When Goldman Sachs, the investment bank known for its demanding culture, recently told its senior bankers they could take as much time as they wanted, the policy change immediately catapulted it into the ranks of the most employee-friendly companies in the world. USA.
Managers should “take the vacations they need to be able to continue to work hard, be competitive, function productively, but take care of their families,” David M. Solomon, CEO of Goldman, told CNBC.
But the bank’s move hasn’t drawn much applause in a place where employees build their careers by being available to customers anytime, anywhere. Goldman, in particular, has long prided itself on that ethos, so much so that its leaders rarely use all of their holidays and often forget about out-of-office messages. Some have even been known to take satellite phones on vacation.
“It sounds psychologically reassuring, and it’s part of Goldman’s cultivation of a nicer, softer image of Goldman,” said Mike Mayo, a banking analyst at Wells Fargo. “The reality is it’s not going to make any difference. It’s like telling a restaurant owner that he can have unlimited vacations. Will that change the way the restaurant owner works?
Some observers have been downright cynical about Goldman’s motives, calling the policy a cost-saving move. In the past, if employees had a set number of unused vacation days, the bank had to pay them for those unused days when they quit. But unlimited vacations means the bank doesn’t have to pay them anything.
“This was completely financially driven,” said Veehtahl Eilat-Raichel, CEO and co-founder of Sorbet, a company that buys unused vacation days from employees of other companies and puts the cash value on prepaid cards. Unlimited paid time off is “positioned as if it is an incredible benefit for employees, when in fact it is really bad for employees and amazing for employers”, Ms Eilat-Raichel added.
Goldman Sachs, which posted a record profit of $21.6 billion last year, said any cost savings were incidental.
“Our focus is to encourage our people to take more time off, rest and recharge,” said Bentley de Beyer, the bank’s global head of human capital management. “We are proud to join many other companies in introducing a flexible policy that requires a minimal amount of time away from the office to continue building resiliency and sustained performance.”
Unused vacation days have long posed a financial challenge for employers. When employees quit, especially top executives, with high salaries and mountains of untouched vacation days, the company often has to pay them for unused time off. It has become an even greater financial strain for businesses in recent months, given the tremendous turmoil in the job market.
The return of back-to-the-office plans
Although Covid cases are on the rise again, businesses are still trying to return to some form of in-person work, amid hybrid work models and office renovations.
The average employee in the United States has about $3,000 in paid time off at any given time, according to data from Sorbet. Employers across the country owe an estimated $272 billion in unused vacation days, Sorbet found.
Although companies like Netflix and LinkedIn have long offered unlimited vacations to employees, the option has become popular lately. In a dynamic job market, unlimited paid time off can serve as a recruiting tool and tell a potential employee that the company values employee well-being. But in practice, unlimited vacations are often more advantageous to the employer than the employee, because they are usually accompanied by a policy of removing unused days from their accounts.
Research has shown that employees with unlimited vacations often take less time off because they don’t want to overdo it or be perceived as unmotivated. A 2017 study by HR platform Namely found that workers with unlimited vacation days took two fewer days off per year on average than those with a fixed number of days off. And employers who tell workers to take as many days off as they want typically don’t have to pay them for unused vacation days.
In other words, unlimited vacations can allow employers to position themselves as caring and considerate, while reducing their own financial investment in them.
At Goldman, the new policy has irked bankers in part because Solomon has been adamant about returning to office.
Mayo, the banking analyst, said he was surprised to see how many people were working in the office when he went to Goldman’s headquarters for his first in-person meeting during the pandemic. Solomon regularly worked from the office and urged managers to show up in person, a tactic that led some senior bankers to leave the company.
Goldman managing directors and partners are typically allotted 20 vacation days or more, depending on the length of their tenure, said a company representative who requested anonymity to discuss personnel matters.
Under the new policy, more than 1,400 senior bankers will no longer have a cap on their time off, though all employees are expected to take a minimum of 15 days a year starting in 2023, according to a memo seen by The New York Times. . The 15-day provision is to provide some structure for junior employees, who will also get an additional two days off. To ensure the changes stick, the firm will monitor vacation days taken and address the matter if necessary during performance discussions, the representative said.
Senior bankers who take less than 15 days won’t get paid the rest, the person said. In 2017, Goldman had already scrapped a policy that allowed employees to carry over unused vacation time, but some longtime employees still have days carried over from previous years.
“It’s a great thing: They’re trusting their top people to do the right thing because they’ve earned their stripes, put in their time and been successful,” said Paul Sorbera, president of Alliance Consulting, a Wall Street executive. search signature.
Still, there are risks. Employees who report to “old school” managers could jeopardize their careers if they take too much time off, Sorbera said. And in an industry where working on paternity leave and scrapping vacation plans is common, change can be slow.
“You can’t just set a new policy and then the next day managers come out and crack the same whip as before,” he said.
William R. Gruver, a former Goldman partner who spent two decades at the firm, was skeptical of the unlimited vacation policy. “I don’t think they really quit the job; they will work from the mountains or the beach,” said Gruver, who served as chief operating officer of Goldman’s stock division until 1992.
Mr. Gruver likened his love of work to an addiction, but after it contributed to a marital breakdown and ill health, he left at the age of 48 and went on to teach at Bucknell University. He now he works in a think tank.
In recent years, Goldman has implemented family leave benefits. It gave 10 days off for Covid-19 interruptions, which were used by around 4,000 employees. In 2019, it expanded parental leave from 16 weeks to 20 weeks.
Goldman’s vacation benefits echo those offered by other financial firms, including BlackRock, a giant asset manager, and Bridgewater, the world’s largest hedge fund.
Long before Wall Street, the tech industry embraced flexible time off and was aware of its potential drawbacks. In his 2020 book, “No Rules, Rules,” Netflix co-CEO Reed Hastings discussed the company’s unlimited vacation policy, instituted in 2003, noting that the benefit worked best if leaders served as an example by taking leisure. .
But Robert Sweeney, a technology executive, said that when he worked at Netflix in 2011 and 2012 he was embarrassed to ask his manager for time off. Mr. Sweeney recalled a period that year when he had been working 80 hours a week to introduce a new product. When he completed the project and asked for a vacation, he said, his supervisor reprimanded him for leaving when another important deadline loomed.
In 2012, when Mr. Sweeney started his own company, Facet, which does tech recruiting, he mimicked Netflix’s unlimited paid time off policy. But he found that his employees took very few days off and many felt burned out. Eight years later, Mr. Sweeney changed Facet’s policy to offer a minimum of 25 vacation days a year, with managers giving discretion to award more to high-performing employees.
Experience has made him wary of employers who offer unlimited vacations. “They claim they’re for employee health and time off, but they don’t really commit to it,” Sweeney said.
kate kelly contributed report.