Goldman Sachs, an American multinational investment bank, managed to flourish in its business by amassing the trust of its customers and keeping a profound work ethic in the field. The road to this excellence was paved by the sound decisions taken by its management and the amount of investment the company made in building a cultural capital that is quite hard to replicate. It could be seen that even its competitors reserved an amount of respect towards Goldman Sachs . This case study is an attempt to explain why.
The first and foremost element that helped Goldman Sachs to stand out from the crowd of Wall Street was its cultural and ethical working platform. The very idea that they propagate is of efficiency and excellence. In a market where everyone secretly longs to be a member of Goldman Sachs it is highly unlikely that even the enemies would want to pass over an opportunity to be a partner in this firm. This is where the company’s success lies in. And this is not something that started overnight. The company had to invest a serious amount of effort and time to create this longing in people.
The management team of Goldman Sachs was one of the pioneers who were able to understand the key elements that were necessary for success. They realized that being great at what they do is not simply enough. They created a world within their company that was constantly on the run to prove their worthiness. They were constantly in a competition within themselves. They were fighting to rise up in the firm so that they could finally say that they are Goldman worthy.
And this was no coincidence either. Goldman Sachs was already invested in one of the biggest high-risk high-return market, investment banking. This provided the members of Goldman Sachs an opportunity to offer its workforce a different kind of motivation. The more risk you take, the more is your chance of winning big. Goldman Sachs delivered what they promised. This culture immense returns for huge work motivated people to work harder. Well, it was highly addictive too. It is the nature of people to work towards goals that are almost impossible to achieve once they’ve been given a directive. Climbing up one of the toughest corporate mountains in Wall Street was enough for a directive.
There is another formula to sustaining this inner upward drive every Goldman Sachs member feels. This is done by collecting the right kind of people who have a passion for excellence and perfection. The firm’s global treasurer, Liz Beshel, was caught saying once that the firm’s top level executives always get into the recruitment process to land the best from the candidates. One thing is for sure, the management at Goldman Sachs did not take silly things much silly. They believed in laying a firm foundation rather than trying to make a skyscraper on a housing floor. They realized the necessity of a worthy workforce to achieve the ‘Gold’ standard.
Goldman Sachs helped people oust their mediocre ambitions and forced them to dream bigger. Being ambitious was no longer enough. The one thing that the case study reveals is that Goldman Sachs helped its employees realize that, “more is not enough”. The actual reason why Goldman Sachs’ success sustained for more than a century is not because they hired the best or they found a life hack to success. It was because of the lofty standards that they set and the drive they gave its employees to achieve it. But like everything else in the world, Goldman Sachs was also susceptible to change.
Which forces in Goldman Sachs external environment have accounted the most for the “fortunes of fate” that the company, indeed the investment banking industry, has experienced since 2008?
The General Environment that contributed mostly to Goldman Sachs’ decline from excellence was the economic and socio-cultural dimensions. During the 2008 economic crisis Goldman Sachs suffered huge blows in its financial stability because of its involvement in subprime mortgages. This factor was already covered in the work environment of Goldman Sachs. It was a high-risk high-return market. And when the economic factors outside of Goldman Sachs were no longer favorable, the industry tumbled. But the company had already predicted this downward trend with the help of its creative employees and successfully managed to make profit during loss by short-selling subprime mortgage backed securities. This affected the external socio-cultural environment of Goldman Sachs. The customers that idolized Goldman was now extremely disappointed that their trusted partner had bet against their winning. The change in socio-cultural sentiment towards the company called for a drastic change. Goldman Sachs seized its existence as an investment banker and became simply a bank.
Explain the role of Goldman’s partners, owners and employees, in forming and managing its internal environment.
Goldman Sachs realized that the best way to maintain its pinnacle position is by adopting an integrated perspective on effectiveness. But primarily, Goldman Sachs focused on an internal process approach where the employees and owners worked towards maintaining an ambitious and hardworking internal environment with lofty standards of work ethics. This internal process approach helped Goldman Sachs become one of the most desirable work place for power hungry employees. But that does not mean that Goldman Sachs completely avoided the other approaches. They also focused on their output, feedback, and their resources. Goldman Sachs was renowned for delivering more than they promised. They used to help their corporate customers from hostile takeovers. But even through all that their primary focus was always on their internal environment.
How valid do you think is the characterization of Goldman by Fortune Magazine as one of top 20 most admired companies? And how would you manage the conflict between “individual ambition” and “robot-like teamwork”
Admiration for a company can rise from different reasons within the employees. The example of NetApp and Google in the study is enough to explain the difference. When the former believed in keeping an open and free management policy the latter believed in providing immense incentives to keep the employees satisfied. But what Goldman provided was an opportunity to prove one’s might. Goldman Sachs helped its employees declare to the world their worthiness. It helped the employees stand out from the workforce of every other company. Working for Goldman Sachs opened million other opportunities. Many former employees of Goldman Sachs had moved onto respectable government positions in finance. So there is a reason why employees admire working at Goldman. No wonder that it was named one of the top 20 most admired companies by Fortune magazine.
“Individual ambition” and “robot-like team work” has to go hand-in-hand to help a company achieve its collective goal. Individual ambitions usually are easily served by derailing the attempts of one’s competition. This unhealthy practice can destroy company goals. But the one way to end this practice is by integrating individual ambition and team work. The best way to curtail unhealthy competition is by making team work as a part of individual ambition. If the best way to serve your individual goals is also by being the best team player, no employee shall think to destroy his/her competition to get ahead. And that is how one should integrate “individual ambition” and “robot-like team work”. And that is the best way to manage the conflict between the two. Most modern corporate environments have chosen such a management system where teamwork is a mandatory criterion to get ahead in the company.
Works Cited
Goldman Sachs. Corporate Profile. 2016. 25 February 2016 <http://www.goldmansachs.com/investor-relations/corporate-governance/key-facts-about-our-firm/index.html>.
LaCapra, Lauren Tara. Goldman Sachs. 2 June 2011. 25 February 2016 <http://www.reuters.com/article/us-goldmansachs-idUSTRE7513HY20110602>.
