"I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place [Goldman Sachs] was to work."
This is one of the opening lines from the New York Times op-ed written by Greg Smith, a Goldman Sachs employee who has been with the firm for twelve years and has grown increasingly disenchanted with its culture.
He published his resignation on Wednesday—a move which cost his former company nearly $2.2 billion.
Smith, who was the Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, writes that during his time there, the company culture changed from prioritizing clients' needs to prioritizing the bottom line. When his colleagues discussed their clients, they often referred to them as "muppets."
"It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are," he wrote, calling the environment "as toxic and destructive as I have ever seen it," and lamenting the fact that "Goldman Sachs today has become too much about shortcuts and not enough about achievement."
The idea that Goldman Sachs might be less than a shining beacon of morality isn't exactly news—the bank has made headlines in the past few years for discrimination lawsuits and SEC investigations—but it's jarring to hear a successful, experienced employee criticize his workplace with such a scathing, thoughtful argument. And to see him do it in a national publication?
We weren't the only ones who were taken aback. Goldman Sachs' market value dropped a staggering $2.15 billion as the piece went viral and the stock price dropped. Investors make their choices largely based on confidence that the company or fund they choose will continue to grow (a pattern we've discussed before), and Smith's words made them less confident in the future of the bank.
Goldman responded to the accusations in an internal memo, saying the company disagrees with Smith's points and outlook on the company culture.
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