2014 is a special year. It’s not because of the FIFA World Cup. It’s not because it’s the year of the horse. It’s not because of the coming Ring of Fire Solar Eclipse, visible only in Antarctica. It’s because Goldman Sachs is going to make some more partners. It’s only April and Goldman’s partners are usually announced late in October, but selecting partners usually starts seven months before the announcement and so over at Goldman they’re already thinking about it.
“This is a partner year for us,” said Harvey Schwartz, Goldman’s CFO, during last week’s conference call. “It’s been two years since we made partners. And so, obviously we’ll be grinding the whole organisation through that process this year.”
Michael Sherwood, the London-based co-CEO of Goldman Sachs International is in charge of the Goldman Sachs partner process. At this stage, Goldman is still collecting nominations for it partner pool. According to the Wall Street Journal, around 27% of those who are nominated are rejected from the outset. 73% go on to be vetted by the current partners. And only 42% make the partnership list in October. Goldman’s new partners attend a celebratory partnership ball and get paid more: partners account for less than 1% of Goldman’s total staff but around 20% of all the firm’s compensation goes directly to them according to the WSJ.
While that’s all very exciting for those who make it, Goldman’s partner year also has a few downsides.
Firstly, Goldman has stated that it wants to reestablish a ‘pyramid structure’ in its investment bank, with a few super-senior people and a lot of VPs, analysts and associates. When new partners are made, therefore, old partners need to leave. Secondly, Goldman’s grinding will involve the so-called ‘cross-ruffing’ procedure under which prospective partnership candidates are secretly scrutinized and discussed by existing teams of Goldman partners. In theory, candidates are unaware that they’re being subject to this. In reality, it makes for a febrile atmosphere in which everyone who thinks they might be a candidate agonizes over what’s being said about them.
The last time Goldman nominated new partners it was 2012. Then, 70 made the cut. In 2010, 110 people did. In 2008, 94 partners were made. Goldman hasn’t had a great start to 2014. This year’s partnership pool is unlikely to be huge. Already that’s likely to be causing some discomfiture for all who hope to be a part of it.