Goldman Sachs has changed the process for selecting managing directors, instituting a new schedule for bestowing the title on employees.
Goldman will name its managing directors â€" a senior rank just below the partner level â€" every two years, instead of annually, the firm told employees on Thursday in a memorandum reviewed by DealBook. The change will take effect after this year’s class is announced.
The decision alters an annual ritual at Goldman that dates to 1996. At that time, the firm intended to eventually move to a biennial selection process once there was a “critical mass†of managing directors, said the memorandum from Lloyd C. Blankfein, Goldman’s chief executive, and Gary D. Cohn, the firm’s president.
The slower pace gives Goldman more time to mull over its choices for the elite group.
“A biennial process will allow us to invest more in the managing director selection process so that it will continue to be a disciplined and rigorous exercise,†Goldmanâ€s leaders said in the message. “This will help to ensure that the managing director title remains as aspirational as it should be for our top performers.â€
In November, Goldman selected 266 new managing directors, after naming 261 the previous year.
The selection of managing directors came a day after Goldman announced 70 new partners, the smallest class size since the firm went public in 1999. Partners are chosen every two years.
Below is the text of the memorandum sent to employees on Thursday:
When Goldman Sachs began the annual selection process for managing directors in 1996, we stated at the time that we intended to move to biennial selection once we had a critical mass of managing directors at the firm. As expected, the number of managing directors at Gol! dman Sachs has grown as a percentage of our population since the first class, reflecting the growth of our business and the expansion of our global footprint. As a result, and following extensive deliberation, we have concluded that it is in the best interests of the firm to move to biennial selection of managing directors after the 2013 class is announced.
A biennial process will allow us to invest more in the managing director selection process so that it will continue to be a disciplined and rigorous exercise. This will help to ensure that the managing director title remains as aspirational as it should be for our top performers.
The selection and development of leaders at Goldman Sachs remains at the heart of our culture and is fundamental to our success. The value proposition of a long-term career at the firm is as compelling as ever, and we are confident that we will continue to attract, train and develop a strong pipeline of managing director candidates in the future.
We are prou of every class of managing directors we have selected since 1996. We look forward to welcoming the class of 2013 at the end of this year, and the following class in 2015.
Lloyd C. Blankfein
Gary D. Cohn
