Goldman Sachs and the Ethics of Doing What’s Right

Wow. Johnny Paycheck caused a minor kerfuffle, while providing the national anthem for disgruntled employees everywhere, when he warbled, “Take This Job and Shove It.” But when Greg Smith exited Goldman Sachs this week via an Op-Ed that questioned the ethics of Goldman’s culture and integrity of its management, he sparked a debate (See “Does Morality Have a Place on Wall Street?“) that has the stock flat-lining and management scrambling to contain the crisis, while hoping to restore the trust and credibility of the venerable Wall Street firm.

Good luck with that, since the perception is that Goldman Sachs is greedy and corrupt and working in its best interests [consider huge bonuses and other perks not generally available to even available to the other Captains of Industry], not the interests of clients. That may or may not be reality, but it’s how many, if not most, view Goldman these days.  Hey. I guess when you play a role in nearly cratering the USA economy, it leaves a bitter taste for years after.

Back to Smith. Here’s from his Op-Ed, “Why I Am Leaving Goldman Sachs“:

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. 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.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

And a key point:

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

When I was teaching a class in media ethics at Kent State, one the many thoughtful discussions we would have in class: Would you quit a job over a matter of ethics?

In abstract, the answer is easy: yes. But in the real world outside the classroom, with mortgage payments and gym membership payments due, it’s another matter.

So I give Smith credit for stepping out and stepping up to what is an important issue in this nation — and not just on Wall Street: ethical conduct on behalf of management. If the senior management of an organization doesn’t establish the solid foundation for ethical conduct, then there is no hope. That’s why I chuckle whenever I see or hear claims that the senior public relations officer is in effect also the chief ethics officer. LOL. I digress.

Anyway, as a sidebar to the Goldman Sachs debacle, I read this week that Rushworth Kidder had died. Among his dozen books, Kidder wrote “How Good People Make Tough Choices.” I used it as the text for the media ethics class because it provided a readable overview of ethics and some difficult, yet common sense, solutions to ethical dilemmas.

Here’s from the NYT:

Mr. Kidder taught that thorny moral decisions rarely involved choosing right over wrong; rather, he said, they demanded selecting among various “right” solutions. Making ethical judgments, he said, included balancing considerations like truth versus loyalty and short-term versus long-term effects. He urged that people think through such matters regularly to achieve “ethical fitness.”

Maybe Rushworth Kidder should be required reading in business degree programs — and in boardrooms on Wall Street and elsewhere.


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