Midterm elections aside, there’s another big round of promotions taking place in the U.S. this week, with Goldman Sachs set to announce its latest class of partners.
Goldman GS, -0.23% went public in 1999, meaning its partners — its highest-ranking staff — were no longer on the hook for losses, as they’d been in the past. Nevertheless, the bank took steps to maintain its partnership culture.
The biennial promotion round is still one of the most closely watched on Wall Street, and the 2018 list will draw particular attention, coming as it does just weeks after the elevation of David Solomon to chief executive of the bank.
Goldman has widely been touted to move away from a reliance on bond trading —a business line that defined the 12-year reign of CEO Lloyd Blankfein — under Solomon, with a focus on forging closer corporate ties expected.
The Wall Street Journal reported this week that Goldman’s 2018 class of partners was likely to be its smallest in 20 years, with around 65 employees getting the nod.
See: Partnership class shrinking at an increasingly exclusive Goldman Sachs under CEO David Solomon
The following is a run-through of how Goldman bankers make it to the top.
What is the path to partner at Goldman?
Goldman’s best entry-level analysts typically rise to become associates in around three years. Those who do not tend to leave the bank (voluntarily or otherwise). Three more successful years — give or take — will lead to a promotion to the rank of executive director or vice president. The best-performing EDs/VPs will eventually become managing directors — one level beneath partner.
Goldman’s MDs are all high-achieving bankers, fund managers and traders, but the step up to partner is never guaranteed. There is no limit to the amount of time an MD will stay at this level, and many will get passed over in promotion rounds before eventually getting the call from the CEO or moving on.
Who makes the decisions?
Those that make the cut are judged on more than their money-making credentials. They need top-notch managerial skills and must demonstrate a commitment to the bank’s culture and values.
A group of existing partners will solicit feedback on candidates from other managers and people who have worked closely with them — this process is known as “cross-ruffing.” A period of consultation with leaders of the candidates’ divisions follows before the successful few are personally given the good news by Goldman’s CEO or another member of the C-suite.
What’s life like at the top?
Being one of the 400-plus Goldman partners means holding a title still considered to be among the most coveted in finance. The financial benefits mean partners are able to share in the bank’s special partnership compensation pool. But there are other perks, too; Goldman has in the past run annual dinners for existing and former partners to keep the network going.
And what about after the partnership?
Partners who leave Goldman are certainly not short of opportunities in finance and elsewhere.
Former Goldman partners now run some of the world’s biggest financial companies, or hold top positions within them. Among their number is Pimco’s chief executive, Emmanuel Roman; JC Flowers & Co. co-founder and CEO J. Christopher Flowers; and London Stock Exchange LSE, -0.21% boss David Schwimmer.
In politics, onetime Goldman CEO Hank Paulson went on to become U.S. Secretary of the Treasury under George W. Bush, while Mario Draghi, who’d been a managing director of the bank’s international division, is president of the European Central Bank. And then there’s Gary Cohn, who departed Goldman two years ago to join the Trump White House as chief economic adviser, departing that role in March.
Another big name to take note of is John Thornton, the former co-head of Goldman in London, who is now the executive chairman of Barrick Gold Corp. ABX, -0.53% .
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