Even Conservative Wall Street Has Changed... Goldman Sachs Removes Vacation Policy [Jjinbit]

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The global financial sector is known for maintaining a conservative work environment. Despite many companies allowing flexible work attire, the streets where global financial firms gather are filled with office workers dressed in black suits. During the period when remote work became widespread due to COVID-19, prominent figures such as Jamie Dimon, Chairman of JP Morgan, and David Solomon, CEO of Goldman Sachs, publicly opposed remote work and consistently insisted that employees must return to the office once the pandemic ended.

However, the financial sector is changing amid labor shortages. According to the UK Telegraph and others on the 15th (local time), Goldman Sachs, a leading player on Wall Street, abolished fixed paid leave days starting earlier this month. Although limited to senior positions such as partners and directors, the company eliminated fixed paid leave days altogether, allowing employees to take flexible time off whenever and for however long they want. While flexible paid leave policies without fixed days have often existed in IT companies like Netflix, foreign media regard this move as unusual for the financial sector.

'Freedom and Responsibility' Emphasized in the Policy... Background of Introduction

Not having fixed vacation rules is based entirely on the individual employee's freedom and responsibility. It means the company supports employees in managing their own condition and taking breaks when needed to maintain work performance. Netflix CEO Reed Hastings introduced this policy by saying, "We trust the judgment of talented employees." In fact, the freedom to rest comes with the expectation that employees take responsibility and deliver results.

[Image source=Reuters Yonhap News]

The background behind Goldman Sachs' unusual decision appears to have started from internal criticism of a "dehumanizing work environment." In March last year, a group of first-year analysts at Goldman Sachs sent a survey result to management, reporting that analysts worked an average of 95 hours per week and barely fell asleep until 3 a.m., getting only about five hours of sleep, demanding changes to the work environment. With labor shortages worsening, there was concern that maintaining the status quo could lead to losing talent to competitors, prompting this measure.

For employees below the executive level, Goldman Sachs maintained fixed paid leave days but extended the duration by two days. Employees can use three weeks of paid leave annually, with a rule that one week must be taken consecutively. While this is not a groundbreaking proposal compared to other industries, it represents a slow but forward step toward improving the work environment in the financial sector. Last month, Goldman Sachs notified employees via memo, explaining that it is "committed to providing benefits that support employee well-being and recovery."

Global Accounting and Consulting Industries Also Changing

This change is spreading beyond Wall Street to the global accounting and consulting industries. According to Business Insider, PricewaterhouseCoopers (PwC), a UK-based accounting and consulting firm, announced at the end of last month that it will close its offices in the U.S. and Mexico for two weeks annually to give consultants time to rest. Usually, a one-week break is given in December, and now an additional week of vacation will be granted to all employees in July, when vacation periods tend to cluster.

Global consulting firms McKinsey and Boston Consulting Group (BCG) are also showing interest in improving work environments and expanding employee benefits by encouraging vacations and offering special bonuses. McKinsey is reportedly providing special COVID-19 bonuses worth thousands of dollars, while BCG recently provided consultants with 180,000 Marriott hotel welfare points to offer travel-related benefits that had not been available before, according to Business Insider.

Business Insider reported, "Management consultants usually found the lifestyle attractive due to frequent business trips, meeting clients in person, and extensive air travel, but with reduced face-to-face contact and remote work during COVID-19, they often worked 100 hours a week," adding, "Many young consultants are burning out and quitting."

Ultimately, changes in the work environment due to COVID-19 are transforming even the conservative culture of the financial sector. It remains to be seen whether the abolition of fixed paid leave days, following Goldman Sachs, will spread throughout the financial industry.

Editor's Note[Jjinbit] is short for 'Jeong Hyunjin's Business Trend' and 'Real Business Trend,' a corner that showcases trends in corporate management such as organizational culture and HR systems. Based on analyses from foreign media and major overseas institutions that have not received much attention, we will deliver fresh and differentiated information and perspectives.