Greg Smith isn’t the first person to write an article about their past employer that is less than flattering and he won’t be the last. As a Goldman Sachs executive director
and head of the firm’s United States equity derivatives business in
Europe, the Middle East and Africa he’s bound to be listened to and will cause more than a few intakes of breath in Goldman Sachs offices.

What Greg said in New York Times
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 axe murderer) you will be promoted into a position
of influence.

What are three quick ways to become a leader?
a) Execute on the firm’s
“axes,” which is Goldman-speak for persuading your clients to invest in
the stocks or other products that we are trying to get rid of because
they are not seen as having a lot of potential profit.
b) “Hunt
Elephants.” In English: get your clients — some of whom are
sophisticated, and some of whom aren’t — to trade whatever will bring
the biggest profit to Goldman. Call me old-fashioned, but I don’t like
selling my clients a product that is wrong for them.
c) Find yourself
sitting in a seat where your job is to trade any illiquid, opaque
product with a three-letter acronym.

Disgruntled or upset
It’s obvious that Greg is leaving Goldman Sachs a very disgruntled individual. Upset at how he’s been treated or genuinely upset at how customers are treated. Whatever the reason some will support him and others will be “appalled”.

Badly managed exit
Whatever you think of Greg and whether you agree with his point of view or not one can only assume that Goldman Sachs have mishandled his exit from the business. Here you have a senior executive that has potential to harm the business.

In my experience there will have been warning signs and these should have been picked up at an early stage.
Generally these include internal conflict, poor management of the individual, inappropriate blame, confusion over change programme, change in leadership that results in the individual being sidelined, change in corporate direction or values.

CNN reported that HSBC has announced that 3,000 people – roughly 10% of its
workforce – will be out of a job by 2013 and are part of the bank’s plans to eliminate 30,000 positions worldwide.

Other banks making huge numbers redundant include Bank of
America, the largest bank in the U.S., plans to shed between 25,000 and 30,000 jobs as reported in the Charlotte Observer . In Stockholm, Nordea, the largest bank in the Nordic region is to cut 2,000 workers. The Dutch bank ABN Amro has announced that it will cut 2,350 jobs. The Daily Telegraph has reported that Lloyds TSB will be cutting 15,000 jobs, Barclays 3000 and Goldman Sachs 1000.

A payroll cut is instant money
Banks are looking for ways to boost their
bottom lines – and as employees
represent around 60% of a bank’s expenses a payroll cut is instant
money.

Another reason is that as banks increase salaries and reduce bonuses they find that whilst bonuses could be easily adjusted to reflect the bank’s financial performance, salaries are a fixed cost. So rather than axe bonuses, banks are axing bankers.

A future problem
In my experience when team personnel are restructured there is the need to restructure work processes and determine new targets and work outcomes. In effect there is a NEW TEAM and new teams are likely to achieve their anticipated results only 60% of the time.

This failure rate (40%) can cause huge losses on the bottom line and delay mission critical outcomes unless clear management of the transition situation is carefully implemented. In my experience the more team change that’s implemented at the same time the more likely there is to be a failure.