When Goldman Sachs — the investment bank known for its strong culture — recently told top bankers they could quit as much as they wanted, the shift in policy immediately propelled it into the ranks of America’s most employee-friendly companies.
David M. Solomon, CEO of Goldman, told CNBC that managers should “take the time off they need so they can continue to work hard, be competitive, work productively, but take care of their families.”
But the bank’s move did not lead to much cheer in a place where employees build their careers on being available to clients anytime, anywhere. Goldman, in particular, has always taken pride in this spirit — so much so that its leaders rarely use all their vacations and often drop messages out of the office. Some have even been famous for taking satellite phones on vacation.
“It seems psychologically calming, and it’s part of Goldman cementing a kinder, softer image of Goldman,” said Mike Mayo, banking analyst at Wells Fargo. “It really wouldn’t make any difference. It’s like telling the owner of the restaurant that you can take unlimited vacation – will that change the way the owner of the restaurant works?”
Some observers have been frankly cynical about Goldman’s motives, calling the policy a cost-saving move. In the past, if employees had a fixed number of vacation days that they did not use, the bank had to pay them for those unused days when they quit. But unlimited vacation means the bank does not have to pay them anything.
“This was entirely financed,” said Veehtahl Eilat-Raichel, CEO and co-founder of Sorbet, a company that buys unused vacation days from employees at other companies and puts cash value into prepaid cards. Unlimited paid time off “is positioned as if it’s a great perk for employees, as it’s actually really bad for employees and amazing for employers.” Eilat Rachel has been added.
Goldman Sachs – which posted record profits of $21.6 billion last year – said any cost savings were accidental.
“Our focus is on motivating our employees to spend more time, rest and recharge,” said Bentley de Baer, global head of human capital management for the bank. “We are proud to join many other companies in introducing a flexible policy that requires a minimum amount of time out of the office to continue building resilience and sustainable performance.”
Long vacation days have posed a financial challenge for employers. When employees quit — especially CEOs, with high salaries and mountains of untouched vacation days — the company often has to pay them for the unused period off. It has become a bigger financial burden for companies in recent months, given the enormous violence in the labor market.
Back plans back to the office
Although Covid cases are on the rise again, companies are still trying to return to a form of in-person work, amid hybrid work models and office renovations.
The average employee in the United States has about $3,000 in paid time off at any given moment, according to data from Sorbet. Sorbet found that employers across the country owe about $272 billion in unused vacation days.
Although companies like Netflix and LinkedIn have long offered unlimited time off for employees, the option has become popular lately. In a hot job market, unlimited paid time off can serve as a hiring tool and tell a potential employee that the company values the employee’s well-being. But in practice, unlimited leave is often more beneficial to the employer than the employee, because it is generally accompanied by a policy of erasing unused days from his accounts.
Research has shown that employees who have unlimited time off often take less time off because they don’t want to overstep or are seen as unmotivated. A 2017 study by the HR platform found that workers with unlimited vacation days take on average two days less than those with a fixed number of vacation days. And employers who tell workers to take as many days off as they want usually don’t have to pay them for the days off they don’t use.
In other words, unlimited time off can allow employers to position themselves as caring and thoughtful, while reducing their financial investment in it.
At Goldman, the new policy angered bankers in part because Mr. Solomon was adamant about returning to the office.
the master. Mayo, the banking analyst, said he was shocked to learn how many people were working in the office when he went to Goldman’s headquarters for his first in-person meeting during the pandemic. the master. Solomon regularly worked out of the office, urging managers to come in person—a tactic that has led some of the top bankers to leave the company.
A company representative, who asked not to be identified to discuss personnel matters, said that Goldman’s managing directors and partners are typically set aside 20 days or more, depending on the length of their employment.
Under the new policy, there will be no maximum vacation time for more than 1,400 top bankers, although all employees are expected to take at least 15 days a year starting in 2023, according to a memo seen by The New York Times. . The 15-day requirement is to provide some structure to entry-level employees, who will also get two extra days. To make sure changes persist, the representative said, the company will keep tabs of vacation days taken and address the matter if necessary during performance discussions.
The source said top bankers who take less than 15 days will not be paid for the rest. In 2017, Goldman already rescinded a policy that allowed employees to accumulate unused time off, but some old employees still have days granted from previous years.
said Paul Sorbera, president of Alliance Consulting, a Wall Street search firms executive.
There are still risks. Employees who report to “old school” managers may jeopardize their careers if they take too much time off, mr. Supra said. And in an area where it’s common to work through parental leave and cancel leave plans, change can be slow.
“You can’t just make a new policy, and then the next day, the managers come out and whip out the same whip as before,” he said.
It was William R. Grover, a former Goldman Sachs partner who spent two decades at the company, is skeptical about the open leave policy. said mr. Gruver, who served as chief operating officer of Goldman’s equity division until 1992.
the master. Gruver compared his love of work to addiction, but after it contributed to a broken marriage and health problems, he left at 48 and went on to teach at Bucknell University. He now works in a think tank.
In recent years, Goldman has introduced family leave benefits. It gave 10 days off for Covid-19 disruptions, which was used by about 4,000 employees. In 2019, it extended parental leave to 20 weeks from 16 weeks.
Goldman’s holiday benefits mirror those offered by other financial firms, including BlackRock, the asset manager giant, and Bridgewater, the world’s largest hedge fund.
Long before Wall Street, the tech sector embraced a flexible vacation — and was aware of the potential downsides. In his 2020 book, No Rules, Netflix co-CEO Reed Hastings discusses the company’s unlimited vacation policy, which was established in 2003, and notes that the feature works best if leaders serve as an example by taking time off. .
But Robert Sweeney, a tech executive, said that when he was working at Netflix in 2011 and 2012, he was ashamed to ask his manager for a vacation. the master. Sweeney recalled a period that year in which he was working 80 hours a week to introduce a new product. He said that when he completed the project and requested time off, his supervisor told him to leave when another deadline loomed.
In 2012, when he was mr. Sweeney started his own company, Facet, which does tech hiring, and he’s emulated Netflix’s unlimited paid vacation policy. But he found that his employees were taking too little time off, and many were feeling overwhelmed. Eight years later, Mr. Sweeney changed Facet’s policy to offer at least 25 vacation days a year, giving managers the discretion to award more to high performers.
Experience may advance his concerns about employers offering unlimited leave. “They claim they are pro employee health and pro time off but they actually make zero commitment to it,” Mr. Sweeney said.
Kate Kelly Contribute to the preparation of reports.