Goldman Sachs Tells Interns to End the Late, Late Show(wsj.com)
wsj.com
Goldman Sachs Tells Interns to End the Late, Late Show
http://www.wsj.com/articles/goldman-sachs-tells-interns-to-end-the-late-late-show-1434562103?mod=e2fb
63 comments
These people are essentially on-call, on-site. There's a lot of money involved with the deals companies are trying to close and bankers are there to handhold clients throughout the entire process. They're not working the whole day but if a client or senior person wants a change to a Powerpoint deck, they're paid to turn that around quickly.
Why not just do that from home?
I think it's more than hazing. It may be some kind of costly advertizing, to show off their ability and willingness to function under that kind of stress level.
On the other hand this behavior also selects for candidates who are driven more by (the hope of) success and money, than by health, social/family life etc.
On the other hand this behavior also selects for candidates who are driven more by (the hope of) success and money, than by health, social/family life etc.
Former GS IBD associate here.
You basically have two workdays: the client-facing workday, and the preparation-for-the-next-day workday. Client-facing workday goes roughly 9am-6pm. Preparation workday goes from 6pm to anything from midnight (on a good day) to 5am (on a bad day).
During the client-facing workday you're spending about 1-2 total hours having meetings with clients, usually on conference calls, occasionally in person; the more senior you are, the more personal interaction you have with clients. The remainder of the time is spent reviewing the materials you generated the previous night, talking about what needs to be done, etc -- basically a constant planning / execution workflow around multiple concurrent streams of deliverables.
In the evening, managing directors go home around 6pm and vice presidents go home around 8pm. That's when you become really "free" to hunker down and start jamming out work. It's a lot harder to be productive when your time is hacked into 30-minute chunks the way it is during the client-facing day.
It is quite common to have nothing to do for hours at a time, both during the day and evening, while you wait for people to get back to you with further instructions on what to prepare and/or instructions for changing what you've already made. So, a 16-hour workday isn't usually a full 16 hours straight. You usually have time to go to the very nice on-site gym, for example.
The deliverables you're making are usually PowerPoint presentations with a lot of model-driven Excel outputs in them. Occasionally the underlying models are intellectually interesting, but they usually are pretty monotonous to put together....you're building something to a clear spec, and the challenge is being 100.000% certain you did it without errors, not figuring out how to do it.
To answer the question about whether you're productive working such long hours: the time commitment and the stress certainly don't foster creativity, happiness, or high productivity, but they really don't need you to be doing inspired work. At a junior level they're looking for people who can follow defined processes at a high level of throughput with a low error rate, while contributing occasional flashes of original thought -- for example, when you have to build a new model based on a unique client situation. Those situations are actually really exciting (especially when you're working on a big problem for a big client) but the flipside of the excitement is the stress around the consequences of fucking it up -- e.g., if the client just got a "bear hug" letter from a competitor expressing interest in a merger and you have to model out whether it makes financial sense.
The downside is that it's a miserable and unhealthy way to spend a couple of years. The upside is that you ride an incredibly steep learning curve and gain a ton of knowledge on valuation models, the inner workings of various industries, corporate governance, and how to run merger / fundraising / hostile-defense processes.
Hope this was helpful.
You basically have two workdays: the client-facing workday, and the preparation-for-the-next-day workday. Client-facing workday goes roughly 9am-6pm. Preparation workday goes from 6pm to anything from midnight (on a good day) to 5am (on a bad day).
During the client-facing workday you're spending about 1-2 total hours having meetings with clients, usually on conference calls, occasionally in person; the more senior you are, the more personal interaction you have with clients. The remainder of the time is spent reviewing the materials you generated the previous night, talking about what needs to be done, etc -- basically a constant planning / execution workflow around multiple concurrent streams of deliverables.
In the evening, managing directors go home around 6pm and vice presidents go home around 8pm. That's when you become really "free" to hunker down and start jamming out work. It's a lot harder to be productive when your time is hacked into 30-minute chunks the way it is during the client-facing day.
