On 14 March 2012, The New York Times carried an article by Greg Smith, formerly Executive Director of Goldman Sachs and head of their US equity derivatives business in Europe, the Middle East and Africa. Mr Smith has now left Goldman Sachs after 12 years based in their Stanford, New York and London offices and has taken the highly unusual step of communicating his reasons for leaving so publicly.
He says that there has been a major cultural shift at Goldman Sachs during his time there. What used to be a collegiate and customer-centred business is now, in his words, ‘toxic and destructive’ and entirely focused on making money rather than doing right by their customers. He argues that the Goldman Sachs reputation, throughout its 150 year history, revolved around ‘teamwork, integrity and a spirit of humility and always doing right by clients’. He believes that the key reason for this decline centres on leadership and a major shift in their core values.
Finding your moral compass
This is a fascinating insight into the global investment banking powerhouse at a time when the entire financial services sector is widely despised and blamed for the current economic crisis. Whatever the truth of this situation is (and those of us in HR know that that there are always many perspectives on every story), this article raises a number of very important issues that are relevant to every business.
- It is hard to underestimate the power and impact of leadership on the culture of any organisation. People pay close attention to what their leaders say and do and how they behave. They really do get it. If a leader is passionate about innovation, they will be innovative if they want to get ahead. If the leader’s key driver is customer service, they will go out of their way to deliver excellent customer service. If all that matters is maximising short term profit at any cost, then this is what they will do.
- The economic climate has forced many of us to re-focus our businesses and, for many, short-term survival has been the over-riding priority. The businesses that get through tough times, tend to dig deeper into their core values living and breathing them more. They are even more innovative. They take their customer service ethos to even higher levels. They use their core values as a compass to help them navigate through the choppy waters ahead and they never allow these values to be diluted as they drive forward.
- This is the territory that HR should be inhabiting. Helping businesses articulate the ethics and core values and that will underpin everything they do and then ensuring that these come alive and are recognsied and rewarded at every possible occasion IS the work of HR.
Living your core values
Visiting a prospective client at their inspiring Kings Cross offices recently, it was clear to us that this was a company with strong ethics and values at its very core. Like every business, it is undergoing massive transformation as it adapts to a rapidly changing world. But it has remained absolutely true to its core values. You could feel it as you entered its foyer and reception. It was clear in the conversations we had with their people. You could even sense it as you sat drinking coffee in their café. We left enthused and energised by what we had experienced. We arrived as fans of their business and left as passionate ambassadors for their brand.
The only way is ethics
As Lord Justice Leveson considers his report on media ethics and on the day after that it was revealed that the Conservative Party’s Treasurer and chief fundraiser was offering access to the most senior levels of Government for up to £250,000, Greg Smith’s account of why he left Goldman Sachs resonates loudly and clearly with many of us. Whether he was right to go into print in the way he did is another question. Why wasn’t he able to work with colleagues internally to try to address the issues he has highlighted? Perhaps he did. Either way, he has taken this unusual course of action and we should reflect on this.
What is absolutely clear to us - and we have been arguing this since we formed bold_hr – The Only Way Is Ethics!
27 March 2012