Goldman’s Woman Problem Just Keeps Getting Worse

(Bloomberg Opinion) — David Solomon, CEO of Goldman Sachs Group Inc., was hoping to take a victory lap.

On Friday, the firm released his annual letter to shareholders, which he used to tout the successes of his five-year tenure: book value per share up about 50%, stock price up some 130% versus about 60% for its peer group, a quarterly dividend that has more than tripled. He proudly noted that the firm had raised more than $250 billion in alternative assets under management, beating its $225 billion goal a year early.

But the Wall Street Journal provided some serious counterprogramming, publishing just days earlier an investigation into the stalled progress of women at the firm. The article is damning. It notes that about two-thirds of the women who were partners at the end of 2018 have left the company or no longer hold the title, and that no women currently run a major division or are seen as a real candidate to at some point take over from Solomon. (A Goldman spokesman told the WSJ that “partner departures at the firm are within historical norms.”)

Then, on Monday, news broke that Stephanie Cohen, one of two women with a revenue-producing role on the firm’s 25-person management committee, is exiting to join Cloudflare Inc. The other, Beth Hammack, has already said she is leaving.

When it comes to fixing the company’s “core” businesses, Solomon took “swift, decisive action to refocus the firm’s strategy,” as he wrote in his Friday letter. But when it comes to fixing Goldman’s woman problem, the firm has not shown the same urgency. When Solomon became CEO, he claimed that promoting women into senior leadership was a priority. But now, five years later, he tells the WSJ :’Advancing women into our most senior ranks is an area where we have not accomplished our goals,’ and that the ‘longer term success’ of the firm depends on it.

This raises an obvious question: If Solomon believes diversifying the firm’s top ranks is so crucial to its success, then why hasn’t he figured out how to do so? He has the resources and the will to fix other parts of the business. But when it comes to moving women into top jobs, female partners told the WSJ that “they’ve seen little results.” 

Ariel Investments co-CEO Mellody Hobson, who is one of corporate America’s leading voices on the importance of DEI, likes to quote her husband, George Lucas — or rather the lines he wrote for Yoda — when it comes to addressing issues of diversity: “Do or do not — there is no try.”  Hobson, who is also board chair of Starbucks Corp. and a JPMorgan Chase & Co. director, has explained it like this:

“Every other thing we do gets measured. I like to say a line that I learned from a CEO: Math has no opinion. But in this area, we want credit for trying. You don’t get credit for trying to meet earnings expectations. You don’t get credit for trying to deliver the product on time to your client. You either do or you do not.”

In reading the WSJ piece, it’s clear there are several fixes that Goldman could implement: Stop passing women over for big and important positions, which is what happened to Hammack when she didn’t get the CFO job. Stop putting them in glass-cliff roles, which is what happened to Cohen when the firm tapped her to run its flawed platforms solutions division. And stop elevating men who have a tendency to undermine and diminish the work of their female colleagues — for this one, read the full article if you really want your blood to boil.

The current climate around DEI now gives Goldman cover to do even less to try to advance more women into senior management. Bloomberg News has detailed the Wall Street rollback on its diversity efforts amid blowback from conservatives and possible legal threats, and Goldman has not been immune. It has reportedly opened its “Possibilities Summit” for Black college students up to White students, and lawyers have advised senior executives to eliminate mentions of race and gender in its college recruitment programs. They’ve also cautioned against holding events for targeted groups, such as women and people of color. 

If Solomon actually wants to make advancing women into Goldman’s upper ranks a priority, he can start by treating it like a real business problem and not just an optics issue that needs to be managed. As Hobson (and Yoda) would say, it’s time to stop trying and start doing. More From Bloomberg Opinion’s Beth Kowitt:

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Beth Kowitt is a Bloomberg Opinion columnist covering corporate America. She was previously a senior writer and editor at Fortune Magazine.

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