Coronavirus Tests the Leadership Style of Goldman Sachs’s C.E.O.

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David M. Solomon started 2020 on his back foot.

The chief executive of Goldman Sachs, perhaps Wall Street’s most storied and vilified institution, had been in the job just over a year, working to broaden the bank’s offerings by pursuing lines of business that his predecessors had long avoided.

But his Main Street push had failed to impress shareholders. After Goldman’s investor day in January, the bank analyst Mike Mayo described some of these moves, including a credit card offered in partnership with Apple, as “somewhere between a distraction and a moonshot” and added that he didn’t know of a single investor who had bought Goldman’s stock for those reasons.

If stockholders were scratching their heads at the direction of the bank under Mr. Solomon, employees weren’t much clearer on what kind of leader he was. Lloyd C. Blankfein, the previous chief executive, was seen as a coolheaded strategist who had steered Goldman through the 2008 financial crisis. Mr. Solomon, a spare-time disc jockey, had a reputation for being blunt and pragmatic, but also intuitive and flexible.

Then, as Mr. Solomon was still getting situated, the pandemic hit, presenting him with the biggest leadership challenge — and opportunity — of his short time atop the bank. The crisis has shown Mr. Solomon to be a deft navigator who quickly adapted to changes that caught some of his bank’s bigger competitors flat-footed. But it brought an unforced error by Mr. Solomon that underscored the perils of a fun-loving attitude he has viewed as an asset when dealing with Goldman’s young work force.

Other challenges remain, including investigations by United States prosecutors and bank regulators into Goldman’s role in helping raise billions of dollars for 1MDB, a Malaysian sovereign wealth fund that some officials used as a personal piggy bank. A framework for the settlement with U.S. authorities has been reached but not finalized, a person familiar with the matter said. Prosecutors declined to comment.

When New York City went into lockdown in March, Mr. Solomon sent most of the bank’s 40,000 employees home immediately and blessed the firm’s procurement of thousands of monitors and landline phone systems for use in home offices. He also got on hundreds of Zoom calls with clients to reassure them that Goldman would help see them through their mounting obstacles — and not necessarily for a fee.

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Credit…September Dawn Bottoms/The New York Times

Goldman’s early embrace of working from home helped traders capitalize on surging market activity in the first and second quarters. Their efforts pushed the firm’s stock and bond-trading revenues to recent records, while minimizing disruptions and encouraging worker loyalty. By contrast, JPMorgan Chase and Bank of America stumbled initially as they struggled to ready backup sites and, in some cases, created an atmosphere in which trading-floor workers felt pressured to come to the office.

“David has done a solid job navigating the Covid crisis,” said Justin Gmelich, a partner at the hedge fund King Street and longtime Goldman markets executive before that. He praised the firm’s flexible work-at-home policies and the insights that analysts and traders had provided him as a client, although he said he had concerns about the talent pool because at least a half-dozen senior traders had left the bank since Mr. Solomon’s ascension.

With nearly half the bank’s employees under the age of 30, his messaging appears attuned to the mores of a changing finance industry. Already, Mr. Solomon — a yogi and music lover — had brought a different vibe to the job, ripping up the firm’s stodgy dress code and talking about bringing one’s “whole self” to work. In managing Goldman’s response to the virus, he is also becoming an unlikely poster boy for a softer era on Wall Street, where personal well-being can take precedence over profits and displaying anxieties isn’t a matter of embarrassment.

Mr. Solomon, 58, did stumble into a minor scandal recently while indulging his favorite hobby. Last month, he took the stage to DJ at a concert in New York’s affluent Hamptons beach community, while a large crowd partied in close quarters. The gathering drew the ire of Gov. Andrew Cuomo, who demanded an investigation. A spokesman for the state’s health department said the inquiry was continuing.

Credit…Kevin Mazur/Getty Images for Safe & Sound
Credit…Kevin Mazur/Getty Images for Safe & Sound

In two separate meetings with Goldman Sachs partners and members of the firm’s management committee after the event, he acknowledged that he had made a mistake, according to two people familiar with the matter.

And while he has long said that mixing and recording music is an enjoyable outlet that helps him connect with Goldman’s younger generation, some of the firm’s directors raised concerns last summer about the optics of his hobby, the people said. In side conversations, some directors have suggested that golf might be a better alternative, one of those people said.

