The Journal. - Why Women Are Leaving Goldman Sachs

Episode Date: March 19, 2024

When David Solomon became CEO of Goldman Sachs just over five years ago, he made promoting women to senior levels of the firm a priority. But female executives are heading for the door—among them, Stephanie Cohen, one of the most senior executives at the company, who announced her departure Monday. WSJ’s AnnaMaria Andriotis unpacks what’s happening at the Wall Street giant. Further Reading: -Women Aren’t Getting the Big Jobs at Goldman Sachs, and They’re Heading for the Exits  -Stephanie Cohen Is Latest Senior Goldman Executive to Depart  -Goldman Sachs to Pay $215 Million to Settle Female Employees’ Discrimination Case  Further Listening: -The War Inside Goldman Sachs  Learn more about your ad choices. Visit megaphone.fm/adchoices

The CEO of Goldman Sachs, David Solomon, has long said that promoting women to senior executive jobs is one of his top priorities. Our colleague Anna Maria Andriotis covers the company. Advancing women further up the ranks, in particular to its highest ranks, has been a priority of David's from even before he became CEO. Solomon took over as CEO in late 2018.

In about a year and a half into his tenure, he made a big statement in front of the company's investors. We are aware that we have an issue with underrepresentation of women at senior levels. We are extremely focused on the advancement of women and all underrepresented diverse professionals in the workplace. So that was a big deal to have somebody like him, CEO of Goldman, acknowledge this publicly. And it did set the tone for some things that followed at the firm. And now we're several years into David Solomon's

tenure as CEO of Goldman. How is the company doing when it comes to female executive leadership? to female executive leadership. So we are a little bit over five years into David's time as CEO at Goldman. And what women partners and several men partners at Goldman said to me is they've not only not made advancements here with regards to moving women to the highest ranks of the company, but they've actually moved backwards in some ways.

Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Tuesday, March 19th. It's Tuesday, March 19th. Coming up on the show, why women aren't getting the big jobs at Goldman Sachs. Put your hands together for Lady Raven. Dad, thank you. This is literally the best day of my life.

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When did you first start to hear that Goldman Sachs had this problem with promoting women into its higher ranks? It was late 2022. I was just assigned to cover Goldman Sachs, and I had begun reaching out to executives there to introduce myself. One executive who spoke with me, it was the first call I actually had, said to me, you know, I'm really surprised that nobody has written a story chronicling all of the women partners who have left in recent years, and many of them for better opportunities. It wasn't like they were truly retiring. I thought, that's interesting. Over the next year, Anna Maria spoke to people inside Goldman

to understand how big the problem was. She found that despite CEO David Solomon's promise to advance more women, they're mostly absent from top roles at the company. No woman currently runs a major division. Is this a Goldman Sachs problem or a Wall Street problem? Well, I mean, certainly the issue of women's advancements high up the ranks within Wall Street is an issue across a number of institutions. But the fact is, there's a very big difference between the progress that some of Goldman's direct competitors have made versus Goldman itself. For example,

at JPMorgan Chase, two leading contenders to replace CEO Jamie Dimon are women. Citi's CEO is a woman. Morgan Stanley's CFO is a woman. Goldman cannot say that for any of these positions. There is no credible internal candidate right now who is a woman who is looked at as being in line to replace David Solomon. In a statement, Solomon said, quote, advancing women into our most senior ranks is an area where we have not accomplished our goals. He added, quote, Many women do make it to partner at Goldman, which is a coveted position. But Ana Maria says they face challenges advancing beyond that. One issue she found was that female partners

were sometimes promoted to roles that didn't help them move further up the ranks. I would hear about women, you know, being named chair of divisions and how that kind of was a demotion. I would say, what do you mean? Chair sounds very important. Well, yeah, but when you become chair, the chances that you're going to move up after that, in particular to run a major division, are very slim. So like, you know, titles that were like fancy, but didn't really mean much if you had the ambitions to move up the ranks. Some women told Ana Maria that sometimes executives were brought in above them,

which created distance between them and a top decision maker. But when Ana Maria spoke to people at Goldman about this and other issues, I was getting a lot of pushback from some senior executives, in particular male executives, saying, you know, Anna Maria, this is a merit-based institution. And this woman said to me, you know, they talk about merit. It's all about merit, merit, merit. And it's like they're telling us,

oh, so the women at the other firms that are now contenders for CEOs become CFO or running major divisions. I guess they're just much better than we are. That's how it sounds like to us when they're telling us, like, this is merit. Fact is, you have women here with 20 plus years experience, long-term partners running businesses in many cases, and they're interested in moving further up the ranks. And for either one-off reasons or for other reasons, they haven't gotten those opportunities. Some partners also said there were instances when a male executive denigrated the work of his female colleagues.

Sources told Ana Maria that one top executive, named Mark Nachman, told other executives that women at the firm lacked substance, couldn't lead or were light, or that they didn't know how to do their jobs. And what I'm told is Mark Nachman, an executive who is one of the most important people at Goldman, he's probably only going to ascend. He's speaking negatively of colleagues, other women partners, colleagues' work. That is undermining. That is causing concern. You know, women are like, I know my worth. I've busted my butt here. And I don't need somebody, you know, speaking negatively of me,

in particular when, based on their thoughts, it's uncalled for. So I don't need this. In a statement, Nachman said, quote, The women I've worked with here are the best leaders in our industry. I continue to be committed to personally investing in their growth and advancement to the most senior levels on my team and across the firm. Last year, Goldman agreed to pay $215 million to settle a class-action lawsuit involving current and former female employees. The suit alleged the bank systematically discriminated against women in associate and vice president positions in some divisions.

