Greg Smith’s open letter of resignation from Goldman Sachs that appeared in the New York Times last week has been devastating on many levels. Only with time will the real impact be revealed, however already billions of dollars have been wiped off its stock price, with clients deserting at a fast pace. It has been a public relations fiasco. The questions I ask are: what about the colleagues and co-workers who remain at Goldman Sachs, and what of its employer brand?
Mr Smith, after 12 years at Goldman Sachs, writes that he could no longer participate in an institutionalized ‘toxic culture’ that he considered ‘moral bankruptcy’. This is strong language – and his allegations are directed at the most senior leaders the business.
I remember when I was at Ansett years ago (clearly) a colleague in his farewell speech chose to sledge his peers and superiors. He was young and thought it would be ‘insightful’. Whilst many of us may have concurred with his insights it was completely inappropriate to diminish others efforts publicly– quite frankly he came off as smug and superior… nothing was gained.
So what might be the outcome for Mr Smith’s colleagues at Goldman Sachs? His intention may well have been for the ‘greater good’, however for those people at Goldman Sachs who work hard and show up every day believing that they are doing some good work for their clients, they will be feeling angry and bewildered. Only time will tell if this letter is a catalyst for change, but the workaholic culture of this institution makes me suspect it will struggle to change its behaviour. Will Goldman Sachs employees dismiss or disregard his comments? Will they deny there is any truth in what he says? After such a damning public letter, would you admit that you were working in such a place with such a value system? It’s hardly the best employer brand to say you’re associated with. So will employees take a stand and agree with Mr. Smith. Or will they dismiss it as sour grapes?
Let’s look at employer brand for a moment: the reputation of an organization is critical to its ability to recruit and retain the best of the best. Goldman Sachs woos young smart graduates trying to attract them to a life of long hours and sacrifice. Will graduates think twice about what they want their CV to look like? Will they vote with their feet and not want to apply to work there? Without the best and brightest will Goldman Sachs be able to stay competitive? On the flip side, those current employees who have worked there for a long time may well have their career choices limited. Smith’s letter may well tarnish their reputations by association.
Last year in the GFC documentary Inside Job, Goldman Sachs was named as being culpable in the share crash and mortgage debt pyramid. Was than not warning enough that their business practices could not continue? Yet – going by Mr Smith’s letter – nothing has changed culturally. Is there a way Goldman Sachs will be able to lift and reinvent itself after 143 years?
There is a difference between a disgruntled employee leaving under a cloud and looking for revenge; and someone who is prepared to make a stand for integrity. History will show which camp Greg Smith is in – in the meantime, the question remains whether the Goldman Sachs employee brand can ever recover?
As leaders, we can learn a lot about our own organisations from the Goldman Sachs affair. Take a moment to think about your business values. Are they aligned and cascading through every level of your business? Our values are everything at RedBalloon. It’s who we are. What and how we do. Letters like Mr Smith’s are a great reminder to stop, breathe, and take the pulse of your business.
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