In Goldman Sachs we trust?

It’s pretty toxic to think of your clients as Muppets.  Reports of the death of Corporate Social Responsibility may be exaggerated in the light of the Goldman Sachs letter that appeared last week, but was this just a rogue trader or the conscience of the firm speaking its wrath?  Which ever, the unwelcome spotlight shining on a supposedly top-ranking firm will have sent shivers down corporate spines.

And Goldman is not alone.  Consider the following quotes:

“Banks must accept responsibility for past mistakes and show how they can contribute to society and economic growth”, Bob Diamond, CEO of Barclays Bank, Nov. 2011.

“We need to be seen to be giving something more broadly to society”, Philip Clark, CEO of Tesco in the Financial Times.

“We are very conscious of our social responsibility”, Phil Bentley, MD of British Gas in Nov. 2011, 6 weeks before fuel poverty activists occupied British Gas offices.

Poor CSR policies are no better than sticking plasters – potentially dangerous ones if they lull management into a false sense of security.  Without a sense of values, truly reflected through the company, there is an ever present danger of disillusion and rebellion – flooring the management, the share price and the bottom line!

LeaderShape Associate, Alan Little reflects:
If further proof of the economic impact of reputation were necessary, Greg Smith’s resignation letter calling Goldman Sachs ”morally bankrupt” provides a neat case study.  Did bank and its managers behave exactly as he describes or are his assertions the foul canard of a disgruntled employee, bent on writing a book?  The effect is the same: Goldman’s shares dropped 3.4%

The regular appearance of stories alleging poor behaviour in the business suggests management has a deep-set problem. Its response is repudiation and PR about Smith’s baser motives. What is clear from many corporate crises is that no amount of positive communication can counter what stakeholders and society perceive to be credible. In the current climate, it is going to take a lot more than advertising campaigns to persuade people that banks of any kind are on their side; and Goldman is the fattest of the fat cats.

People see with unerring precision when communication is not authentic.

Aside from managing the message, there is a need for policy and structural reform, controls, oversight and, most of all, cultural change.

The missing factor, without which all such effort is doomed to failure, is leadership.

We still believe leadership centres on hierarchy and power. The western crisis of capitalism and societal dissatisfaction with the status quo displays a need for a very different kind of leader, with genuine regard for all stakeholders and the maturity and humility to serve, not just be driven by the cheese.  It is clear that mature organisations – and that includes whole economies- are often trapped in the prison of their historic success, unable to move to a new model.

The limited overlap between the top companies of 20 years ago and those of today (many of which did not even exist then) testifies to that. The economic impetus is with Asia, working with very different assumptions about organisation, investment and leadership.

The pressing need is for the West to reinvent itself. ‘Transpersonal leadership’ – beyond the ego – opens the door to that possibility. Perhaps Goldman-Sachs can see beyond ‘good business’ to an inspiring vision of ‘being a good business ‘, pre-eminent for its perceived value to society, not just its commercial leverage?

‘Transpersonal leadership’

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