Recruitment Set Back To "Normal"

Do you think other banks will now follow through?

WSJ: Goldman, JPMorgan Hit Pause on Intern Recruiting 'Madness'

Two Wall Street investment banks are easing up in the race to hire their most junior employees.

Goldman Sachs Group Inc. GS 2.23% and JPMorgan Chase JPM 1.76% & Co. won't interview or extend summer internship offers to college sophomores this year and will go back to recruiting students in the fall of their junior year, executives said.

It is a nod to a softer Wall Street, eager to cast off its sweatbox image to compete with perk-happy Silicon Valley. It is also an acknowledgment that a push in recent years to move up application deadlines isn't bringing in the kinds of candidates banks need as they try to diversify their overwhelmingly white and male ranks.

"We were contributing to an environment that pressured students to choose rather than to explore," said Dane Holmes, Goldman's top human-resources executive. "I want people who want to be at Goldman Sachs, not people who felt they had to say yes to an offer."

David Solomon, Goldman's new chief executive, spent his college summers as a camp counselor and, in a recent fireside chat with Goldman's summer interns, said he "stumbled into" a career in finance. "The world was not as competitive then," he said.

For students, Wall Street internships are the on-ramp to a potentially lucrative career in finance. For banks, they are the wide end of a funnel that will produce future leaders.

Mod Note (Andy): See more discussion on WSO on this topic

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Comments (32)

Oct 29, 2018

It was getting out of hand

Funniest
Oct 29, 2018

Wait, if you're a Sophomore isn't it already too late? Recruiting already opened up for 2020? This only seems like good news to Freshman, and younger (lol).

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Oct 30, 2018

If you are a current sophomore you will be able to recruit almost immediately at EBs or under the traditional timeline at GS and JPM.

Oct 29, 2018

Moelis RBC Guggenheim are officially starting recruiting this week. So I don't see the EBs following. My hunch is this is really all about diversity...

Oct 30, 2018
Stannis_B:

Moelis RBC Guggenheim are officially starting recruiting this week. So I don't see the EBs following. My hunch is this is really all about diversity...

I'm expecting the BB's will lead in pushing back their recruiting cycles.

The EBs (and MS) are the ones who pushed it to the point where banks were giving offers 18+ months in advance for internships.

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Oct 30, 2018

Just read the article. I think its so fucked now, that the EB's are probably going to stick with it...think about it. They already have the infra trained and ready to go for the accelerated timeline. When JPM started this 2 years ago, they made a huge mistake that in my eyes is not irreversible. Prove me wrong, but I went through the whole "recruiting for your 2019 internship before getting my 2018 internship" and it was hell and high water.

I doubt they will stick with it

Oct 30, 2018
sell-syde:

Just read the article. I think its so fucked now, that the EB's are probably going to stick with it...think about it. They already have the infra trained and ready to go for the accelerated timeline. When JPM started this 2 years ago, they made a huge mistake that in my eyes is not irreversible. Prove me wrong, but I went through the whole "recruiting for your 2019 internship before getting my 2018 internship" and it was hell and high water.

I doubt they will stick with it

The most ridiculous part is the kids who would get offers are the ones who already had something lined up for the upcoming summer, as I saw first hand. Easier to take the risk on a kid whose dad got him a solid seat than the kid who had 1 semester under his belt at college.

Hopefully this becomes widespread.

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Oct 30, 2018

I takes true leadership to change things. It's hard, and will be if the EBs maintain current recruiting schedules. However, what the industry has done by advancing the cycle is simply recruit less mature, less qualified candidates. Most of these students (virtually all of them who attend schools with 2 yr business programs like McIntire) haven't taken any finance classes and don't know anything about the industry other than high compensation.

Think about it like the NBA. It used to be rare if a player left college early. They were using the four yrs to grow (physically and mentally) and mature their game. Now it's rare for them to stay all 4 yrs...and quality of play (and the game) has changed drastically for the worse. The Steph Curry's are great but half these kids wouldn't have made the cut 20 yrs ago.

