Assurance of Learning: Driving Cultural Change at Goldman Sachs

Read the overview below and complete the activities that follow.

Just as every human being has a unique personality, every company has its own unique corporate culture. These corporate cultures include shared values, ingrained attitudes, and company traditions that determine norms of behavior, accepted work practices, and styles of operating. The character of a companys culture is a product of the core values and beliefs that executives espouse, the standards of what is ethically acceptable and what is not, the chemistry and the personality that permeate the work environment, the companys traditions, and the stories that get told over and over to illustrate and reinforce the companys shared values, business practices, and traditions. In a very real sense, the culture is the companys automatic, self-replicating operating system that defines how we do things around here. A companys culture is important because it influences the organizations actions and approaches to conducting business. As such, it plays an important role in strategy execution and may have an appreciable effect on business performance as well. When a companys present culture promotes attitudes, behaviors, and ways of doing things that are in sync with the chosen strategy and conducive to first-rate strategy execution, the culture functions as a valuable ally in the strategy execution process. The foundation of a companys corporate culture nearly always resides in its dedication to certain core values and the bar it sets for ethical behavior.

The goal of this exercise is for you to explore the corporate culture and values of Goldman Sachs and the important role corporate culture plays in strategy execution.

Before completing this exercise, be sure to review Chapter 12, Corporate Culture and Leadership; specifically the section entitled Instilling a Corporate Culture Conducive to Good Strategy Execution, as well as Illustration Capsule 12.1, Driving Cultural Change at Goldman Sachs (which is below).

Goldman Sachs was long considered one of the best financial services companies to work for, due to its prestige, high salaries, bonuses, and perks. Yet by 2014, Goldman was beginning to have trouble recruiting the best and brightest MBAs at top business schools. Part of this was due to the banking crisis of 20082009 and the scandals that continued to plague the industry year after year, tarnishing the industrys reputation. But another reason was a change in the values and aspirations of the younger generation that made banking culture far less appealing than that of consulting, technology, and start-up companies. Newly minted MBAs were no longer as willing to accept the grueling hours and unpredictable schedules that were the norm in investment banking. They wanted to derive meaning and purpose from their work and prized work/life balance over monetary gain. The tech industry was known for fun, youth-oriented, and collaborative working environments, while the excitement and promise of entrepreneurial ventures offered much appeal. Goldman found itself competing with Amazon, Google, Microsoft, and Facebook, as well as with start-ups for the best young talentand losing out.

Goldmans problem was compounded by the fact that its culture was regarded as stuffy and stodgyqualities not likely to appeal to the young, particularly when contrasted with the hip cultures of tech and start-up companies. Further, it had always been slow-moving in terms of implementing organizational change. Recognizing the problem, the leadership at Goldman attempted to pivot sharply, asking its executives to think of Goldman as a tech company, complete with the associated values. The Chief Learning Office at Goldman Sachs was put in charge of the effort to transform its culture and began taking deliberate steps to enact changes. Buy-in was sought from the full C-suitethe leadership team at the very top of the firm. To foster a more familial atmosphere at work, the company began with small steps, such as setting up sports leagues and encouraging regular team happy hours. More significantly, they instituted more employee-friendly work schedules and policies, more accommodating of work-life balance. They liberalized their parental leave policies, provided greater flexibility in work schedules, and enacted protections for interns and junior bankers designed to limit their working hours. They also overhauled their performance review and promotion systems as well as their recruiting practices and policies regarding diversity. Although cultural change never comes swiftly, by 2017 results were apparent even to outside observers. That year, the career website Vault.com named Goldman Sachs the best banking firm to work for, noting that when it came to workplace policies, Goldman led the industry.