It’s been hard to avoid the Goldman Sachs’ story that broke last week when a disgruntled ex-employee, Greg Smith, wrote effectively an open resignation letter which soon found itself in the New York Times. The letter was a fairly damning indictment of what employee life had become at the firm, with its ‘toxic and destructive culture’ and clients being referred to as muppets.
The firm hasn’t come out of it well, losing $2bn in share value and it has been royally castigated in the tweetosphere, with even Robert Peston commenting ‘The damage to the firm could be pretty serious’. And Goldmans’ reaction appeared unapologetic and unconciliatory, suggesting Smith’s comments were more sour grapes than valid comment, which again drew further rebukes that ‘Goldmans wants to block criticism rather than engage with it’.
However, perhaps the most damning comments Smith came out with touch on the collateral employer brand damage. On top of client issues, Smith left the firm because ‘I knew it was time to leave when I realised I could no longer look students in the eye and tell them what a great place it was to work’. At a time when investment banking has taken some knocks from the St Pauls and Occupy Wall Street protests, this one feels like a badly timed and self inflicted blow. This from an organisation that had appeared bullet proof, dodging the worst of the financial crisis and continuing to reward its people handsomely. At a time of increasing competition across campus hiring, in both the UK and US markets, this kind of positioning is unlikely to benefit Goldman’s hiring aspirations.
Interestingly, one of Goldman’s chief competitors did come out of the fiasco with an enhanced reputation – as the Greg Smith story broke, Jamie Dimon, CEO of JP Morgan, urged his people not to ‘seek advantage from a competitor’s alleged issues or hearsay — ever. It’s not the way we do business.’
The Goldman’s story is likely to run and run. Which is much what Justin King at our own Sainsbury’s has recently been doing. King has spent much of March pounding the pavement in support of Sport Relief. Not only that, but he has been accompanied on these runs by at least one employee from every one of the retailer’s UK stores. The story appeared on page 15 of City AM – so clearly Sainsbury’s isn’t seeking to create too much residual PR as a result of King’s efforts.
On top of trying to raise more than £1.8m for Sport Relief, King will have been creating genuine engagement with his employee base. That Sainsbury’s not only thinks its CEO should spend time on such a deserving cause, but that its store-based employees can get involved, have some quality time and share common purpose with Justin King, is an impressive example of an organisation getting its priorities in order and getting employee engagement right. Perhaps it is no coincidence that last week saw the retailer report a 4.6% increase in total sales in its fourth quarter.
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