Image Source: DonkeyTs.
On March 14, Greg Smith left Goldman Sachs as head of Goldman's United States equity derivatives business in Europe, the Middle East and Africa. He also published an op-ed in the New York Times that went viral describing what he thought of the firm, where he worked for the past 12 years:
Not everyone gets to flame their former employer in front of the whole world. To a lot of insiders, it looked immature, unrealistic, unprofessional, pathetic; after all, Smith was in the financial business. What did he expect? Meanwhile, critics of Wall Street have no sympathy for someone who profited from the boom and finally - it seems - got caught in the toxic atmosphere of the prolonged bust. Despite the public weakness for conspicuous consumption, the popular feeling about the finanical industry is that it was evil, is evil, and always will be evil, so there are no surprises here, except apparently for Greg Smith, who should have known better. In other words, for insiders and outsiders alike, for top management and up-and-coming young analysts, and for everyone else, the perception is that the financial culture is thoroughly morally compromised.TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. ...
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief. ...
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. ... It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? ...
It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
Those assumptions inspired spoofs of Smith's op-ed across the Internet (thanks to -C.): Why I am Leaving the Empire; and Why I am Leaving the Muppets. At Minyanville, Michael Comeau spoofed the spoofs, letting Goldman know they should hire him because he knew the score and could keep his mouth shut.
The NYT editors highlighted one of hundreds of comments at the foot of the op-ed from John Riley: "I don't think you attack on Mr. Smith is called for. It takes a long time for people to come to the painful realization that the place you have dedicated your career to is morally bankrupt, and not worthy of your time or energy. Mr. Smith realized this, and left in a way where he would expose much of the misaligned culture, and hopefully bring about resolution. That takes courage."
Image (2010) © Pat Bagley, The Salt Lake Tribune.
Remember the Jet Blue air steward, Steven Slater, who gave a plane full of passengers a piece of his mind, grabbed a beer from the airplane mini-bar, and deployed the escape chute in 2010? The incident (the precise details are disputed) started when a passenger, who was told to remain seated, opened the overhead compartment after the plane had landed, but not stopped. A suitcase fell out and hit Slater on the head. Slater and the passenger might or might not have exchanged profanities. According to the Wiki summary of this incident (which anyone can edit), the police later concluded that Slater fabricated at least part of his account of the altercation. Slater reportedly announced over the plane's intercom system: "I've been in this business 20 years. And that's it, I'm done." He deployed the escape chute and slid off the plane, walked out to the parking lot, got in his car, and went home - where he waited to be arrested. You can see the airport security cam video of him sliding out of the plane here. The incident was ranked as #2 in the Top 10 Travel Moments of 2010.
At first, the media reported Slater as an unhinged, wild-eyed maverick and there are still low key comments that he suffered from "clinical" problems. But Slater quickly became the darling of Facebook and disgruntled workers everywhere. Was Slater crazy? Was this just one overhead compartment suitcase too many? Or was there something wrong with Jet Blue's corporate culture? In 2009, a member of their Board of Directors, Ann Rhoades, stated in an online piece, Jet Blue's Success - A Corporate Culture Based on Values: "JetBlue CEO ... and his team to develop a values-centric model for creating a unique culture. The model is simple, but difficult to execute, because it requires a commitment to a set of core values and associated behaviors. It also requires a commitment to hire and retain 'A' players who mirror your values as well as a systematic method to reward and recognize these players."
Image Source: Facebook via Proactive Thinking.
Management ideas at Jet Blue revolve around something called 'organizational culture.' The transparency Web site glassdoor, which promises an inside look at jobs and companies, allows insiders to anonymously post their experiences with Jet Blue (and other companies), here. Of course, the opinion of anyone disgruntled enough to use glassdoor may not be worth reading. But at any rate, amid positive responses, this picture emerges from the most recent reviews of the company, from December 2011 to March of 2012:
"Some people definitely shouldn't be in the positions they're in... not just referring to management roles. Nearly impossible to get fired once you're in, and I think a lot of people take advantage of that."
