There was a time in goldman sachss history when

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There was a time in Goldman Sachs’s history when bonuses were very subjective. At the end of each year, your manager made an assessment based not just on how much business you’d brought in, but also on how good you were for the organization. These two factors combined indicated your true economic value to the firm. But from 2005 until the present day, the system has become largely mathematical: you were paid a percentage of the amount of revenue next to your name. In some years, it would be 5 percent of that revenue; in better years, it would be 7 percent. So, if you brought in $50 million in revenue in a good year, and you were senior enough (VP level and above) to be tied to this formulaic system, you could, in theory, get paid $3.5 million. The problem with the new system was that people would now do anything they could anything —to pump up the number next to their name. Traders and salespeople, even very young ones, were learning from the bad example set by leadership. Watching the poisoning of young minds really began to weigh on me. During my eleven years as one of the captains of Goldman Sachs’s recruiting effort at Stanford, I had met thousands of the best and brightest undergraduates who would become the future of the firm. There was always something very special about the recruiting process for me, about bringing new blood into a place that I cared deeply about and believed in. Someone had done it for me, when I knew nothing about finance; they saw some potential in me and looked out for me. And now I, in turn, relished doing it for people I believed in. It was extremely rewarding to be on the giving end of this relationship. Experienced investment bankers often talk about how young people—especially summer interns and analysts who have just graduated from college—bring a sense of renewal and exuberance to the trading floors when they arrive, conveying a fresh spirit of idealism to the rows and rows of tough Wall Street veterans. I felt this was no longer the case. Now, first-year associates were seeing their bosses, the MDs and partners, fighting over GCs. Over time, this corrosive behavior had filtered down through the system. Associates started believing they should be doing the same thing, because that’s what their leaders were doing. I must have had to referee at least ten disputes between associates who were trying to increase their share of GCs relative to those of their colleagues. When I was an associate, I wasn’t even set up in the system to receive GCs, because they weren’t a focus at the firm yet. Now associates saw GCs as the absolute yardstick for the size of their end-of-year bonus. A typical associate fight went like this:
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ASSOCIATE 1 : “I really think I deserve seventy-five percent of XYZ client’s GCs. I’ve been doing far more work than you, and the client loves me.” ASSOCIATE 2 : “Nah, I’m the client’s go-to guy for derivatives. I think it should be seventy-five percent the other way—in my favor. Back off.” Goldman Sachs teamwork had gone out the window. In most of these situations, I would encourage
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