Goldman/Blankfein’s Crisis Communications Dilemma
Disclosure: My younger sister works for a large investment bank and my alma mater is an investment banking factory.
When I was younger, my father once told me that a man’s reputation was important, because a man’s reputation will be the only lasting memory of that person when he dies. Luckily for Goldman Sachs, the firm isn’t dying today…
In a scathing exit letter that rivals Scarface’s resignation from a burger joint in “Half Baked,” former Goldman Sachs’ executive director Greg Smith wrote about Goldman’s decaying culture in today’s New York Times. The reputation of Goldman, and investment banking in general, has been repeatedly hit since the Financial Crisis, due to events ranging from Occupy Wall Street to the infamous Goldman Elevator Twitter handle, but this has to be the biggest blow for the world’s most prestigious financial institution.
So far, the response has been better than other large corporate crises this year (see AirBnB), but the company still has to do a lot more than just issue and an open letter from Lloyd Blankfein and Gary Cohn, CEO and COO of Goldman Sachs, respectively.
For any client-facing industry, client trust is paramount, and with the rising negative sentiment against the finance industry, Goldman and Blankfein need to do a lot more to assuage the masses and win back trust. For starters:
- Use media: In Blankfein’s letter, he mentioned that Smith’s opinion was “amplified in a newspaper.” Goldman is one of the top ten brands in the world, so it shouldn’t be too hard to secure earned media to reassure clients and the general public that Goldman is looking out for their best interests. Do you think the likes of Larry King, Jon Stuart, Steven Colbert, CNN, etc., would be amenable to an interview with Blankfein in light of today’s op-ed? I would think so. Blankfein needs to prioritize this type of media engagement to address the issue head-on.
- Get on the phone with your clients: Writing a public-facing letter was a good first step, but Blankfein needs to go above and beyond to make sure their clients still trust Goldman with their money. Blankfein needs to make reaching out to all clients a company-wide priority – now. This would truly illustrate the value that Goldman places on those relationships and allay any lingering doubts regarding the firm’s integrity.
- Respond to social media commentary: Right now, the conversation about Goldman’s integrity is happening on social platforms like Twitter that Goldman doesn’t subscribe to. As an investment bank, I understand the reasoning behind not having a corporate Twitter account, but this situation should expose the need. The corporate handle wouldn’t publicize announcements like the availability of pre-IPO Facebook stock, but would be a great resource in times of crisis communications like this, since right now, Goldman can’t even join the conversation.
- Reassess the corporate culture: Smith may have had an axe to grind with Blankfein, but the question still remains – what is the current state of Goldman’s culture? Is it one of making it rain, even at the expense of your clients? Or is it the previous culture of “teamwork, integrity, a spirit of humility, and always doing right by our clients” that attracted executives like Smith to the financial juggernaut? Smith’s opinion may be an outlier, but Blankfein should take this as an opportunity to seriously examine the firm’s current culture. It also wouldn’t hurt to publish the findings publicly when they become available as well.
Goldman has a great opportunity to be the leader they claim to be and set an example for the rest of the financial community on how to deal with these types of crises. I’ll be watching with keen interest as Blankfein’s next steps will have a large impact on his tenure at Goldman and his overall reputation.