Goldman Sachs argues over whether to pay higher salaries to junior bankers
Goldman Sachs executives are wondering whether they need to raise the salaries of junior investment bankers this year to match Wall Street competitors after young employees complained about them. Burn out.
According to people familiar with the discussions, some senior executives believe that raising wages in the middle of the year will create a “dangerous precedent” and mark the breaking of the bank’s “pay for performance” slogan.
Investment banks have historically avoided substantial inflation of fixed wages, which is more difficult to reduce during vacations. On the contrary, they tend to award bonuses to employees every year based on the overall performance of the individual and the bank.
Despite this, several U.S. banks have recently increased the basic salary guarantees for first-year investment bank analysts, including Citigroup, which last week proposed an increase of up to $25,000, raising the fixed salary to $100,000 per year.
JP Morgan Chase and Barclays Bank also raised similar wages from $85,000 at the end of June to $100,000, while Bank of America and Wells Fargo both increased their first-year income by $10,000 earlier this year.
This made Goldman Sachs one of the last remaining adherents on Wall Street, sparking internal debates about the correct course of action.
A person involved in the discussion said: “We shouldn’t be involved in a game where wages go up and down every few months.” “If you do this, you will end up as a mercenary. We pay performance at the end of the year.”
According to Wall Street Oasis, the income of analysts and assistants at Goldman Sachs in the first year is already below the typical level in the industry. The bank’s first-year analyst salary averaged less than US$86,000, plus a bonus of US$37,500, which lags behind Wall Street’s average of US$91,400 and US$39,700, respectively.
Some executives worry that if they can’t compete with companies such as JPMorgan Chase, Goldman Sachs may lose some of its most promising descendants, not to mention technology companies such as Apple and Google.
Goldman Sachs declined to comment.
James Esposito and Dan Dees, co-heads of investment banking, discussed this issue in a series of departmental conference calls recently. They told employees that they were monitoring the wage changes of competitors and knew that employees worked long hours during the pandemic, when the financial market was extremely busy.
Goldman Sachs’ first-year salary year for analysts and assistants lasts until the end of July, and they will find out their compensation plan in August.
Esposito and Dees promised that young employees will receive generous rewards to reflect the surge in bank income. However, they have not yet resolved the wage issue, which makes the bank one of the last lenders to make a decision with Morgan Stanley.
The bank is keen to ensure that it maintains its focus on performance-linked compensation in any salary increase.
Another person who listened to the debate briefing said: “We are still considering the issue of sharing base and bonuses.” “We are studying what our peers are doing, not only in the field of investment banking, but also in other industries. The battle for talent is more than ever. It’s more intense at any time.”
Employees were told to look at the overall “annual total compensation” or “PATC” described by the bank, rather than simply comparing the base salary with the salary paid to their peers.
After a group of investment banking analysts for the first year, the job burnout of young employees has become the focus of special attention of Goldman Sachs speak out Regarding the impact of punishment time on their mental health.
Goldman Sachs chief executive David Solomon has also taken a strong stance on flexible arrangements when the office is fully reopened, which sets the bank apart. He called working from home “a deviation that we will correct as soon as possible.”
Citigroup and UBS stated that they will adopt a hybrid return to work model, while Goldman Sachs and Morgan Stanley and JPMorgan Chase executives have more bluntly emphasized the importance of employees in the office.
“Goldman Sachs doesn’t want to hire people whose most important thing is how many days they have to stay in the office,” said a senior manager. “Others can have it.”