The bank giant, hit with a gender-bias lawsuit yesterday, may not overtly discriminate against women, former Goldman exec Nomi Prins says, but the numbers tell a damning story.
Yesterday morning, my inbox filled with emails about the new Goldman Sachs sexual-discrimination lawsuit. Some asked questions—you were there, you’re a woman, what’s your take? Others revealed information. As a former Goldman managing director, let me say this: While I don’t know the three women filing the suit, I’m not surprised by it.
As with all things Goldman, it comes down to money. I never saw anything vulgar or off-colour there. (In contrast to my time at Bear Stearns, when I saw puking in London, got pawed by a client in Dubai, and learned what a “hostess bar” really was in Singapore.) Everything at Goldman was very politically correct—on the outside.
But on the heels of a $53 million discrimination suit against Morgan Stanley, these three different women, who worked at the firm during different time periods, in different departments, claim that the firm routinely undercompensated and underpromoted women.
Goldman immediately dubbed the suit “without merit,” claiming it makes “extraordinary efforts to recruit, develop and retain outstanding women professionals.”
The first part of Goldman’s defence of its practices is true—it does make efforts to recruit outstanding women professionals, I had the pleasure of hiring and working with a swath of them. I had worked at several other Wall Street firms before I was hired by Goldman, following a nine-month interview process that did not, to the best of my memory, include any women interviewers. I remember Lloyd Blankfein gesturing to the trading floor outside his office, asking me if I realised working in New York was different than working in London, and working at Goldman Sachs was certainly different that Bear Stearns. (I did.)
The “develop” and “retain” aspects are where this gets murkier. Yes, there is an internal development process, and even a mentoring initiative. There were even one-day internal seminars on diversity and discrimination where we were given scenes and had to kind of role-play what the appropriate response was to issues of discrimination or general management complaints. While I was there, the firm had an established “diversity committee.” Tellingly, it was headed by a white male—Lloyd Blankfein himself. Whether “diversity” is code for “let’s cover ourselves legally” or not, retention is the ultimate issue and Goldman’s statement neglects to say whether women have actually risen to the top in any kind of large number or proportion. It can’t, because they haven’t.
Why not? Well, either these women don’t have what it takes, they lose their talent along the way, they leave, or there’s something more Machiavellian going on.
I never worked with any of the women filing this suit, so I don’t know the specifics of the firm politics and decisions regarding their compensation and promotions. But, when I was a managing director in the Fixed Income Currency and Commodity Department, Lloyd Blankfein was its leader, and its management committee was comprised of all men. And while perhaps half of those coming into the firm were women, just 11 per cent of the managing directors/partners in my division were, myself included.
Why did my peers leave? Myriad reasons—from going to head departments at other banks to creative pursuits to leaving the field entirely. But whatever the reason and wherever they went, the attrition was far sharper among women, so that the 50 per cent ratio I saw coming into the firm (which was just for the junior analyst ranks, it was a much smaller ratio for more senior women—I believe I was the only female managing director to come into my division the year I joined) was eventually winnowed to that 11 per cent level.
The suit claims that these figures are “no accident,” intentionally implemented by Goldman “in order to pay their male employees more money than their female counterparts, and to promote them more frequently.”
Intent is hard to prove. I certainly don’t believe that the male bosses (and they were all male) secretly met, saying, “she’s a woman, so let’s pay her less.” It just works out that way, like a primal and secretive self-selection process that became more apparent as women tried to climb the internal ladder rungs. (Right now, the executive officers of the firm are all men, but one—the general counsel.)
Some have already questioned why anyone should care about this at all, given that the employees of Goldman are generally paid more than most of the rest of the world—what’s a million bucks here or there?
But when the men running these firms have been at their helms during the biggest bailout and subsidization period of the banking industry in our country’s history, it seems prudent to examine promotion and compensation patterns. As Goldman says in its last 10K report, “A substantial portion of our compensation and benefits represents discretionary compensation.”
Wall Street has a hard-fast unwritten rule about compensation: Don’t ask, don’t tell. When pay is extreme (compared to the rest of the population’s median salaries), extreme secrecy ensures discretion. And that allows patterns like this to emerge.
That’s why I admire these women for standing up for themselves. To the extent there can be a full disclosure of pay and promotion information and gender percentage, it will show a general bias. Transparency is good. Intent? That’s a tough sell.
I have been asked many times and in many interviews why I left and whether it was more difficult to be a woman in the Goldman or Wall Street world. The truth is, I left because , as I wrote in my first book, Other People’s Money, “I know exactly what I need to do to be successful here, and I have no desire to do it.” And part of that was due to the fact that I was sick of haggling with the men in my chain and the soulless pursuit of promotion and pay, and wanted my life to take another direction.
Those who stick around this male-dominated culture, however, deserve to be paid fully for it.
Nomi Prins is author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Before becoming a journalist, she worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London.
This article is re-printed here with permission from The Daily Beast.