November 23, 2014
Stashed deep in a box of cubicle memorabilia from a long-past job along my journalism trail is a sheet of 8½-by-11-inch copier paper with a quote that sticks with me to this day. Just over a decade ago, Jay Harris announced his resignation as publisher of the San Jose Mercury News. Harris was quitting because he believed Mercury News parent company Knight Ridder was putting profit goals above the publication's duty to fulfill the public trust. "My argument," Harris said in 2001, "is that a freedom, a resource so essential to our national democracy that it is protected in our Constitution should not be managed primarily according to the demands of the market or the dictates of a handful of large shareholders." I'd heard plenty of my editorial peers make impassioned pleas to maintain integrity in the face of mounting financial and competitive pressures. Yet it was the unconventional pronouncement by Harris—who as publisher understood the financial implications of his stance better than any editor ever could—that I clearly recall. Though Harris' quote is squirreled away, figuratively and literally, a similar declaration by a corporate big shot fed up with his company's ethics brought the power of his message back to me. Greg Smith, an executive director of financial giant Goldman Sachs, last month announced his resignation in a high-profile New York Times op-ed piece. In "Why I Am Leaving Goldman Sachs," Smith, a 12-year company veteran, openly criticized the investment bank's push for profit that eclipsed its concern for clients' best interests. Smith, an international derivatives guru who also was mentor, recruiter and leader of the summer internship program for sales, reached his "aha" moment while urging the college students he would likely be advising that they join a firm in which he'd lost all confidence. Smith said that in the dozen years since he joined Goldman as a summer intern, the company "veered so far from the place I joined right out of college that I can no longer in good conscience say that I can identify what it stands for." Throughout Goldman's 143-year history, Smith says, teamwork, integrity and doing right by its clients was crucial to its success. "The culture was the secret sauce that made this place great and allowed us to earn our clients' trust," Smith says. Finally, Smith exhorted the company to "Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much they make for the firm. And get the culture right again, so people will want to work here for the right reasons." Smith's high-profile farewell may indeed offer inspiration to a generation of young financiers, becoming the article that's tacked to a bulletin board—or more likely a Facebook wall—as a daily reminder to do the right thing. And Smith is correct: Goldman's broken culture is not irreparable. The "secret sauce" Smith touts as the key to success isn't entombed in an icy cave atop the Himalayas. In 2007, Workforce Management awarded Goldman an Optimas Award for general excellence, largely for its Goldman Sachs University program that emphasized management development. Just a year later, as Goldman purged roughly 10 percent of its 32,000-plus person workforce as the U.S. financial markets melted down, cultural preservation and training likely took a back seat. Goldman's response to hard times allowed the ascendance of employees like senior director Fabrice Tourre—Goldman's infamous "Fabulous Fab," who awaits trial on charges in a government fraud suit and who has become the poster child for Wall Street hijinks. It's time for the firm's leadership to give Goldman U an overhaul and provide instructors with a fresh set of values. Teach managers to get involved, get social and ponder ways the company can make the world a better place. Instruct your campus recruiters, who face Occupy Wall Street factions chanting "Take a chance, don't go into finance," to let candidates know that Goldman clearly hears that culture and conscience are on the same bottom line as profit. And while sprucing up Goldman U, sweep out the "morally bankrupt," as Smith calls them. If it took a dozen years to shred Goldman's culture, how long will it take to rebuild? That depends on the backbone of Goldman's people—and those who find bulletin board material in Smith's resignation to inspire them.