Goldman Sachs changes how it selects partners

David Solomon (right) speaks with Sir Richard Branson at the Goldman Sachs 10,000 Small Businesses Summit in Washington.C-SPAN

• Goldman Sachs is making changes to how it selects its partners, one of the most elite clubs on Wall Street, as incoming CEO David Solomon remakes the firm in his vision.
• 2018 is a partner year, when the firm names a new crop of senior leaders. Insiders expect it to be less than 100, and perhaps even smaller than 84, the size of the 2016 class. 
• In recent weeks, Goldman announced that special situations head Julian Salisbury would become a co-head of the partnership committee, one of the firm’s most powerful committees. 

Goldman Sachs is making changes to how it selects its partners, one of the most elite clubs on Wall Street, as incoming CEO David Solomon remakes the firm in his vision.

This summer, as company leaders began to identify potential candidates, Solomon told them they should consider at least three characteristics: lean toward execs who hold revenue-producing roles, place people on the list only if they have a real shot of making the cut and ensure women execs get a fair shot at making the final list, according to people with knowledge of his guidance. 

That’s different than how it’s been done in the past. Goldman’s support functions, such as legal or compliance and known internally as the Federation, gained coveted partner seats and more power across the firm in the years after the financial crisis. Some employees in the past may have made the first cut of potential partner candidates to placate their self-esteem even if they were unlikely to be chosen. And partners are predominantly men, with the 2016 class including just 19 women out of 84, or 23%.  

Now, Solomon has said he doesn’t want candidates to go through the partner selection process, known internally as cross-ruffing, unless they’re real contenders, one of the people said. The process, in which current partners and other employees engage in a series of lengthy discussions about the candidate’s performance, is time-consuming and can take several months. 

That’s already shrunk this year’s list versus where it might have been in years past, one of the people said. The final selections are expected to number less than 100, according to the people, though the final size hasn’t been determined. It may be smaller than the 2016 class of 84 executives, one of them said. 

Goldman selects partners every two years, a throwback to its history as a private partnership and an attempt to preserve a culture that officially ended when the bank went public in 1999. The rank of Goldman Sachs partner is still one of the most sought after titles on Wall Street, largely for the wealth it can bring. Those who get called up are given a raise, a sizable chunk of the bonus pool and investment opportunities not available to other employees.

Partners day-to-day work lives don’t change drastically, though they’re expected to take on more responsibilities in the form of partner meetings and firmwide committees. Currently, more than 400 of Goldman’s roughly 36,000 employees are partners.

The changes come as Solomon is looking to zero in on revenue growth as Goldman looks to generate an additional $5 billion by 2020. He also wants more diverse perspectives involved in the firm’s most important decisions. It’s the latest sign, coupled with a series of significant management changes, that Solomon is moving swiftly to put his mark on the makeup and direction of the firm even before Oct. 1, his first official day as CEO. 

To oversee the process and enact some of the outlined changes, Goldman has named Julian Salisbury to co-run the firm’s powerful partnership committee. Salisbury will take the place of recently departed trading chief Pablo Salame and lead the panel alongside investment management co-head Eric Lane. Lane has held the role since February 2017. 

Salisbury runs the firm’s special situations group, a business that makes principal investments in, and provides financing to, medium-sized companies around the world. He’s kept a low profile, but his unit is one of the firm’s most lucrative. Prior to his current role, he ran the group in Europe after a successful stint establishing its presence in the former Soviet Union. He joined Goldman in 1998 and made partner a decade later. 

His addition is not the only change to the panel’s composition. In June, Solomon pushed to add eight women to the partnership panel, bringing the total number to 12, or about 40%, two people with knowledge of the appointments said earlier this year. Among the additions were Sheila Patel, head of the asset-management arm’s international business; Liz Martin, global head of electronic trading; Amanda Hindlian, chief operating officer for the investment research department; and Christina Minnis, global head of acquisition finance.

The full membership of the partnership committee is closely guarded, and a Goldman spokesman wouldn’t give a full list. In addition to providing one of the final sign-offs on the selection of each biannual class, it also spearheads initiatives intended to preserve and foster the firm’s partnership culture.

Goldman is expected to name its list of new partners later this fall. 

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