Edgar Schein, the MIT management professor who actually coined the phrase “culture eats strategy for lunch,” wrote that the success of a company is determined not by its business plan but by its people.
Welcome to Part 3, as we watch with interest Goldman Sachs’ loss of more than $2 billion in market value after a searing indictment of their culture in the New York Times by one of their own people, Greg Smith in his very public letter of resignation.
While we may think that Goldman Sachs became one of the world’s most successful investment banks because of aggressive business practices, Smith reveals that it was actually because of its employees. “[C]ulture was always a vital part of Goldman Sachs’ success,” Smith writes. Culture “was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years.”
Smith reflects on his former “pride” and “belief in the organization.” This is the real-deal—the emotional connection Brandemix strives to embody in each of our branding assignments.
It’s the living illustration of the service-profit chain, a philosophy that proves engaged, empowered employees may increase company profits by as much as 22%. For an investment bank, that could ladder up to billions of dollars.
Today, Smith rues the lack of “humility” and “integrity,” two of Goldman’s core values, which also include include placing clients' interests first, commitment to excellence and innovation, and teamwork. Smith calls out Goldman's two leaders, President Gary Cohn and CEO Lloyd Blankfein, for "decline in the firm's moral fiber."
No surprise. Culture starts from the top down and, as I tell clients, senior leaders must buy in, live the values, and set an example for everyone else.
I’m not alone; Frederick E. Allen, the Leadership Editor at Forbes, responded to Smith’s letter with an article titled To Save Goldman Sachs, Lloyd Blankfein Must Go.
If you’re ever attended a Brandemix presentation on Employer Branding, you know how important I think an organization’s values are to employee acquisition and retention. Well, here’s that idea in reverse: a lack of values is actually causing an employee of 12 years to leave a lucrative position with bonus money on the table.
Smith isn’t just saying that the new culture isn’t for him. He’s not saying that it isn’t right. He’s saying that the culture threatens the firm’s very existence. Because the culture puts profits ahead of clients, Smith makes the equation clear: “Without clients you will no longer make money. In fact, you will not exist.”
Today’s disgruntled employees are sharing their stories to more than their friends and colleagues. It’s a world of One Brand, and they are speaking to your clients, your vendors, and your applicant pool.
Is your organization’s culture is the best it can be? Let’s find out.