Morning Coffee: Goldman Sachs dad claims to have been unfairly deprived of $5m. One third of junior bankers just don’t have enough drive

Employment disputes shouldn’t end up in court unless at least one person has made a bad mistake.  But when they do, it often gives us a useful opportunity to observe changing norms and to learn some important facts about the state of the industry. A current case in London, between Goldman Sachs and a former vice president in its compliance department might help us all understand where things stand on the touchy question of paternity leave.

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The timeline seems straightforward. In 2019, Goldman Sachs sent a memo to all staff announcing that parental leave would be the same for all Goldman employees, irrespective of gender or caregiver status. A short while later, Jonathan Reeves took advantage of this policy, taking six months’ paid leave after his child was born. Five weeks after his return in 2022, he was terminated.

When you look at it that way, it seems pretty bad; Reeves hadn’t been identified as an underperformer in any of his previous 15 years at the firm, but shortly before his return to work, he was told he was at risk. There’s a recurring problem in banking (and in many other industries) that firm-wide policies don’t always percolate down to the operational levels, and it’s often the case that staff have rights in their employment contract which aren’t really worth anything because their line manager will punish anyone who exercises them.

That’s the basis of Reeves’ case; he is claiming that there was an informal policy at Goldman that fathers shouldn’t take the same leave as mothers, and that a female employee wouldn’t have been treated the same way. That means that in UK employment law it’s a case where compensation awards aren’t capped, and Reeves is claiming a lot; he says that when you add up lost earnings, pension contributions and a “stigma” of being fired which might have cost him other jobs, he’s owed £3.8m (US$5m). Which seems a bit high for a middle office VP, but isn’t completely out of the bounds of possibility.

But it might not be as simple as that. An alternative timeline might include the fact that 2022 was the year in which Goldman resumed its annual performance-related job cuts, having suspended them during the pandemic. A lot of people were unpleasantly surprised that year, having thought that they were doing fine when they had actually just been failing to take hints for the previous couple of years that their boss thought their performance was slipping. And the way that rank-and-yank systems work, Reeves might not have had to have been considered an underperformer in absolute terms – if he wasn’t doing as well as his colleagues in a department that had to find a headcount reduction, that would have been enough.

In any case, this doesn’t look like it’s going to be the exception to the rule “nobody walks out of an employment court feeling like a winner”. Goldman is already saying that after the redundancy, they discovered that Reeves had been covertly recording conversations, so any stigma is likely to end up worse.  But as facts come out, we might get more of a steer as to whether extended paternity leave is one of those benefits you’re not really meant to take.

Elsewhere, another area where there’s often been complaints of a marked difference between the official policy and the actual policy is in junior bankers’ hours. Although big banks appear to be settling on 80 hours as a hard limit, what is anyone realistically going to do when there’s a crunch deadline on a big deal and 79 hours 59 minutes rolls by?

If you answer “go home”, then you’re in the wrong job. As one finance professor says, “I’ve been trying to disabuse about a third of my students from going into [banking] because they don’t have the drive”.

Even the juniors agree – according to the FT, the general view is that 80 hours a week is survivable, 90 is really unpleasant, but things don’t actually get to an unsustainable level until 100 or even 120.

But that’s as long as it really is a crunch on an important deal.  Everyone also agrees that the real problem is working long hours on pointless tasks, or waiting for revisions. The really intolerable thing for junior bankers, like everyone else, is being treated as if their time doesn’t matter.

Meanwhile…

As widely expected, Georges Elhedery at HSBC is planning something similar to Citi’s “Project Tora Bora”, a thinning out of top management layers and co-heads. The trouble is that this won’t save much in the way of actual dollar costs, so everything has to depend on this business running more efficiently. (Reuters)

A profile of Bill Ackman’s turn toward politics and spicy opinions about vaccine effectiveness. Including a pretty strongly worded assessment from an unnamed ”well-known Wall Street figure” that we’d love to identify. (The Bulwark)

The 59% pass rate for the CFA Level II in May was an all-time high and probably unsustainable. It’s now dropped to 47%, although that is still above the long term average. (Bloomberg)

Not many people are in a position to assess the relative merits of stand up comedy versus being APAC head of equities strategy at Deutsche Bank, but Ben Quinlan has, and he says that comedy is more difficult, much more frightening but ultimately more rewarding. (SCMP)

Apparently, even prestigious CVs can be improved by saying you spent a while working at McDonalds and learning skills of hard work and customer service. If you want to try this, mention that they have double sided grills, so nobody actually flips the burgers. (WSJ)

It seems slightly embarrassing for both sides of the litigation over Doug Schadewald and Daniel Spottiswood that in the quarters immediately following the pair taking their “immensely profitable “trading system to Millennium, the Jane Street Indian options trading desk seems to have actually had a record quarter. (Bloomberg)

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