It is quite common to have nothing to do for hours at a time, both during the day and evening, while you wait for people to get back to you with further instructions on what to prepare and/or instructions for changing what you've already made. So, a 16-hour workday isn't usually a full 16 hours straight. You usually have time to go to the very nice on-site gym, for example.
The deliverables you're making are usually PowerPoint presentations with a lot of model-driven Excel outputs in them. Occasionally the underlying models are intellectually interesting, but they usually are pretty monotonous to put together....you're building something to a clear spec, and the challenge is being 100.000% certain you did it without errors, not figuring out how to do it.
To answer the question about whether you're productive working such long hours: the time commitment and the stress certainly don't foster creativity, happiness, or high productivity, but they really don't need you to be doing inspired work. At a junior level they're looking for people who can follow defined processes at a high level of throughput with a low error rate, while contributing occasional flashes of original thought -- for example, when you have to build a new model based on a unique client situation. Those situations are actually really exciting (especially when you're working on a big problem for a big client) but the flipside of the excitement is the stress around the consequences of fucking it up -- e.g., if the client just got a "bear hug" letter from a competitor expressing interest in a merger and you have to model out whether it makes financial sense.
The downside is that it's a miserable and unhealthy way to spend a couple of years. The upside is that you ride an incredibly steep learning curve and gain a ton of knowledge on valuation models, the inner workings of various industries, corporate governance, and how to run merger / fundraising / hostile-defense processes.
Hope this was helpful.
Wow, great description.
Parts of that actually seem really fun, but mainly the learning about industries and the model-building. I suspect I'd be a bad IBD intern.
(I've been talking with some people about a technology-focused turnaround firm; capital is cheap, but being able to do PE/etc. turnarounds by buying existing failing companies and replacing tech, rather than building a startup to disrupt the industry, might be interesting in certain sectors where distribution, IP, etc. really matter.)
Parts of that actually seem really fun, but mainly the learning about industries and the model-building. I suspect I'd be a bad IBD intern.
(I've been talking with some people about a technology-focused turnaround firm; capital is cheap, but being able to do PE/etc. turnarounds by buying existing failing companies and replacing tech, rather than building a startup to disrupt the industry, might be interesting in certain sectors where distribution, IP, etc. really matter.)
Very interesting, thanks for the write-up. I'm currently intensely miserable in the midst of a long string of 12-hour days, so I can't imagine what 16-hour days would do to me. But very interesting to hear what's happening in these situations.
>>Hope this was helpful.
I found it very interesting. Thank you for the write-up!
I found it very interesting. Thank you for the write-up!
It's a gut check for motivation. How badly do you want to be there? Are you willing to give almost everything for the firm?
Hazing might be a part of it but I see it more like boot camp than anything else. Weed out those who don't have the fortitude and drive. They don't want employees who value family time over the company, for example. Forcing people to work insane hours will self select for the "right stuff".
It's not about productivity, it's about cultivating a specific culture.
Hazing might be a part of it but I see it more like boot camp than anything else. Weed out those who don't have the fortitude and drive. They don't want employees who value family time over the company, for example. Forcing people to work insane hours will self select for the "right stuff".
It's not about productivity, it's about cultivating a specific culture.
They're weeding out anyone who prioritizes literally anything in their lives above money and their job, and at the same time showing those that are left that treating others as less than human is all in a day's work.
And we wonder why the financial industry keeps finding new ways to profit at the expense of others.
And we wonder why the financial industry keeps finding new ways to profit at the expense of others.
I've seen how this works at somewhat close quarters. They are expected to shadow a manager (or their mentor or somebody senior), go to meetings, take notes, prepare presentations, revise presentations, rework presentations because their boss' boss' boss didn't like it, prepare reports for that meeting at 9am tomorrow morning.
