 p.m.

Photo of the MD Class of 1998

7:00–10:00 p.m.

Cocktails and Dinner with John L. Weinberg

Jon Cohen

John Thornton

John Weinberg

Friday, November 13
7:30–8:30 a.m.


8:30–9:30 a.m.

Strategy Committee Update

9:30–9:45 a.m.


9:45–10:15 a.m.

Legal Issues

Greg Palm

10:15–11:30 a.m.

Financial Overview of the Firm

David Viniar

11:30–11:45 a.m.


11:45–1:00 p.m.

Divisional Business Overviews

1:00–2:00 p.m.


2:00–3:00 p.m.

Building Client Relationships as a Managing Director

3:00–3:15 p.m.


3:15–4:30 p.m.

Future Directions (with Q&A)

Source: Goldman Sachs.


Steve Einhorn,
Lloyd Blankfein

John Thain

Bob Hurst

Hank Paulson

Leadership Development at Goldman Sachs

Exhibit 6


Benchmark Companies Visited by the Leadership Development Advisory Committee

Financial Services



Professional Services

JP Morgan
Lloyds TSB

BP Amoco
General Electric
LG Group


Andersen Consulting
Arthur Andersen
McKinsey & Company


Leadership Development Advisory Committee, “Leadership Development at Goldman Sachs,” presentation to
Goldman Sachs Management Committee, November 8, 1999, p. 14.

Exhibit 7

Training Assets at Selected Benchmark Firms, 1999


Total Employees

Merrill Lynch
General Electric
Allied Signal

No. Training Days


Usable Square Feet


5–6 n/a 5 n/a 15


36,000 n/a 147,000

Leadership Development Advisory Committee, “Leadership Development at Goldman Sachs,” presentation to
Goldman Sachs Management Committee, November 8, 1999, p. 34.



Exhibit 8

Leadership Development at Goldman Sachs

Key Findings of GS Leadership Development Advisory Committee Benchmarking, 1999

Senior Management Focus and Accountability
Senior time and focus is spent on people development issues. It is very striking how many senior people see the
“people thing” as a critical issue they cannot delegate.
• Jack Welch (GE) devotes approximately 50% of his time to people development issues.
• Andy Grove routinely leads Intel’s new hire orientation.
• Twice a year Scott McNealy (Sun) asks each of his direct reports: “What are you doing for your own development?” and, “What are you doing for my development?”
Leaders feel they are fighting a “war for talent” which is critical to the company’s success
• Intel focuses significant resources on defining and marketing superior employee value propositions in order to capture more talent share.
CEO’s hold their senior managers accountable for talent development
• At McKinsey, every Director has people development responsibilities, success at which influences compensation.
• John Chambers (Cisco) holds his top 200 leaders accountable for developing their staff.

Taking a Systemic Approach
Developed a leadership model by reviewing strategy and assessing high performers
• Arthur Andersen, BP Amoco, Dell, GE, IBM, Intel, Lloyds TSB, McKinsey, Motorola, Shell UK and Sun Microsystems have a clearly defined leadership competency model.
Structured succession planning process, focused on high risk or high reward
• BP Amoco, Cisco, Intel, Shell UK, and Sun all focus extra effort on high-potential pools.
• GE devotes enormous energy moving people into key jobs that maximize high reward for high-risk type of assignments.
Link development to reviews and rewards
• Intel’s practice of “constructive confrontation” is often a key part of the development review process. • PWC is developing a formal planning process that links professional development, employee reviews, career advancement and rewards and recognition.
• GE annually reviews all employees. Welch and a few other senior executives visit the 12 operating units to conduct one-day personnel reviews. At each site, they focus on the top leadership and pair people with job assignments that link to key rewards.
Relentless and disciplined execution
• GE devotes enormous energy to match key managers with jobs in a process called “Session C” that consumes nearly a month of Jack Welch’s time each year.

