A few hours ago, Goldman Sachs acknowledged in an SEC filing that mounting criticism in the press is a risk to the firm. Goldman should be concerned. A firm’s reputation affects employer brand, employee engagement and employee retention. In the past Goldman employees were proud to say they worked for the firm. Not so today following a long string of articles where Goldman has been referred to as a blood-sucking leech in the economy that cares only about its bottom line. I cringe when I read such reports because I have several good friends who work or have worked at Goldman and without exception I trust and respect each one. That said, having worked on Wall Street for most of my career, I know that people get caught up in thinking what they do is a game the score of which is determined by how much money they make relative to others. This mindset encourages imprudent risk-taking and behavior that may meet the letter of the law, but not the spirit. (Note: the gamesman profile was first described by Michael Maccoby in his book The Gamesman.)
I advise leaders that they must clearly communicate a set of virtuous values and keep them in front of employees. The most effective leaders do this by celebrating the stories of individuals who exhibit the right values and getting rid of employees who don’t. Absent a clear focus on virtuous values, an organization’s members will eventually stray into ethically questionable behavior that can destroy the firm. And with organizations such as Goldman that are interconnected to many companies and countries via derivative contracts, they can take the economy down with them. That’s one reason I agree with Paul Volker and others who support effective regulation of financial services organizations.