"No opportunity for advancement to management side of the house."
"Lack of benifits [sic], communication from upper management, no job security, may for you to relocate across the country with only a weeks notice. Too money hungry."
"Not room for advancement, title doesn't match position, working harder than reflected in salary."
"The pay is rather low, as it is with any other airline in the United States. People tend to be whiners about everything. Then again, that must be pretty standard in the industry as well."
Reviewer describes the Flight Attendants (FAs) section of the company: "I think it might be time for a CEO change. Sorry, but the problems always start at the top. Either show that you are a leader and help fix this department (as well as others) Or step down, I'm an employee and an investor, I want the company to do well because I care about my stock too, but something is broken, fix it before it really becomes a problem and we become just like everyone else."
"Back in its hay day [sic] (10 years ago or so) this was a fantastic company. Now its run by a B.O.D and a group of upper management that cares less about its employees, and more about their own bank accounts.
The front line employees are not taken care of, in fact more is expected of us and we receive less support than ever. Bonuses go to the "big-wigs" who all pat each other on the backs for the hard work that the 99% of the actual hard working front line employees do, who's hard work win the JD Powers awards time and time again (not the "happy jetting" and " you above all" bill boards). You know, the Crewmembers who actually spend face time with our paying passengers and do everything in our power to keep everyone happy and loyal, even when the managers making the big bucks drop the ball and we have to over compensate for why we are stuck out on the runway for 4 hours while other carriers have gates and actual plans to avoid such crises. If we treated passengers the way Jetblue treated us, there would be no airline. Period.
The company pays our former CFO (who left rather abruptly) a 1 million dollar farewell gift, yet our health insurance goes up, our work load increases, and the flight attendant quality of life rapidly declines with work rules that make other airlines actually laugh in disbelief in what Je[t]blue gets away with.
Our CEO spends time and a lot of company money in DC with other non union airlines trying to make it harder for Flight Attendants to have a better quality of life, yet we don't see him willing to rip up his iron clad contract.
Lets talk benefits....I have the same amount of vacation/sick/personal time as I had 10 years ago (give or take a couple of hours, yes HOURS), and I make close to the same salary....when at this point in the game I should be working less to make the same amount in this line of work. So no, I would not recommend this company to anyone to work for.
If I had a crystal ball and could see that the BOD would throw its founding CEO under the bus and fire him to try and save some face in the public eye, only to replace him with what we have now...I would have chosen another company, as would a good 75% of this department if you want the truth. Corporate greed continue to be its biggest downfall."
The above commenter, whose remark is headed, "Corporate Greed is ruining this company," closed with the following advice to Senior Management: "Fear does not gain respect."
Video Source: Youtube.
There are enough similarities between the Slater incident and Greg Smith's Goldman Sachs op-ed exit that Time has just done a piece on 'most epic I Quit' moments. Daily Finance wondered whether Slater's case was a symptom of a much bigger, dark problem: "Work-related stress -- and the fantasy of escaping it -- is a theme that is increasingly bubbling up on the Web."
But the stress is not just caused by the recession. It is caused in part by workplace environments and employer policies.
In a moment, the disgruntled employee can turn into a resigning quasi-whistleblower. In 2009, a Bank of America employee, Jackie Ramos, who worked in the bank's customer service, aka collections department, according to Daily Finance,
Jackie Ramos said: "there was something inherently evil about my job." She claimed that she was fired for taking a stand against policies which she thought were wrong.posted a video on YouTube in which she offered an inside glimpse into what happens on the other end of the phone. While Ramos notes that her former employer encouraged her to "do the right thing for the customer," she says she soon came to realize that her job was actually to squeeze as much money as possible from the company's cardholders. In her video, Ramos describes the strategies that Bank of America used to maximize its profitability. From charging a $15 "convenience fee" for payments over the phone to tacking on $39 late fees and $39 overlimit fees, Ramos says her bosses encouraged her to nickel-and-dime customers, drawing out every penny possible.
Video Source: Youtube.
