Goldman staff to be paid for best behaviour

Tim Wallace
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TOP INVESTMENT bank Goldman Sachs has joined the industry’s drive to clean up behaviour and show a more considerate, less greedy side to the sector with a new business standards report published yesterday.

The firm’s reputation took a series of blows following the crisis, including when a former employee published a book alleging Goldman Sachs’ staff called clients “muppets” in internal conversations.

Staff will now have to run products through more layers of management before selling them to clients in a new effort to improve service, will see their bonuses based partly on good behaviour as well as financial performance, and will face additional public scrutiny as more information is published about their activities.

Extra scrutiny from senior staff is now given to transactions where clients can lose or gain large sums; markets may be moved significantly; where large hedges are required; where public filings are needed; and when clients are making substantial financial commitments.

The report involved chief executive and chairman Lloyd Blankfein, 450 partners and 1,900 managing directors as well as tens of thousands of hours to plan and around 100,000 hours to implement through enhanced training sessions, the bank said.

“We’re a great believer, as a firm, in individuals and judgment and how important it is to fill jobs with the best people,” said Blankfein, as the report was unveiled at the annual shareholder meeting.

“But unless you have process and stop the clocks so that people of good judgment have the time and the incentive to exercise that judgment, then you don’t necessarily benefit from their good judgment.”

The bank’s shares fell 1.2 per cent yesterday to $157.41.