On 8th December (Friday), the Lok Sabha voted in favour of expelling the Trinamool Congress MP Mahua Moitra on the recommendation of the Ethics Committee against the TMC leader in connection with the cash-for-query scam case. Since her ouster, several netizens have flaunted her past credentials as the Vice President at the Investment Banking giant JP Morgan and Chase. Notably, it is touted among the big five in the Investment banking sector.
Supporting the accused TMC leader, some social media users claimed that she is innocent of the cash-for-query scam case and alleged that it is an attempt to silence her. They argued that Moitra left her lucrative and ‘distinguished’ position at one of the biggest investment banks (I-bank) to enter politics and serve the people of her constituency.
इस खूबसूरत तस्वीर को गौर से देखिये….इसे देखकर पता लगता है क्या कि इस महिला ने करोड़ो रु की बैंक की नौकरी एक झटके में समाज सेवा के लिए छोड़ दी थी…इस तस्वीर से यह भी नही लगता कि इस महिला की एक स्पीच से पूरी बीजेपी के फासीवाद को नंगा कर दिया था
— अपूर्व اپوروا Apurva Bhardwaj (@grafidon) December 8, 2023
ये तस्वीर यह भी नही बताती यह… pic.twitter.com/dojLHNKUus
Additionally, they asserted that her lavish lifestyle is a result of her previous role as the VP at JP Morgan, a high-paying and consequential post. Furthermore, they claimed that her ‘senior’ position in the top Investment Bank underscores her leadership qualities, which have rattled her naysayers insinuating that she has a brain of her own and didn’t need to take cues from others to shape her decisions countering the allegations that she accepted bribery to ask pliable questions.
However, several netizens have pointed out that the senior-most designation in the I-banks is not a rarity linked with high calibre and exemplary growth. Instead, it is a general trend in Investment Banks to dole out fancy designations to scores of employees, sometimes even in the hundreds to thousands. This is done for various reasons, including massaging the egos of their employees, non-cash retention tools to assuage lower paychecks, or creating an impression on clients/customers, among other considerations.
Some fools are under the impression that Mahua Moitra once being "vice president" at some bank is a huge deal
— Abhishek (@AbhishBanerj) December 8, 2023
At big investment banks, almost everyone is a "vice president"
Goldman-Sachs for example reportedly has almost 12,000 "vice-presidents." pic.twitter.com/maCl78aqCB
"Vice President" in an investment bank is not what you think it is https://t.co/8jHDYA0QFG pic.twitter.com/Qmik1Yrw4L
— Rahul Roushan (@rahulroushan) February 12, 2023
Inflated designation conundrum: VP in I-Banks may not be the second-most or even a very high-ranking official
It is generally assumed that an official with senior-most designations like Vice-President, Director, or Managing Director would be among the highest-ranking decision-makers in any company or country, possibly holding the 2nd or 3rd authority in the entity. However, things are different in I-Banks, and according to reports, as high as 30-40% or even higher of officials enjoy these fancy titles of VP, Director, or MD without their designations granting them as much power, privilege, or reflection of experience as their contemporary designation holders in non-I-Banks get.
In March 2012, Goldman Sachs, in a court case, noted that the plaintiff Greg Smith, an estranged VP of the firm, was one of 12,000 VPs in their organisation. Back then, US media also estimated that 40% of Goldman staff were VPs as it was estimated to have 2,400 managing directors!
While it was a decade-old case, things have not changed much, and recent estimates also highlight that there are between 10,000 and 12,000 Vice Presidents employed at Goldman Sachs, FourWeekMBA reported in October this year.
Reuters in November this year reported that Goldman Sachs would promote 608 executives to managing directors next year. These would be fewer than the 643 senior bankers it elevated two years ago, according to a company memo. Notably, the Wall Street firm announces managing director promotions every two years. The number of promotions this year is the lowest since Goldman promoted 465 in 2019, before the pandemic, the report added.
Similarly, on 4the July 2022, the global accounting and consulting firm EY became the latest firm to promote thousands of its employees to “partner” without offering them a share of profits, the Financial Times reported. However, outside the non-I-banking terminology, a ‘partner’ is often assumed a co-founder or large shareholder which is not the case in I-banks.