I have talked about the strain on Gen X employees and their position in the liberal professions here. Particularly, I quoted Alec Scott's 2007 commentary on why he abandoned the legal profession. Like contemporaries in other jobs, he spoke of the creeping degradation of professionalism. It could be easy to second-guess a lawyer about having moral qualms, because lawyers, like investment bankers, have a bad reputation. But Scott made a clear case that the legal profession once had a fairly humane internal culture.
The strain employees are reporting across the Web in many job sectors comes from Machiavellian marketing and management techniques, and a dog-eat-dog environment of back-stabbing and pole-climbing. This environment was deliberately cultivated from the 1960s to the 1990s by a stratum of managers, some of whom leave a lot to be desired.
In academia, the reports are the same. Anonymous academic bloggers, such as Bitch PHD, have been talking about the decline in workplace conditions in the Ivory Tower over the past decade. The Chronicle of Higher Education has a report nearly every week on these problems. For example: seeking to secure their retirements, Boomers are not retiring and creating faculty bottlenecks (at some universities 1 in 3 academics are 60 or older); they enjoy tenured job security which they are institutionally dismantling, thereby destabilizing the employment environment for their successors. Tenure is therefore declining. Superficially, this is due to the recession; in reality it is due to generational power struggles. Meanwhile, adjunct professors (i.e. untenured contract hirees) struggle, and fail, to unionize, their efforts blocked.
In most colleges, formerly tenured academic positions are replaced, when vacated by retirees, by contract piece work. This means that an untenured Assistant Professor with a PhD can be required to move to a new city on his or her own bill (usually the moving expenses far outweigh the total salary), sometimes for one semester only, and be paid a grand total of $4,000 to teach one three-month course. Then, leave town, please. That's it. That's all, folks. It's disgusting.
A tragic case last year at Princeton summed up the tensions - and percolating interpersonal politics - associated with this picture. A 45-year-old popular professor of Spanish and Portuguese, Antonio Calvo, came to the university in 2000 in what must have seemed like a dream job. By spring of 2011 he was dead, having committed suicide by stabbing himself repeatedly in his apartment.
According to his friends, he had been kept hanging on whether or not his contract would be renewed. In the middle of a reevaluation of his contract, he was suspended for 'politically incorrect' behaviour. His friends claimed that an offensive remark he made, which led to the suspension, was taken out of context and was culturally specific; that is, in Spanish it was pretty common, and meant something much less outrageous than it did in English. He also shouted at another grad student and intimidated her by clapping his hands near her face.
While these incidents were certainly unprofessional, there was a time when complaints like this would have been dealt with by a chat with the Dean of Arts. Instead, the university moved on this matter; perhaps Calvo's political incorrectness accelerated the issue. Apparently against the wishes of the Department, Calvo's contract was evidently cancelled by top adminstrators at the university. He was asked without warning to turn in his keys and he was suddenly banned from the campus, as summed up by a colleague:
Returning to his apartment, he wrote a note about his long wait to see if his contract would be renewed: "The emotional torture of the months-long wait has become unbearable in my job. It is better to leave it here instead of continuing this road toward a greater torture, left exposed as if I were guilty of a crime when in reality the committee refused to see the merit of my work, focusing instead only on the fact that I raised my voice at my subordinates."1. On Friday, April 8, [2011] a representative of the administration, essentially a security guard, entered Antonio’s office (without informing either him or anyone else in the department more than a few minutes beforehand), demanded his keys and told him to leave. He was not “on leave,” and certainly not for “personal” reasons,” as per Nassau Hall’s press release. This is a euphemism for their having cancelled his contract against the wishes of the department.
2. He was under a standard 5-year review, as a result of which the Department’s enthusiastic recommendation was to continue his contract. The reappointment committee, if they performed any sort of investigation whatsoever, never interviewed a single member of the department nor Antonio himself.
3. On the morning of Tuesday, April 12 Antonio Calvo committed suicide at home in New York City. He did not merely “pass away” as per Nassau Hall’s official line.
