This past Wednesday, London based Goldman Sachs Executive Director Greg Smith stepped away from his 12 year relationship with the firm. Upon his departure, Smith composed a very personal and revealing resignation letter which was published Op-ed in the New York Times. In it, Smith expresses how deeply disheartened he’s grown with the direction the company’s carried itself throughout the years; particularly in the manner it’s clients are being treated.
“I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief,” Smith says in his letter.
In fact, it was this drastic change in Goldman’s culture that prompted him to sever ties to the establishment that gave him his start. When Smith first began as a summer intern while attending Stanford, the company’s morals centered around a completely different ideal: putting the interest and well being of the client before all else.
“It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years,” reflects Smith.
Today, he observes that not a trace of that culture exists in the firms current environment. A few key realizations culminated Smith’s opinions on Goldman, which essentially led him to his final decision. One of these revelations came when he reached the point where he could no longer look students in the eye and honestly tell them what a great place it was to work.
The next was when he watched the facet of Goldman advising that he was once proud to embody – directing clients in a way most beneficial to them – reach its untimely demise. Smith explains how the notion of counseling clients in such a way, even if it meant making less money for the firm, was quickly declining in popularity.
His final thought on the company revisits in depth the focal point of his piece, which is of course the former executive directors dismay with the way clients are treated.
“I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them,” Smith states.
He goes on to explain the way clients are currently regarded amongst the company’s inside culture and compares it to how it was when he began. During this time, Goldman advisers made it their job to get to know their clients, determine how they defined success, and work to help them achieve it.
One of Smith’s lines says it best: “If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.”
This proves true in any business and Goldman Sachs apparently is no exception. Perhaps Smiths letter will contribute in some way to restoring the culture of one of the worlds leading investment banks back to what it once was.
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