It's essentially grind work (which also includes bringing coffee/lunch or if you really are up to it, walking the boss' dog). It makes me wonder if they ever get to learn anything at all, but I guess making presentations and creating good first impressions matter a lot in the long run. But what do I know.
It's essentially grind work (which also includes bringing coffee/lunch or if you really are up to it, walking the boss' dog). It makes me wonder if they ever get to learn anything at all, but I guess making presentations and creating good first impressions matter a lot in the long run. But what do I know.
Depending on the role, the financial modeling skills learned as a junior banker are pretty much unparalleled vs any other opportunity straight out of undergrad.
I have no experience but I always figured it was similar to training in the armed forces. Put people through stressful situations to see how they perform under pressure, lack of sleep, etc.
> "set up this thing which has lots of waiting on other people or long-running processes"
It's exactly this in I-banking, from what I understand. A lot of the day is spent tweaking/waiting. Towards the end of the day, you get feedback from clients/managers, and that's when the "real work" starts.
From an external perspective, it's always struck me as horribly inefficient.
It's exactly this in I-banking, from what I understand. A lot of the day is spent tweaking/waiting. Towards the end of the day, you get feedback from clients/managers, and that's when the "real work" starts.
From an external perspective, it's always struck me as horribly inefficient.
A lot of it is ego-driven. Senior people think that because they went through it, all junior people have to go through it too. Companies feel that if they're shelling out huge money in fees that banks should be on-call 24/7. If you're responsible for a deal either from the company or adviser side, , you'd rather have it fixed before anyone notices or at least as quickly as possible. Thus the benefit of junior staff working crazy hours.
What it really sounds like is that a lot of shit work is being done all over the place. If everyone needs to be on-call 24/7 and most of their time is spent applying fixes to problems that are continually happening, something is probably broken in your organization.
Sounds like ad agencies do their work.
>"It's just hazing" is a reasonable answer
How is hazing reasonable? Most seem to find it to be an abhorrent tradition.
How is hazing reasonable? Most seem to find it to be an abhorrent tradition.
the amount of work that can be generated by a bad manager is infinite
Never worked in a bank but I believe it's a matter of being available to senior employees.
It's bootcamp for finance.
A thought experiment: you have a job that pays exorbitantly well, and you want to offer it to someone. It isn't particularly difficult, and any reasonably well-informed, self-motivated college graduate can handle it. How do you hire for that job? The demand is likely insanely high.
Spoiler alert: you create an insanely complicated funnel to weed through huge quantities of candidates. And if talent isn't the primary determiner of success (remember that the job isn't that hard), how do you distinguish people? Simple, you work them nearly to death and see who comes out alive.
I'm not saying that is exactly the situation here, but I think as a mental model it's not that far off.
Spoiler alert: you create an insanely complicated funnel to weed through huge quantities of candidates. And if talent isn't the primary determiner of success (remember that the job isn't that hard), how do you distinguish people? Simple, you work them nearly to death and see who comes out alive.
I'm not saying that is exactly the situation here, but I think as a mental model it's not that far off.
Instead of having one job pay $200,000 per year (let's say total compensation is $350,000) and require 18-24 hours a day of work, you create 2 jobs that each pay $100,000 (total compensation $175,000 each) and only require 9-12 hours per shift.
OR
You could create 3 shifts at $66,667 (total compensation $117,000 each) and have true around-the-clock coverage!
OR
You could create 3 shifts at $66,667 (total compensation $117,000 each) and have true around-the-clock coverage!
So people always bring up outsourcing part of the job to some developing country but that would run into the same problem as your third option. Having too many cooks in the kitchen will introduce a lot of operational error while having a few people who know everything about a project will run things smoother even if they are worked to the bone.
Outsourcing to some remote part of some other country, and outsourcing to some remote part of the country you live in, aren't much different.
