March 16, 2012
Goldman Sachs PR Response: Firm Missed a Golden PR Opportunity
By Adele R. Cehrs, President of Epic PR Group
On the heels of recovering from one of the worst recessions in U.S. history, largely caused by financial sector mismanagement, Edelman's 2012 Trust Barometer released findings that show consumers trust financial service institutions more this year compared to last year. Ironically, this announcement was made on the same day that Goldman Sachs executive Greg Smith issued a damning resignation letter calling one of the biggest firms on Wall Street "toxic" and "destructive." The op-ed, which appeared in the New York Times, was reportedly vetted by the paper's editorial staff before being published.
This begs the question: if trust is so high, why is this issue receiving so much play? The answer is threefold.
From Water Cooler Gossip to the New York Times
The relationship between traditional media and social media continues to evolve, a symbiotic connection that fuels 'viral' stories like this one. We call it the 'bounce effect' because stories bounce from traditional media to social media (and not necessarily in that order).
It's clear that some stories are 'bouncier' than others. Elements of a bouncy story include mass appeal, the human element and controversy — and this tale of intrigue is no exception.
In the past, all staff emails from disgruntled employees received a small, but captive audience when someone was let go abruptly. Now, the way people share information has made what would otherwise be water cooler gossip into a public relations nightmare for a major company.
Top-dog to Underdog
Everyone has been in Greg Smith's shoes at one point, but most people didn't have the nerve to write an op-ed in the New York Times about it. It is a classic underdog positioning strategy, which is hard to swallow given Smith's affluence. It is basic human nature to want to watch as someone does what we know we couldn't. And, this is being heralded by the Huffington Post as a "dream job exit."
Unfortunately, how Goldman Sachs responded to this op-ed maybe one of the PR missteps of the year.
They Should Have Killed the Crisis with Kindness
Goldman Sachs, who is already seen as a Wall Street Goliath, commented but didn't address the accusations or issues Smith ranted about. The company's response just fueled the fire.
Goldman Sachs Original Statement in Response to the Op-ed:
"We disagree with the views expressed, which we don't think reflect the way we run our business. In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves."
But why is Goldman Sachs getting so defensive? Had they taken the high road and responded with a less defensive tone and a more human approach to the matter they may have seemed less petty. For example:
"Greg Smith has been a valuable employee at Goldman Sachs for the past 12 years and we are saddened to see him take this type of a position in such a public forum. Our culture has been based on providing excellent client service for more than 140 years and we stand by this fundamental truth."
As you can see, the first statement makes the company look like they are hiding something and the second softer statement makes Smith look bad. Either way, many will argue that the firm may not have won any popularity contest regardless of its response, but it could have lessened the focus on the firm.
However, this was a costly PR mistake, a $2.15 billion mistake to be exact, as the stock price took a dive after the controversy. Goldman Sachs missed the opportunity to be seen as an organization under attack by one disgruntled executive. Now, the firm is stuck defending its position in what has become a multi-day media firestorm.
Again, the company didn't learn from how its first statement was received by the public. Instead, Goldman Sachs responded to Smith's op-ed with a Letter to the Editor in the Financial Times. The most recent letter is even more damning than the company's original statement, citing an internal study that shows how happy people are about the work they do at the firm.
Does Goldman Sachs really expect the American public to believe an internal study? This seems like a thinly veiled attempt to show that Smith was wrong. Unfortunately, the statement and the study will only prompt reporters to dig for more dirt, instead of seeing this as what it is, an angry ex-employee with a bone to pick.