Focus on High-Potential Leadership
Careers of select high-potential groups, managed by senior committees or CEO
• At BP Amoco, the CEO, HR Director, and six of the top business leaders oversee development of senior leadership.
• Lou Gerstner (IBM) works closely with the director of Global Executive and Organization
Development to develop key leaders.
Rigorous, objective assessment based on company definition of leadership
• BP Amoco, GE, and Shell UK’s assessment processes are an integral component of senior leadership development.


Leadership Development at Goldman Sachs


All LG Group employees are required to take and pass one of six levels of promotion examinations. People that fail an exam remain in the incumbent grade for another year.

Flexible pool—people move in and out of program
• Lou Gerstner (IBM) is very involved in the development of his Senior Management Group, he adds new people and deletes others from his group at least twice a year.
Aggressively manage out bottom quintile
• GE annually ranks their people on a scale from A to F. Performers that fall into the bottom quintile are typically pushed out the door.
Selective use of executive education
• Sun Microsystems favors a “concierge” approach to education for their senior group. This includes tailor-made developmental job assignments and committee work.
Use of Non-Training Initiatives
• GE provides high-potential managers with full-time assignments to destroy a particular GE business. • BP Amoco is in the process of deploying a new Executive Education initiative for the top 250 leaders. This initiative will focus on macro issues (geopolitical, sociopolitical, and environmental). • Intel focuses on non-programmatic developmental levels: on-line tools/systems, communication, work with intact teams, consulting assessments, and “environmental supports.” • Sun does an increasing amount of training with intact work teams (25% of total training in
1998 vs. 2% in 1995).

Bias towards Use of “Real Work”
Move away from traditional classroom model
• At Lloyds TSB, development programs for senior executives include various “charity projects” and a “UK Development Consortium” which involves the London Business School, along with benchmarking visits to other organizations.
• Technology plays a critical role at Arthur Andersen. It is a key enabler in supporting a number of key processes that are essential to organizational success: continuous learning, change, knowledge sharing, and improved performance.
• Dell believes in “stealth learning,” a process that blurs the lines between development, training, information and job aids. They aim to make employees unaware that they are being trained; education occurs as they are solving business needs.
• Motorola plans to deliver at least 30%–40% of its training via technology by 2002. Networkedbased learning is a critical part of their strategy.
Use of real projects/issues as focus for learning sponsored by CEO/Executive group
• At BP Amoco, action learning is used informally and consistently. It is CEO-driven; John
Browne selects six people to work on a project with him on issues he considers key.
• At IBM, each global cross-functional team spends approximately 20%–30% of their time, in addition to daily responsibilities, solving large-scale organizational issues assigned by the
• At Shell UK, action learning is seen as an important part of the development of high-potential managers. High potential managers are asked to be members of value creation teams and one particular project resulted in the establishment of a new business unit.

Excerpted from Goldman Sachs Training and Development Group, “Best-in-Class Benchmarking Overview,”
November 3, 1999, pp. 4–7.



Leadership Development at Goldman Sachs

Exhibit 9



What Matters Most Is Often Not Delivered

McKinsey & Company, “The War for Talent,” 1998, p. 65, cited in the GS Leadership Development Advisory
Committee, “Leadership Development at Goldman Sachs,” presentation to Goldman Sachs Management Committee,
November 8, 1999, p. 40.

Leadership Development at Goldman Sachs



Boris Groysberg, Sarah Matthews, Ashish Nanda and Malcolm Salter, “The Goldman Sachs IPO (A),” HBS
Case No. 800-016 (Boston: Harvard Business School Publishing, 1999), p. 13.

Boris Groysberg, et al., “The Goldman Sachs IPO (A),” HBS Case No. 800-016, pp. 12–13.


Ibid., p. 13.


Goldman Sachs, 1999 Annual Report (New York: Goldman Sachs), p. 4.

5 This section draws upon Groysberg, et al., 1999. For more on the firm’s history and growth, see Lisa
Endlich, Goldman Sachs: The Culture of Success (New York: Knopf, 1999).

Lisa Endlich, p. 17.


Ibid., p. 262.


Ibid., p. 235.


p. 236.


See Groysberg, et al., 1999, p. 11.


Ibid., p. 6.


McKinsey and Company, The War for Talent (New York: McKinsey and Company, 1998), p. 65


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