Many large companies are able to maintain a large number of server operators and perform essential functions without needing one person to do everything. With sufficient communication you can avoid the "too many cooks" problem. I've personally lead highly-communicating teams which avoid this problem. In short what you do is put one of the 3 in charge of different work as it comes up, load balance and collaborate.
But maybe it's cheaper and easier to pay one person a huge amount of money, and beat them up, than to create a highly-communicating organization of people (including email, IM, ticket system, face-to-face time, regular meetings, bridge calls, etc). It certainly looks simpler.
Many large companies are able to maintain a large number of server operators and perform essential functions without needing one person to do everything. With sufficient communication you can avoid the "too many cooks" problem. I've personally lead highly-communicating teams which avoid this problem. In short what you do is put one of the 3 in charge of different work as it comes up, load balance and collaborate.
But maybe it's cheaper and easier to pay one person a huge amount of money, and beat them up, than to create a highly-communicating organization of people (including email, IM, ticket system, face-to-face time, regular meetings, bridge calls, etc). It certainly looks simpler.
Thank you, I'm well-aware that other large companies are able to do all these wonderful things but it really is a different beast.
I think a huge part of it is that the tools do not lend to a very collaborative workflow. Excel and Powerpoint do not exactly have a robust version control system or any great way of leaving any useful comments so that alone makes things difficult.
And honestly, it's probably around the same amount of money if not more expensive to keep a leaner crew but for the type and nature of the work, it's probably more efficient.
And don't get me wrong, there is some outsourcing going on, just not on some "well if all they're doing is powerpoint and excel, why don't they outsource the whole thing" level.
I think a huge part of it is that the tools do not lend to a very collaborative workflow. Excel and Powerpoint do not exactly have a robust version control system or any great way of leaving any useful comments so that alone makes things difficult.
And honestly, it's probably around the same amount of money if not more expensive to keep a leaner crew but for the type and nature of the work, it's probably more efficient.
And don't get me wrong, there is some outsourcing going on, just not on some "well if all they're doing is powerpoint and excel, why don't they outsource the whole thing" level.
It's probably not only easier, but the alternative requires having considerable technical expertise. GS and ilk probably identified such expertise as a massive cost center long ago and don't keep much stock in people that could actually execute such an organization.
That's not a useful solution. Consider they are trying to get 3 candidates for 1 job promotion; having 6 doesn't help it just dilutes the ability to observe. On the other hand, you now have to manage/babysit double the number of over-qualified, highly ambitious people with too much time on their hands. Thats a recipe for trouble.
Its the same logic as why PhD programs don't simply double their size when there are plenty of people with enough credentials to pass entrace exams. Its a people-management issue, and maintaining the incentives of the rank-higherarchy. It has nothing to do with talent levels.
These positions are only loosely meritocratic. The higher-order filtering is almost always based on some form of social privledge. Its not dysfunctional, at least in a litereal sense. Privledge opens doors and changes the economics (ie, productivity) of the industry materially. That is why it is selected for very heavily.
Its the same logic as why PhD programs don't simply double their size when there are plenty of people with enough credentials to pass entrace exams. Its a people-management issue, and maintaining the incentives of the rank-higherarchy. It has nothing to do with talent levels.
These positions are only loosely meritocratic. The higher-order filtering is almost always based on some form of social privledge. Its not dysfunctional, at least in a litereal sense. Privledge opens doors and changes the economics (ie, productivity) of the industry materially. That is why it is selected for very heavily.
So this is a form of "labor-theater" that signifies a job that shouldn't exist? It's just a show, a play put on, to legitimize the transfer of wealth between the privileged? You make it sound like a false-problem, a social invention where any effort to resolve it is just wasted.