It will take time to see real change. Fortunately GS and JPM are leaders and many will hold out for that status on their resume. Other BBs will follow. Give it a few yrs.

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Oct 30, 2018

Right - if only Lebron, KD, Anthony Davis, etc stayed all four years then they probably could have made the cut 20 years ago

This NBA analogy is terrible

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Oct 31, 2018
rickle:

I takes true leadership to change things. It's hard, and will be if the EBs maintain current recruiting schedules. However, what the industry has done by advancing the cycle is simply recruit less mature, less qualified candidates. Most of these students (virtually all of them who attend schools with 2 yr business programs like McIntire) haven't taken any finance classes and don't know anything about the industry other than high compensation.

Think about it like the NBA. It used to be rare if a player left college early. They were using the four yrs to grow (physically and mentally) and mature their game. Now it's rare for them to stay all 4 yrs...and quality of play (and the game) has changed drastically for the worse. The Steph Curry's are great but half these kids wouldn't have made the cut 20 yrs ago.

It will take time to see real change. Fortunately GS and JPM are leaders and many will hold out for that status on their resume. Other BBs will follow. Give it a few yrs.

I thought Steph stayed all 4 years?

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Nov 1, 2018

Maybe he did, not sure. My point is there is a lot less actual talent (because of age, lack of maturity and development, etc) then there used to be. The bar has been lowered. Previously, it took a rock star to go from high school (Moses Malone) to the NBA. Now it's common place (certainly is to leave college after a yr or two) and it's not because they're that much better then their peers a generation ago, it's because the talent gap has been reduced. They're competing against other 20 yr old kids who haven't developed.

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Oct 30, 2018

0

Oct 30, 2018

As someone who uses this site as an educational resource for finance and still has several years until any kind of recruitment begins, I seriously hope this can get changed. If the current trend continued I was starting to get worried that it might have become expected for someone that wants to break into finance to start networking during end of freshman year, and that is just absurd. When I get to college I don't want to have to commit to a certain recruitment path in my first year, that defeats a large part of the reason behind going in the first place.

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Nov 3, 2018
lumber_cruncher:

As someone who uses this site as an educational resource for finance and still has several years until any kind of recruitment begins, I seriously hope this can get changed. If the current trend continued I was starting to get worried that it might have become expected for someone that wants to break into finance to start networking during end of freshman year, and that is just absurd. When I get to college I don't want to have to commit to a certain recruitment path in my first year, that defeats a large part of the reason behind going in the first place.

Agreed. Hope the best for you, youngin. If I'm still chopping wood and laying pine when you get in the game, but willing to look at a different career (commodity trading), holler at me.

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Oct 30, 2018

Pasting the article body from behind the paywall.

:

Updated Oct. 29, 2018 9:49 a.m. ET

Two Wall Street investment banks are easing up in the race to hire their most junior employees.

Goldman Sachs Group Inc. GS 2.23% and JPMorgan Chase JPM 1.76% & Co. won't interview or extend summer internship offers to college sophomores this year and will go back to recruiting students in the fall of their junior year, executives said.

It is a nod to a softer Wall Street, eager to cast off its sweatbox image to compete with perk-happy Silicon Valley. It is also an acknowledgment that a push in recent years to move up application deadlines isn't bringing in the kinds of candidates banks need as they try to diversify their overwhelmingly white and male ranks.

"We were contributing to an environment that pressured students to choose rather than to explore," said Dane Holmes, Goldman's top human-resources executive. "I want people who want to be at Goldman Sachs, not people who felt they had to say yes to an offer."

David Solomon, Goldman's new chief executive, spent his college summers as a camp counselor and, in a recent fireside chat with Goldman's summer interns, said he "stumbled into" a career in finance. "The world was not as competitive then," he said.

For students, Wall Street internships are the on-ramp to a potentially lucrative career in finance. For banks, they are the wide end of a funnel that will produce future leaders.

