In the midst of intense public scrutiny, Goldman Sachs' Chief Learning Officer George Parsons puts great stock in learning and development.
by Site Staff
June 27, 2010
Investment banking firm Goldman Sachs emerged from the financial meltdown of fall 2008 relatively unscathed, posting a $13.4 billion profit — a Wall Street record — in 2009. But in April 2010, the Securities and Exchange Commission filed a civil lawsuit against Goldman Sachs alleging the company sold fraudulent mortgage investments, and CEO Lloyd Blankfein was brought before the U.S. Senate to explain the company’s actions.
Such a chain of events might lead one to wonder whether Goldman Sachs’ learning and development culture could have been structured differently to have averted this outcome.
“It’s an interesting question because it presupposes that somehow the leadership internally did something to create this difficulty,” said George Parsons, Goldman Sachs’ chief learning officer. “If anything, the firm has a remarkable commitment to the preparation of all its people to function with integrity and to pay really close attention to the relationship between the firm and regulatory agencies and to be very astute about the issues regarding compliance and risk management.”
Parsons terms Goldman Sachs’ situation “a cauldron” and said it likely will bring a sharper focus to its core values.
“The recession in general, the crisis that ensued and the current circumstances have all been part of a furnace that people have gone through that has I think sharpened and deepened people’s commitment to the quality of what’s done and the integrity of what’s done,” he said.
Parsons also stressed that Goldman Sachs views regulatory oversight as good for the firm and for the industry overall.
“The firm’s attitude toward the regulatory world from my point of view has been very positive,” he said. “We’re really on the same side as the regulators because we want the financial transactions and the services we provide to be of the highest quality. We’ll get in debates about facts at times but not about whether or not the regulatory sharpening is going to help the industry.”
According to Parsons, the company has not taken a big hit on its morale as a result of this controversy.
“I think the general mood really has been hopeful, optimistic,” he said. “It helps people to remember again what really matters to them in their contribution to the firm and to their communities.”
A Client-Based Culture
In an April 2010 BusinessWeek cover story on Goldman Sachs, author Roben Farzad described working at the firm for two years after college.
“The training program was all about culture,” he wrote. “Keep your head down. Never get your name in the newspaper.” Farzad generally depicts the company as instructing its employees to be very careful about the company’s public image, saying they should “walk on eggshells.”
Parsons calls this “a bizarre interpretation,” describing the company’s culture as focused on clients, and not on being extremely careful about its image.
“It’s really not much about keeping one’s head down particularly as it is to put one’s head up and take care of one’s clients,” he said. “The focus has been on redoubling efforts to connect to one’s clients and to really paying attention to what it takes to produce day to day.”
According to Parsons, what Goldman Sachs provides its clients is simple: “good information and a constant presence.” The company’s philosophy of learning speaks to this sense of purpose.
“The most important element is the connection between the development effort and the needs of clients, the needs of the particular business or the needs of a part of the organization that serves the business,” Parsons said. “So it’s making sure that that connection is current [and] robust.”
Pine Street
Parsons manages Goldman Sachs’ learning organization, called Pine Street after the original address of the firm. Pine Street was created 11 years ago to focus on the company’s managing director population, which comprises about 1,700 of the company’s more than 30,000 global employees. Parsons leads a staff of 10 at Pine Street and said this will probably grow to 20 by the end of the year.
Parsons assumed the position of CLO at Goldman Sachs nine months ago. His own education began with an undergraduate degree in sociology from the University of California, Berkeley, followed by a degree from the San Francisco Theological Seminary. He spent six years as an ordained minister and then returned to school at the University of Oregon, earning a master’s in counseling psychology.
Upon graduation, Parsons worked as a consultant specializing in conflict counseling, eventually moving into executive coaching. He first began working with Goldman Sachs in 1999 as an independent contractor, coaching managing directors in a variety of global settings. This working relationship was instrumental in his eventual decision to join the company.
“George has been coaching our leaders for over a decade,” said Edith Cooper, managing director and global head of human capital management at Goldman Sachs. “His unique experience in counseling and organizational development has been essential to our programs.”
In designing its learning programs, Goldman Sachs tends to draw on its workforce’s inherent talents.
“We’re more likely to take full advantage of the knowledge, expertise and acumen of people already present in the firm,” Parsons said. “We run a series of programs that give people the opportunity to not only learn on the court with the help of executive coaches, but also to get involved in projects that take them out of their own business arena and link them up with others to generate results that tend to be more cross-business or cross-firm in their content. We take about 40 people every year, for example, and involve them in a leadership acceleration initiative. As part of that program, they work with a task force that is sponsored by the executive office and reports to the board of directors of the firm. They end up producing proposals that will go on to take root in the organization.”
When the company offers instructor-led training, it’s again based on internal knowledge.
“Any time a group of managing directors are pulled together for some educational event, it’s likely that the majority of instruction will be done by their colleagues,” Parsons said. “In 2009, we drew on the help of 150 internal faculty to help with our various programs, so people get the benefit of instruction that comes from colleagues who not only know the place but really know their business internally.”
A Full Grasp
Parsons reiterated that he doesn’t believe the problems Goldman Sachs currently faces will change its overall approach to training.
“I don’t think those challenges are actually changing the way we’re going about our work, but the challenges are causing us to be more reflective about the processes and how we go about our business,” he said. “Our clients understand what we do but we will continue to work closely with them to help them truly understand what Goldman Sachs is [and] how it operates.”
Parsons did specify that the company has recognized the need to foster understanding of what it does internally as well — that its financial offerings can be so complex that they’re difficult to grasp even for the employees selling them.
“This became particularly important around this whole SEC issue,” Parsons said. “There’s more of an effort going on right now to provide people with information so that they really do understand how those products work and how the firm is involved in dealing with those products.”
The Next Plateau
Parsons said the next steps in the company’s learning and development strategy include assisting those who may get stuck at a certain level of development in their careers.
“They’re a little bit more vulnerable to what I called, in my research, a proficiency problem,” he said. “They get really good at what they do in their role, and once they [do so], they’re ready to move on to their next challenge, and the firm needs to be able to help them do that. Failure to do that in any institution becomes a retention problem, and so we’re spending more time helping people understand the early warning signs that somebody is starting to plateau.”
The company then gives these individuals a leg up “to re-engage, to develop the next challenge, to expand their role in some cases or recast their role, or [to] work with senior leaders to help move them to a new position,” Parsons said. “The emphasis really has been on trying to figure out, first of all, what we’re going to need to do — future tense — to make sure that we take advantage of the talent management work at the senior level so that we are ready to really assist people as they move forward with their careers.”