No matter what you think of Goldman Sachs, there's no denying that the bank has become the main, if not sole innovator on Wall Street when it comes to workplace policies. Goldman was the first big bank to enact a protected-weekend-day policy, the first big bank to enact a no-working-past-midnight policy (for interns), the first big bank to revamp its promotion policy, and the first big bank to modernize its performance review system. And now, it's become the first big bank to radically alter the way it interviews entry-level candidates.
This past Thursday, the firm announced it will no longer hold face-to-face interviews with undergraduates looking for full-time jobs and will only accept video interviews from undergrads—videos that applicants will record themselves using a certain software program and then upload and send along to Goldman.
The idea is to open up the recruiting process to a broader array of candidates with varying backgrounds. By using technology, Goldman is hoping that it can screen for young bankers who are a better fit for the firm and thus more likely to stay longer instead of defecting to a private equity fund or start-up after a few years, which has become the norm.
“Leveraging technology will enable you to get to more places,” said Edith Cooper, the global head of human capital management at Goldman Sachs, during a conversation with reporters on Thursday. “It doesn’t limit us to the number of human beings we have in the recruiting organization.”
Indeed, one of the problems Goldman and other top Wall Street firms have been facing in the advent of the technology age is the fact that top college graduates are increasingly foregoing careers in investment banking and instead opting to join the sexier and more lucrative technology industry, start-up world, or, to a lesser extent, some of investment banking's sister industries: venture capital, private equity, and hedge funds (to that end, VC and PE are still rather warm, if not hot industries to enter, but hedge funds are in a deep freeze as of late, due to extremely low, to no, investment returns).
And so, "better fit" means, in part, "more apt to settle for a career in banking." It also means getting young people with a true interest in banking, not just young people from top schools who aren't too sure what they want to do and figure they can make a lot of money and get some good training in the process and so why not take a job at a bulge-bracket bank and then later figure it out. (Note to candidates: the "Why banking?" interview question is not one to take lightly; it's also one sure to appear in Goldman's new video interviews.)
And to find students that "fit better," or at least to find more of them, Goldman will be using the videos to help them look beyond their core schools, that is, outside of the couple dozen elite schools from which it and other top banks have been getting the bulk of its bankers and traders for the past 25 years. Which could mean in the very near future no longer will a crazy high percentage of banking professionals have degrees from the Ivy League, Stanford, MIT, Duke, Chicago, and a handful of top state universities like Michigan and UVA, but instead there will also be plenty of bankers and traders who've graduated from schools from the SEC, Big 12, Big East, MAC, and WAC as well.
There's also the issue of cost savings. Since it isn't free to send scores of bankers away from their desks and away from their work (and thus away from making money for their employers) to conduct interview after interview at various campuses, video interviews will not only get candidates that "better fit" but they will also reduce the costs involved in recruiting new employees.
In addition, Goldman believes/hopes/predicts the new video system will reduce human bias and thus human error.
The move … seek[s] to eliminate the likelihood that an interviewer chooses a candidate based on traits they share, such as college athletics or extracurricular activities, executives of the firm said Thursday.
“We’ve created a process to create consistent rigor,” Edith Cooper, global head of human capital management, said in a briefing at the bank’s headquarters. “We’re trying to take out an individual’s assessment of talent.”
Although actual human beings from Goldman will still be watching and assessing the videos, it appears that the assessors will be HR/recruiting professionals as opposed to bankers and traders. Which could, according to some (human) insiders, cause more error.
Here's former Goldman banker turned Bloomberg columnist Matt Levine on the move away from "the usual process of sending a bunch of Wharton alumni back to Wharton to hire the coolest guys from their frat":
[A]s someone who did a lot of interviewing, I am inclined to trust bankers more than human resources executives to pick the best future bankers, though I bet the HR people would disagree. Who will ask the "tell me how to build a DCF model" questions now?
In any case, the move by Goldman (which doesn't include MBA recruiting yet) is an extremely bold one, and where Goldman goes, the rest of Wall Street typically follows (most other big banks now also have protected weekends, among other new workplace policies, thanks to Goldman). And so, you can expect that firms like J.P. Morgan and Morgan Stanley and Credit Suisse and Citi will be closely following the results of Goldman's new recruiting efforts, which begin July 1st of this year, and perhaps will be copying them video-recorded word by video-recorded word soon enough.
More widely, and perhaps more importantly, given that Goldman is still one of the most desirable employers to work for in North America, it'll be interesting to see if and when companies in other industries begin to adopt similar video interviewing efforts in lieu of campus recruiting.
And, if I were to bet, I'd wager that, given that video interviews makes such economic sense and that initial interviews of entry-level candidates have become so standardized and similar (which firms don't ask for your strengths and weaknesses, about your teamwork skills, to tell about a time you had to deal with conflict, etc., etc.?), on-campus recruiting efforts could be a thing of the past in the very near future, with video interviews, in place of first-round interviews, becoming as ubiquitous as Facebook, LinkedIn, and Instagram accounts.
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About 16 months ago, I posted a blog entitled, An Open Letter to Wall Street Recruiters: What Junior Bankers Really Want. In it, I suggested that investment banks, in their efforts to better their offerings to entry-level employees, shouldn't focus on increasing salaries and bonuses as much as on increasing job responsibilities, including:
More deal experience and better deal experience.
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