Goldman Sachs is one of the most successful banks in the world. It makes a lot of money. It attracts the best and brightest employees. Most of my students would happily take a job there. With great success, comes the burden of attention. So when a now-former Goldman employee wrote this scathing editorial in the New York Times last week, it got a lot of attention.
The author, Greg Smith, discusses in some detail why he is leaving Goldman after a seemingly successful twelve years. His main complaint, as I see it, is that Goldman no longer puts its clients first. Instead, the focus is on making money for Goldman.
Of course, Goldman responded, and denied all of Smith’s assertions, relying on employee surveys that indicate great happiness.
I am not sure what to make of all of this; I don’t know Greg Smith and I have never worked at Goldman Sachs (or anything other bank). But I have a couple observations:
– The mere fact that Smith’s letter made it into the New York Times is telling. If I left BU and wrote a letter why (not that I would have a bad word to say about the Terriers, of course), no one outside of my immediate world would care. Again, the burden of great success is that you become a target of great attention for good, and for bad.
– If any of Smith’s assertions are true, it reflects the lack of ethics that we so often hear about in the business world. Everyone sighs and says how tragic it is that everyone in business is unethical. The wealthy and successful are being demonized every day in the media. Does success make you a bad person? Think hard about this, because it will be you and your peers that will be the successful business people in the next generation, just as the media is talking about my friends and former classmates right now.
– To me, most of these problems can be fixed with a little bit of education. We read about many instances of corporate wrongdoing in my ethics course, ranging from Worldcom to Bernie Madoff. My observation with most of those cases is that they could have been prevented, or fixed much earlier. With the exception of a few bad eggs, which you will find everywhere, most people want to do the right thing. They just don’t know how. That is why it is essential that we teach you how, now, before you go to Goldman and are asked or tempted to do the wrong thing.
– The burden of success will be on you soon. Remember that. You must take this opportunity to think about how you respond to the pitfalls and temptations that go along with success in business. Because not everyone can write a letter to the New York Times and walk away.
9 Comments
Nick Li posted on March 19, 2012 at 1:01 pm
http://articles.cnn.com/2012-03-15/opinion/opinion_lessig-goldman-sachs_1_goldman-sachs-lloyd-blankfein-goldman-s-ipo?_s=PM:OPINION
This article gives some interesting insight about why companies behave like what Smith described at Goldman. Once a company goes public, they have to deal with shareholders, who demand constant profit from companies they invest in. If Goldman doesn’t meet performance expectations, it can expect to see its stock value drop, which means a lot of bad implication for the company. Because of this, they probably feel extremely pressured to meet financial benchmarks and will do everything in their power to succeed.
Hope Blalock posted on March 20, 2012 at 9:53 pm
I have to give it to Smith for writing his accusations about Goldman, with a corporation of its size and standing, that had to have taken a lot of courage. Regardless, it seems to be Smith’s word against the firm’s and the 89% of satisfied customers…
Ryan Gee posted on March 22, 2012 at 9:01 pm
I just want to address a point Professor Spooner made in her second bullet: “does success make you a bad person?” Success is a relative term from person to person, but in this case it is clear that success is defined as monetary gain. I do not believe success makes a “bad” person. I believe it is in human nature to be selfish, or to look out for your own back before you protects others’. However, I also believe that it is human nature not to personally harm others. So when people try to succeed, they make decisions that will ultimately benefit them, while at the same time not harming other parties. This does not mean, on the other hand, that people will always try to help others succeed. That being said, if the described culture of Goldman by Smith is accurate, I do not believe it is unethical or “bad”; the firm is just trying to succeed as Nick described. As long as they are not hurting any of its clients, I do not see a moral or ethical problem…
Evan Weinreb posted on March 25, 2012 at 10:31 pm
I believe that these days people who are successful are being labeled as bad people, which is the wrong direction the country should be moving in. I live in New York City and the occupy wall street protests angered me (not that they don’t have the right to do so) but the fact that many people on wall street are good people and they deserve credit for being successful instead of being forced to pay ridiculously high taxes, lauded as criminals and being forced to forgo bonuses that their families depend on because of bad public backlash. What the country needs to do is incentivize people to be successful and also incentivize people to adhere to ethical and legal behavior. There are obviously a few people like Bernie Madoff who act unethically but the majority of people don’t. Goldman Sachs knew the investments they sold to clients were worthless and even though I respect the company since it is one of the most successful and is a company I dream of working for one day, they should always put the client first since they are the ones that keep them in business in the first place.
Jinfeng Cai posted on March 26, 2012 at 8:32 pm
I have a different opinion with Evan’s point. Actually we are not labling successul as bad people. And I read an article online which says that many of the wall street occupants are well educated and some are actually former employees of the wall street. From what I learned in this article, Greg is pointing out that the Goldman Sachs is being gradually toxic and destructive. Because the company does not put the customer in the first place. That being said, since the economic crisis, many companies go out of business. In somways, it is understanable that companies care more about profitability, but for a good company, customer should always come in the first place.
Yuting Su posted on March 28, 2012 at 9:40 pm
Making profit is alaways the main goal of all companies. It is reasonable that companies care lots about their profit and reward employees according to the profit their bring to companies. However, to gain long-term profit, companies have to put customers in the first place. As this case shows, employees may bring shor-term benefits to the company by ignoring customers’ benefit, and in this way get reward from the company. It is companies’ responsibility to set up values and relative rules that motivate empolyees to give priority to customers’ benefits.
Yuchen Qin posted on March 28, 2012 at 10:48 pm
It is astonishing to me how much integrity the resigning director values. As we learn from the ethics chapter, Goldman Sachs must be using shareholders’ perspective when dealing with its customers. However, to make a prominent company sustainable, people still need to think about company’s culture and spirits. I’m interested to know how this letter will affect the campus recruitment in the coming summers.
Sophie Park posted on April 4, 2012 at 4:08 pm
It seems that the culture of America today is built solely upon success. What Smith tells of Goldman Sach’s direction towards the “easy way out” and maintaining the highest profits seems to reflect the mentality of our country as a whole. We’re constantly fixated on the fastest way out, the fastest weight loss, the fastest path to success–even a huge corporation is guilty of this. Although this is a huge generalization, I can definitely see how a company could get so obsessed with making money that they lose their company culture and sense of real determination to succeed in their business sector.
FlexinAll Review posted on February 11, 2018 at 5:25 pm
Exactly what I was looking for, appreciate it for posting.