“Friday’s dead,” says the glum counter guy at the street-level convenience store in Goldman Sachs’ lower Manhattan headquarters building. “Not many people on Fridays. I think nobody’s here,” he says, pointing upward to the 43 stories of Goldman offices above him.
The man behind the cash register isn’t the only one noticing that Goldman’s ranks are thinner on Fridays. CEO David Solomon has the data. “Certainly Monday through Thursday, we’re operating pretty close to the way we were operating before the pandemic,” he told a Wall Street Journal conference in December. “Fridays are a little different.”
Like virtually every other employer, Goldman is navigating its way through the unexplored post-pandemic future of work, and the trip is taking unexpected turns. Solomon’s tough talk earlier in the pandemic—declaring that remote work is “not a new normal, it’s an aberration that we’re going to correct as quickly as possible”—is gone. Now, almost a year to the day after Goldman urged its employees to come back to its offices five days a week, Solomon delivers progress reports acknowledging mildly that Goldman still isn’t back to pre-pandemic attendance and saying he expects the numbers to improve.
Goldman’s experience is especially worth watching because many companies want their office workers back in the office—Disney recently ordered hybrid employees back four days a week, for example—and few CEOs have expressed that wish more emphatically than Solomon. Business leaders across industries are asking the same questions that frame Goldman’s case. Would liberal remote-work policies degrade a firm’s performance, perhaps not immediately, but steadily over years as lack of in-person interaction frays internal relationships? Will the best young prospects join a company that expects five-days-a-week attendance? Will senior employees stay at such a company?
The Goldman case magnifies such questions because so much is at stake. The firm is perennially the world’s No. 1 investment bank, handling more deal volume than any competitor. In the Vault ranking of corporate prestige, its peers reliably vote it the world’s most prestigious investment bank. The firm’s recently announced plan to lay off thousands of employees—a response to the deteriorating economy and Wall Street’s deal drought—doesn’t change the larger, longer-term challenge: Can it maintain its stature in the post-pandemic world?
Solomon has noted explicitly that he’s focused solely on Goldman, not on what other employers should do. (The firm did not make Solomon available for an interview for this article.) But while Goldman is decidedly unique, its return-to-office issues are every company’s issues.
How Goldman’s back-to-work numbers measure up
Goldman’s return-to-office program began in earnest on Feb. 1, 2022—the inauguration, finally, of the post-pandemic era. It didn’t go as planned.
Pre-pandemic attendance at Goldman’s U.S. offices averaged 75% to 80%, Solomon has said; it’s never 100% because many high-level employees travel heavily to visit clients, and some workers will always be out sick or for other permissible reasons. On Feb. 1, attendance was a shockingly low 50%. The outlook for a return to the old days did not seem bright.
The numbers have since inched up to 65% to 69%, the firm reports—not back to the old norms, but levels that other office employers would envy. Only 49% of Manhattan office workers were in the office on an average workday in September, says the Partnership for New York City, a nonprofit organization of major New York employers. The average in 10 major U.S. cities was just 48% in the weeks before the holidays, as measured by Kastle Systems’ employee tracking at 2,600 buildings nationwide.
View this interactive chart on Fortune.com
For employers generally, getting back to pre-pandemic numbers may no longer be realistic. In the early days, so long ago, most employers and policymakers believed the pandemic would run its course in three months. Had that actually happened, “everybody says that if they’d brought employees back in June of 2020, that would have been it,” says Kathryn Wylde, CEO of the Partnership for New York City. Work would have picked up where it had left off. But the virus grew more contagious. People learned new ways to work. Many changed where they lived. Remote work embedded itself as a broad-based norm. As for going back to the old ways, says Wylde, “the longer we waited, the harder it became.”
