It was with keen interest and mixed feelings that I read the recent commentary by Greg Smith, the Goldman Sachs executive who resigned with a flourish on March 14, publishing his reasons in the New York Times. He argues that a "toxic" culture has flourished inside Goldman Sachs, where the focus is on short-term profit maximization for the firm, its shareholders, and its bonus-driven executives, with little regard for the best interests of its clients.
My work on values-driven leadership is all about giving voice to values—a new way of thinking about and teaching business ethics that focuses on pre-scripting and rehearsal for action—and Smith was certainly doing just that. My mixed feelings come from a sense of weariness I detect in the responses to Smith's pronouncement, and from my reflections on what can be done about the situation he describes.
To the degree that one accepts that the financial sector has been trending toward a narrow emphasis upon short-term profits, neglect of client interests, and even exploitation of the information asymmetry that is the very reason investors turn to institutions such as Goldman Sachs in the first place, then one might legitimately ask: Do employees have any choice, even if they want to act? Are values a lost cause?
Most of the chatter in the business media has focused on a different set of questions:
- Are Smith's accusations true?
- If so, what caused this phenomenon? Some argue it was the move from a partnership model to a publicly traded firm structure that decoupled the firm's incentives from its clients' welfare. Others argue that this sort of problem is nothing new and point to previous problems in the 1920s, long before the partnership model was abandoned.
- Is Goldman Sachs "unique" in these behaviors?
- If so, won't the market discipline them as investors turn to competitors?
- Or if, as most argue, "everybody does this," how can the market work if there is no alternative?
- Finally, what should the government do? This triggers a set of arguments for and against government intervention. On the one hand, some argue that businesses cannot ever be expected to regulate themselves because they know that someone else will violate the rules and thereby gain a competitive advantage, and therefore self-interest suggests business support for government's regulatory role in creating a level playing field. On the other hand, others argue that it is precisely government's intervention in protecting those firms deemed "too big to fail" that undermined the disciplinary function of the market in the first place.
Although these are all good and legitimate questions, if somewhat familiar and well worn, my work on helping business leaders build a practice of voicing and enacting their values would shine the focus on a different question: What can the individual manager or leader do, within his or her firm, to avoid—or to correct—these problems?
My concern comes from a refrain I commonly hear from business practitioners when explaining why they violate their own values—"I had no choice." I must admit: There are days when I wonder if this is, in fact, the truth.The most common reasons people do not voice their values are fear of retaliation and fear of futility.
But then I realize that there are always choices. Smith made the choice to express his concerns publicly and to leave his employer; was that his only choice? We know that the reasons people do not voice their values inside their firms are myriad but the most commonly noted are a fear of retaliation and a fear of futility. If I am ready to leave the firm anyway, why not confront those fears first?
Or, if I have not yet found myself at the point of no return, what if I did some quiet exploration and conversation among my trusted peers? Am I really the only one who feels as I do? The truth is that we are always alone with our values before we express them. It is only after we voice them, and to the degree that we do so skillfully, that we find out whether or not we have company.
Which brings us to this all-important question of how we voice our values—skillfully, tactically, persuasively, thoughtfully. The emotional proclamation, spoken in anger or frustration, is often accusatory, ill timed, and uncomfortable for the audience. But in my conversations with individuals who have found ways to express their values effectively in the workplace, they tend to do their homework; to provide face-saving outs for the listeners; to raise issues early and often; to gather allies; to research both good and bad exemplars and to generate alternatives. In other words, they approach a question of ethics the same way they approach making the case for any other business decision.
None of this assures a positive outcome, and convenient as it would be to be able to point to a "hero" in the investment banking arena at this juncture, we still need them.. This does not mean that no one ever acts with integrity in that arena and does so effectively, but rather that it probably happens quietly behind the scenes.
Even if we identified such examples, the ethical challenges in the finance industry would still pose a large and palpable threat to the financial health and functioning of the markets, and the public trust upon which they rely. The outcry following Smith's commentary demonstrates this, as do the Occupy Wall Street movement and the ongoing global financial upheaval that triggered it.
Yet if more individuals raised questions thoughtfully and skillfully—bringing to bear more light than heat—a quiet but powerful tide could begin to shift. What does a Greg Smith have to lose? Consider how much we all have to gain.