When Greg Smith published his editorial in the New York Times (14 March 2012) on the alleged debased culture and greedy exploits at Goldman Sachs, this was far from surprising after the many misdeeds of Corporate America over the last decade that saw the rise of Sarbanes Oxley in 2002 and the massive financial bailouts in 2008, which does not represent who we really are and can be.
It’s not that Corporate America is bad, it’s just that they frequently get rewarded for doing the wrong things.
All too often, promotions, corner offices, year-end bonuses, and stock options are the rewards for racking in profits, but are not necessarily tied to innovation and/or customer satisfaction.
I believe over the years this has taken many word forms from snake oil salesman, charlatans, spoilers, and many others.
Greg Smith who worked for a dozen years at Goldman–in of all things “recruiting and mentoring”–described the venerable Goldman Sachs as a place where:
– “Interest of clients continue to be sidelined”
– “Decline in the firm’s moral fiber represents the single most serious threat to it’s long-term survival.”
– If you make enough money for the firm…you will be promoted.”
– At sales meetings, “not one single minute is spent asking questions about how we can help clients.”
– Leaders callously “talk about ripping off clients” and call their clients “muppets,” a British slang terms for “idiots.”
The funny-sad thing is that after all these horrific accusations, Goldman has not come out and full-on-full repudiated these claims.
On March 15, the Wall Street Journal reported “Goldman Plays Damage Control” saying that “it will examine the claims.”
Rather than denying the accusations in specific ways and pointing out their true moral fiber, the Chairman in a memo to employees chose to downplay the accuser calling him only one “of nearly 12,000 vice presidents” of 30,000 employees. In other words, this is just the opinion of a lone wolf.
More generally, the Chairman wrote coyly that this does “not reflect our values,our culture, and how the vast majority of people at Goldman Sachs think of the firm and the work it does on behalf of our clients.”
In another article, in Bloomberg BusinessWeek (19-25 March 2012), it states similarly that “Goldman Sachs would have you believe it’s learned from the financial crisis. Don’t be fooled.”
The article goes on to list a scathing history of scandal from Goldman Sachs Trading Corporation that “blew up” after the stock market crash of 1929 to Goldman’s settlement with the SEC for a whopping $550 million in 2010. Further, it describes a current conflict of interest case with El Paso and Kinder Morgan that they call a Goldman “heads-I-win, tails-you-lose approach.”
While I have always respected the likes of Goldman Sachs for their unbelievable brainpower and talent,the accusations against them and by extension against others in Corporate America is very concerning.
The notion that customers are but idiots for Corporate America to pillage and plunder is not democracy and capitalism, but greed and evil.
When we no longer value a creed of service above pure profiteering then moral bankruptcy is just a prelude to financial bankruptcy.
No company can stay afloat and be competitive over time, if they do not work to strengthen their balance sheets, income statements, and cash flows.
However, at the same time, no competitor can thrive for long on a culture of greed and duplicity that sees people as victims to spoil, rather than as customers to serve.
While I do not know the details of Greg Smith’s accusations, this last part I know in my heart to be truth.
(Source Photo: here)