Goldman Sachs’ new recruiting strategy has spread ripples throughout the industry among aspiring bankers and other major firms.
The Goldman Sachs Group, Inc. announced last week that it will terminate the two-year analyst program in its investment banking and investment management divisions for analysts recruited for 2013. This termination means that employees at the banking and financial services company will be hired with the understanding that they will be staying for more than two years.
Another result of the termination is that analysts will not receive program termination bonuses when they complete the program. This bonus has traditionally been viewed as the road to Wall Street wealth.
“What has happened with all banks, not just Goldman Sachs, is that private equity firms have been interviewing first-year analysts as early as the fall of their first year, and making offers of employment to those analysts for 18 months later,” Pat Rose, director of Career Services said. Rose spoke with representatives from Goldman last Friday.
Despite what many have presumed, Goldman is not reducing the number of hires, Rose added.
Goldman had fired some analysts last year for interviewing for and accepting jobs before they were allowed to, according to the Wall Street Journal.
“We think the historic two-year program is no longer the best approach for hiring and developing the careers of analysts in our banking and investment management divisions,” Goldman spokesperson David Wells told Reuters, adding that the company will now be able to “emphasize the longer-term career opportunities available at the firm.”
Penn seniors who have received full-time offers at the firm think that it is a cost-cutting measure for Goldman.
“The banking industry is not like it was before, they have to save money,” said a Wharton senior who chose to remain anonymous because she has a full-time offer with Goldman pending graduation.
“So they have to find ways to cut costs — it saves a lot of training and recruiting costs if they promote associates from the analyst pool.”
“The first thought that all of us had in mind when we saw the news was that in a two-year contract, we’re less likely to be fired at any time if required,” said a Wharton senior who also has a full-time offer with Goldman.
“Now that they eliminated this, they can fire without giving huge amounts of compensation so we definitely have less job security,” he said.
However, both students agree that the news will probably not make much of a change for students hoping to work at Goldman.
“If you want to leave, to be perfectly honest you can leave at any time,” the female senior said. “In this business, if you get fired, you get fired, so there’s no change for someone who is interested.”
Karina Sengupta, College and Wharton senior, said the announcement is “the best thing that has happened to investment banking.”
Sengupta had an internship in asset management at Goldman over the summer. She is participating in on-campus recruiting for a variety of careers including banking.
“Goldman Sachs has a fantastic HR division that really knows how to keep talent,” Sengupta said. “This termination would let the firm keep people who are actually passionate about finance instead of just being in it for the money.”
Goldman has long been viewed as the leader on Wall Street in its recruiting strategy — its two-year analyst program has been emulated throughout the industry.
With this change, “an interesting question will be whether other banks follow suit,” Rose said. “Stay tuned.”Comments powered by Disqus
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