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Hazing at Goldman Sachs

The Goldman Sachs booth on the floor of the New York Stock Exchange
Getty Images
The Goldman Sachs booth on the floor of the New York Stock Exchange

There is perhaps no more telling detail about what kind of person works at Goldman Sachs than the story of the Memorial Day weekend meeting William Cohan relates in his book "Money and Power."

A group of newly recruited investment bankers, fresh out of the nation's top business schools, were summoned to a conference room at 5 p.m. on the Friday before Memorial Day. The partner who summoned them did not tell them what the meeting was about—a fairly standard practice at Goldman , where junior employees are often kept in the dark until the last moment. No doubt the young recruits expected that they would be working on a new deal that absolutely had to get done over the holiday weekend.

No doubt each of these young investment bankers had plans for the weekend. Most likely they were going out of town, probably to a share house in the Hamptons. By summoning them to the meeting at 5 pm, the partner was effectively issuing an order for them to cancel their plans—without going through the courtesy of actually saying, "You'll have to cancel your weekend plans because our client needs us over the weekend." At Goldman, that kind of ordinary human courtesy is typically absent.

This alone would be bad enough. But the famed Goldman culture is, all too often, merely an ecosystem of subordination. Every aspect of a junior employee’s life is expected to bend to the needs of the company. This creates a moral poisoning of Goldman employees that is, at some level, the cause of the willingness of employees to brag in their self-reviews about screwing clients out of information before allowing them to engage in a profitable trade.

It gets worse. As Cohan tells it, the partner who issued the order to meet at 5 p.m. did not show up until 10 p.m.

What had kept him?

Nothing at all. He told the group that the wait had been a test to see whether they had "the right attitude."

Three of those summoned had left during the intervening hours. They were promptly fired.

Of course, Goldman fired the wrong guys. The sadistic partner should have been fired. This is simply not how a decent human being behaves.

This kind of abuse is an indictment of the partner's character.

The employees who stayed did not display anything like intelligence or character. They displayed a willingness to subordinate themselves to the unexplained and unreasonable demands of Goldman partner. They behaved not as men, but as moral sheep. And this, according to the Goldman partner, is "the right attitude."

This is a little unfair to Goldman, of course. Similar things go on at every investment bank and law firm.

But let's be perfectly clear: it's wrong everywhere. And those three guys who walked out of the fictional meeting are far, far more admirable men than their counterparts who waited for the partner.

(Hat tip: Kyle Stock at Fins.)

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