Solomon nonetheless has good reason for wanting to go all the way back. Substantial research supports him. At Goldman, as at many companies, everything happens in teams, and humans are hard-wired to work together in person, face-to-face. For example, when we’re physically together, we unconsciously mimic one another’s posture, gestures, tone of voice, and even accents, and research finds that such behavior builds empathy and trust. It doesn’t happen remotely. Separate research from two U.S. universities and three European universities concludes that teams with the most internal trust produce more creative and higher quality ideas, and “there is no substitute for face-to-face interaction to build up this trust.”
Much evidence for the power of in-person work comes from the pioneering pre-pandemic research of MIT professor Alex Pentland and his team. He finds that bringing people together “allows employees to learn tricks of the trade—the kind of tacit, detailed experience that separates novices from experts—and is what keeps the idea machine efficiently ticking along.” Early in the pandemic Pentland foresaw trouble. “What people will lose is the feeling of connection and being a member of a team, and all the incidental conversations and nonlinguistic cues that get people on the same page and aligned, as well as the serendipity that is the source of most innovation,” he told Fortune in 2020. The damage would accumulate slowly, he predicted. “Completely standardized tasks work well. You can rely on existing social ties to align people for a while. But that is expiring.”
To be sure, much work is being done now on how to build trust in remote teams. Some remote-work advocates believe that companies can develop strong employee cohesion even with little or no in-person interaction—though there’s been little research so far to back up that assertion.
Whatever the research says, Solomon knows what has worked for Goldman. “The thing that really has differentiated the firm over a long period of time starts with the quality of our people,” he told Fortune last February. “It’s a place that attracts and creates an environment for really extraordinary people to operate at a very, very high level of excellence in a super-collaborative apprenticeship culture. I think it’s unique.” And, he says, “for Goldman Sachs to retain that cultural foundation, we have to bring people together.”
Thus Solomon faces a vexing dilemma. In theory, he could quickly get attendance back up to 80% by decreeing in-person attendance five days a week at pain of dismissal. But as he clearly knows, that would be a terrible idea. Coercion almost always backfires, provoking so-called malicious compliance—following rules to the letter even when results will surely be bad—and other forms of retaliation. It would be even worse at Goldman because—the dilemma—it would violate the culture Solomon wants so fervently to preserve.
As he says, it’s a culture of collaboration, and that isn’t because everyone necessarily loves one another. It’s because Goldman recruits some of the smartest and most ambitious people available, and in that setting they can’t stand out through individual brilliance. They get ahead by collaborating with smart, ambitious colleagues. But the spirit of collaboration withers if the CEO starts dictating where and when work gets done.
In addition, the Goldman culture has always offered flexibility within bounds. If your child is sick and you need to stay home, you stay home. Nathan Risser, a former Goldman employee in London, told Fortune that when he asked for a leave during the pandemic’s most stressful days, it was given immediately. “They’re very demanding, but as soon as you put in a request for something, it’s granted,” he says. When the company starts codifying exactly when an employee must be in the office, that element of the culture vanishes.
Solomon understands all this. He makes his wishes and expectations abundantly clear, but he doesn’t issue decrees. “We have nudged, cajoled, evolved,” he recently told a Wall Street Journal conference. In the same spirit, as he told CNBC, “I don’t want rules. I want a culture where we show up, serve our clients. We work hard. We mentor our people, we teach our people, we strive for excellence. That’s what Goldman Sachs is all about.”
He’s describing a company in which employees absorb and conform to cultural norms rather than complying with a rulebook. That has been a powerful model at Goldman for decades. But now at least some employees aren’t conforming to the pre-pandemic norms. Why not?
Part of the answer may be growing in an overlooked side of the firm. Goldman is becoming a technology company. The number of tech employees—software engineers, systems engineers, data analysts, cybersecurity experts—has grown to 25% of the total, some 12,000 workers. The firm has a longstanding pilot program, still underway, in which some engineers come into the office just three days a week, says a person familiar with Goldman’s practices. Goldman’s own careers site offers fully remote tech jobs. A new cultural norm is forming, at least in a significant portion of the company—and it isn’t encouraging full-time work in the office. It’s worth noting that San Jose and San Francisco, two tech-dominated markets, consistently score among the lowest on Kastle Systems’ occupancy surveys.
