The Goldman Standard: Will firms go back to the office or not?

BY ALICE WRIGHT

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Whenever the CEO of Goldman Sachs David Solomon speaks, markets listen. In March 2021, the chief executive declared that working from home will not be the new normal, but instead an “aberration” in these strange times. By September 2021, we can see that the debate still isn’t resolved.

It’s one of those mysterious questions. Of all the successful businesses out there, why is the investment bank always deemed a yardstick when it comes to discussions around the workplace?

In one sense, it’s because of the huge numbers of well-known former employees, including US Treasury Secretaries such as Steve Munchin and Henry Paulson, as well as figures of international importance such as former Australian Prime Minister Malcolm Turnbull and former President of the European Central Bank Mario Draghi.

But it’s also because the firm, in its commitment to long hours and hard work, embodies a way of doing business perceived to be under threat. The sense is that if Goldman isn’t going back to the office, then who will?

When I spoke with former chief economist at Goldman Sachs, Jim O’Neill, it was clear that he retains a fondness for the organisation of which he was once a partner. Even so, he expressed his doubts about whether Goldman would really return to the office in any meaningful sense: “I would have thought virtually every major professional practices firm, whether they be finance or otherwise, is going to have some form of home-working as a result of what we’ve learned during the pandemic.”

And is that the case for Goldman Sachs too? “It might be harder to keep that culture so I can see why David said that,” says O’Neill, clearly chewing the matter over.

One could understand O’Neill’s hesitation. After Solomon’s remarks reports would emerge that young staffers at Goldman Sachs have warned that they might quit if work conditions don’t improve. the firm: Mr Solomon described the atmosphere at Goldman Sachs an “innovative, collaborative, apprenticeship culture” when explaining why he viewed the bank as ill-suited to home-working.

Certain eye-opening statistics emerged as a result of an internal survey among an admittedly small data sample of 13 employees (Goldman employs over 38,000 people). Even so, an average working week of 95 hours, with a mere five hours of sleep per night, appears to be an increasingly unpopular status quo.

High-profile reputation lawyer, Mark Stephens, whose clients include James Hewitt, Julian Assange and Mike Tyson, was unimpressed by the remarks, noting that Solomon had failed a crucial test of business leaders: he hadn’t communicated clearly with his staff.

“Unfortunately, I think he was unclear,” Stephens explains, “as it wasn’t obvious what context he was talking in –presumably he was thinking particularly of the bearpit of traders that needs proximity and collaboration.” Stephens added that it is likely that “other businesses are going to move away from old-fashioned working and will be more flexible.”

Others expressed themselves unsurprised by Solomon’s remarks.

David Dwek explained that according to a recent survey of 500 respondents carried out by his firm DC Dwek Corporate Finance in collaboration with BLAS and Klapa8, “over 70% of senior executives are suffering the effects of Zoom or isolation fatigue related to the current situation and to the working environment.” communication; it’s much easier to communicate with your colleagues in the office. At home, you can’t catch your manager for two minutes to ask a quick but important question.”

The company operated throughout 2020 with less than 10% of workers in the office. And the financial performance has hardly been worrying. In January 2021, the group reported net revenues of $44.56 billion and net earnings of $9.46 billion for the year ended December 31, 2020.

O’Neill continues: “Yes, although I can see why David said that, I cannot imagine Goldman will go back to the same arrangements as before. The idea that everybody has to be in the building for 15 hours a day, five days a week – I can’t see that continuing in a million years.”

In addition, Gina Miller, who as well as being a campaigner on matters such as Brexit and education is also the cofounder of wealth management firm SCM Direct, agreed with Solomon’s approach: “When it's professional settings such as lawyers, accountants –even in the City – there's so much to learn by watching people and seeing how they make decisions,” she told us. “There’s also this whole mentoring issue. The question of how we bring up the juniors is going to be a problem, because you can't actually just do that remotely.”

It might well be that remote-working arrangements affect CEOs particularly.

Marta Ra, CEO of Paracelsus Recovery, has seen an increase of referrals from stressed-out CEOs. “In situations like this, people are looking for fulfilment,” she told us. ‘The typical CEO used to have his team of people. Hierarchy was the religion and now that’s missing.”

David Dawkins, staff writer at Forbes magazine, who has written extensively about the banking sector, was unsurprised by the comments. In his view, Solomon “understands just how valuable Goldman’s culture is. It’s part of a soft power that draws the best graduates and mid-career professionals towards it.”

To put that in context, look at the bank’s performance in 2019. Then the bank reported net revenues of $36.55 billion and net earnings of $8.47 billion for the year ended December 31, 2019. These figures would appear to suggest that the bank is well capable of functioning on a different basis.

Solomon’s move is also in direct opposition to many other sectors, such as the tech industry, whose major firms expect working from home to be a central component of work going forwards. Microsoft, for example, is offering its staff working from home options after the pandemic, so long as employees can secure managerial approval. Giants such as Twitter and Facebook have also decided to make remote-working a permanent option. Meanwhile, Sir Richard Branson recently told this publication: “Over the years we have always tried to give our people the freedom to be themselves and treated them like adults.” home has lowered productivity levels. Working from home has been hailed as revolutionary by workers who gain time from dropping the commute. A PWC survey found that around 55% of employers said they expected staff to work at home flexibly in the future after the pandemic.

It’s worth noting that Solomon’s initial remarks were tethered to the question of the future of young people within

This was a reminder that Solomon’s remarks – made at a Credit Suisse AG conference – were prompted more by a desire to return to the “culture” of banking rather than any serious practical impediment.

But if the bank didn’t return to the old ways, something would be lost according to Dawkins: “The pedigree of its former staff, the quasi-masonic structure of its partner system, makes Goldmans an incredibly aspirational place to work. But how do they keep that culture going when staffers can’t see and feel it all around them during 12-16 hours of a working day.”

Not everyone has piled in on Solomon. One data analyst, who spoke to us on condition of anonymity, concurred with Solomon’s remarks: “For me, working from home was a one-off venture. I enjoyed the journey but the office environment is a lot better. It’s all about

But Solomon’s stance isn’t just about a return for the sake of pure productivity, but in consideration of the incoming graduates, around 3,000 of whom he worries will not have received the faceto face interactions and mentorship they require.

All of this is why Solomon has been one of the most vocal private sector leaders in urging the government to ease restrictions, to allow workers back into offices. He is not alone in the banking world either: Jamie Dimon, the chief executive of Morgan Stanley, has previously stated that working from

Yet Goldman Sachs seems unlikely to partake in the revolution anytime soon – particularly, as Dawkins points out, since the firm recently built a new £1 billion headquarters that is “so obviously designed around keeping the staff within the GS bubble for as much of the day as possible.” Dawkins imagines “thirsty Goldman Sachs staffers staring at one another – judging, aspiring, ranking themselves alongside their peers.” But for our insider data analyst the experience of returning to the office is a more benevolent one. He describes it as an educational process of “seeing the pressure” and adds that, being in that environment “puts you in the right mindset.”

That level of animal competition is certainly hard to simulate over Zoom. But for Solomon to succeed in the postpandemic new normal he’ll need the support of those who work for him.