Goldman Sachs…sometimes I wonder what I’d write about if it weren’t for them. They’ve become everyone’s favorite punching bag over the last couple of years – a symbol of all that is wrong with Wall Street, in particular, and with business in general.
With the now-infamous resignation of one of Goldman’s employees (Greg Smith) and the ensuing “sturm und drang“, it seems the very right of Goldman to exist is being called into question. Goldman has gone off the path…Morgan Stanley has gone to the dark side…the investment banking business has the stink of corruption all over it.
Everywhere, there’s this attitude that you don’t make waves if you want to keep your job, continually reinforced by the warning that “there are plenty out there who’d be glad to take your place”, punctuated with “…some would do it for less than you’re getting.”
This noxious brand of corporate philosophy has grown at a staggering clip within the last couple of decades. It’s a not-so-subtle way of enforcing compliance with directives of top management. This philosophy either started with changes in the investment banking business that began in the 1970’s, or it picked up speed at around that time.
Partnerships, or benevolent dictatorships, began turning into publicly traded companies (evil empires, to some) in large numbers. Short-term gain took precedence over long-term goals and mutually satisfactory relationships. An “us or them” mindset took over.
But that’s the investment banking business, right? Over at Our Corporation, we’re not like that. We’d never sell out our customers to make gobs of profit. We value our relationships with them. Don’t we? Well…
What’s going on at Goldman Sachs, Morgan Stanley, and other Wall Street firms ought to give us pause – cause us to reflect on our own ethics and practices, rather than point the finger at them and say “we’re not like that.”
Ever hear of the term “hubris”? It means an exaggerated or misplaced sense of pride or self-confidence – that feeling of “what happened to them won’t happen to us”.
What we should be telling ourselves over and over again is “what happened to them could very well happen to us if we are not careful and vigilant.” We need to understand what causes and what contributes to that sense of invincibility, pride, and even arrogance.
What are some of the root causes? Greed? Perhaps. Taking the short-term view only? Could be. Misplacing one’s priorities? Forgetting about the company’s mission and vision?
A lot of this might not happen if companies would continually audit their practices. Of course, I’m not talking about a breezy, once-over internal audit. Internal audits, if done correctly, are a good place to start – for Goldman, Morgan, or Our Corporation. What I mean, though, is a complete, top-to-bottom, third-party process audit. ISO 9001 provides an excellent framework for such an audit.
This audit must be conducted by a knowledgeable but disinterested third-party auditor – one that takes its responsibilities seriously and cannot be unduly influenced (i.e., corrupted) by Our Corporation. Process audits like this must take place on a regular basis and as the need arises – for example, whenever relevant legislation is newly enacted.
If the SEC had been doing this all along, Goldman and their customers might not be in the uncomfortable position they are. Rather than us saying “I knew this would happen to them”, though, why don’t we learn from this situation? Why not see it as an excellent opportunity for improvement?
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SUGGESTED READINGS
Cohan, William D., “Goldman Sachs’s Long History of Duping Its Clients”, Washington Post, 16 March 2012 – http://www.washingtonpost.com/opinions/goldman-sachss-long-history-of-duping-its-clients/2012/03/15/gIQAVlu3GS_story.html
Cohan, William D., “Whistleblower Gets Sham Justice from Wall Street Court”, Bloomberg Opinions, 18 March 2012 – http://www.bloomberg.com/news/2012-03-18/whistleblower-gets-sham-justice-from-wall-street-court.html
Ogg, Barb, PhD, “Termite Damage, Infestation, and Control”, University of Nebraska-Lancaster County Extension, Sept 2009 – http://lancaster.unl.edu/pest/resources/termite002.shtml
Schwartz, Nelson D., “Public Exit from Goldman Raises Doubt over a New Ethic”, NY Times, 14 March 2012 – http://www.nytimes.com/2012/03/15/business/a-public-exit-from-goldman-sachs-hits-a-wounded-wall-street.html?_r=1&hp
Sebastian, Michael, “5 Crisis PR Lessons from the Goldman Sachs Resignation Letter”, Ragan.com, 16 March 2012 – http://www.ragan.com/Main/Articles/44561.aspx#
Smith, Greg, “Why I Am Leaving Goldman Sachs”, NY Times Opinion Pages, 14 March 2012 – http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html
Zehner, Jacki, “Why I Left Goldman Sachs-Version Two”, 16 March 2012 – http://www.jackizehner.com/2012/03/16/why-i-left-goldman-sachs-version-two/
