As I caught up on the business news after a few days of being in Germany, one of the things that struck me was the letter from Greg Smith, about why he has resigned from Goldman Sachs.
After 12 years of working for the company and rising up the ranks, he now says that the culture of Goldman Sachs “is as toxic and destructive as I have ever seen it.”
Smith contends that the interests of the clients are side-lined and that “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.”
The Cost of Poor Leadership
In the letter Smith questions how the firm got to this stage and sites poor leadership as the root cause of the problem.
I could join the clamour of people who are criticising Smith for being “naïve” about the firm’s purpose and culture, but I commend him for his courage and also for placing centre stage my long held view that leaders are responsible for setting the culture of the business.
He sees that the leaders have moved away from the company’s long held values of integrity and customer focus and feels that this will negatively ultimately impact on the business and I agree with him.
Anyone who aspires to a position of leadership understands the vital role that culture plays in business success. To think or act otherwise is suicidal in the long run.
Culture impacts the bottom line
While Goldman Sachs may see their change of culture and approach as successful now (if indeed it is), what impact will this change of leadership focus and style have if it continues in the years to come?
As Greg Smith says in his letter “It astounds me how little senior management gets a basic truth: if clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.”
I echo his sentiments in hoping that this can be a wake-up call for the Goldman Sachs board of directors and for other companies who fail to realise that leadership and organisational culture have a direct impact on the bottom-line.