:

' We were contributing to an environment that pressured students to choose rather than to explore '

--Dane Holmes, Goldman Sachs Group 's top human-resources executive

Fierce competition has pushed the timetable earlier over the past few years. Last year, applications opened at many schools in winter for summer 2019 internships, meaning that sophomores--many of whom hadn't yet declared a major or taken basic finance classes--were jockeying for jobs that wouldn't start for more than a year.

"It's madness," said Barbara Hewitt, who runs career services at the University of Pennsylvania, a major feeder for Wall Street. "Everybody I talk to at the banks thinks it has moved too early but nobody has wanted to be the first to pull back," for fear of losing top candidates to rivals.

Executives at Goldman and JPMorgan, which together hire about 5,500 interns each summer, acknowledged that risk. Matt Mitro, JPMorgan's head of campus recruiting, said the bank this fall asked the National Association of Colleges and Employers to recommend that all banks move to junior-year recruiting to create a level playing field.

JPMorgan "felt obliged to follow the market" and match earlier recruiting timelines, Mr. Mitro said. "But we found it was disruptive to students doing what they were supposed to do, which is study," he said.

"We're not cops," said Mimi Collins, a spokeswoman for NACE. "Our guidance is to be reasonable and we encourage employers to work with the schools and arrive at a timeline that makes sense for everyone."

The group's recommendations aren't binding but involve input from both universities and employers and so tend to carry weight.

When Jane Hershman started in the career services office of Emory University's Goizueta Business School three years ago, students applied in the spring of their junior year for internships that summer. In 2016, the interviews crept into juniors' fall semester. In 2017, they moved into the sophomore spring--a full year before the job would start.

Last year, students were doing all-day interview marathons known as "super days" during final exams."It was a nightmare from an academic standpoint," Ms. Hershman said.

At Boston College's Carroll School of Management, some freshmen delay tougher classes that could hurt their grade-point averages, which leaves them unprepared for advanced courses later on, said Amy Donegan, an assistant dean. In 2017, enough students planned their study-abroad semesters around recruiting schedules that Boston College faced a housing crunch in the spring.

Earlier timetables and "exploding" job offers that expire within a few days have ramped up the pressure on students to commit, Ms. Donegan said. "These are 19-year-old kids," she said. "It's really hard to tell them, 'you can say no to that.'"

Tensions have risen between banks eager to get first crack at candidates and college deans trying to keep order. Boston College last year sent a letter to Deutsche Bank AG , Barclays PLC and other banks asking them to wait until final exams had ended before scheduling "super days" with students.

The University of Virginia's McIntire School of Commerce, where about a third of the school's roughly 350 graduates go into investment banking, has asked banks this year to hold off on interviewing second-year students until after spring break.

"You're just trying to set some boundaries," said Tom Fitch, head of McIntire's career services office, "without stifling students' opportunities."

Early recruiting was originally meant to reach diverse candidates who might not have considered careers on Wall Street, including women, minorities and students from less affluent backgrounds.

But the opposite happened. When banks started recruiting earlier, the most enthusiastic applicants were white men who had informal ties to finance through family or friends, people on both sides of the process said. "It began to advantage people who were already plugged in," said Mr. Holmes of Goldman.

Goldman has set a goal of having half of its incoming analyst class--the full-time positions extended to graduating college seniors--be women by 2021. Citigroup Inc. in August said it aims to have African-Americans make up 8% of its managers within three years, up from 6% today.

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Oct 30, 2018
:

Updated Oct. 29, 2018 9:49 a.m. ET

"We were contributing to an environment that pressured students to choose rather than to explore," said Dane Holmes, Goldman's top human-resources executive. "I want people who want to be at Goldman Sachs, not people who felt they had to say yes to an offer."

When banks started recruiting earlier, the most enthusiastic applicants were white men who had informal ties to finance through family or friends, people on both sides of the process said. "It began to advantage people who were already plugged in," said Mr. Holmes of Goldman.

This is great news, and primarily for the two observations listed above. We've moved our timeline up, only to end up with a less diverse candidate base and more incidents of candidates reneging on their commitment once they really figure out what they want to do.

