Attention Goldman Sachs: Time to Buckle Down and Focus on Culture
BY Paul Spiegelman
Here's how--and why it will even improve shareholder value.
Dear Goldman Sachs (or any company that lost its culture):
I'm sure you're stinging a bit from the letter to The New York Times by your former employee Greg Smith. Rather than be frustrated or defensive, I'd suggest you do one simple thing for a change: Listen.
Don't worry. You're not alone. There are many companies that have lost their culture or never had it to begin with. There are many loyal employees like Greg. He just had the guts to do something about it. And if you take this as less of a threat and more of an opportunity, you can turn this ship around. You had a culture of integrity and leadership by example at one point—that's what kept Greg loyal. Now that you've lost it, how do you get it back?
My small company doesn't make the headlines like Goldman Sachs. But I've lived by the philosophy that money is the lagging indicator for business, not the leading one. In fact, I believe—and there is increasing data to support—that a "people first" philosophy leads to better financial performance. The 2007 book Firms of Endearment found that companies focused on culture returned 1,025% to their investors over a 10-year period, compared to only 122% for the S&P 500 and 316% for the companies profiled in the bestselling book Good to Great.
While we've always had a good culture for the 27 years we've been in business, we did have times when we thought we were losing it. In fact, we had our management team draw a graphic of the "state of the business" at that time as reflected in an "ocean going vessel" and they had people jumping ship. Didn't feel good. I get it. But we corrected our course, and now when we ask our team to draw those pictures, there is a bright sun on the horizon.
In his "Why I'm Leaving Goldman Sachs" letter to the Times, Greg spells out in great detail how the eroding culture of your business, the focus on money at the expense of client needs, has forced him to leave the place he honored and called home since he left college at Stanford. It sounds like you lost a good one. That hurts.
Greg wrote about the wonderful culture at Goldman Sachs when he started 12 years ago. He described how he was mentored and then taught new employees to care about products and the customer. But that all went away as the focus of the company shifted and became purely about money and profit. While some of Greg's descriptions about Goldman's operation are difficult to face and embarrassing, I was pleasantly surprised to read that Goldman wasn't always that way. It used to be a great place to work (for employees)—or work with (for clients).
You now have the chance to get your culture back. Here's how you can do it:
Forget the public embarrassment. Look in the mirror and commit to fixing things. Realize that you have a great company with a great history.
Lead by example. Culture begins and ends at the top. If you don't genuinely care about your employees or customers, you are doomed to fail. Get your people together, be vulnerable, and tell them that you are committed to turning your culture around.
Let your employees develop the culture plan. Communicate a vision, but let them do the rest. Ask for their help and implement their ideas.
Develop a set of core values that will never change, no matter what else in the business changes. Greg seemed to nail what it might be: teamwork, integrity, humility, and doing right by clients.
Talk to your customers. Like the old FedEx commercial in which the CEO sent the management team on the road after losing a big customer, you have to get out there and talk to them face to face.
Develop trust. If you just talk the talk, but don't walk the walk, things will only get worse. If your employees and customers believe what you say, and see change over time, you will also see great change.
I congratulate Greg for having the guts to leave. I'm sure he had a great financial future had he stayed with the company. But Greg realized something I wish more people and more companies would realize. Business and life is more than just about making money. It is about purpose and meaning. When Greg no longer found it, he left.
The companies that put profit before people are a vanishing breed. Companies big and small, with a multiple stakeholder approach to business, the ones that value their employees and customers as much as shareholders, are realizing that the financials only get better. If you want to make more money, focus on your people first.
It's not only the right thing to do. It's good for business.