The dynamics at Goldman have compelled many women to leave the company. Some women said to me, recruiters used to call me all the time and I would just hang up on them. But then when issues like this started playing out, I started taking the calls. Because I saw that the path to move further up, which was kind of within reach before, now was it. And this week, a woman who at one point was seen as a possible candidate for CEO at Goldman, left the company. Her story is next. We'll see you next time. that your business is unique, so your business insurance should be too. Whether you're a shop owner, a pet groomer, a contractor, or a consultant, you can get customized coverage for your business.

Contact a licensed TD Insurance advisor to learn more. A fresh voice can speak to you and open your ears and your mind to new views and new perspectives. The call of the wild, a crescendo of culture. Listen as a chorus of fresh voices moves you, taking you to greater heights. Add your voice to the mix and let fresh answer back with perfect harmony in Pure Michigan. Keep it fresh at michigan.org. Stephanie Cohen joined Goldman Sachs in 1999.

It was a successful investment banker at the company for almost 20 years. She was someone who David Solomon and others looked at as this is a rising star. Here is a clear-cut example of a successful executive here in investment banking who should move up the ranks, who we want to move up the ranks. And in fact, that started to play out in a very clear-cut public way in 2017 when she was promoted to chief strategy officer of the firm. Here's Cohen being interviewed by Forbes in 2019.

If you could just explain to everybody what your remit is as chief strategy officer for Goldman. It's a good question. It's actually the question I asked when they asked me to be chief strategy officer. And the answer I got was, here is a blank sheet of paper, go figure it out. And then in 2020, it's announced that she's going to co-head consumer and wealth management, which at the time was a major division of Goldman Sachs. It was a really big deal because it was the first time in years that a woman had been named as a head of a major division. And it was also looked at internally at Goldman as if Stephanie did well in this position, she could be on track to possibly becoming one day CEO of Goldman Sachs.

Cohen was co-head of a new division, and part of its focus was consumers, which was a big departure for a company that had historically focused on investment banking and trading. That meant that Cohen oversaw consumer savings accounts, personal loans, and a big credit card partnership with Apple. But it was a portfolio fraught with challenges. By the time that Stephanie had inherited the business, the consumer business, it had high-level critics inside the company and it had deep flaws.

And one of those deep flaws was the Apple credit card partnership. The contract had already been set. That all occurred before Stephanie was named co-head of this division. So there was already issues in this division when she took over? Correct. So in the early years when she was in charge, the internal goals, the mandate, what the consumer team was basically told to do

was to continue growing out this business. That was the mandate, continue growing. But then things started to turn, and certainly by around the mandate, continue growing. But then things started to turn, and certainly by around the middle of 2022, they had turned. Goldman's president ordered a review of the struggling consumer division, and Cohen took a personal leave of absence

for several months. After she came back, Goldman announced a major reorganization. They put her fully in charge of a new division responsible for most of its consumer lending. But just months later, the company began pulling back on consumer lending amid billions of dollars in losses. How did people inside the company perceive

what this meant for Stephanie Cohen? Like, was she set up to fail? Was she sort of given a division that had no hope of success? Or was it that she had not managed this division very well? I heard all of that. I heard people speaking negatively about her, very negatively about her. I heard people saying, well, this was just doomed to begin with. Like, whoever the head of this division or the head of the consumer lending effort would have been, this would have been doomed to begin with.

Cohen took another leave of absence for family reasons in June 2023. And now, she's leaving Goldman Sachs for a job at the tech company Cloudflare. In a post on LinkedIn, she said, quote, Goldman Sachs is an astonishing institution made up of incredible individuals. for a job at the tech company Cloudflare. In a post on LinkedIn, she said, Goldman Sachs is an astonishing institution made up of incredible individuals. She also thanked David Solomon for his support.

Is her move to Cloudflare a promotion? It is a move that she couldn't have made at Goldman. It is a move that allows her to have a very senior position in an industry that she now wants to be in. And it's also a clean slate. Goldman says it has increased the number of women it recruits out of college and those it promotes to vice president, managing director, and partner. In a statement, Solomon said, quote, we are very fortunate to have extraordinary female partners, adding, quote, we are encouraged where we've made progress and very focused on where we have not.

Last night, Solomon hosted a dinner at his Manhattan apartment for a group of female partners at the company. Ana Maria says the overall problem of bringing women into top jobs was one of the things they plan to talk about. Gatherings like this have happened in the past, and some women partners say they've seen little results. Why is this important to Goldman? Why does it see it as something that's critical to its long-term success? Well, first of all, let's talk about the optics. You're putting in all this effort, and they are, and they have been for years, to recruit more women out of college, to every time they announce, or at least like the last few times that they've announced their new class of managing directors, their new partner classes. They make it a point to add more women to those new groups and to basically state, you know,

new record levels here in these new classes of partner or managing director. So internally, you're signaling to women that this is important, right? This is a merit-based institution. Obviously you move up based on hard work period and success that can be shown from that. But then where do they go? They can't move further up the ranks. So how is that motivating to women who are further down in the ranks? What does that say about, I don't know, the culture, down in the ranks. What does that say about, I don't know, the culture, the mentality there? And it's weird because, again, like David's on record saying from years ago, this was something he wanted to fix. So it's just a bad look. Thank you. Thanks for listening. See you tomorrow.