However, this phenomenon isn’t confined to I-banks alone. According to a report from the Small Investor Protection Association, there are approximately 121,000 registered financial professionals in Canada. The majority of them, classified as dealing representatives, are essentially salespeople licensed to sell financial investments. Only about 4,000 among these registered financial professionals bear a fiduciary duty, a legal obligation to act in the best interests of their clients.
Meanwhile, the exact figures and percentages of individuals bearing these inflated corporate titles may vary, the prevalence of fancy designations, as exemplified by Goldman Sachs, is a common practice in the sphere of investment banking. This broad trend is observed in I-banks worldwide, including those in India. This means that I-banks are plentiful of Vice-presidents, directors, and managing directors.
A consultant from a financial services company, Jerome Tillier, conducted a test and discovered a significant number of hits when searching for the keyword ‘bank vice-president’ in LinkedIn’s search box. He pointed out that this number is larger than the population of Malta.
Similarly, when searching for the keyword ‘Vice President JP Morgan Chase’ in India, the results yield thousands of hits, featuring dozens of Vice Presidents, Managing Directors, and other senior positions available regularly.
Furthermore, in a wrongful termination lawsuit between Bank of America and an Indian-American, Padmanabhan Ramanathan, at the California Court of Appeals in 2007, the bank’s legal representation made an unusual assertion. As detailed by the California Business Litigation Blog, the counsel contended that the bank has the authority to label any employee, “including janitors, maintenance workers, everyone,” as “vice-presidents” if it so chooses.
The assertion that a bank can make even a janitor as VP aptly explains why an Investment bank VP or MD doesn’t immediately translate to authority, experience, and command in that domain or career growth viz-a-viz equivalent title holder employed in non-I-banks.
It is important to note that the abundance of such posts has diminished the perceived authority associated with these positions. Evidently, a vice president is the most junior of the senior bankers and, as far as clients and higher-ups are concerned, the post carries the first legitimate title. The general Hierarchical structure in an Investment bank could include Analysts followed by Associates, then VP, Senior VP, and Managing Directors.
This begs the question: What accounts for the abundance of these fancy titles in certain fields like Investment banking?
Experts claim fancy and inflated titles are “non-cash feel good” factors and more
Foremost, Indian and India-based banks adopted a well-established practice observed in American banks, particularly investment banks (I-banks). Evidently, post-liberalisation, American banks introduced their HR norms to India, and the influence of peer pressure compelled Indian private banks and I-banks to conform to these practices.
A major reason for these inflated Corporate titles is to stoke egos. A bank executive said, “Fancy designations address a human need for validation by employers.”
The head of one of the largest MNC I-banks in India noted, “The MD designation gives social status…being an MD symbolises seniority outside.”
Another reason for so many VPs, MDs, and Directors is to make an impression on customers.
K Sudarshan is a managing partner, Asia at EMA Partners International which is a global executive search firm.
Explaining the rationale and power wielded by such fancy titles, Sudarshan said, “Designations like MD, VP are not jobs, but grades that reflect seniority. VPs are just fancy titles on visiting cards for market-facing executives… VPs are ubiquitous and the title does not mean anything and has nothing to do with the job one is doing…even the person managing in-house tech support can be called MD, technology.”
VP & Head – HR, India Factoring and Finance Solutions, Gauri Das explains that companies try to go innovative with designation, wherever required, and use it as a “retention tool”.
According to Das, another reason for fancy designation is to compensate for low payouts by giving a very high social status through designations. This is because a
fancy and inflated title does not cost money and is not necessarily linked with the paycheck, making it an easy tool for employee happiness.
As per experts, one of the reasons can also be to create a buzz on social media. Das added, “Fancy designations help you get many eyeballs.” Job titles like Customer Service Evangelist, Marketing Dynamo, Head of First Impressions (Receptionist), Opportunity Creator (Business Development), and Master of Disaster (the one who helps federal agencies with information to manage calamities) among others are an example of it.
In a sector where customer perception is crucial, a headhunter said, “A customer meeting a vice-president is going to be a bit impressed…and a company looking for an acquisition likes the idea of liaising with an MD.”
He added, “These designations are visiting card tools for banks to present a grand face to people and companies.”
Meanwhile, after her education, Mahua Moitra worked as an investment banker for Investment banking giant JP Morgan Chase in New York and London. In 2009, she quit her position as one of the vice presidents of JPMorgan Chase in London to join politics, where there were thousands of VPs in the bank.
