So, Goldman Sachs has increased pay for its first year technologists (with masters qualifications and more) to £98k ($128k), up from £67k last year. I'm sure Goldman's young engineers are thrilled. However, as someone doing a technology job at VP level for a rival bank I have no idea why they did it.
Firstly, increasing pay for juniors raises a clear question as to what you're going to do for everyone else. - There are going to be technology vice presidents (VPs) at Goldman who've come up through the graduate process and who are on less than £100k in base salary. Add in a standard bonus of £20k and you're looking at total comp of £105k-£110k. So, now those first year graduates are now earning nearly as much as them. Is Goldman going to rebase pay across its technology function to maintain the differentials?
Secondly, for all the talk of competition for technology staff, I don't see much hiring happening in finance now. The only banks that have significant numbers of tech roles open in London seem to be Goldman Sachs, JPMorgan and Citi. Morgan Stanley has none (check on their website if you don't believe me). The battle for technology talent between banks isn't quite as aggressive as you might think.
Nor is it true that banks are being assailed by technology companies. The broader technology recruitment market has cooled. Google, Facebook and Amazon are suffering from reputational damage - idealistic graduates who want to change the world appreciate that the integrity of big technology companies is as impugnable as that of banks. Those graduates could always join a start-up promising moral probity - except that venture capitalists are going into in risk-off mode, which means more start-ups failing this year and next.
In the circumstances, it seems Goldman is being unnecessarily generous. Why hike pay across the board when you have no idea which graduate hires are good and which are bad? Why alienate all the graduates you hired in previous years, plus your VPs who already feel underpaid in terms of base salaries? Sure, keep your people, but you could have done that with a 10% increase in salary. Trust me, they would have been just as happy and you would still have been ahead of the street.
Albin Pajak is a pseudonym
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