Of Muppets and Men - How Will Your Goldman Sachs Social Media Nightmare be Told?
One general misconception that business owners have when it comes to social media policies is that it is a silver bullet against disgruntled employees disparaging the company. Certainly this is a serious concern for any employer. But a recent "parting gift" from a Goldman Sachs Vice President illustrates the real danger that social media poses to the business - you simply cannot control the message.
As explained below, it is, therefore, more important for companies to focus on drafting the story that will be told rather than focus on preventing the message.
The Goldman Sachs Muppet Debacle
It appears that Greg Smith, a former Vice President of Goldman Sachs Group Inc., single-handedly caused Goldman Sachs lose $2.15 billion (yes, billion) of its market value. This loss happened after Mr. Smith's highly critical editorial appeared in the for the New York Times detailing Goldman and its Chief Executive Officer Lloyd C. Blankfein’s treatment of clients as nothing more than cash cows.
An excerpt from the New York Times piece highlights this scathing analysis:
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.
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It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets ...”
The Response by Goldman Sachs
The Wall Street Journal reported that in a memo to employees of Goldman Sachs employees, its Chairman and Chief Executive Lloyd C. Blankfein and President Gary D. Cohn response essentiall boiled down to two elements:
- Mr. Smith was one "of nearly 12,000 vice presidents" among more than 30,000 employees at the company;" and
- Mr. Smith's assertions do "not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients."
The complete Goldman Sachs memo is available here.
Analyzing Goldman Sachs' Response - Is it Convincing?
First, Goldman Sachs avoided the mistake of offering a My Cousin Vinnie response to the public relations debacle. Specifically, there is scene where Joe Pesci's character responds to the prosecutor's opening statement: "Uh... everything that guy just said is bullsh*t... Thank you." While this classic line garners laughs, it does little to offer convincing support for your position.
But instead, of taking this approach, Goldman Sachs responded that its leadership team had implemented policies and procedures to promote and ensure that employees have opportunities to resolve company concerns like Mr. Smith raised. The fact is that when a current or former employee - disgruntled or not - feeds the media with a story like Mr. Smith's, management will want to quickly demonstrate that the company's process and culture inside the company is perceived as "fair" and reasonable.
Building on the preceding point, Goldman Sachs also noted that there was no record that Mr. Smith ever elected to use such policies to voice the concerns raised on his way out the door and through a very public medium.
With both the policy and Mr. Smith's apparent failure to use it, Goldman Sachs is in a better position to turn the microscope back onto Mr. Smith and question his motives. For example, why did Mr. Smith see fit to enjoy whatever perks, bonuses, and compensation came to him during his 12 years with the company yet make a public issue of his concerns on his way out the door. He may have had compelling reasons to do so, but the focus is no longer exclusively on Goldman Sachs because Mr. Smith is now in a position where must explain himself.
It is important to note, however, that to make the preceding point credible, there must be a company culture where employees are expected to raise questions and concerns. On this point, however, Mr. Smith points to a number of specific issues that make Goldman Sachs look guilty of the cultural lapses described by Mr. Smith and far from the type of anti-Goldman culture that exist at other investment firms.
Third, one criticism I have about Goldman Sachs' response is its attempt to minimize Mr. Smith's tenure by noting that he was only one of 12,000 vice presidents in a company with 30,000 employees.
For me, this is a valueless piece of information in that it does nothing to address the issues raised. In fact, it calls into question how much authority or opportunity Mr. Smith actually had to realistically exert any influence over the culture and issues he described. After all, having the title of "vice president" in a company where approximately 2 out of every 5 employees have such a title speaks more to title inflation rather than the type of true leadership function required to change culture.
Not every departing employee will have the opportunity to aire their grievances about an employer on the editorial page of the New York Times. But with the ubiquity provided by social media, stages like the New York Times are no longer required to reach a large audience.
And when it comes to social media, no employer will ever be able to control what current or former employees have to say. And under certain circumstances, such an attempt may violate applicable laws, such as under the National Labor Relations Act.
For these reasons, employers should certainly strive to have a better response than Goldman Sachs offered. But in order to do this, up-front planning is required. Part of that planning includes implementing internal policies and procedures that will promote a company's culture and organizational goals. And a social media policy should be an extension of both. At this point, employees should understand and be dedicated to those preferences.
I don't have any first-hand insight as to the culture at Goldman Sachs or Mr. Smith's assertions or his motivations. But I would be unlikely to ever become a Goldman client based on Mr. Smith's critique. Do you think, however, Goldman's response offers a compelling reason to revisit this assessment?