Unlimited vacation is a classic Goldman trade

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David Solomon Chairman and CEO, Goldman Sachs speaks at the 2022 Milken Institute Global Conference in Beverly Hills, California, U.S., May 2, 2022.

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NEW YORK, May 17 (Reuters Breakingviews) - Goldman Sachs (GS.N) rarely ends up on the wrong side of a transaction. The Wall Street firm’s offer of unchecked time off for senior staff, and two days’ extra vacation for the rest, is a classic example of giving a little, and getting more back.

Unlimited vacation is rare in high finance but getting more common elsewhere. Around 7% of companies now offer it, according to an upcoming survey from the Society for Human Resource Management. Proponents include Netflix (NFLX.O), IBM (IBM.N) and General Electric (GE.N). For Goldman, it’s a way of softening the edges of a company whose Chief Executive David Solomon has called working from home an “aberration.” read more

Generous as they sound, these policies can in practice favor the employer. For starters, an extra day off doesn’t impact cash flows like increasing a salary would. And the employee is unlikely to take extra days if doing so might incur the judgement of peers. A paper by Shlomi Boshi, now an executive at Stripe, describes an experiment where chocolates were doled out to passersby. Those told to take no more than three ate on average 1.9 chocolates; those given free rein ate just 1.1.

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The idea of time off for senior Wall Street bankers is particularly nebulous. Clients call when they want to call, and pay is strongly linked to performance. Partners are equity holders too. The less work they do, the less well the shares perform. This isn’t a secret, and Goldman’s stock is already down 20% so far this year.

There’s much about Goldman’s policies that are sincere. Staff are expected to take 15 days a year, at least, which creates a floor for workaholics. And the firm has been rolling out more generous leave programs for those dealing with personal matters. Junior staff, some of whom earlier protested about 95-hour working weeks, will get a fixed but extended vacation allowance. That’s probably a better deal than their superiors are getting.

The incentives to work as hard as possible make it likely the firm will still benefit more than its employees. And in giving up very little, Goldman is also, classically, reading the changing job market. Unhappy employees have fewer options than they did a year ago, with the markets sliding, cryptocurrencies collapsing and inflation closing in on double digits. As the job market normalizes read more , elite employers can afford to be just human enough, and no more.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

CONTEXT NEWS

- Goldman Sachs is offering senior managers and partners flexible vacation time without a fixed entitlement, according to an April memo seen by Reuters on May 16. Other staff will get an extra two days on top of their current allowance.

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Editing by Lauren Silva Laughlin and Sharon Lam

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