Oct 30, 2018

I have never been a fan of the timeline moving so far forward in both banking and private equity recruiting. It's a classic prisoner's dilemma: everyone will tell you they prefer a more mature and seasoned candidate, but everyone also recognizes that failing to participate in an ever-earlier process means you run the risk of a lower payoff (worse candidates left on the market).

I wrestle with the logical inconsistency of a personal libertarian streak and the idea that 'regulation' of some sort is beneficial.

I see it at the MBA level: schools bar employers from talking to students for a certain number of months into the school year to let them get acclimated before succumbing to the pressure of recruiting madness, and also mandates minimum periods for offer expiry. This works better for all parties: the students do better, the employers get happier and more motivated interns, and the school gets more satisfied customers on both sides of the equation.

HBS, for instance, doesn't permit direct contact with students until the third week of October (roughly 10 weeks after students arrive), offers cannot be extended before the middle of January, and no offer may expire before the middle of February.

Since there isn't any one body with the power to force different firms to adhere to any standard in the context of banking recruiting, I don't see how this gets resolved. Even if the bulge brackets return to a more sensible model, you'll still have early players jump the gun. It sounds like a handful of the boutiques have already said they have no plans to change.

If I were head of recruiting at a bank, my approach would be two-fold: to run a longer interview process, and to be flexible on class size.

By standardizing the interview process where everyone has a 'sell day' on-site (similar to the screening dinners private equity firms run prior to finalizing their interview list), two phone screens, and an in-person superday of four interviews, you'd eliminate a lot of the irregularity where some candidates are getting waved through after doing a whirlwind process of a phone screen and an invitation to a superday two days later (where their superday may be eight interviews relative to someone else the following week only having five).

You'd also be able to 'batch' your interviews regularly through the year, illustratively doing six of these batches over a 12-month period to allow the eager-beaver sophomores to show up early while the slower-baking juniors could show up later (e.g. March of junior year). You could also re-invite people who were on the cusp in a prior batch to participate again.

Secondly, if you felt there were strong people who showed up in a late batch, you could be less dogmatic about your intern class size and include them anyway, acknowledging that some people will self-select out during the internship, others will prove to be underperformers, and you won't be batting 1.000 in any event.

This is in contrast to a place like Goldman who finalizes its banking intern class of 100-whatever, maybe squeezes in three or five very late entrants over the four months between February when the old/traditional timeline ended and June when the internship starts (all of whom are either diversity hires or super-connected kids who had phone calls made on their behalf), and then focuses really hard on its conversion vs. yield metrics.

In short, my ideal would be to screen a lot of people early and often, then be okay with adjusting class size to add worthy late entrants.

This means I have to be okay forcing out early entrants who I gave seats to who may get outperformed by strong late entrants, but that scenario isn't too likely. Illustratively, if I want 50 returning analysts, I could do six interview batches over 12 months and aim for 12 offers at each, meaning I want ~70 people for the summer since history shows me the return offer rate is 70%.

However, if I end up giving 18 offers in the final three batches (because some strong candidates showed up late since they wanted to recruit for startups, consulting, or something else), I now have 90 for the summer. This will give me a lower conversion rate of 55% instead of 70%, but I am (a) okay with that because it makes my place a true meritocracy and (b) I could mitigate how harsh that figure may seem by increasing my returning analyst class size to 55 instead of 50.

It isn't perfect, but these are quick thoughts that I think would make it easier on both sides.

The moral of the story is that the early arms race that has evolved in the past few years is not healthy and I hope it gets worked out.

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Oct 30, 2018

Curious if people think that EBs will move back this year or stay early. Thoughts?

If you're a sophomore and want to target GS/JPM/other BB, how would you manage this timeline. Not recruit at EBs because of slim chance you get GS/JPM/other BB? Just go through the process at banks recruiting early and give up dream of GS/JPM?

