Back in May, we reported that there was a bit of tension between some growing first year analysts and higher-ups at Goldman Sachs. The issue was that the li'l fellas, antsy to leave the nest, were making arrangements with private equity firms and hedge funds for the following year, when they still had a little more than twelve months left until their two year commitment to GS was complete. And while Mama Lloyd and Papa Gar want nothing more than to see their babies succeed, they also felt like the kiddos were jumping the gun a little bit (and were in violation of the rule that when you live under their roof, you play by their rules, namely that no analyst shall take part in recruiting until six months from the time they’ve finished the two year program). To set an example, a bunch of particularly bad analysts were kicked to the curb and while it probably did put the fear of God into the others, who've remained on the straight and narrow ever since, it didn't make anyone very happy. So now this is happening:
Goldman Sachs is doing away with two-year contracts for most analysts hired out of college, according to communications reviewed by The Wall Street Journal and confirmed by a Goldman spokesman. Analysts also won't get bonuses for completing the program, which has been around for a quarter of a century and has been viewed as a meal ticket to a lucrative Wall Street career.
The New York company's decision came after executives grew frustrated that many graduates weren't staying with the firm after completing the two years, and after Goldman fired a handful of analysts over the past year for signing on to work at other financial companies in violation of their contracts. Goldman has been reaching out to employees over the past two days to inform them of the changes, which will take effect for analysts who will start in 2013. "We think the historic two-year program is no longer the best approach for hiring and developing the careers of analysts in our banking and investment-management divisions," said the Goldman spokesman. "Making this change allows us to emphasize the longer-term career opportunities available at the firm."
No more fighting, no more sneaking around, no more need for anyone to put their foot down. If you want to leave after a year (or sooner), if you think you're grown up enough to make it out there on your own, by all means, go. That's your call and no one's gonna stop your or beg you to reconsider.* But if you decide you want to stay, be it for two years or twelve or twenty, Gary Cohn's thighs appreciate your commitment to the firm and look forward to working with you one day.
*It's a mistake, of course, but it's yours to make.