Morning Coffee: Goldman Sachs wants employees to disclose their emotions in real time. The WhatsApp detectives of London’s brokerage industry
Your employer might have an annual staff morale survey, but Goldman Sachs has an “experience management platform”. They’ve partnered with a software company called Qualtrics to make the bank’s HR department part of the “experience economy”. Uising a lot of buzzwords, Dr David Landman, the global head of talent assessment at GS, has been elaborating upon what this means in practice.
In the initial stages, Goldman seemed to use Qualtrics mainly to improve their employee satisfaction surveys, but this wasn't harnessing the system's full potential. Qualtrics offers a more sophisticated version of those Smiley terminals you often see at airports to allow sentiment to be monitored in real time. There are also overlaps with Bridgewater’s “pain button” system, in which everyone is wandering round rating each other out of five like the world’s best paid Uber drivers.
The difference, though, between the Bridgewater approach and what Dr Landman is trying to build at Goldman seems to be that the Qualtrics system is aimed at optimising the employee experience, rather than operational performance. The first big application of the system was to the recent revamp of the employee benefits package (the one that increased paternity leave and provided “Paths to Parenthood”). Usually, GS does the same thing as other banks, and carries out a benchmarking survey of what other banks are offering and how the cost of that compares with the amount of money that Goldman wants to spend.
This time though, Goldman constructed a survey that asked the employees about what actually mattered to them and their families. It looks like they got some answers they weren’t expecting, because the benefits package they ended up designing is quite innovative by the standards of Wall Street. The idea is that going forward, although they will still need well-designed employee surveys (with the assistance of Dr Landman’s new “Survey Design Centre of Excellence”), Goldman are going to make more use of the real time analytics in the Qualtrics software and allow managers to pull together what’s happening in their teams at an emotional level.
It sounds quite nebulous and indeed there is a lot of fuzzy language in there, even though Dr. Landman wants to say “we’re a very data driven firm and Qualtrics has given us a lot of data to drive change”. But banking is a people business, and probably the single biggest driver of success or failure over the long term is the ability to keep employee turnover down. It’s a popular fallacy that bankers are mercenaries; people generally start looking for other jobs because they’re unhappy or frustrated, only rarely because they’ve been given a huge unsolicited offer. So it’s understandable (if ever so slightly unsettling) that big banks, whose most valuable assets leave in the elevator every day, might want to get an early warning about downward trends in happiness.
Elsewhere, another method of managing employee turnover is by suing them and following them around with private detectives. In London, moneybrokers BGC Partners and Tradition seem to be re-enacting the Credit Suisse / Iqbal Khan episode, repeated as farce. BGC is suing Tradition for poaching six of its brokers (having settled a $100m lawsuit itself in 2015 for poaching from Tullett Prebon).
There are plenty of comic touches, may of them seeming to revolve around data extracted from people’s phones. Michael Anderson, Tradition’s joint head of the London office, deleted all his WhatsApp messages on the day that the brokers resigned, except for a message sent to the headhunter involved saying “I am deleting all my WhatsApps”. The combination of this piece of (according to Tradition, coincidental) inbox management and the other WhatsApps brought into evidence saying things like “Obv don’t tell ppl...cos they would sack me...If got back” could form a useful advertisement for more secret messaging apps.
But the case basically comes down to the question that Goldman Sachs’ “experience management platform” is meant to manage. One side of this case says that Tradition made big offers to the head of their forward cable desk to act as a “recruiting sergeant”. The other side says that BGC was just “great at buying staff, useless at holding staff” and didn’t make their traders feel valued. The case goes on, but you have to think there’s a better way to go about things.
Everyone has got regulatory trouble these days – Pope Francis has criticised the management of the Vatican’s financial regulator, which got raided by the police last month. (WSJ)
And Citigroup has been fined the equivalent of $57m, the largest such fine to date, for flaws in its regulatory reporting to the UK PRA. (Bloomberg)
Which makes the $1m that Goldman Sachs had to pay the CFTC as a penalty for not being able to produce voice recordings of traders’ calls for an investigation look comparatively cheap. (WSJ)
SocGen’s regional heads of commodities financing and trade finance in Asia have both left the bank; no details, but it might be related to the recent $96m loss the bank took on trades with the now-bankrupt Inter-Pacific Petroleum (Ship and Bunker)
Citigoup have lifted Kara Wang out of HSBC to be their co-head of real estate investment banking for Asia, along with Dayday Zhou from her team (Bloomberg)
It takes quite a bit to shock Roger Jenkins, but the request by the Qatar government for a 3.75% fee on the 2008 capital investment knocked him back on his heels. (FT)
The working environment of hedge fund Doughty Hanson was described as “male dominated and financially driven” in a recent court case, although the judge did not agree that this was a mitigating circumstance or reason why its office manager might have stolen £2.7m from its petty cash and foreign exchange funds over a period of nine years. (Evening Standard)
If at first you don’t succeed … according to a database of successful and failed startup investments, it means basically nothing. Everyone fails to begin with, and people who are eventually successful try more or less the same number of times as people who never succeed – they just learn better from their failures. Alarmingly, according to lead researcher Dashun Wang, the same model is also true of their other dataset, of terrorist attacks. (Scientific American)
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