An Analysis of the Goldman Sachs Public Statements
Submitted by Aldon Hynes on Thu, 03/15/2012 - 21:15Yesterday, I wrote about the overarching issues of the resignation of Greg Smith from Goldman Sachs. I made a reference to crisis communications. While I recognize how difficult it must be to be in the communications department at Goldman right now, it does look like they really failed in their efforts to address Mr. Smith's concerns.
The message Lloyd C. Blankfein and Gary D. Cohn sent March 14, 2012 to the people of Goldman Sachs starts off
By now, many of you have read the submission in today’s New York Times by a former employee of the firm. Needless to say, we were disappointed to read the assertions made by this individual that 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.
They go on to talk about how Mr. Smith was just one voice out of 12,000 vice presidents and that a survey of staff found that 89% felt that they provided exceptional service to their clients.
Reading between the lines, 11% of the staff don't feel that their firm provides exceptional service to their clients. Doesn't that strike you as a bit high? The rest of the letter doesn't do much better.
So, let's put this into context. On the 13th, Bloomberg reported Goldman Sachs Hires Ex-Treasury Aide Siewert for Communications.
Siewert started working in New York as the global head of corporate communications, replacing Lucas van Praag, who is leaving after 12 years. (Curiously, the same amount of time that Greg Smith was at Goldman). Talk about an exciting way to start a new job.
The Bloomberg article goes on to say,
Goldman Sachs was viewed unfavorably by 54 percent of respondents in a Bloomberg survey of traders, investors and analysts conducted last May…
Goldman Sachs’s score was among the lowest in a recent study of corporate reputations, according to a Feb. 13 statement from Harris Interactive
That's a very different picture than the memo to employees painted.
After Mr. Smith's OpEd, Bloomberg posted an editorial, Yes, Mr. Smith, Goldman Sachs Is All About Making Money: View. The comments were overwhelmingly negative. The anonymous Bloomberg editors were painted as stuck in a false dichotomy. Either, you look out for the best interests of your clients, or you make money. In fact, businesses that don't look out for the best interests of their clients end up losing clients and going out of business.
The day after, there were reports about how Goldman stock had dropped 3.4% of its stock value, or $2.2 billion as a result of the disgruntled employee. Yet it picked up 2.2% to recover somewhat today. Others have written about what this may do to recruiting efforts for Goldman.
A statement from a Goldman Sachs spokesperson hits a better tone. In the Wall Street Journal's blog entry, Goldman Rejects Claims Made by Outgoing Executive we find:
“We disagree with the views expressed, which we don’t think reflect the way we run our business,” a Goldman spokeswoman said. “In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.”
If Goldman had led with this, followed by comments about taking the accusations of Mr. Smith seriously and investigating them, they probably would have come out much better.
Yet the way news cycles go, this story will be soon enough forgotten and will fall into the background, until the next issue with Goldman comes up, and people return to this one.
Toxic Cynicism and Believers
Submitted by Aldon Hynes on Wed, 03/14/2012 - 21:24I remember when Liar's Poker came out. It was right about the time that I followed a friend from Lehman Brothers to Smith Barney. I was providing technical support to the mortgage traders and they were passing around the book. Several of them were in the book and every so often you would hear someone say something like, "Hey Steve, did you see what they said about you on page 298 of Liar's Poker?"
I never played Liar's Poker, but I had friends that did and I knew the rules and listened to many stories of great bond traders in the past.
Most of the folks I knew were good people. They worked hard, trying to use their wits to make a quick buck, but it always seemed like they knew right from wrong and at least had a rationalization of why what they were doing was a good thing. They were creating liquidity, making the markets more efficient, ultimately, making it easier for people to borrow and lend money at fair rates. I trusted most of them, and still believe that in most cases, that trust was well founded. Yet there were some that you just couldn't trust. They'd sell their sister if they could get an extra basis point or two.
All of this came back to me as I read the OpEd in the New York Times this morning by Greg Smith on why he was leaving Goldman Sachs. It rang true to me. It sounded like Greg was one of those believers, a very bright guy, who worked hard, made a lot of money, but became disgusted with what was going on around him. I can only imagine what was going on at Goldman Sachs today.
When my friend left Lehman Brothers, I was a consultant. I was called into one of the managing directors' offices with a couple of the big name players; names that came back to haunt many of us as the mortgage crisis unfolded. They wanted me to hear their side of the story, to understand that they were the good people, and for me to stay at Lehman. Then, my friend's name came across the newswire. A trader rushed into the office to inform them, and I heard a vile spew of vindictiveness that did little to convince me of their virtue.
I can easily imagine some vile streams at Goldman today. I can easily imagine the discussions in the corridors about the OpEd. And I can imagine what it must have been like in the communications department.
The first rule of crisis communications that I've heard repeated over and over again is when you find yourself in a crisis, stop digging and return to your mission statement. The problem for Goldman is that Greg Smith's OpEd hit directly at that mission statement. Investment banks, the story goes, should be making money by helping their clients, not by trying to take advantage of them.
I also have to wonder what went on before Mr. Smith wrote his OpEd. What brought about this aha moment? Was it something on the road to Damascus, or perhaps Zuccotti Park? Did he get a smaller bonus than he thought he deserved? Was he slighted in some other way? Did he try to negotiate, to let his former employers know that things might not turn out that well if they didn't accommodate him?
Yet, I also have to wonder, is this really about Goldman Sachs? Or is it about something bigger? Has cynicism become so rampant that people are beginning to say, "Enough!" and throw their TVs out the window? Are the battle lines of the culture wars beginning to shift from abortion and gay marriage, to love of money versus living for some higher ideal?
