Morning Coffee: Citadel Securities' intense approach to making employees worth $2m pay. Goldman Sachs and JPMorgan joined H1B weekend frenzy
Citadel Securities, the electronic market making firm, is highly profitable and highly remunerative. In the first half of this year, Citadel Securities generated revenues of $5.8bn and net income of $2.7bn, and was on track to pay its 1,800 employees an average of $2m each for the year. Even graduate hires are paid well there: $250k starting salaries are not unusual.
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But as might be expected, earning this sort of money does not come easy.
Most importantly, it seems to come with a deterministic approach to things. Bloomberg reports that Citadel Securities really, really likes to set its employees goals and targets. Every year, 5,000 goals are set for 1,800 employees - nearly three each.
That may not sound too intense, but this is Citadel Securities, and Citadel Securities is "maniacal in their attention to detail" according to one ex-employee. The 5,000 goals involve months of work, beginning with "hundreds of initiatives" with "timelines and measurable outcomes" which are debated and finessed. Each employee is then expected to explain their responsibilities, milestones and measurable targets in no more than 150 words, preferably with bullet points. Failure to do so is seen as symptomatic of woolly thinking.
Unusually for a firm that operates in the electronic realm, Bloomberg says Citadel Securities then adds these commandments of corporate success to a large physical binder of biblical proportions called "The Goal Book." Very few people are allowed to look at the whole thing, which is delivered to Citadel Securities Chief Executive Officer Zhao Peng on a golden litter in a cloud of incense.
The goals in the book aren't entirely inflexible. It's possible to "pivot" if circumstances change, but the existence of the goals and bullet points (which might not be that different to other organizations, were it not for The Book), seems to drive a particular culture. Former insiders tell Bloomberg that Citadel Securities can be "brusque" with a "level of emotional intensity." - "There’s no masking of feelings, and people express disappointment without softening it.”
Once the book is assembled, it doesn't simply sit in a secret cabinet, gathering dust. Zhao Peng reportedly likes to browse it and to add scribbled annotations to the pages when he encounters goals that are too modest. Subsections of the book are available online for their relevant audience.
The achievement of the goals therein is tracked in real-time. Bloomberg says employees have weekly and quarterly check-ins and mid-year evaluations to see how they're doing. If the goals are not being met, staff may be terminated. Termination doesn't happen automatically, but Bloomberg says the environment at Citadel Securities is "high pressure" nonetheless.
Alex DiLeonardo, Citadel's chief people officer and a former McKinsey & Co. Partner, expresses it all slightly differently. “We want to be very clear about the social contract that we have with people who join us,” DiLeonardo declares. “Our promise is exponential career growth.” This appears to be a euphemism for, "If you work hard and achieve your goals, we will promote you fast and pay you very well indeed. But if you don't, we will consider you in breach of our tacit agreement. "
Separately, employees at Goldman Sachs and JPMorgan were caught up in the weekend's panic over H1B visas, which the WSJ says involved "vicious" texting from organisations to their employees.
It's not clear whether Goldman or JPMorgan were texting this way, but the Financial Times says both banks were among the organisations contacting US staff on H1B visas to suggest they don't travel overseas.
The texts followed a weekend of confusion in which Secretary of Commerce Howard Lutnick seemed to suggest that a $100k fee would be payable annually for H1B Visa holders, starting Sunday. There were also fears that employees travelling outside the US who are already on H1B visas would need to pay $100k to reenter.
Spurred by panic, the WSJ said major employers of H1B visa-holders, like Google, Amazon and Microsoft, spent Saturday texting staff who were travelling abroad and telling them to come back to America ASAP. This turned out to be unnecessary when the White House clarified that the changes won't apply to current visa holders, won't affect anyone's ability to travel out of the US, and that $100k will be a one time rather than an annual fee.
$100k is still significant, though. US employers have historically paid $215 to register for an H-1B visa lottery and an additional $780 to sponsor visa applicants. If the fee goes ahead, it's expected to be favourable for US jobseekers who don't need $100k visas, but may also simply mean that jobs move out of the US to India, where most H1B visa applicants live.
Bloomberg spoke to one woman who's from Asia and who works in finance in New York. She said the change was unnerving. “I feel like at this moment I’m kind of a little bit lost and not sure about how this policy will apply to people who already got their visa...I am not mentally prepared to leave everything that I have known for 10 years.”
Meanwhile...
Some travelers were trying to connect through Abu Dhabi, where they can pass through U.S. immigration before arriving in America. (WSJ)
JPMorgan hired two Brians for its consumer and retail team as it expands its investment bank. Brian Esmond joined from Centerview. Bryan Fleming joined from Bank of America. Both are in New York and are MDs. (Bloomberg)
Ex-JPMorgan executive Blythe Masters is causing ripples at FNZ, a firm where she is now chief executive and whose 180 shareholder employees say their shares have been diluted by multiple rounds of fundraising. When they were growing the company, seven-day weeks and 16 hour days were allegedly common. Now they're saying things like: “The shock of seeing the potential value of your life’s work, for your retirement savings, [reduced] — that’s had an impact on people. The expectation of what we thought we’d created and what it is worth to us has been completely eroded.” (The Times)
Getting a graduate job in a bank is awful, says a student who's made 100s of applications. “I knew it would be competitive, but I found it like a nightmare. AI meant that every application involved days of work. Only four companies interviewed me. Looking back, the biggest thing that increased my chances was applying on the day or second day it was advertised, rather than my own skill set.” (The Times)
PWC cut 60 partners and 1,500 staff from its Middle East business after falling out with Saudi Arabia’s Public Investment Fund. (Financial Times)
Big Four accounting firms have eliminated 1,100 entry-level roles in the UK over the past two years in response to an ongoing decline in advisory work. (Financial News)
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