Greg Smith's "Why I Leaving Goldman Sachs" includes this paragraph:
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.Mr. Smith is right about the importance of leadership in a firm's culture. It matters that a company's officers and directors reward the right behavior and punish the wrong behavior. But what I liked most about Mr. Smith's op-ed is that it recognizes that culture isn't up to the C-level suite and the board alone. Senior people have to reinforce the culture all the way down the line. They have to watch what their people do and say (and reinforce the right behavior).
As I've said before, the problem isn't that all people are evil. It's that all people are human, and humans have an unlimited capacity to fool themselves into thinking that what they're doing is the right thing to do, even when it isn't. When senior people rationalize their behavior, a company's decline isn't far behind.
As for the board, it can start thinking about how to turn around this very important company, or it can continue down the same path. I'll be interested in watching what happens.