Marketing Lessons From the Goldman-Sachs Bomb-Throwing Exit Letter

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Dwhite706
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Re: Not common. Wonder why?
Dwhite706   3/15/2012 7:08:11 PM
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Part of the problem as you suggested is the horrible job market and fear of reprisals, but I think the biggest issue is inertia.  People don't like to rock the boat.  They like to hear others doing it, but don't want to do it themselves.  As you mentioned, I'm sure Mr. Smith got a pretty big chunk of change from his years at Goldman Sachs.

Ellis Booker
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Not common. Wonder why?
Ellis Booker   3/15/2012 6:52:53 PM
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Do you wonder why this kind of outing by ex-employees doesn't happen more often? Does it suggest most companies are well run, that they don't feature prickish, unethical or simply stupid executives and questionable business practices? Of course not. The reason why "Why I left" letters are rare is that they amount to a professional suicide note.

There are two exceptions to this rule: 1) The leaving employee knows the hammer is going to fall and wants to indemnify himself, perhaps on advice of counsel; 2) The leaving employee has enough f***-you money that the prospect of becoming an industry pariah isn't a problem. (Anybody want to guess the cash-out for Mr. Smith for his years of service? I'm guessing it's a very large number.) 

Given this, why aren't knowledgeable, motivated and pissed-off ex-employees using annoymous social media posts to sound alarms about their old employers? Again, I say it's the fear of reprisals and professional repercussions--fears that have only increased in the recent horrible job market. 

"The only thing necessary for the triumph [of evil] is for good men to do nothing." --Edmund Burke

 

Dwhite706
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Mitch, I think Mr. Smith thought about all of his options before sending that letter.  While I think you are right, that he can if he wants to, land at another financial services company (probably a smaller boutique company) or start his own company, but I really don't think he cares about that.  He sounded like he was sincere and is really disallusioned, and needs to take a break from corporate america.  Besieds, he worked there long enough. I'm sure he put some money aside for a rainy day

Mitch Wagner
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Karl - You make a few good points there:

One common trait among failing companies is that they've not only stopped listening to customers and stakeholders, they're not even aware that customers and stakeholders are talking. Management at a company at this time is completely insulated from the outside world. They only talk to each other, never to outsiders. 

That sounds crazy but I've seen it many times, particularly when I was a tech journalist. I covered a few giant tech companies that failed in the 90s -- Digital Equipment, for example. I would talk to customers, or former customers, who complained bitterly about the company. Then I'd go to PR people and executives who basically accused me of lying. Oh, they were nice about it, but they claimed that it was I, and not them, who was out of touch. 

Regarding joining companies and leaving managers: One thing that's been shown in studies of companies that treat their employees well is that those companies tend to be more profitable, and have fewer HR costs than their competitors. If a company is unpleasant to work at, employees need to be paid more to stay, they're less productive, and more likely to leave, leading to recruitment and retraining costs. Whereas if a company is pleasant to work at, employees work hard, they treat their customers better (as indicated in this article). And they don't even have to be paid a lot; employees will stay if their pay is merely average for their job, industry, and location, so long as the company is a good place to work at. 

Mitch Wagner
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WaqasAltaf - Ex-employees will also fear reprisals. There is some discussion that the ex-Goldman executive, Greg Smith, will never work in finance again. 

But I think he will, for a company that values his integrity -- or at least the publicity he brings. 

Or maybe he wants to work in a different kind of finance. Or do something else entirely. 

Ryck
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Re: THE BEST PR MOVE...
Ryck   3/15/2012 2:43:45 PM
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@AliceAMM - further to your point, in today's world with all the social media, things are found out eventually, so if you intend to line your pockets at the expense of clients, it will certainly be exposed at some point.  If you let that happen, you'll be on your heels reacting to it, rather than taking a more sensible, proactive approach.

AliceAMM
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Re: THE BEST PR MOVE...
AliceAMM   3/15/2012 2:39:34 PM
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Having worked for a few companies who gave a token nod to the "customer first attitude", perhaps the day has come when companies and their employees need to stand behind that concept. Speaking up about negative experiences via social media, blogging, etc. shouldn't be a surprise. Businesses caught by surprise aren't paying attention. It seems that "business as usual" may need a revamp for many companies.

Am glad to see it.

Ryck
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Evangelist
THE BEST PR MOVE...
Ryck   3/15/2012 2:35:13 PM
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Mitch, in my opinion, the best way for Goldman and other companies to address these kinds of situations is to not let them happen.  Although that sounds overly simplistic, the thought is that if your culture was inbued with a sense of taking care of the customer first, which allegedly it wasn't at Goldman, the truth would defend a firm against any postings like Greg Smith's exit letter in the NYT.  In particular, customers would publicly voice their perspective to the contrary and that would mitigate the firestorm from postings like Smith's.  Interestingly in this case, I have yet to hear one Goldman client stand up and defend them from this attack.  That should say volumes to all of us.

KarlHakkarainen
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Blogger

Mitch - I agree that it's imperative that companies running disaster drills to rehearse scenarios for handling events such as this. Of course, if we are to believe the exit letter, the GS executives were too tone-deaf to believe that something such as this would happen. 

Some companies resort to contractual solutions, perhaps tying an incentive to an agreement not to criticize the (former) employer. That can backfire as well if the ex-employee speaks and the company has to go to court to enforce the terms. 

The old principle of "We join companies and leave managers." still holds. We're drawn to a company by its culture as well as its opportunities. Most of the time, we leave because someone higher up the food chain starts to behave badly, leading us to believe that our work and work style are no longer of value. 

Which leads to your point that everything a company does and everything that each employee does is marketing, internal and external. Marke research these days is all about signals. What people say is less important than what they do. If management acts as though they've abandoned the company's core values, it doesn't matter what the annual report says. Kids learn this early on from their parents. So, too, do employees.

WaqasAltaf
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Proponent
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Interesting development. There is no short term solution to the problem of defamatory marketing by your ex-employees or your ex-customers. The enterprises need to realize that improvement to character ethic is the only solution because any weakness or bad act of yours will come out as social media is faster than office grapevine these days. 

However, this is still only an option for ex-employees. Current employees may not act on such pubicity options due to fear of reprisal.

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