A potentially greater threat to the Goldman model is that Solomon’s return-to-office stance may repel the best talent. The firm argues it clearly does not. For example, Goldman’s 2022 intern program—some 3,500 positions, on-site five days a week—attracted 236,000 applications, the firm says, an all-time high.
No available data shows whether Solomon’s in-office expectation is damaging Goldman’s workforce quality. “It’s a great firm. They can of course attract people,” says an industry consultant. “They’ve probably got a thousand people lined up at the door as we speak. Are they the people they want? That’s really the question.” Asked if Goldman’s stance is harming the firm’s ability to attract top talent, this consultant says, “I know it is.” A Goldman spokesperson strongly disputes this.
If Goldman becomes less attractive to top talent—still a major if—any damage may not happen where expected. The Goldman model relies on attracting thousands of new college graduates every year—half the firm’s employees are in their twenties—and keeping the best. Conventional wisdom holds that the youngest workers, digital natives, insist most stridently on remote work. But the opposite may be true. A broad survey by WFH Research finds that among workers able to work from home, the youngest, age 20–29, least want full-time remote work; the oldest, age 50–64, want it most.
View this interactive chart on Fortune.com
Such findings suggest Goldman’s return-to-office stance may actually attract young workers. “I'm definitely a proponent of working in the office,” says Leila Eshaghpour, an analyst (Goldman’s entry-level title) in the real estate investment banking group. “You can just walk into someone's office, so everyone knows who you are. Maybe even more important is the learning. When you're in-person, you can just look over someone's shoulder or turn around and ask a question.” Another factor may be especially valuable to twentysomethings: “I've made some of my best friends in my analyst class, and I wouldn't have made those relationships had I not been in-person.”
The talent problem, if there is one, could manifest more broadly up among the managing directors. They’re more likely to have kids and maybe parents to look after, likelier also to own second homes that beckon. No solid evidence suggests they’re yearning to spend at least a bit more time away, though the WFH Research findings show that the older you are, the more likely you are to be tempted.
Will Goldman Sachs settle for “hybrid”?
Amid so much turbulence, many experts argue for carefully crafted hybrid models. Nicholas Bloom, a Stanford professor and cofounder of WFH Research, cites a Goldman competitor, Lazard, which overhauled its policies in response to the pandemic. Now everyone comes to the office Tuesday through Thursday. These are “highly social days,” Bloom says, packed with “in-person meetings, training, lunches, coffees, etcetera.” Monday and Friday can be in the office or remote, subject to client needs, and are focused on deep work—writing, data analysis, planning—and one-on-one meetings or calls; first-year employees can come in “for boosted mentoring.” (Lazard confirms Bloom’s description.)
That middle-of-the-road strategy is still being tested. So are the extremes—permanent remote work as an option (Airbnb, Dropbox) and mandatory full-time office presence (Elon Musk companies—Tesla, SpaceX, Twitter). Who’s right? “No one knows,” says the Partnership for New York City’s Wylde. “Anyone who says they know doesn’t know.”
In the working world’s continuing flux, Goldman’s employees are edging their company toward the post-pandemic mainstream, reporting to the office less than they used to. At the same time, the mainstream is edging toward Goldman. Remote work is losing its appeal. In New York City, the share of office employees working fully remotely dropped from 28% in April to 16% in mid-September. More broadly, data from LinkedIn shows job postings for fully remote work declining from 20% of the total last spring to a recent 15%.
Pushing toward an uncertain future, Solomon will likely continue to nudge, cajole, and evolve. He’s willing to be patient. “Behavior shifts take time generally,” he told CNBC. “I think over the next couple of years our organization will generally come together.”
As he focuses on preserving Goldman’s venerable culture in a societal hurricane, Solomon confronts a classic CEO imperative in tumultuous times: deciding what must change and what must not change. Entrusted with one of America’s most famous elite institutions in an environment no one envisioned, getting it right will be the managerial challenge of a lifetime.
