What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences
Steven G. Mandis
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In What Happened to Goldman Sachs, Steven G. Mandis uncovers the forces behind what he calls Goldman’s “organizational drift.” Drawing from his firsthand experience; sociological research; analysis of SEC, congressional, and other filings; and a wide array of interviews with former clients, detractors, and current and former partners, Mandis uncovers the pressures that forced Goldman to slowly drift away from the very principles on which its reputation was built.
Mandis evaluates what made Goldman Sachs so successful in the first place, how it responded to pressures to grow, why it moved away from the values and partnership culture that sustained it for so many years, what forces accelerated this drift, and why insiders can’t—or won’t—recognize this crucial change.
Combining insightful analysis with engaging storytelling, Mandis has written an insider’s history that offers invaluable perspectives to business leaders interested in understanding and managing organizational drift in their own firms.
organizational and environmental factors. So what happened at NASA was not drift in the way Snook defines it because drift detaches outcomes from people’s action which is different than Vaughan’s normalization. From a personal communication with Vaughan, 2013. 19. Vaughan, The Challenger Launch Decision, 55. 20. Vaughan, The Challenger Launch Decision, 42. 21. Vaughan, The Challenger Launch Decision, 238. The compartmentalizing, divisive effects of rapid organizational growth are also evident
height of its earning power and prestige. But I felt that, in some weird way, I was mourning not only the loss of the man who had embodied Goldman’s values and business principles, but also the change of the firm’s culture, which had been built on those values.2 Chapter 1 What Happened GOLDMAN IS GOING STRONG” DECLARED THE TITLE OF A Fortune article in February 2007. “On Wall Street, there’s good and then there’s Goldman,” wrote author Yuval Rosenberg. “Widely considered the best of the
analysts and associates sat were right next to the partners’ offices, and they worked directly with the partners and shared assistants. In fact, some partners tried to sit in cubicles to make themselves more accessible and approachable. They abandoned this approach because the partners had so many meetings with so many people it distracted the junior people around them. Also, the junior people who sat next to the partners felt their personal lives and comings and goings were becoming too
peers that went public, Goldman tried to remain a “partnership,” even if the partners didn’t fully recognize or understand its intended and unintended benefits. For example, Goldman created the Partnership Compensation Plan (PCP). The program retained biennial public partnership elections and gave the elected partners (internally referred to as PMDs, or partner managing directors) financial and social prestige preferences over nonpartner managing directors (MD-lites). In the original idea of the
calls (and relying on “big boy” letters). The law is the standard that allows Goldman to maximize its business opportunities. Consider a hypothetical example of a conflict and its resolution. A bank owns a position in company X through its private equity arm, and another client, company Y, now asks the bank to help it buy company X. The bank is in a potentially conflicted position. Its client, company Y, wants to pay the lowest price for company X. The bank’s private equity business manages