There is a set of legitimate economic issues raised about the cognitive overhead of alternative selection models, etc. Its not like its all in somebody's head. That being said, the trivial view of "meritocratic" selection is not the right model to articulate. These jobs weed out people who don't have a certain level of technical competence, but technical competence (level) is trumped by the speed and consistency (of application) in many cases. Also, the ability to "avoid doing work" is a skill or a feature, not a bug or a liability. Again, this is not really going to line up with the notion of merit being who can do the "most work" at the "highest level". But it turns out one way to test who can "avoid doing needless work" is to force such a high workload that some work must by necessity be avoided. If that makes any sense. I dunno.
It sounds like you're describing the Bill Gates quote: "I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it."
To which others counter: "The lazy person will just not do the job." And you're describing something closer to the ideal of only doing the important part of the job, and being able to discern the important work from the unimportant.
To which others counter: "The lazy person will just not do the job." And you're describing something closer to the ideal of only doing the important part of the job, and being able to discern the important work from the unimportant.
If the demand is so high, why not simply lower the pay to winnow the candidate pool? Why bother with the insanely complicated funnel instead?
Because your pay is high too! If you can find people to work beneath you for cheaper, why can't they replace you for less money?
Edit: also, they do that with intern/entry-level banking jobs. Internships pay well, but it's nothing like what higher-level bankers make. Same with entry-level analysts.
Edit: also, they do that with intern/entry-level banking jobs. Internships pay well, but it's nothing like what higher-level bankers make. Same with entry-level analysts.
The senior bankers who actually bring in clients are worth their weight in gold. 0 chance anyone in a position like that is going to stick around to get underpaid while bringing in business.
Because it winnows the wrong ones. They want the extremely tenacious money-driven type, because those are the ones that will help them make billions once they work their way up—and gladly clap on the golden handcuffs as they do.
If you lower the pay, the "best" candidates get grabbed by competing firms. The funnel works because you're not just selecting a subset of people, but because you're selecting a particular group - specifically, those who are willing to give the firm a better share of the organizational rents.
Well it's already $0 in some situations, so... charging people to be interns? You just might have a future in finance.
The funnel is not that complicated; it's set up to find the people who are willing to make any amount of personal sacrifice to make huge amounts of money. Those are the people they want to be future Managing Directors. Startups that have insane working hours are doing the same thing.
Just a note that a policy to head home at midnight doesn't end the late, late show. It institutionizes it. Midnight is not a reasonable time to leave work.
So interns are expected to stay out of the office from 12am to 7am on weekdays. That's great... Now they're only expected to be there 17 hours a day! But, during those off hours, does that mean that they can remote in and still work?
on weekdays.
Very sneaky, Goldman. I guess weekends are wide open to work as much as needed, right? Gotta prep that big PowerPoint for Monday morning's meeting.
This all reeks of polishing the optics and nothing to do with treating their interns with any respect.
Very sneaky, Goldman. I guess weekends are wide open to work as much as needed, right? Gotta prep that big PowerPoint for Monday morning's meeting.
This all reeks of polishing the optics and nothing to do with treating their interns with any respect.
As of about a year ago GS IBD analysts and associates are required to be out of the office from 9pm Friday to 9am Sunday unless they are granted specific permission to work extra hours by the head of the group.
It is stupid that the new rule makes people go home from midnight-7am. It would be a lot more aligned with the working hours of investment bankers if that were changed to a 2am-9am embargo. However, the optics would probably look bad; "midnight" sounds a lot more wholesome than "2am". So instead, summer analysts are going to have to be waking up at 5:30 or 6 to make it in by 7am sharp, which is going to absolutely suck for them.
It is stupid that the new rule makes people go home from midnight-7am. It would be a lot more aligned with the working hours of investment bankers if that were changed to a 2am-9am embargo. However, the optics would probably look bad; "midnight" sounds a lot more wholesome than "2am". So instead, summer analysts are going to have to be waking up at 5:30 or 6 to make it in by 7am sharp, which is going to absolutely suck for them.
So what exactly do they do there for so many hours a day? I'm having a hard time imagining anyone doing anything productive for that long.
