Thursday, March 15, 2012

A Perceptual Crisis Cost Goldman Sachs $2-Billion So Far

A company doesn't have to do anything wrong to pay dearly for a disgruntled employee.

It costs about the same, or more, if the company actually does something wrong and gets called out by a disgruntled employee.

This week a disgruntled former executive director at Goldman Sachs submitted an op-ed piece to the New York Times....claiming the "environment" at Goldman Sachs is as "toxic and destructive as I have ever seen it."  Greg Smith (no relation) joined GS right out of college and most recently was responsible for the company's U.S. equity derivatives business in Europe, the Middle East and Africa.

Diane Schwartz, my friend and PRNews Publisher and Blogger wrote yesterday, "what a 'get" for the New York Times, what a forum for Smith and what a HR and PR nightmare for Goldman Sachs."

Couldn't have summoned it up any better.

Except today, we now know that in just over 24-hours one disgruntled, former employee has cost Goldman Sachs about $2-billion in market value. The bank's shares plummeted 3.3 percent in trading Wednesday in the wake of the NYT's op ed article.

Now, it is important to remember that Goldman is not a "bank" the 99% keep their savings and checking accounts in.  It is an investment bank that offers services to its clients that most of us could never afford nor understand.

There are some crisis management steps the company should be taking to reassure internal and external audiences that the former director was just an unhappy former employee -- if that is all there is to it.

However, the former banker and his venue, the New York Times, have left some bruises. He talked about the "decline in the firms moral fiber" and claims bank officials referred to their clients as "Muppet's"

Every organization, even mom and pop businesses, are subject to an unhappy employee now and then. The first thing good leaders must do is keep their door and ears open to those unhappy workers BEFORE they go public and try to fix the problems rather than force a potential trouble-maker out.

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