For Goldman Sachs, the road to rebuilding its reputation post-financial crisis has been long and arduous. Still, the release of the bank's Business Standards Committee's Impact Report in May, highlighting the link of “collective accountability” to how employees will be rewarded is an important industry milestone.
Actions around the committee point the way forward, not only for financial institutions, but also for companies trying to balance conflicting demands placed upon them by stakeholders. Goldman's intent to link pay with “reputational sensitivity and awareness” provides evidence of the value of reputation to a company's bottom line.
About 70% of Americans think that people, companies, and government have not learned from the mistakes of the recession and will return to making irresponsible choices, according to an Allstate/National Journal Heartland Monitor Poll that FTI Consulting conducted. Furthermore, a majority of Americans believe policies to repair the economy have benefited institutions, not individuals.
Goldman has taken that last finding to heart. Established in 2010, its Business Standards Committee has been a rigorous process of self-analysis, supported at the highest levels of the firm. The bank even makes certain metrics available, for example, the fact it has conducted 42,000 hours of training for MDs and VPs.
The bank's actions reflect a rising trend of company leaders being more proactive in managing reputation, often using compensation as a lever for change. Protecting and enhancing enterprise value requires a company to achieve four performance thresholds that encompass its essential stakeholder groups. These are: engaged leadership and a committed workforce; market and reputational leadership; enhanced license to operate, proportional to the trust a company's stakeholders have in it to meet the legal, ethical, and societal standards in different markets; and optimal valuation, measuring a company's ability to manage the expectations of the financial public.
Goldman's business principles say much the same. Years ago, the bank might have listed shareholder returns as its key principle. Today, however, it has reprioritized clients first.
Doug Donsky is a senior MD in FTI Consulting's strategic communications practice, leading the financial services sector in the Americas.