Radical transparency is coming to Goldman Sachs Group Inc.
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The Wall Street firm is rolling out a new review system where employees can get ongoing feedback from their managers and peers. The goal is to supplement the bank's annual review process with more frequent check-ins, Edith Cooper, Goldman's head of human capital management, said in an interview with The Wall Street Journal.
The firm will continue to conduct annual reviews. Those remain a high-stakes affair that influences employees' chances for promotion and the size of their all-important bonus checks.
Goldman's changes are part of a bigger shift in the way companies track and grade workers' performance.
Consulting firms Accenture PLC and Deloitte also recently scrapped annual performance reviews in favor of more-frequent communications. J.P. Morgan Chase & Co. made a similar move last month, rolling out a tool that employees can use to request and receive feedback "from anyone, anytime."
A memo to employees explained the change this way: "Our employees want to know where they stand at all times."
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Goldman and rival Morgan Stanley in recent years have dropped numerical ratings of employees and moved to more-qualitative feedback, as have Microsoft Corp. , Netflix Inc. and FedEx Corp.
Goldman's new system is based on software the firm already used in a few divisions last year. It is now being extended to the rest of Goldman's 35,000 employees.
"The same approach that we take to our revenue-producing businesses, we have to apply to our investment in people," Ms. Cooper said. "That means taking a look and saying 'can we do this better?'"
The idea is that after a big client pitch or product launch, employees can get quick feedback instead of waiting until year-end, Ms. Cooper said. A real-time sense of where they stand allows employees to make improvements and avoid feeling blindsided later on, she added.
"Those conversations that happen once a year for an hour are going to go better," Ms. Cooper said.
In Goldman's early days as a small private partnership, performance reviews were easy. As the firm grew, an informal system developed in which, following a big deal or successful trade, executives would send around a memo detailing each team member's contributions, a tradition that continues.
And every two years, the selection of a new class of managing directors and partners entails a thorough review of candidates, with feedback from their managers, colleagues and direct reports.
But in an internal firm survey in 2015, many Goldman employees said they wanted more-regular feedback, Ms. Cooper said.
The software for the review system was developed in-house by Goldman's engineers and is accessible from smartphones. Ms. Cooper chose Goldman's investment-banking division as a testing ground last year, figuring that if even its harried, road-weary bankers could be convinced to use it, others would follow.
It is easy to view Goldman's latest shift as a response to millennials, with what is often described as their expectations of constant praise. And indeed, Wall Street has changed much about its work environment in recent years to satisfy a younger generation, including "protected weekends" at J.P. Morgan, one-month sabbaticals at Morgan Stanley and faster promotions at Goldman.
But Ms. Cooper said vice presidents and managing directors, a group that is typically in their 30s and 40s, were the most likely in the 2015 survey to say they wanted more-frequent reviews.
Still, financial firms need to adapt their management to keep younger workers. "If you're a boomer, you grew up in an environment where it was, 'put your head down, work really hard and if you don't get fired, you know you're doing OK,'" Carla Harris, a vice chairman at Morgan Stanley, said at a Wall Street Journal event this week .
That won't work for millennials, who grew up in a more transparent world, she said. They will be loyal to employers as long as they have a clear sense of where they stand and where they can expect to go in their careers.
"If you're giving them lots of feedback and being transparent, that will create some stickiness," she said.
Emily Glazer contributed to this article.
Write to Liz Hoffman at email@example.com
(END) Dow Jones Newswires
April 21, 2017 12:47 ET (16:47 GMT)