The Greg Smith debacle has thrown up an interesting and potentially depressing statistic: Lloyd Blankfein wrote a memo pointing out that Smith (allegedly a Vice President or VP) was only one of 12,000 vice presidents at the bank.
Goldman employed 33,000 people at the end of 2011, suggesting a massive 40% of its staff are VPs. It only promoted 261 managing directors (MDs) last year, also suggesting the chance of making it from VP to MD is only 2%.
Quirks of the Goldman hierarchy
Headhunters say careers at Goldman evolve differently to careers at other banks. There are thousand and thousands of Goldman VPs because people get dumped into this catch-all category after doing their time as analysts and junior associates. VPs are the workhorses of the bank.
“A standard Goldman CV will usually have someone who’s spent 3-4 years as an analyst, then another three years as an associate, at which point they will become known externally as a VP – although internally they’re still seen almost as senior associates,” says one headhunter.
A rival headhunter confirms this. “People called VPs at Goldman would still be known as senior associates at other banks,” he says.
Notably, Greg Smith described himself as an ED, but Goldman described him as a VP. Goldman confirms the two terms are used interchangeably.
One headhunter contrasts Goldman’s hierarchy to Deutsche’s. At Deutsche, he says progression from VP is automatic and people get stuck at director-level instead. “At Deutsche, you will automatically become an VP after spending a few years as an associate. And then after being a VP for 3-4 years you will become a director. You can remain a director at Deutsche for 20 years waiting for an MD promotion,” he suggests.
Not a pyramid
What with all its VPs, Goldman’s hierarchical structure appears to be slender at the bottom, fat in the middle, and to taper to a fine point at the top.
Last time it gave us figures (in 2010), Goldman said it was hiring 300 analysts in Europe. From this, we surmise that its first year analyst intake is probably around 1,500 people globally. People are analysts at Goldman for three years, implying the total analyst pool is no larger than 5,000.
How many MDs does Goldman have in total? Again, there are no definitive figures, but in November 2011 Lloyd Blankfein said the average tenure for MDs at the bank was 12 years. Given Goldman promotes an average of around 200 MDs a year, this suggests there are around 2,400 MDs in total.
The mass of mid-ranking VPs appears to far outweigh the number of both junior and senior staff.
One thing is indisputable: whether you work for Goldman or another firm, the probability of making MD is receding. Last year, Goldman promoted 19% fewer MDs than in 2010. Similarly, Morgan Stanley promoted fewer MDs than at any time since 2008. Mid-ranking staff are being culled, fewer people are being made MDs, and there is severe downward pressure on pay. Greg Smith may have been right to get out.