The telephone call lasts just a few seconds. The words “congratulations, you’ve become a partner,” are just about all Goldman Sachs chief executive officer and chairman Lloyd Blankfein will have time to say to the 85 or so banking high-flyers he will call tomorrow to invite into one of the most prestigious and lucrative cliques on Wall Street.
It is a day of huge expectation for individuals spanning time zones from Sydney to New York who are waiting to hear that they have been given a position for which there is no job advertisement and no interview.
The whittling down of the candidates was under way last week in Goldman Sachs’s head office in New York. Stretching across several days, a team of partners led by London-based Michael “Woody” Sherwood were deciding upon whom to bestow the glittering title of Goldman Sachs partner.
The decision comes at the end of a thorough, secretive and sometimes brutal decisionmaking process that happens only every two years. This year’s deliberations began in the summer and include the selection of managing directors, one rung below partnership.
With the title of partner comes prestige that is arguably unrivaled in the financial world. It also brings vast wealth in the form of a partnership bonus pool that pays out millions of US dollars each year. It also opens the door to high-profile career moves: former US secretary of the Treasury Hank Paulson was in the golden circle, as was one-time BBC chairman Gavyn Davies. Annual payouts can reach tens of millions of US dollars — each — on top of annual salaries which are thought to start at almost US$1 million. Blankfein, for instance, took home more than US$16 million last year, according to Forbes, and received US$68.5 million in 2007.
To be selected, candidates will have survived a process known as “cross-ruffing,” a term borrowed from the card game bridge. Insiders describe it as a rigorous cross-checking procedure that involves teams of Goldman partners interviewing each other about potential candidates.
The individuals being cross-ruffed should, in theory, be unaware that their strengths and weaknesses are being scrutinized. They are not interviewed.
However, in reality, the hierarchical nature of the firm means that anyone with any ambition will be aware they are next in line for promotion, and William Cohan, a former US banker who authored a book about Goldman called Money and Power, said the partnership selection procedure was “an incredible endurance test on one hand and incredibly anxiety-inducing on the other.”
The Goldman hierarchy is rigid. Graduates are hired as analysts while business school graduates come in as associates. The next rung is vice president — the level attained by disgruntled former employee Greg Smith, who has just written a book about the hard-nosed culture of the bank — which is known as executive director in London. Then comes managing director — there are hundreds of them — and ultimately the role of partner managing director, the highest level in the firm.
Sherwood, a partner since 1994 who can still recall the brief, but crucial, call he took 18 years ago summoning him into the elite group, describes how partners are given the job of interviewing their fellow partners to discuss candidates put forward by divisional heads. The partner selected to cross-ruff is always drawn from another part of the firm, possibly even in another part of the world.