The resignation letter from a former Goldman Sachs executive, published today in the New York Times, has been making the rounds on Facebook and Twitter this morning. As former executive Greg Smith walks readers through the reasons for his resignation, he touches on a number of lessons surrounding group culture and ethical leadership – two subjects that couldn’t be more relevant for fraternity life.
Smith wastes no time in identifying a lack of leadership as the culprit for Goldman Sachs’ increasingly negative work culture.
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.
It’s hard to say where profit fits into an analogy between a business and a student organization. As you read on, know that Smith’s letter is not an indictment of profit-seeking per se, but rather a lesson in what happens when an organization strays from its core purpose.
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
For better or worse, the fastest way to change the culture of a group is the behavior of the leadership. As Smith witnessed, younger employees would observe and later mimic the insidious behavior of the senior analysts. Sure enough, new members are likely to take cues from older members, particularly the leadership. When upperclassmen abuse alcohol, act irresponsibly, and otherwise neglect their duties, the new members will undoubtedly do the same.
Smith closes with some advice for the remaining Goldman Sachs executives – people with the ability to reshape the company’s culture.
Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons.
It’s not easy to tell a peer, one who might even be a good friend, that he can’t be in the fraternity anymore. But that’s what being in a fraternity founded on the Honor principle is all about – self-governance and peer-accountability. That aside, a chapter that lacks the fortitude to remove members who contribute to a toxic culture will not be around for very long.
//Nathaniel Clarkson (James Madison)