Greg Smith to Goldman Sachs: A new era in Wall Street ethics
Greg Smith belongs to younger generations that put loyalty to values above loyalty to company. As young professionals ourselves, we believe his op-ed resignation from Goldman Sachs last week may well forecast a new era in ethics on Wall Street and in other workplaces.
Greg Smith has been called many things – flattering and not – since publicly resigning from the storied firm of Goldman Sachs last Wednesday via an op-ed in The New York Times. He has been hailed as a “hero” and a “whistleblower” by some, while called “self-righteous” and deemed a “traitor” by others.Skip to next paragraph
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Mr. Smith, in a sense, has become a Rorschach test for our times. We see in him what we value or disdain – depending on our perspective, and perhaps reinforced by generational attitudes.
Those who celebrate Smith’s courage to speak truth to power in such a public forum prize audacity and an uncompromising commitment to ethics – especially on Wall Street. Six months ago, the Occupy Movement became a home for this ethos – people of all ages, but especially the young, speaking out, taking up space, and legitimizing a new conversation about inequality and accountability.
Others value loyalty, seeing Smith as a reckless attention-seeker and believing that honorable workers don’t air an employer’s dirty laundry as a matter of principle. Violating that principle can be costly: Goldman stock dropped $2.15 billion on the day of Smith’s public resignation, which, according to The Atlantic magazine, means his op-ed cost the firm a staggering $1.7 million per word. (The company has since recovered much, but not all, of that loss.)
What Smith himself holds sacred is abundantly clear from his own unequivocal language. “The interests of the client continue to be sidelined in the way the firm operates and thinks about making money,” he wrote. He identified the “decline in the moral fiber” at Goldman Sachs as an existential threat to the company, endangering the client relationship and creating a work environment that is “toxic and destructive.”
In other words, the bottom line, not the spirit of service, became the driving force at Goldman Sachs, according to Smith. That was unacceptable to this young professional who clearly held to the ethos of service above all else – or “servant leadership” in the parlance of business leader and visionary Robert K. Greenleaf.
In 1971 Greenleaf wrote, “It begins with the natural feeling that one wants to serve, to serve first. Then, conscious choice brings one to aspire to lead. That person is sharply different from one who is leader first, perhaps because of the need to assuage an unusual power drive or to acquire material possessions.”
Think it sounds disingenuous or preposterous for an investment banker to be a servant-first leader? You’re probably not alone. The public perception of Goldman’s complicity in the moral downfall of Wall Street and the US economy, culminating in CEO Lloyd Blankfein’s April 2010 congressional dress-down, has left many feeling a range of emotions toward bankers, particularly those at Goldman, but empathy is not one of them.
And yet, one doesn’t have to be a social worker to care about serving others – and surely, Wall Street firms include many such workers of all ages. But for employees in the younger generations, whether they be the children of Baby Boomers, known as Gen X, as Smith is, or the newest Millennials, service comes ahead of profit.
Smith is actually unusual for his generation, having stayed with one firm for eleven long years. His articulation of what he holds sacred, however, is closely in line with generational expectation.
In a 2011 study that asked about the purpose of business, 51 percent born after 1981 cited societal development, while only 39 percent cited profit. (Smith, who is 33, misses that age group – defined in the study as Millennials – by a hair, but he fits the altruistic sentiment.)