Goldman Has 'Serious Trust Issue': Yale's Sonnenfeld
The reaction to a departing Goldman Sachs official's scathing column in the New York Times Wednesday shows the bank has "a serious trust issue here and they have to acknowledge that," Jeffrey Sonnenfeld told CNBC Thursday.
"We’re on thin ice here," said Sonnenfeld, a senior associate dean at Yale's School of Management. He referenced King Henry VIII's adviser Sir Thomas More in stressing the "importance of institutional trust. It's as fragile as the liquid cup in your hand. Once you separate the fingers, it's forever gone."
Goldman's board of directors "has to pay attention," he said, adding, "They can’t say losing almost $2.25 billion [in stock value] on one article written by a disgruntled employee is something to ignore."
The op-ed piece by Greg Smith, an executive director who resigned from Goldman, detailed his concerns the bank puts its profits ahead of client needs.
"The firm changed the way it thought about leadership," Smith wrote. "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."
That's the very thing Sonnenfeld said Goldman needs to do: Live up to its reputation.
"They have to live the brand. If they can’t be the boy scouts, don’t act that way," he said. "Goldman shouldn’t advertise that this is who they are if they can’t live by it. If they are no better than the competition, don’t say you are."
Goldman said in its official response Wednesday it disagreed with Smith's views, "which we don't think reflect the way we run our business."