How much, exactly, does client success matter is the real question. Does it matter more than short-term profits?
Figuring out what would best create client success would mean that Goldman would not just be facilitating financial transactions, they would advise clients in what best suited them and act in their interest. If Goldman wants to say publicly that is the nature of its client relationships, it needs to be darn sure it plans to live up to the advertising. It is hard to see how the firm has been living up to that standard based on its regulatory history. And, unfortunately, on this board's watch, the business practice review was not sufficiently well thought-out to move that aspiration forward.
The board missed another opportunity yesterday. Instead of brushing off Smith's comments, the board should have ensured that the CEO took the allegations seriously. It should have used this opportunity to communicate to employees and others that it would move to understand what actions would make all employees and stakeholders comfortable that Goldman's deeds match their words.
Instead, the board allowed Blankfein and Cohn to take the tact most likely to shut down future whistleblowers: reject Smith's comments as out of hand. If they are willing to do this in public, what goes on behind closed doors?
The board itself should be taking action. It's serious when your CEO has been publicly called out by both a judge and an employee in a two-week timeframe.
And shouldn't it be a wake-up call when stakeholders mock the employee whistleblower for being naïve, implying that everyone should know that Goldman is as bad as Smith made it sound?
Last month, I spoke with directors who sit on the boards of approximately 50 different companies and who believe the board's role in overseeing the corporate culture is one of its most important jobs. That role includes responsibility for redirecting any senior management myopia toward its people, reputation, and ethics, directors say. Of course, righting HR systems of promotions and compensation are primary ways to correct cultural miscues.
Good boards need to know what individuals think, down inside the hierarchy, and get the views of those who will speak up and aren't already so embedded they can't see the problems in the organization and its culture, these directors say. While many boards create opportunities to meet with lower level staff in a variety of settings, one director spoke about how his board invites middle managers to the board dinner, the night before the board meeting, without the senior executive team or CEO present. That board has found it a great way to get the real lay of the land.
Blankfein has been on the Goldman board for nine years and some Goldman directors have served terms ranging from seven to 13 years. Are some too embedded? Where have their hearts and minds been? Hello, Goldman board. Are you awake?
Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://thevaluealliance.com), a board advisory firm.
