The JSBF Report
Goldman Sachs - Leading the Wall Street in Diversity and Inclusion
Updated: Oct 29, 2022
By - Aryaman Kapoor
Source: The Business Times
Since the start, investment banking and the whole “wall street culture” has been synonymous with unethical behaviour and questionable practices. Few firms like Goldman Sachs and HSBC which are arguably the biggest firms in the banking sector have been in the limelight for promoting this “wall street culture” and have been scrutinized by the government and other stakeholders for the same. However, not much has been done to regulate and change the unacceptable behaviour of these few “too big to fail” firms even though their behaviour once brought the whole United States economy to the brink of collapse in 2008. But now all the banks have started taking steps to improve their image and perception in front of the general public. For this, they have adopted measures related to gender and diversity inclusivity and increased its relevance as a social objective.
Diversity and Inclusion are being recognized increasingly and has become one of the most utilised organizational resources in the past few decades. When the topic of diversity comes up, people discuss the inclusion of different ethnicities, races and genders but the term also includes other features such as age, physical qualities, education, ancestry, marital status, and work experience. The reason diversity and its inclusion are important in every corporation are because it helps in increasing the frequency of innovation and technological and social advancement in the workplace. It also leads to more unity inside the organisation as well in the dealings of the organisation with other partners which exist in the external environment. And at the same time, gender inclusivity means an equitable and fair representation of all the genders in a company whether it be male, female, or non-binary. If a company becomes gender-inclusive, it not only uplifts the genders who have been discriminated against but it has been proved also helps to increase the financial profits due to an increased customer base and better decision making which creates a win-win situation for both the corporation and the society.
BACKGROUND OF GOLDMAN SACHS
Talking about the changes that have cropped up, especially in Goldman Sachs. Since 2019, several decisions were made, and several policies were implemented to change the internal culture and external image of the bank. This would both conform to the employer standards of the 21st century and motivate the employees as well as the customers to stay associated and do business with Goldman Sachs. Even though some of these approaches have been controversial and questioned by the public, they have had a positive effect and the goodwill of Goldman Sachs has increased over time and the same has been reflected in their revenue and profits. Most of these changes that came can be attributed to David Solomon, who took over the reins of the bank from Llyod Blankfein in 2018. David Solomon was always seen as a long-shot pick for CEO as he was a lateral hire but the board of the bank which includes people like Warren Buffett and Lakshmi Mittal understood the need to change the public perception of the bank so that it can survive and stay profitable in the long run and hence they decided to bring in a leader who fits the current social climate. David Solomon has been advocating gender equality and inclusion for a long and is also famous for his stint as a disc jockey which has been both beneficial and harmful for the reputation of the firm. But to change the opinion of the general public that wall street does not face any consequences for their actions, several moves have been made by the firm which has affected the employees, especially the CEO but has increased the bank’s accountability and thus affected the overall goodwill of the firm.
ANALYSIS OF GOLDMAN SACHS
Since the start of David Solomon’s term in 2018 as the CEO, his focus has been on improving the public image of Goldman Sachs not only through media channels but also through the most effective way which also happens to be the most difficult to change, the internal workings and culture of the employees and the management. For this, the firms’ focus has been on ESG, Diversity and Inclusion. Focusing on Diversity and Inclusion, David Solomon has talked about setting specific and aspirational goals which are achievable and can be implemented with ease and end up making a change in the status quo as well. For that, the firm brought in several goals like doubling the number of entry-level bankers and traders from historically black colleges. Solomon also said that the firm aims to have 40% of vice presidents globally who are women, 7% Black in the Americas and UK, and 9% Latino in the Americas by 2025. All these changes mentioned till now have been internal changes that did not benefit the general public at large directly, but the firm has also taken several measures which have led to growing companies reshuffling their boards to raise more funds from the public and this was done by Goldman Sachs making it compulsory for a company to have diversity on its board of directors if it wants to go public with the help of Goldman Sachs. As Goldman Sachs is best in the game of taking companies public and has succeeded exceptionally with companies like Airbus, this move has not made their clients move towards different wall street firms which do not require the company to conform with this condition but rather, the companies have made the required change which they had been resisting since ages. The virtual monopoly that Goldman Sachs has created in the IPO market is now being used to push forward the agenda of Diversity and Inclusion and because of these policies which Goldman Sachs has implemented there has been a major change and women now hold more than one in four corporate board seats.
What has been discussed above has only been implemented in Goldman Sachs which even though is the second-largest bank on the street, in no way represents the whole picture or ends up having a major difference. The British offices of these wall street firms do show a major pay disparity amongst genders and even Citi Bank themselves admitted that they pay their women employees 29 per cent less than their male counterparts globally. Hence, it is imperative that a vision like that of Goldman Sachs is adopted by other banks and it is recommended that wall street firms should enter into an industry self-regulation agreement that focuses on setting specific and achievable diversity goals and then having partner firms who have also signed the agreement inspect the compliance to the agreement in order to increase the effort put into achieving diversity.
Aryaman Kapoor is a second-year law school student at JGLS.
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