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
