Does Goldman Sachs need care about its public reputation since profits are up?

On the back of my Goldman Sachs article today in PR Week (a fortnightly look at how corporate messages have played out in the media http://www.electricairwaves.com/messageinthemedia.html) I've been asked whether Goldman Sachs really need care about its public reputation if its year-on-year third quarter profits are up 53%.

The answer lies in the fact that Goldman Sachs, like all organisations, has multiple reputations with multiple audiences. So while their public reputation may be trash, charities may value its donations, a CFO may value their investment banking skills most or a CEO may have a personal relationship with a Goldmans executive "who's not like the rest of them". Which is fine. Hence profits rise. BUT.

Multiple reputations can, do and probably will become increasingly interdependent. And it ignores the human factor. As I reported at the end of the article, a FTSE100 CFO who considered them a good investment bank nonetheless took a personal decision not to be associated with them because of their poor public reputation. It could well be that Goldman Sachs profits would have been 73% higher if it was not for their poor public reputation. We don't know at this point.

The bank may well have been obtuse in failing to understand its external operating environment - that bankers are not liked, that foreign companies are being bashed over the amount of tax they pay in the UK etc - but it did back down over the timing of the bonuses.

Stakeholders that the bank does care about - the Governor of the Bank of England, the Treasury - criticized them. And probably in response to the media stories which then caused Parliamentarians to ask questions.

Moreover, Goldman Sachs peoples' time and other resources were expended dealing with the issue. Time spent on issues management (especially avoidable issues) is time that can alternatively be spent on more productive things. And all the while, competitors - maybe new one - will be nibbling away at their business: "we're not like them", "we're the acceptable face of investment banking" etc.

It's a connected, interdependent world we live in. That's what Goldmans needs to come to grips with.


Andre Caesar-Gordon

Top Tip From Coverage Of Today's Vauxhall Helicopter Crash

Today’s tragic helicopter accident in Vauxhall, London, also offers PROs a quick learning point in managing a crisis situation.

Your crisis will cause the media and many members of the public to head to your website as a central source of information.  You must be ready to adapt your website (and other online channels) for use as a central hub for communication. A gallery of ‘positive’ images including shots of happy, smiling staff or customers may well jar with people and feel inappropriate at the time of crisis.  The creation of a ‘dark site’ prior to a crisis hitting, allows immediate activation and the ability to position the business as an organisation in control of a challenging situation

Rotormotion – who operated the helicopter – is a small company and will understandably not have invested in a ‘dark site’. But you can’t have an incident (in bad weather) that is core to your business in this instance – flying safely - and then keep on your home page:

“Safety is no accident. Our helicopters have twin turbine engines and are certified to fly at night, over water and in cloud. Relax in the knowledge that both pilot and machine are fully instrument qualified to fly in poor weather conditions.” 

Whether you are a large or small organisation, check and change your website to remove anything incongruous with the crisis situation. Show the outside world that you care more about people than profit at this time. If you can't adapt the home page, at the very least prominently post your response to the crisis and any key messages that you want the audience to understand about you and your business.

Moreover, while the company’s managing director was right to say "Our main priority now is for the family of the pilot and we extend our greatest sympathy to the friends and relatives of those who have died and been injured", he needed to add that the company was taking steps to ensure that none of its own processes were at fault, that it cannot speculate until the investigation was completed and that processes would be rectified should an investigation find any shortcomings.

17th January -  UPDATE

Seems as though RotorMotion read our blog last night and have changed their website. The front page - indeed their website's only page - is their press release which says all the right things. Bravo.

 

Andrew Caesar-Gordon