New Recruits in SG Cowen

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Case Preparation Summary – SG Cowen

Short-Cycle Summary SG Cowen, an investment bank, is in the process of hiring a new class of associates. In this process, there remain two available positions, and Chip Rae, the Director of Recruiting, and a group of 30 bankers have four candidates to choose from. The group is having a hard time deciding how they will extend the offers, primarily due to their different opinions based on an evaluation system that allows biased and inconsistent feedback. The time frame for the decision is as soon as possible, since all present are anxious to leave given the inclement weather and the fact that this is a Saturday with bankers who would rather be home on their day off.

Long-Cycle Summary Basic The main issue is this case is easier to understand if we analyze the background of the hiring process at SG Cowen. The economic environment leading to this point had made available an increasing pool of candidates from top business schools, which made the selection process more difficult. Chip Rae, the director of recruiting, had adopted a model for recruiting, in which SG Cowen recruiters would not go to the top 10 business schools, where they would only get interest from the middle-of-the-class students, but instead, they would go to the other business schools in the top 25, where they were able to recruit the top students.

As part of the process, Chip assigned team captains to the schools where SG Cowen recruited and tried to match up alumni with their own school. The recommendation was then made by the recruiters based on how serious and enthusiastic the candidates were. The top candidates selected were then brought to the corporate office for the final round of interviews. This event was called Super Saturday. Bonuses and incentives were based in part on the performance of a new recruit a banker brought to the company through this hiring process.

The final round of interviews is where we observe the main issue. SG Cowen, while having a very structured process, did not perform very structured interviews. This lead to biased observations and a lack of consistent scoring criteria. The overall score of a candidate depended heavily on who was performing the interview. As an example, two qualities that the bankers fought for were: “prepared and eager”, which are very biased traits and not necessarily historical signs for a good fit.

Another issue observed is an apparent disconnect in desired key attributes between lower and top level interviewers, which created discrepancy between the banker’s opinions of what the best fit among the four candidates was. Interviewers had a process that told them what to do in the interview process but not how to do it. This system (or a lack thereof) ultimately led to the situation that encouraged a rush job. This process also required an unnecessary amount of man hours. There was also illegal basis in the line of questioning and subsequent biased reasoning during the decision making process. Immediate The immediate issue involves the group’s ability to come to a consensus. Chip needs to have the bankers imagine putting the candidates on their own team and figure out which of the four they would take personal responsibility for. He should direct them to decide in terms of who would bring the most to the table in the long run and have longevity with the company. He should either make no decision at this time or advise them to try and look past their preconceptions about the candidates and look towards what they have accomplished, what they could accomplish and how that would fit into the scheme of things for SG Cowen. Importance and Urgency There is definitely a strong urgency to make a decision with 30 high level bankers taking a Saturday to make this decision. But the importance of making the right hire outweighs the pressure to make an immediate choice. The long term ramifications of potentially making the wrong choice outweigh the short term need to...
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