["I]t strikes me that a lot of people dislike Goldman Sachs, and they really don't understand what Goldman Sachs does, but they just know that they dislike them […] And then there are people who know what Goldman Sachs actually does, and they dislike them for different reasons." --David Gregory on Meet the Press, Sunday, March 25, 2010. (Click the link for the full transcript of the show.)
Step back for a moment and imagine that your company is in Goldman's position right now: Universally reviled; Accused of betting against not only its own customers but the entire economic wellbeing of the country; At the center of an international political storm (one example: the bank has become a talking point in the UK general election); So unpopular that you can't find political support even among the most pro-business members of the opposition.
So, given that that's your company, what do you do?
Do you go out on a limb and further expose yourself in the public eye, or do you find a way to control the damage to your firm's image and regroup, hoping it will all blow over?
By now, it should be obvious which path Goldman Sachs has chosen. The megabank seems to be playing a game of chicken with the government — actions that, as Frank Rich pointed out this weekend—may actually be handing the government the leverage it needs to pass reform that will handicap not only Goldman, but all of its neighbors on Wall Street. Which should all but destroy any last shreds of popularity it has left even amongst its peer group.
All of that raises serious questions over the culture at the firm —something that, as has been noted many times before, comes from the top down. While there's no doubt that the firm is a success, the image and reputation it has cultivated along the way makes it one of the least celebrated winners in history. And that's a problem—both when it comes to retaining customers and in attracting and retaining talent over the long term.
Last Friday, Vault Finance Editor Derek Loosvelt published some of the preliminary findings from Vault's upcoming annual banking survey. Given the current state of affairs at Goldman, the following nuggets from people within the finance industry seemed particularly apposite:
"Percentage of respondents who say firm culture was the single most important factor in deciding to accept their firm's offer over others: 35
Percentage who say prestige was the most important factor: 18
Percentage who say compensation was the most important: 9"
Bear in mind those figures are from people already working in Goldman's industry. If they're to be believed, the issue of compensation—including those bonuses that we keep hearing about—isn't enough to attract and retain top candidates. But culture and prestige are: and Goldman is in the process of squandering its reputation for both in record time.
Backing those figures up, meanwhile, is a recent Vault homepage poll, which found that some 25 percent of respondents would be less likely to consider working for Goldman in light of the SEC investigation. And that' in addition to the 10 percent who told us that they wouldn't have considered taking a job offer from the company in the first place. Of course, that still leaves a majority of respondents who are willing to overlook the allegations of wrongdoing—at least in this instance—to take a job at the firm. Should the negative publicity the firm is attracting continue, however, that number would likely drop.
While it would be a stretch to say that the current climate is going to be enough to bring Goldman down, it should serve nonetheless as a cautionary tale for anyone seeking to lead a business—or even looking for a job right now. If your company—or one you're thinking about working for—has the kind of reputation that Goldman is in the process of forging for itself, attracting and retaining top employees becomes that much harder. And without them, the entire house of cards starts to tumble.
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Phil Stott is a staff writer at Vault.com in New York. Originally from Scotland, he has also lived and worked in Japan, South Korea and Eastern Europe. He holds an MA in English Literature and Modern History, and a Masters in Research in Civil Engineering, both from the University of Dundee.
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