The global investment bank’s share price has fallen by £1.3bn after Greg Smith said Goldman staff referred to clients as ‘muppets’ and ripped them off for as much money as possible.
But sources have placed the blame on the investment bank’s ongoing secrecy, which goes against the current trend towards institutional transparency, and have called for the company to embrace openness.
Newgate PR director Jason Nisse said: ‘The problem is years of under-communication by Goldman, something which is endemic in investment banking, where the attitude is "we are very clever, trust us to get things right", not "we are very clever, we’ll show you how we get things right" (See how I See It, below).'
Despite the ongoing issues about transparency, many were quick to praise Goldman Sachs for its immediate handling of the incident, with one source commenting on the speed in which there was negative spinning against Smith, by suggesting that he was ‘quite junior’ or ‘passed over for promotion’.
Media House International executive chairman Jack Irvine said: ‘I think Goldman Sachs handled the story pretty well and it didn’t take journalists long to work out that anybody who waits 12 years to discover he doesn’t like his colleagues and the firm’s ethos is a bit of a saddo.’
He added: ‘The comms priorities are to demonstrate that (a) your company delivers for its customers; (b) the majority of the staff are happy and well rewarded; and (c) every organisation has its moaners and groaners.’
The news came as Google has also been thrown into a similar controversy as departing executive James Whittaker wrote a blog attacking his former employer, with the line: 'The Google I was passionate about was a technology company. The Google I left was an advertising company.'
University of Westminster visiting professor of PR Trevor Morris said: ‘While neither the Google nor Goldman Sachs denunciations can be described as harmless, they are also not as damaging as some slightly hysterical commentators have claimed. There is no evidence of illegality, nor is there much surprise in the allegation that Goldman Sachs is obsessed with money or that Google is after ad bucks.
‘The usual strategy with such stories is to avoid fanning the flames while getting others to undermine the credibility of the accusers. Not a pretty sight, but likely to be effective unless there is a flurry of similar accusations.'
Ed O’Brien, senior account director, corporate and public affairs, Ketchum Pleon, said of the Goldman Sachs case: ‘The key test will be if other employees follow him out the door.’
How I See It
Director, Newgate PR
Is Greg Smith a man of principle standing up to Goldman Sachs, or a low-level ex-employee bitter at being passed over for promotion?
Spinning against Smith started within a few minutes of his coruscating editorial appearing on the New York Times website. Yet Goldman’s top brass’ immediate public reaction was good – a letter to employees, sent on to the media, refuting Smith’s accusations.
The problem is years of under-communication by Goldman, something which is endemic in investment banking where the attitude is ‘we are very clever, trust us to get things right’, not ‘we are very clever, we’ll show you how we get things right’.
Trust, though, is fickle. Clients worry less about the ‘vampire squid wrapped around the face of humanity’ – that can be seen as envy at Goldman’s influence – than at calling clients ‘Muppets’ and ‘sidelining’ their interests.
The only way to rekindle trust is to be more open, which is counter cultural at Goldman. Something has to change.