Defending Goldman Sachs

It’s easy to hate Goldman Sachs, and to swallow disgruntled employee Greg Smith’s bitter  Times editorial in full, but as you read it and forward it to your friends, I suggest taking one step first:  Think.

Greg Smith is a middle-manager in a company of 27,000, he is not a “top executive” as portrayed in the Times and in the media.  I challenge anyone to go to any company of similar size and not find hundreds of disgruntled employees with a plethora of reasons for being so, some justified and some a matter of personal failure manifesting itself as hatred for the employer.   I don’t know which is the case of Greg Smith, but I don’t take his editorial as most of the liberal media is, as a clear indication of the evil of Goldman Sachs.  Perhaps everything he says is true, and maybe it’s even worse than he describes.  Or perhaps he is disgruntled because relative to his peers he didn’t make as much money, or was slighted in his 2011 bonus (bonuses were paid on March 1 of 2012.  Interesting timing, huh?  One thing is for sure.  He made sure he quit AFTER getting his 2011 bonus!).  Or perhaps he was given his 2 weeks’ notice of being fired the day before, and he decided to take this way out (if this were the case, Goldman must be very frustrated because they can’t defend themselves by publicly saying he was fired as it would subject them to a lawsuit).

Normally I wouldn’t want to vilify an employee for speaking, especially when I don’t know why he left as I’ve stated above.  But Greg Smith opened himself up for it by going so very public, so here I go:

I do not know an ethical, responsible, reasonable, leadership-oriented executive that would go out this way.  If such an executive felt as Greg Smith did, they would have either left 5 years ago and moved on with their lives, or escalated their concerns to the very top of the business to ensure senior leadership or the President and CEO himself knew how they felt about an eroding culture.  Instead, Greg Smith decided to publicly release directly to the New York Times a bitter condemnation of the company that had been paying him handsomely for 12 years.

To many this appears to be authentic and sincere.  To executives in similar positions to Smith’s, this is viewed as cowardice and vengence driven by some unstated ulterior motive.

One can only imagine the New York Times editorial staff when they saw this editorial.  They must have been careful not to drool all over the printed sheet as they passed it around in glee.  Similarly, the Huffington Post, Atlantic magazine, CNN, MSNBC, NPR, and others jumped all over it, saying “see, I told you these guys were crooks!”  (note that Smith’s allegations are mostly about not caring for clients, not about unethical behavior and illegal trades, though liberal interpretations of it turned into thievery and lawlessness).

His editorial prompts several questions:

1.  Why, if Goldman doesn’t care about their customers, do their customers keep coming back for more of Goldman’s services?  Why is Goldman growing their customer base so significantly when all they care about are themselves?  This is not how businesses grow, and Goldman has been growing and generating huge repeat business.

2.  Why stay there for so long if it was so bad?

3.  Explain these quotes from the editorial: “Culture was always a vital part of Goldman’s success”.  “I look around today and see no trace of the culture that made me love working for this firm for many years” (my emphasis on many).  “But this was not always the case. For more than a decade I recruited and mentored candidates….”.  Smith worked at Goldman for 12 years, and it sounds like he had a very happy and proud 10 years at least.  Has he just had a bad 2 years?  If so, who happily and proudly works for a company for 10 years, has an unhappy two, and goes out with a bitter editorial in the New York Times?

4.  Why, Greg, did you end your editorial “I hope this will be a wake up call to the Board of Directors”.  If that’s what you hoped, and you truly respected the company for 10 of the 12 years you worked there (and apparently paid you over $500k/year on average), and you wanted the best for the fellow employees you left behind as you claim, why didn’t you strongly express your opinions on the inside instead of the outside?  The result of your editorial may actually be an implosion at the top, but it may also generate the destruction of valuation of the company for employees, job cuts, reduction in equity held by employees and investors, loss of customers, and more.  The editorial was “destructive”, not “constructive”.

5.  Why has this company that you vilify ranked in the top 25 companies to work for in the last 5 years (Fortune 100 Best Companies to work for)?

6.  Can you please explain the timing of your departure?  Is it a coincidence that you left immediately AFTER receiving your 2011 bonus?  Did you reach the tipping point in January of 2012, or did you happen to reach it in March, just after you saw the EFTS of your bonus hit your checking account?

After reading and thinking about Smith’s editorial, and not knowing the details behind his situation at Goldman, I have concluded this much:  Smith is like many employees and executives who have gone through a bad run for a period of time with their employeer.  Most employees dream about writing the letter Smith did, and some even write it and then save it in their draft folder, thinking “I’ll send it tomorrow if I still feel the same way”.  But for thousands of such employees, the letter never gets sent, because these employees decide there are better and more ethical ways to achieve the result they desire.  Or they realize that their issues with their employer are caused not just by the employer, but by some personal failure as well.

No matter how much of a brave hero some want to make of Greg Smith, I find him to be the opposite.  He will get book deals, interviews, and lucrative future job offers from various sectors of the media (he is an overnight liberal icon), but if he is half as ethical and upstanding as he claims to be, he will feel guilty for the rest of his life for handling this matter in the cowardly and destructive way that he did.

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