Interesting dynamic

What's the point of having fuck you money, if you never say fuck you

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Oct 30, 2018

Those who are still in school know this, but this was honestly just a dumb move from GS and JPM. Just about every other BB and EB have already begun the process for 2020 (with a few minor exceptions that you could count on literally one hand), apps are open online now at RBC, Rothschild, CS, PWP, etc. No kid in their right mind is going to wait out for the slim chance of GS/JPM and forgo recruitment with every other bank....

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Oct 30, 2018

This

Oct 30, 2018

Although this sounds like good news at first glance, has anyone considered that the banks may be doing this in anticipation of a recesssion? May not be so great of news for students

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Oct 31, 2018

In this article, GS and JP don't mention if they would bring in students with exploding offers from other banks to interview. Sure, they may not be actively recruiting students. However, if students come to them with exploding offers, I wonder if they would bring them in to interview. They said they wanted students who wanted to be at GS or JP. A student who comes to them with an offer already in hand fits this profile. Their strategy could be to have other banks do the vetting for them and they pick off the top kids then open applications up to fill remaining spots in the fall. I could be way off on this, but it's just a thought.

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Nov 3, 2018

Very good point, GS and JP know there's solid candidates that will network and will want to go work there, but will still be recruiting with other shops because of timelines - that'll help GS / JP interview candidates that are already vetted and genuinely interested in their firm. (Basically just reiterated your post) I'm sure they didn't play their whole hand with the article.

Oct 31, 2018

As someone who went from analyst through to VP with a partnership offer at a boutique before I left to start my own operating company, the ridiculously early recruiting makes no sense to me.

Students mature at different rates. The early offers benefit target kids who have family connections in the industry so they understand it pre-college but will by no means yield the most talented candidates.

I was a farm kid who had no idea what banking was until I was a junior and had a cousin land in IB. He convinced me to transfer colleges to pursue it and then I got caught up in the tech crash with no offers. I moved to NYC and lived on his couch. I got a temp back office job that led to a trading seat and later lateraled to IB.

What I learned (granted in an effectively pre-internet environment) about finance in those 2 years after I transferred was immense. As a sophomore there was no way that I could have made it through an IB interview process, but I ended up being a pretty good banker.

Oct 31, 2018

Great move for GS and JPM. If I were a sophomore, what I would do is recruit for all the other sub-tier internships and try to land one, then take that offer and leverage it to try and get in GS/JPM. If you get it, renege on your other offer and if you don't then oh well. Once Moelis and the rest of the shitco's start losing their top recruits to GS/JPM they will adjust the timeline accordingly.

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Oct 31, 2018

This is actually move. Ridiculous how early recruiting starts and before you even take a business class. There's a reason why many of the analyst classes are not as strong

Nov 1, 2018

"Sub-tier internships"? Wow. The BBs aren't for everyone, you know... and EBs are hardly "sub-tier." BTW all the recruiters talk and if someone does reneg, the other banks do know about it. Just sayin' is all.

Nov 1, 2018

A lot has already been said, I tried to skim through it to not repeat comments...the single biggest point that I have heard from current analysts at my old EB is that there is a noticeable drop in the technical questions being asked (ridiculously easy questions, like what are 3 ways to value a company with no follow up) and that has led to some incredibly poor hires.

Definitely sad since if you can't wait until the candidates are ready/know they want to do IB you get (1) a frustrated employer, who now realizes half the kids don't even want to be there and (2) a student who isn't going to get a meaningful experience in the industry.

Absolutely hope that there is eventually just a push from the career centers of top schools to not allow any recruiting for Junior Year summer before students' junior year.......

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Nov 1, 2018

What happens if you are a sophomore with an internship offer from GS/JPM for next summer then?

Nov 2, 2018

Honestly, good. I remember having my first IB superday with BAML, on May 16th of my sophomore year, the same day my first final started, followed by 3 more in less than 48 hours. I spent two whole day and nights in constant stages of aderrall, THC from my pen, and caffeine. M I S E R Y

Nov 3, 2018
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