Linking bonuses to diversity: can Goldman Sachs be serious?
Is Goldman Sachs going all soft and gooey on us? The bank, infamous for its supposed culture of greed and gruelling hours, plans to link senior managers' bonus payments to their success in encouraging diversity in the workplace.
The program - to be introduced in 2011 and currently being finalised after more than six months in development - has met with mixed reaction from employment experts.
It will comprise of a two-part scorecard: a self-assessment in which managers chart their own progress in promoting diversity; and a company measurement of their performance against statistics.
Goldman already uses the scorecards in the US, but the system is believed to be a first for a bank in Australia. It will apply to Goldman's 50 most senior managers and the firm will consider it when calculating bonus payments from 2012 onwards.
In an existing drive to increase diversity, the firm has established staff networks for women; gays, lesbians and mates (GLAM); and working parents. Senior bankers will be judged on their support of these groups, as well as the diversity of people recruited into their own teams.
But will it work?
If Goldman properly measures the outcomes, then its bankers will embrace the bonus-diversity link, says one recruiter, who asked not to be named. "In other words, if their bonuses depend on it, this initiative will happen."
Bob Olivier, director of Advantage Professional, applauds the Goldman move, but says it begs the question as to whether other strategies have been tried but have failed. "Is this why it now has to be mandated so mechanically?" he questions.
Greg Canavan, a financial analyst with Investment Newsletter, says the scheme sounds like a PR stunt. "Using non-financial outcomes to deliver bonuses may or may not lead to better outcomes for the company," he adds.
Will similar bonus policies be embraced at other banks in Australia? Perhaps, but only if firms avoid using prescriptive quotas to measure the success of diversity performance.
Kym Woolf, senior consultant, Bradman Recruitment Group, says that if diversity is enforced via quotas, there will be question marks about whether every woman or GLAM member in a senior position has really earned a promotion on their own terms.
"We still hold the belief that the best person gets the job. Gail Kelly hasn't headed up two of our biggest banks because she is a woman," comments Woolf.
Olivier adds: "I don't really favour quotas as it can lead to decisions, or the perception of decisions, being based on those criteria alone. This will not help the diversity cause and will give less capable males an excuse or a reason for resentment."
