Archive - Mar 15, 2012
Yesterday, I wrote about the overarching issues of the resignation of Greg Smith from Goldman Sachs. I made a reference to crisis communications. While I recognize how difficult it must be to be in the communications department at Goldman right now, it does look like they really failed in their efforts to address Mr. Smith's concerns.
By now, many of you have read the submission in today’s New York Times by a former employee of the firm. Needless to say, we were disappointed to read the assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.
They go on to talk about how Mr. Smith was just one voice out of 12,000 vice presidents and that a survey of staff found that 89% felt that they provided exceptional service to their clients.
Reading between the lines, 11% of the staff don't feel that their firm provides exceptional service to their clients. Doesn't that strike you as a bit high? The rest of the letter doesn't do much better.
So, let's put this into context. On the 13th, Bloomberg reported Goldman Sachs Hires Ex-Treasury Aide Siewert for Communications.
Siewert started working in New York as the global head of corporate communications, replacing Lucas van Praag, who is leaving after 12 years. (Curiously, the same amount of time that Greg Smith was at Goldman). Talk about an exciting way to start a new job.
The Bloomberg article goes on to say,
Goldman Sachs was viewed unfavorably by 54 percent of respondents in a Bloomberg survey of traders, investors and analysts conducted last May…
Goldman Sachs’s score was among the lowest in a recent study of corporate reputations, according to a Feb. 13 statement from Harris Interactive
That's a very different picture than the memo to employees painted.
After Mr. Smith's OpEd, Bloomberg posted an editorial, Yes, Mr. Smith, Goldman Sachs Is All About Making Money: View. The comments were overwhelmingly negative. The anonymous Bloomberg editors were painted as stuck in a false dichotomy. Either, you look out for the best interests of your clients, or you make money. In fact, businesses that don't look out for the best interests of their clients end up losing clients and going out of business.
The day after, there were reports about how Goldman stock had dropped 3.4% of its stock value, or $2.2 billion as a result of the disgruntled employee. Yet it picked up 2.2% to recover somewhat today. Others have written about what this may do to recruiting efforts for Goldman.
A statement from a Goldman Sachs spokesperson hits a better tone. In the Wall Street Journal's blog entry, Goldman Rejects Claims Made by Outgoing Executive we find:
“We disagree with the views expressed, which we don’t think reflect the way we run our business,” a Goldman spokeswoman said. “In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.”
If Goldman had led with this, followed by comments about taking the accusations of Mr. Smith seriously and investigating them, they probably would have come out much better.
Yet the way news cycles go, this story will be soon enough forgotten and will fall into the background, until the next issue with Goldman comes up, and people return to this one.