Goldman Sachs' PR Nightmare—and How To Stop the Next One
It is a common enough scenario. A mid-level employee decides to leave your company after a number of years. On the day he does, he pens a final message attacking the company, the culture, and all the things that make it impossible for him to stay. The missive makes the rounds and an uproar ensures.
Common, perhaps, but if you’re Goldman Sachs and the employee is Greg Smith, his ultima ratio is disseminated not via email, blog, or message board, but in the op-ed pages of The New York Times.
Smith, a Goldman employee based in London, launched a very public attack on Goldman in the pages of the Times on March 14, 2012, the very day of his departure. Smith alleged Goldman’s “toxic and destructive” culture was forcing him to leave the firm. Smith wrote: “The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.”
Put aside for the moment valid considerations as to whether Smith is right, whether he is naive, or whether the real reason he is leaving is that he failed to make Managing Director. And shelve that notion of a pending book deal.
Instead, let’s consider Goldman’s public response to the diatribe and how such an ineffective response can allow a crisis to grow.
Goldman’s initial reaction to the op-ed was slow and, some have argued, tepid, perhaps in the hopes of downplaying the attack and minimizing its impact. And yes, such a response can work in some circumstances. But not when you have already been the subject of repeated criticism for greed and client conflicts—and certainly not when the public attack comes via the opinion page of one of the most influential media outlets on the planet.
In that context, many of Goldman’s low-key moves in the immediate wake of the Times op-ed just played into the notion that the firm is arrogant, unlistening, and uncaring. At least one client, for example, decried the fact that while a memo went out to Goldman own employees that same day, it was more than 24 hours later before Goldman Sachs actually reached out to clients with any form of reassurance.
Big mistake. Even if it’s essentially the same message, any company facing such an attack on its client relationships should reach out immediately, in a personalized and direct manner that shows you care. Otherwise, you reinforce the notion that your customers are, at best, an afterthought.
True, there is no way Goldman could have seen this particular attack coming. Moreover, Smith’s Times op-ed appeared one day after Goldman announced its head public affairs man, managing director Lucas Van Praag, was leaving, to be replaced by Richard L. “Jake” Siewert, Jr., a former aide to U.S. Treasury Secretary Timothy Geithner. Siewert probably didn’t even know where his desk was yet, never mind how to respond to such an unprecedented public broadside.
Still, Goldman Sachs knows that it is under attack these days (you don’t need to be called “vampire squid” twice to realize that). A company so elite and so talented in other areas of endeavor should be handling public communications with the same seriousness and care that it handles a multi-billion-dollar financial transaction.
In short, they ought to be ready at this point for any and all public attacks. I’m no Boy Scout, but I counsel my clients to abide by one of the Scouts’ main credos: “Be Prepared.” Every corporation—particularly those under fire—needs a “rapid response” strategy to handle effectively communication to all of your company’s stakeholders in the event of a crisis. Customers. Employees. Regulators. Financial analysts. Media. With proper planning and technology, the right response should be getting to the right places almost instantaneously. If you can execute a trade in one-tenth of a second, surely you can do this.
Naturally, there is an element of Monday-morning quarterbacking to all this, but consider the next logical question: Is Goldman Sachs ready for the next attack? What will they do when a second employee emerges, perhaps at a higher level, to voice similar concerns? When a group of clients team up to launch the next broadside? As with all companies that find themselves in the crosshairs over a very public attack on their culture and ethos, Goldman Sachs should be preparing now for the next broadside.
Finally, to the substance: if there is actually a culture crisis at Goldman, the best public relations move they can make is to fix it—and fix it fast. And that requires commitment at the highest levels of the organization. I am reminded of another piece of wisdom, this courtesy of my Irish mother: “The fish stinks from the head down.” If there is a problem at Goldman Sachs, the responsibility lies with CEO Lloyd Blankfein, and it is up to Blankfein to make it right.
In the Dodd-Frank era, with many business lines and profit margins drying up, this is certainly no easy task. But I believe it can be done. Let’s remember that there was a time—as recently as the last decade—when the Goldman Sachs name was synonymous with professionalism. As firm biographer and Bloomberg View columnist William D. Cohan put it recently in BusinessWeek, Goldman once cultivated a reputation for being a “paragon of financial virtue.”
Whether this was smoke-and-mirrors (as Cohan argues) or actual reality is beside the point, because customers, regulators, the media and politicians believed it. Whether Goldman can return to such preeminence is the real question, and that will depend not on offhand comments from middle managers, but rather on whether—from the top—the fish itself stops stinking.
James F. Haggerty, an attorney and communications consultant, is CEO of PRCG/Strategic Communications and the author of In The Court of Public Opinion: Winning Strategies For Litigation Communications (American Bar Association Publishing, 2009). He also hosts a weekly In The Court Of Public Opinion radio show on the VoiceAmerica Business Network.