Bonuses and promotions.
“Bonuses in the financial industry this year are expected to fall 5 to 10 percent,” sorry everyone. On the plus side, though, Goldman Sachs will promote analysts to associate after two years, and associates to vice president after another three and a half. I suppose one way to make up for lower pay is with fancier titles, though that does not seem to be the main motivation; the new young VPs will apparently be paid like VPs.
The goal of course is to compete with buy-side and tech firms that siphon off Goldman analysts after their first two years, and to try to encourage young bankers to build their careers at the bank. But one implication is that this really ought to de-value the MBA, at least at banks. (Or, at least at Goldman.) Now you can go from college to VP in five and a half years, while getting paid the whole time, and you’ll be a first-year VP at the same age as a first-year associate coming out of business school with three years of pre-MBA work experience. In other news, only 14 percent of managing directors at Goldman have MBAs.