Goldman shrewdly grabs McKinsey cast-off
Few people can claim to have worked at both Goldman Sachs and McKinsey. Kevin Sneader joined the investment bank just six months after leaving the CEO of a management consulting firm. Installing someone who agreed to a $573 million opioid settlement and dealt with a slew of other issues may seem unusual for a bank still reeling from Malaysia’s 1MDB scandal. It implies receptivity to new ideas.
Sneader will join Goldman Sachs as co-president of Asia-Pacific, excluding Japan, and will report to Todd Leland, the company’s current CEO. The Scot, whose four-year stint as head of McKinsey’s operations in the region helped propel him to the firm’s top job in 2018, is well-known. Even so, he had to deal with the fallout from scandals like McKinsey’s work for government-linked groups in South Africa, including its recommendations to U.S. drug companies selling highly addictive opioids. Others praised him for his willingness to apologize for previous transgressions and efforts to make the consultancy more transparent. Many of the firm’s partners, however, were not pleased, and he was denied a second three-year term.
Goldman’s unusual move to hire an outsider at such a senior level shows that it values someone who understands how pursuing lucrative business can backfire. The bank reached a $2.9 billion global settlement in 2019, which included admitting to bribery charges related to its work for Malaysia’s sovereign wealth fund, 1MDB. Several red flags, according to regulators, went unnoticed by executives.
The Wall Street firm is also not one to pass up an opportunity to work with someone well-connected. According to Dealogic data, it has been doing well in the region, ranking in the top five in terms of investment banking fees for the last four years, alongside Morgan Stanley, JPMorgan, and a changing cast of Chinese banks.
David Solomon, the boss, has a history of making unusual hiring decisions. He created the position of chief marketing officer last year, which many Goldman bankers considered to be beneath the firm. Few McKinsey professionals begin key speeches with “sorry,” as Sneader did in South Africa. He’ll be a wise hire if he can help Goldman grow in Asia while avoiding future apologies.
Source: Reuters (https://www.reuters.com/breakingviews/goldman-smartly-snaps-up-mckinsey-cast-off-2021-09-09/)
