I am having a hard time getting this week’s NY Times Op-Ed piece by Greg Smith, “Why I Am Leaving Goldman Sachs,” out of my mind. This 33 year old executive, making $500,000 a year, wrote the piece to publicly and fully explain why he is leaving Goldman Sachs. He wanted to expose the firm’s disregard and disrespect for its customers and their relentless drive to make money for GS even if it is not in the best interest of their clients. As the banking industry is an easy target these days, the chatter on the talk shows and Internet exploded. Some might even call the story the real “March Madness.” Smith’s friends and others defended his view while the GS crisis management team tried to respond to, as one insider called it, the “bomb” dropped on the firm.
There are a number of lessons here that go well beyond GS. First, it really needs to be recognized that this could happen to any company or really to any person at any time. The reason that this has had such a negative impact is because the image of the bankings industry since the 2008 crash has been at an all time low and this incident just inflamed everyone’s thinking. It is so important that positive image equity is built up every day so that attacks such as this can have a less severe impact. Last year, there was some significant negative publicly about Warren Buffet’s company, but because he has such a high level of “positive equity” I bet you can’t even remember what that was about.
Culture and values in work is so critical for a company. It can’t just be something that is put on a poster or on the inside cover of the annual report. People obviously need to be fairly compensated, but they are driven to dedicate their time and talent to an enterprise because of things such as vision, values and yes, culture.
The real point to consider is where does all this culture stuff happen. Is this top-down or bottom-up driven. There is a lot of controversy on this issue, but I think it is clear that great companies have great culture and it comes from both directions. The vision, values and culture are embraced by everyone in the organization and everyone owns them. Over time, the genesis of these things is not really all that important and everyone in the organization says this is just who we are and how we want to be recognized by the outside world.
To me, the saddest part of the GS story is that someone who felt so badly about the way things were going had only the one option available to him, to quit. How could someone making a half million dollars not think he could change the culture? The stories state that Smith is not alone in his thinking. If that is true, why aren’t all these powerful bankers speaking up, internally, and calling out those who were violating the image of firm? It takes skill and talent to change an organization from within and really that is what so many of us try to do every day. It concerns me that this change from within is not happening at Goldman.
In our industry we also have issues that we need to work on constantly. You only need to briefly look at CafePharma to see that there is a ton of grumbling about mixed up priorities and lack of customer focus. The key is not to wallow in what is wrong, but to try to fix it. This is the responsibility of everyone in the company, not just the senior leadership. Have you ever noticed in an Apple store, how everyone working there seems to be having fun? I have worked with the Genius Bar, One-to-One team, trainers, business experts and sales people. Everyone has an attitude that rubs off on the customers. They seem to love what they do and the Apple brand they represent. Each of these people are a significant part of the Apple Culture.
With Spring right around the corner it is time for new growth. The “Goldman” lesson for me is just how critical culture is to an organization and how everyone must understand their own responsibility for and critical role they play in the culture of their organization. Leadership’s primary role may be to make sure there is an environment where rough patches can be worked out internally rather than in the Op-Ed pages of the NY Times.