Ahead of a deadline to release gender pay-gap numbers in Britain, Goldman Sachs said Monday that it is boosting its efforts to improve diversity at the storied investment bank, setting goals for the first time for hiring black and Latino associates and saying it will tie top leaders’ pay and promotions to their progress on those goals.
In a memo to employees Monday, chief executive David Solomon said the bank was expanding a year-old goal of 50 percent female recruitment in the crop of analysts it picks from college campuses each year. It will now include in that goal people hired laterally into entry-level jobs and set goals for several diverse groups.
In addition to having women make up half of all incoming Goldman analysts and entry-level associates — representing 70 percent of the bank’s annual hiring — the bank aims to have 11 percent of those recruits be black and 14 percent be Hispanic/Latino in the Americas.
Goldman also announced new steps to address diversity within its more senior ranks, a move that comes within weeks of the deadline to report on its gender pay gap in Britain. Last year, Goldman reported that the average hourly rate for its female employees in the United Kingdom was 55.5 percent lower than the rate for men. The median hourly rate was 36.4 percent lower for women.
Those figures reflect an average or median across all jobs — no matter the role — and do not measure how the bank pays men and women who work in similar jobs and with similar experience, a comparison often known as “pay equity.” Starting last year, companies with at least 250 employees in Britain had to begin sharing what their average and median male and female employees make, a requirement that often revealed what’s known as the “position gap,” or how few women are in an employer’s top-ranking, highest-paying jobs.
Solomon said in his memo that the bank would now require two diverse candidates to be interviewed for all open roles, ask business unit heads to increase their focus on career progression and consider progress on diversity goals when evaluating senior managers’ pay and promotion.
“Experienced lateral hiring has been an important part of the firm’s growth. However, it has also been a significant contributor to the dilution of our diversity at more senior levels and we need to address this,” Solomon wrote in the memo.
He added that “to be clear, we pay women and men in similar roles with similar performance equally.” But, he noted, “we need to improve senior representation in order to change the results of these measures, and we are confident that the steps we’ve outlined will help us, over time, increase our representation of all diverse professionals at senior levels.”
Improving diversity has been a stated priority for Solomon, who formally relaxed the bespoke-suited investment bank’s dress code in recent weeks and made one of his first public appearances as CEO at Fortune’s Most Powerful Women conference last fall. He said in an interview at that conference that the firm had tweaked its recruiting process to seek out a more equal number of men and women and had improved the gender makeup of the bank’s intern class by several percentage points.
In the memo, he wrote that the bank is “nearly there” on the goal it established last year of getting to 50 percent female representation among analysts recruited on campus. The bank’s 2018 partner class, meanwhile, was just 26 percent female, though that was a record, the bank said. Seven of the 30 members of the management committee listed on its website are women.
Goldman Sachs is not among the banks recently targeted by Arjuna Capital in a shareholder campaign aimed at getting them to disclose their global gender pay gap, which Citigroup did in January. Arjuna does not invest in Goldman, said Natasha Lamb, a managing partner at the investment group.
Yet she noted that the Goldman memo showed that the British gender pay-gap rule was having a more broad effect. “I think [David] Solomon is looking to get ahead of the U.K. disclosure and illustrate what they are doing proactively,” she said. “They’re setting goals and applying incentives and being transparent about those goals. I think this is huge progress from what we’ve seen in the past from companies.”
Recruiting more women and minorities, of course, is not the same as retaining them, especially in industries such as Wall Street or technology in which women and minorities have historically left at high rates. The goals the bank announced Monday are for hiring only. The bank did say last year that it wanted women to represent 50 percent of its global talent over time, and it says it has programs in place aimed at retaining various groups.