Goldman Sachs executive, Greg Smith, resigned in March after publicly criticizing the company’s profit-above-customers culture. His action added to a chorus of criticism of the investment bank from politicians, regulators, protestors, and writers. Smith urged Goldman to “weed out the morally bankrupt people no matter how much money they make for the firm. And get the culture right again.” His view of the firm’s “toxic environment” is in direct contrast to statements by Goldman’s top executives who maintain that the firm has a “client-driven culture”.
Dave Ulrich, author of Leadership Brand: Developing Customer-Focused Leaders to Drive Performance And Build Lasting Value, says that Smith’s invective against Goldman may have many interpretations. “It may be as he suggests, that the Goldman culture has become pervasively greedy and self-interested; it may be that he worked for a rogue group of employees who acted in self-interest; or it may be that he has a bone to pick with the company for some personal reason. We don’t know his motives or breadth of experience. But his essay on Goldman Sachs’s culture allows us to reflect on what a culture is and how it should be managed.”
It is common to think about culture from the inside/out, the norms, values, beliefs, and behaviors that guide how employees think and act. Ulrich prefers to think about culture from the outside/in. “Culture, in our view, is the identity of the company in the mind of the key customers and other stakeholders made real to employees every day through leadership actions (we call it leadership brand) and other customer-centric management practices.
“In this regard, a culture should begin by figuring out the firm’s brand because the culture translates this external identity into internal organization processes. This externally driven identity should show in what leaders and employees know and do. When it does, the culture becomes a powerful force for sustainable results.
“If Goldman executives want to use the Smith episode as a signal to rethink culture, they should start by reflecting on what they want to be known for by their key customers and embed that identity throughout the firm,” Ulrich advises.