The recent furore caused by former Goldman Sachs employee Greg Smith appears to be a cautionary tale of why money can’t buy alignment of values.
Greg Smith’s opinion piece, published in The New York Times on 14 March following his resignation from Goldman Sachs, claimed the firm’s culture was "toxic” and asked people to compromise on their core values for short term monetary gains. He said that when he joined Goldman Sachs, its culture was the "secret sauce” that made the company successful and made him love working for the firm. However, over the past couple of years the focus had changed to become all about making money. For him, this didn’t stack up over the longer term.
Whether or not this is the case, his article raises some interesting points about culture – real or perceived.
In retaining and attracting staff, people are motivated by a combination of reward and risk. This means they are required to learn and acquire skills, be continually growing and developing, and have some attachment to their core values.
While financial rewards are an important part of the rewards system (especially in the finance industry), bonuses usually offer short-term gratification, while other more intrinsic rewards motivate us in the long term.
Post-GFC, many in financial services have faced greatly reduced bonuses. Companies need to look beyond the bonus to motivate staff long-term and create a rewarding organisational culture.
Aligning employee interests with the higher purpose of the organisation is fundamental to sustaining a positive long-term culture.
Goldman Sachs’ vision is to help clients achieve their strategic financial objectives. However, if employees are motivated to "obtain profit margins at all costs” as claimed by Greg Smith, then individuals are placed in internal conflict.
The internal story has to be compelling enough to engage and retain staff as a great place to work and for performance to prosper and flourish.
Whether aggrieved or not, things must have become quite critical for Greg Smith to express his views of Goldman Sachs in such a public way (and as other commentators have stated, most likely a career-limiting way).
We don’t know the back story to this public airing of Greg Smith’s concerns and Goldman Sachs has disagreed with his claims. However, the fact it is now public means the company and this issue will be open to interpretation, assessment and judgment from both within and outside the organisation.
In times of crisis or public scrutiny, it is just as important to manage the internal culture as the outward perception portrayed in the market.
However, for me the lessons from this are the importance of maintaining a positive corporate culture and regularly checking the pulse of your organisation, and an invitation for individual executives to reflect on how they balance financial rewards with integrity.
Eight steps to building and maintaining a great culture:
– Build values into all elements of the business – both strategic and operational;
– Conduct an annual staff engagement survey and customer surveys to identify areas of the business which may be under stress or where staff engagement and morale could be an issue;
– Exit those employees who aren’t aligned to the culture;
– Encourage feedback – both good and bad – particularly upward through the organisation;
– Take an active role in the career development of employees, operate talent management programs for future leaders and conduct regular performance reviews as opportunities for constructive feedback, especially relating to alignment with company culture and values;
– Consider using external mentors and executive coaches to facilitate executive development and provide a fresh view;
– Ensure there are regular communications from the CEO/senior executives to all employees in the business. This is particularly important in challenging times such as the current economic climate as people continue to feel insecure;
– Make sure the leaders in the company (including chairman, board, CEO and senior executives) demonstrate a commitment to the values – in actions, not words – that is visible to the entire company.
Virginia Mansell is Executive Director of the Stephenson Mansell Group, a pre-eminent Australian leadership development firm. She holds a BA in Psychology and Statistics, a Postgraduate Degree in Counselling Psychology, and has been a registered psychologist for 18 years. In 2009 Virginia published her first book, The Focused Executive: Leadership & Management Skills in Challenging Times.