Investment banking is all about dealing with other people's money and the customers usually are pretty demanding when it's well, about their money. From what I hear from my investment banker friends a lot of the day is spent socializing and going on client meetings, lunches, dinners to satisfy the relationship and then usually back to the office to do the 'actual work'. It's a lot of hard work but that's why these guys get paid $200-300k soon after joining.
Investment banking is about helping companies raise equity, debt and engage in M&A, not dealing with other people's money (maybe your friends were in wealth or asset management, which sometimes sit within the investment bank?)
Having been a junior banker myself (and with friends at most banks across wall street) I can tell you that virtually no one is being taken to events or spending days socializing as an intern, let alone as an analyst or associate. You spend your days preparing pitchbooks (to pitch companies on why you should be the bank representing them), building financial models and putting together management presentations (in addition to any one-off requests your senior people or the client have). Can go into more detail but it's covered pretty well in comments above.
(Also there's no such thing as shadowing a manager in investment banking - just doesn't exist. There are mentorship programs that the banks run, but the vast majority of the time they consist of getting coffee at most once a month)
Having been a junior banker myself (and with friends at most banks across wall street) I can tell you that virtually no one is being taken to events or spending days socializing as an intern, let alone as an analyst or associate. You spend your days preparing pitchbooks (to pitch companies on why you should be the bank representing them), building financial models and putting together management presentations (in addition to any one-off requests your senior people or the client have). Can go into more detail but it's covered pretty well in comments above.
(Also there's no such thing as shadowing a manager in investment banking - just doesn't exist. There are mentorship programs that the banks run, but the vast majority of the time they consist of getting coffee at most once a month)
I think your response is way too literal. junior people routinely sit (quitely) in higher-level meetings so mid level people don't need to regurgitate stuff. They also spend alot of time developing lower-level social networks so they can function and get stuff done (doesn't need to be socializing with ceo). and all investment banks are (essentially) dealing with other peoples money unless they are prop trading, which is of course not how actual ipos are financed. etc.
... They don't put the interns out there schmoozing with the customers.
Even if they adhere to this new rule that's still 17-hour days. Does not sound balanced at all to me. I assume these guys work the weekends so it's a 119-hour workweek.
If Britain hadn't opted out from the EU's Working Time Directive, it would be illegal.
https://www.gov.uk/maximum-weekly-working-hours/weekly-maxim...
https://www.gov.uk/maximum-weekly-working-hours/weekly-maxim...
Investment banking is a religion or something. Long hours of repetitive supplication and devotion wins the day.
But then again I do find that what clothes I'm wearing does affect my code. When I wear a bowtie, for instance, I find I use more curly-braces! (facepalm).
But then again I do find that what clothes I'm wearing does affect my code. When I wear a bowtie, for instance, I find I use more curly-braces! (facepalm).
It's behind a pay wall. Not fair to make submissions many people can't read. All content I get on HackerNews should be free to read without an implication of paying to join the discussion.
The Irish Times allows current articles to be read publicly but anything that gets archived (a few days old) must be payed for to be read. I prefer and pay for this model - would be nice if WSJ adopted it.
The Irish Times allows current articles to be read publicly but anything that gets archived (a few days old) must be payed for to be read. I prefer and pay for this model - would be nice if WSJ adopted it.
https://www.google.com/search?q=Goldman+Sachs+Tells+Interns+...
Visiting via google removes the paywall.
Visiting via google removes the paywall.
This is a good thing. There may be some work piling up as a result of this but it's not like analysts are lacking for hours in a day to get work done. Since these changes are well-publicized, senior people will have to abide by them and clients will hopefully be more understanding on increased turnaround time.
Note that the curfew (seemingly) does not apply to full-time employees, so a fresh grad could be working the night shift.
Herd mentality.
An entire summer of 17h days is difficult to imagine as a productive way to work.
"It's just hazing" is a reasonable answer, but surely that would create a market opportunity for some alternative entity, or at least would mean the hazing has to be limited in duration.