“David admits it was a mistake to participate, and he’s told people at the firm that,” Goldman spokesman Jake Siewert said of the Hamptons concert. Mr. Siewert added that Mr. Solomon has put live events on hold for the foreseeable future but plans to continue recording electronic music.

Since the earliest days of the coronavirus, Mr. Solomon had been watching it make its way from China to the United States and worried about its potential economic impact. In early February, he spoke with David Tepper, a well-known stock investor and Goldman alumnus, who had read a dire forecast for the virus in the medical journal The Lancet. The two were at a Super Bowl event in Miami, and Mr. Tepper said that he had come to believe the illness could hobble the United States.

“I was struck by the fact that he was more worried than I was, and I was worried,” Mr. Solomon recalled. He began working on larger-scale contingency plans.

By the end of February, Mr. Solomon’s senior team was holding regular 6:30 a.m. meetings to discuss what Goldman should do to safeguard both its employees and its business if the virus were to spread more widely.

Credit…September Dawn Bottoms/The New York Times
Credit…September Dawn Bottoms/The New York Times

In March, after the coronavirus was declared a pandemic and most of Goldman’s workers went home, Mr. Solomon chose to go into the office daily. To lead, he said, was to show up physically. “For me, it doesn’t seem right the C.E.O. of Goldman Sachs goes out to, you know, a country house, a suburb or some other place, and is not in charge, in the office, because that’s what we do,” he said in a phone interview in late June.

Mr. Solomon’s approach to the crisis has been a contrast to some of his peers. James Gorman, the chief executive of Morgan Stanley, worked remotely until early July, worried that returning to the office would put undue pressure on employees to follow suit. A visit to the trading floor by Bank of America’s chief executive, Brian Moynihan, early in the outbreak led some employees to question their decisions to work from home. (A bank spokeswoman said that was not the intent.)

“The message from David on down was so clear, that there were no questions asked, it didn’t matter,” said Jen Roth, 39, who runs the firm’s U.S. currencies and emerging markets business, about Goldman’s quick approval of work-from-home plans. Ms. Roth, who had never worked a single day from home until this year, set up shop in a bathroom of her parents’ suburban Philadelphia house — one of the few available rooms with a lockable door to field client calls with her spouse, children and parents nearby.

Zachary Fields, a 26-year-old associate in one of Goldman’s investing businesses, worked from his high school desk from his parents’ home in Delray Beach, Fla. “As long as I have a Wi-Fi connection, access to my computer and Bluetooth headphones and videoconferencing, I can do my job,” he said.

But Mr. Solomon’s request earlier this summer that some employees return to the office has led to grumbling among those who think a longer stretch of working from home is warranted. Others, however, would like to see Mr. Solomon encourage even more people to resume working from the office and have expressed those views to the C.E.O., a person familiar with the matter said.

The bank hasn’t determined when to bring all its workers back, but it won’t be this fall given the ongoing uncertainty about the virus, Mr. Siewert said.

For now, with everyone dispersed, Mr. Solomon has sought new ways to keep in touch with workers.

“Your jobs are safe during this crisis,” he said in an audio message distributed to the firm’s workers on April 2, noting that Goldman would provide additional family leave to employees. He attended an after-work “geek-out” session for employees on the topic of winemaking, and sipped the wine under discussion as he watched. All 150 participants had received the same bottle from the bank.

In late May, after a Black man, George Floyd, was killed by a white police officer, touching off nationwide protests over racial injustice, Mr. Solomon encouraged employees to speak more openly about race and intolerance. Fred Baba, a managing director in the firm’s markets division, responded with an email to a small group of colleagues discussing his experience with racism and describing the prior few months as “demoralizing.” The email, which argued for mentoring people of color and supporting minority-owned business, soon inspired a Goldman podcast with Mr. Baba and an op-ed article on Bloomberg. Mr. Solomon also convened an emotional town-hall meeting on race, during which he choked up as Black partners shared their anguish over police violence toward Black people.

Mr. Solomon believes more openness will pay off. He recently held a virtual meeting with eight drug-industry chief executives in which they discussed race and the health crisis in a way, he said, that felt more frank than usual.

“We’re all being much more vulnerable as we’re trying to lead our people,” he said. “I think that’s effective leadership, and it’s working.”

Matthew Goldstein contributed reporting.

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