On Wednesday, I was in London for meetings with a professional services firm discussing their ethics program. On Thursday, I was in their Madrid office doing more of the same. Guess what everyone wanted to talk about in each location? The resignation shot that was heard around the world.
Greg Smith
Former Goldman Sachs executive director, Greg Smith’s dropped a media bomb by writing a highly public resignation letter, published Tuesday by the New York Times as an Op-Ed piece entitled, “Why I am Leaving Goldman Sachs.” If you missed it, you should take a moment to read it.
This has to be – or will soon become – one of the most legendary corporate resignation letters in modern times. Even Martin Luther would be proud! The esteemed – but publicly beleaguered Goldman Sachs – received a broadside attack from resigning employee, Greg Smith, as he swung the door behind himself. Smith’s resignation letter is probably doing more public relations harm and rattling of shareholder and client confidence, than the now infamous 2010 Rolling Stone article that called Goldman Sachs “a great vampire squid.” Outside stone-throwers like Occupy Wall Street could never have hit their target as well as this insider’s resignation letter.
To be sure, Smith did this with intentionality and for maximum PR effect. And the New York Times was thrilled to be complicit in publiciz
ing the attack. And Goldman’s new PR director was quick to help them craft an immediate response, which essentially sought to downplay Smith’s seniority (and by inference, his credibility), and portray his views as being out of step with the majority of other employee options.
All spin-doctoring aside – from Smith and Goldman Sachs – I’m extremely interested to know the truth… Was Smith the classic disgruntled employee with an axe to grind, akin to the selfishly motivated whistleblower, who spreads lies about a former employer? Or was he more or less accurate in describing a “toxic and destructive” culture of a once-legendary bank. If the former, I’m less interested, though I feel bad for Goldman Sachs and their unfairly maligned employees. But if the latter, I am extremely interested… How did this happen? How does leadership change it? What do you do if you’re one of the clients?
Assuming Smith told the truth (a BIG assumption!):
- is he to be commended for taking a stand, and for the manner in which he did it?
- or, is he to be commended for taking a stand, but should he have done it differently?
Assuming Smith exaggerated or even lied:
- how would you respond if you were Goldman?
- how should the NYT and other media respond?
What do you think? Please comment below…
He took their money, if he is a whistleblower, the letter did not indicate it.
But he not say anything that the SEC, the U.S. Senate, and other authoritities have not said about Goldman Sachs. The NY Times has a “room for debate” on Smith’s letter – and none of the commenters are in basic disagreement with Smith’s view of Goldman Sachs/Wall Street – and these are knowledgeable people.
But just look at empirical evidence, which supports his contentions.
I think he cared about Goldman, saw a “wrong,” and tried to change it boldly the best way he knew how, while knowing the risks/rewards in doing so.
Goldman (and others) should return to their roots and basic principles of putting clients first in order to start recovering from lost reputation, which will take a long time.
And the NYT should continue printing commentary in the Opinion section, which in this case may affect a positive change.
I like the way you presented this case. We love to see pure heros and villains, but that is rarely the case. There are indeed some big questions to consider, though I suspect we will never fully know all that has gone on. But if this puts pressure on Goldman and other institutions to start thinking about a bigger vision than making money for themselves, it will have accomplished something very important.
Thanks, Al. I agree with your assessment about society’s desire for heroes and villains. I hope you are right about institutions thinking about a bigger vision than their bottom line.. time will tell!
I have found many such companies thinking beyond the bottom line, outside the banking industry, from publically traded to private. And I found one bank CEO who I believe wanted to really do the right thing in a publically traded company, but he retired before the meltdown.
My thirty years on the Street suggest “all the above” are likely correct. We are complex creatures created, as Tocqueville said, with a taste for both heaven and earth, and Wall Street is a complex place. It does much material creation and much spiritual destruction. That was undoubtedly worse in Greg’s position, being in derivatives. Peter Lynch once called commodities speculation the world’s largest casino. Greg should not expect to see the better side of Wall Street, such as quality mortgage origination, corporate underwriting, and such from his perch. Or, as the old Wall Street saying has it: We don’t see things as they are as much as we see them as we are.
Greg Smith is doing the bravest thing a person can do – standing down the establishment. Trying to get out of a wall street hierarchy is like trying to get out of the Mafia (evidently). I suspect that Greg is living according to his deepest values and not the values of the collective. We call these heroes. Greg is on the hero’s journey. Go Greg!!!
I believe if he had noble intentions they were masked by his overt actions. There are other channels than NYT to voice convictions, and the most virtuous of convictions will stand the test of scrutiny, whether in or out of public view. We have sadly lost a great skill in the present of airing grievances, and for that neither Mr. Smith nor Goldman Sachs are innocent.
Our standards for brave men, for heroic acts, are weathered down and this is the greatest of faults, not to be on one party but all of us together. We should not praise a man for leaving in gusto but striving in virtue. I cannot gauge Mr. Smith’s character nor his true convictions; only time tells this tale. I wish him well.
I can challenge Goldman to declare inside and out a clear conviction, not a [PR] response [to a letter], as to who they are and what they stand for. Call a spade for what it is, a spade. The burden of their previous testimony, in mission & vision statements, is nothing but window dressing if they cannot be enacted diligently and in all aspects. This is the real blow, and the heart of what Mr. Smith exposed, whether he wanted to or happened upon.
Interesting point… whether Smith is accurate only in part or in whole is not really the issue now. He said what he said… If Goldman has a good story to tell, then it shold have multiple believable ways to respond, and not have to revert to PR/legal speak…
I I once heard the president a large steel company who was been a costed by a customer say that, “All customers are important but none are significant.” I get the feeling this will be a similar response by Goldman Sachs. That all employees are important but not are significant and until significance is realized very little will change.
It’s too bad Greg Smith was unable to affect change in a manner that would cause management to examine their corporate culture. I think his letter was a more simple solution to have his voice heard.
We, and everyone discussing this case, seem to have missed a very important consideration: that corporate managers have been taught to act as if nothing matters other than money. Milton Friedman famously taught the only social responsibility of a company is to make money for the shareholders. It’s a tiny slide down that moral slope for management to believe their only responsibility is to make money for themselves. Traditional morality understood all too clearly that we humans always fall short of the ideals we are taught. When Jesus said to sell what we have and give it to the poor, he undoubtedly knew that we might give 2% to churches and charity, as we now do. Humanism doesn’t seem to get it that when Ayn Rand teaches us that “selfishness is a virtue,” things get completely out of control.