Yes, Mitt Romney is supposed to be a good Mormon, but his whole campaign reeks of a love of money that stinks with the toxicity of Goldman Sachs, Bain Capital, and so many other firms that have lost their sense of mission. While my values are very different than Rick Santorum's, I can see why people might be fleeing from Romney to Santorum.
Working in social media for non-profits, I get into a lot of interesting discussions, and this disillusionment with organizations losing sight of their mission isn't reserved for just large corporations. I've heard people lay that criticism at the Komen Foundation, willing to sacrifice their mission of fighting breast cancer to appease one set or another of potential donors. I've heard people talk about other organizations getting too caught up in themselves to remember their mission.
I continue to think about the history of Great Awakenings in America. Are we on a verge of another great awakening, where people return to focusing on making the world around them a better place, instead of simply making a quick buck?
A couple quotes come to mind as I think about this. First is Mufasa's ghost in the Lion King, "You have forgotten who you are and so have forgotten me. Look inside yourself, Simba. You are more than what you have become. You must take your place in the Circle of Life."
The other is from Woodstock,
And we've got to get ourselves
Back to the garden
Hiatus
Submitted by Aldon Hynes on Tue, 03/13/2012 - 19:16For years, I've been putting up at least one blog post every day. Then, a week or two ago, I missed a day. Last Friday, I missed another day, and then didn't post on Sunday or Monday either. It is the longest hiatus I've had in several years on this blog.
There are a lot of things going on right now. Due to the nature of them, I can't talk publicly about them, and since a blog is a pretty public place, I'll just have to wait until I write about them. On top of this, I wasn't feeling very well over the weekend, so I spent much of the time sleeping. There were other events that I missed as well over the weekend, like our families annual trip to the Hebron Maple Festival.
With that, let me comment on a couple interesting stories. The first is about the hot topic out of South by Southwest. No, it isn't that InstaGram will soon be available on the Android, nor that Empire Avenue has relaunched itself. No, thing everyone is talking about is homelessness. As a person concerned about homelessness, I'm glad to see this becoming a big issue and particularly interested in how this came about.
BBH Labs, 'Marketing Skunkworks - new models around technology, entertainment and brands', ran a 'charitable experiment' called homeless hotspots. They worked with a homeless shelter in Austin, TX, to give thirteen people a job during SxSW. These people were homeless hotspots. They carried MiFi devices that allowed people around them to by internet connectivity. People were asked to donate $2 for fifteen minutes of MiFi time to the homeless people.
The blogosphere went wild about these homeless people being exploited. It raised interesting questions. Who was exploiting whom? The New York Times ran the article Use of Homeless as Internet Hot Spots Backfires on Marketer. (It is interesting to note that the URL makes it appear as if the original title was 'Homeless as Wi-Fi Transmitters Creates a Stir in Austin') Did the 'charitable experiment' backfire?
The article in the Times quoted one homeless man,
“Everyone thinks I’m getting the rough end of the stick, but I don’t feel that,” Mr. Jones said. “I love talking to people and it’s a job. An honest day of work and pay.”
In My Hotspot's Name is Mark, Mark is reported as being 'grateful for the opportunity'.
As I think about SxSW, I wonder how many people payed for homeless hotspot time using corporate credit cards. I have to wonder if Nathan Fillion, Neal Patrick Harris, or Felicia Day bought some homeless hotspot time as they waited for Joss Whedon's talk at SxSW to start.
Meanwhile, closer to home, there is a conflict about efforts to evict Occupy protesters from the New Haven Green. Paul Bass has written about it in Last-Ditch Occupy Suit Seeks Proprietors’ Demise. It includes a link to a suit filed on behalf of the Occupy protesters by Norm Pattis. The suit is also well worth the read and raises lots of interesting questions.
It will be interesting to see how this all plays out in court and in the green.
Memories
Submitted by Aldon Hynes on Thu, 03/08/2012 - 19:33One of my coworkers, when hears me tell stories of my life, tells me that I should really write a memoir. Based on the stories she's responded to, I suspect she may be thinking of something close to Kerouac or Bukowski. Yes, there are stories in my history which might evoke those writers. Yet, there are so many different aspects of my life, that it might be more like Proust. On the other hand, there are plenty of stories that I'm not prepared to tell, they might be best saved for a posthumous memoir, lest I find myself like Thomas Wolfe, upsetting people from the small towns of my life. More likely it would end up like one of those vanity press publications that end up in the garages of grown children.
I started this blog as a place to gather pieces of my writing. It is mostly organized by categories and in reverse chronological order. Yet I started this blog using Drupal, which, at least as I write this, I continue to use. Drupal provides a book outline that can also be used to organize the blog posts in orders in which they should be read. I've used this a little bit in the past, and now, I'm thinking of using it to organize different parts of memories I've posted here.
One part was a section I started to write years ago about when Kim ran for State Representative. In this section, I've also included a post about when Fiona was born.
Another part was a section I started a while ago where I tried to start adding sections of my journals from 1983, which I spent time hitchhiking around the States and around Europe. There is also a section where I wrote details of my daily life with memories interspersed as part of National Novel Writing Month. Finally, there are random blog posts here and there that also act as parts of my memories. These later parts, I hope to organize as I go forward.
Likewise, I hope to start writing other recollections which will add other stories from my youth. What are you doing to save your memories, or perhaps share them online?