DOES CULTURE MATTER IN MANAGEMENT CONTROL? A GOLDMAN SACHS EMPLOYEE RESIGNS PUBLICALLY “Employees Management believes that a major strength and principal reason for the success of Goldman Sachs is the quality and dedication of our people and the s hared sense of being part of a team. We strive to maintain a work environment t hat fosters professionalism, excellence, diversity, cooperation among our employees worldwide and high standards of business ethics. Instilling the Goldman Sachs culture in all employees is a continuous process, in which t raining plays an important part. All employees are offered the opportunity to participate in education and periodic seminars that we sponsor at various locations throughout the world. Another important part of instilling the Goldman Sachs culture is our employee review process. Employees are reviewed by supervisors, co-workers and employees they supervise in a 360degree review process that is integral to our team approach, and includes an e valuation of an employee’s performance with respect to risk management, compliance and diversity. As of December 2011, we had 33,300 total staff, excluding staff at consolidated entities held for investment purposes.” [SOURCE: 2011 10K of The Goldman Sachs Group, Inc., pp. 6-7; published online February 28, 2012] EXCERPT FROM: “Goldman Sachs' Response to March 14, 2012 New York Times Op-Ed The following is the message Lloyd C. Blankfein and Gary D. Cohn sent March 14, 2012 to the people of Goldman Sachs. 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.” [SOURCE: http://www.goldmansachs.com/media-relations/comments-and-responses/current/nyt-oped-response.html; accessed March 14, 2012] EXCERPT FROM: March 14, 2012 Why I Am Leaving Goldman Sachs By GREG SMITH TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it… [SOURCE: A version of the op-ed from which this excerpt was taken appeared in print on March 14, 2012, on page A27 of the New York edition of the New York Times]
INTRODUCTION On March 14, 2012, Greg Smith stunned the business community by publically explaining his resignation from Goldman Sachs in an op-ed piece published in the New York Times. [Mr. Smith’s full article is in Appendix 1 of this case]. The reaction was swift and varied, ranging from sympathy and support to outright hostility. Some immediate reactions were offered by readers
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of Mr. Smith’s article who uploaded comments to the New York Times website: for a sampling of these online comments, see Appendix 2. Lloyd C. Blankfein (Goldman Sach’s Chairman and Chief Executive Officer) and Gary D. Cohn (President and Chief Operating Officer) quickly responded on the same day that Mr. Smith’s resignation was published, by releasing a message “to the people of Goldman Sachs” (see Appendix 3). GOLDMAN SACHS GROUP, INC. According to page 1 of its 2011 10K report, Goldman Sachs Group, Inc “is a leading global investment banking, securities and investment management firm t hat provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.” The company reports its activities in f our business segments: Investment Banking, Institutional...