If I were Lloyd Blankfein, I would quickly assemble an internal task force and brief them thoroughly about the exaggerations and professional naïveté expressed by the Greg Smith New York Times op-ed piece, while driving home the firm’s strong and adhered-to values in serving its clients and employees. This group should be carefully rehearsed and tasked to answer all calls from the firm’s employees, clients and the media. In fact, the firm might even want to consider setting up a toll free call-in line, so questions by interested parties could be answered. The toll free line could be referenced on the Goldman Sachs website.
I would simultaneously put together a definitive document for both internal and external use that describes the firm’s credo and its values, while separating fact from myth. The document should refute, point by point, the charges made in Smith’s article. It would admit that in a firm the size of Goldman Sachs, there are bound to be individuals who are idealists or purists, who do not understand the aggressive way in which a trading operation must function in a ferociously competitive environment in order to perform successfully for both its clients and its own interests.
I would use social media to reach employees internally and spark discussions of what is proper and what is not when serving clients, explaining when there are conflicts of interest and when not, when the firm is supporting a client or taking advantage, how clients should be discussed in meetings and elsewhere. Pro-active participation can go far in resolving gray areas where client and company interests might collide.
Blankfein, as the CEO, should aggressively seek media coverage to defend Goldman’s reputation. He should reach out pro-actively to CNBC and FOX Business News, seeking an immediate appearance to address the accusations made by Greg Smith. He should contact The New York Times, Financial Times, The Wall Street Journal, Bloomberg BusinessWeek, Fortune and Forbes seeking an audience at editorial board meetings, where he and Gary Cohen would answer any questions directed toward them. He should look for every opportunity to boldly defend Goldman’s honor and reputation rather than waiting to respond to over-the-transom inquiries. He should understand that this media outreach campaign is not short-run transparency, but a long-term effort by the company to win back its reputation after years of pummeling by regulators, politicians and the media.
The effort should be sincere and forceful. Blankfein should recognize that as the leader of Goldman Sachs, he has both a duty and responsibility to manage the firm’s reputation. If Goldman’s clients and employees don’t trust the firm’s leadership and truly believe that its activities are more self-focused than client-focused, the game will soon be over. Competitors will have a field day picking off clients who are tottering as well as key executives who do not want to be seen as being a part of a culture gone wrong.
The company should also announce an internal education program that reinforces the importance of treating the firms’ clients and each other with the utmost respect, recognizing that the firm’s livelihood depends on clients who feel well served and employees who take pride in their work and in their company’s reputation for professional integrity. While Blankfein, to his credit, did issue an internal memo refuting the charges in the article, this is not nearly enough. He needs to raise the issue to one of paramount importance and enforce it to the point of even relieving top executives of their jobs if they do not conform to the firm’s values, no matter how much profit they generate. Blankfein cannot afford to say he’s going to insist that his team adhere strictly to the company’s stated values, and then let top performers off the hook. He has to mean business and has to back up his promises with unrelenting enforcement. The firm’s top managers must come to understand that if they focus on their own bonuses and the firm’s bottom line more than on their clients’ interests, their livelihood could be threatened.
I recognize that such action will not be easy, given the ingrained culture of the firm, but it’s time for Goldman Sachs to recognize that its reputation is its future and that it can ill afford any more warnings about misdeeds. The time is now to take action. Treating this as just another PR crisis that will soon blow over would be a serious mistake, one that could have unintentional, even disastrous, consequences.