This is the new way of doing business. How Calvo had given everything to his job, how he was subsequently treated, and why he was treated that way, and why he responded with such utter, heart-breaking hopelessness, have been questioned in the media and several blogs (here, here, here, here, here).
One commenter on a Calvo-related blog post remarked on Calvo's highly stressful and precarious position as an untenured lecturer: "this trend afflicts all universities, public and private. Non-tenure-line faculty are by far the majority at American universities (close to 70%, according to the AAUP) and administrators like it that way because they (we) are disposable. Tenure is being hollowed out through the use of contingent faculty. Florida is mounting a full-on assault against tenure in its state universities, but a frontal attack is hardly necessary when you look at the numerical decline of tenure-line faculty."
Another comment from the same blog: "This is really horrifying. The AAUP needs to get involved, too, since thay consider any faculty member with that much experience to be entitled to the same protection as tenured faculty. Or at least they used to."
And the blogger herself observed that increasingly-common foreign academic workers in untenured positions are even more vulnerable (as Calvo was) because they can be deported before they can appeal workplace decisions and have no recourse as non-citizens: "This is not the first time I see administrators do this to people. Instead of informing them in advance that their contract will not be renewed, which will give them a chance to find another job, they fire them right after the job market closes. This creates a threat of deportation within WEEKS."
Job stresses for lower level faculty reflect the effective power hierarchies and governance structures in the universities. Like many industries, the academic culture has over the past 30 years been flooded with service orientations, which treat students like customers buying goods instead of people trying to learn something; marketing theories, which treat universities like franchises and brands; and mass production techniques, which demand that researchers write monographs as though they were producing sausages.
Rebellious profs heading to Congregation at Oxford in 2005 (John Hood, inset bottom left). They blocked the introduction of corporate management techniques into the university's arcane and traditionally organic method of conducting and writing up research. Image Source.
But corporate culture does not have to continue rampaging, unstopped, through our whole society. At Oxford, in the mid-2000s, then-new-now-gone Vice Chancellor John Hood brought a business background to his post. He considered introducing 'line managers,' who would monitor professors' writing output and would have the power to "rebalance" their academic duties if it was deemed necessary. This external intrusion on academic productivity (which is admittedly a pretty touchy business) prompted the university's professors to rebel. They called a meeting of their own 'parliament,' which is traditionally known as 'Congregation.' This rare occurence led to days of speeches, debates and arguments, after which, the scholars issued a withering statement, printed on a thick wad of coloured paper, which dismissed the notion that significant thought and innovative research could be conducted under the eyes of line managers. Did Oxford's other great minds in the past have a line manager? The dons asked. Hood's reforms were repeatedly put to the vote and defeated. Wiki: "[Hood's] critics questioned the applicability of corporate models of governance in educational institutions." They refused to enable, or work in, an "atmosphere of fear," instituted by administrative would-be superiors. Other reports quoted professors' statements:
Like other industries over the past four decades, the Academy has been internally compromised by increasingly mechanized ideas and values associated with mass production, mass culture and mass media. The superficial service concern for clients (the students) masks corporate greed (as it does in other large organizations) as well as internal workplace inequalities. There is a lot of talk about grade inflation, fund-raising-driven research, cutbacks, and admissions of undergraduates as a core source of university money. This past week, the President of the University of Illinois resigned in a flurry of accusations about dictatorial tactics and undue 'enrollment management.' This trouble culminated in a letter, signed by scores of professors: "A board that does not act when there is a president who is so ethically and reputationally compromised as to be unable to function is one that is, in truth, itself unable to effectively govern the institution that it stewards."Gavin Williams, a politics tutor and fellow of St Peter's College, who proposed one of the motions, said: 'Line management replaces collegiality and vocation. Performance is measured and costed. Staff find their jobs at risk. These changes undermine academic values and threaten academic freedom.' Gillian Evans, a professor of mediaeval history at Cambridge who opposed similar reforms there, said Dr Hood was mistaken if he thought he could run Oxford like a multinational corporation. "He has failed to understand the culture of direct democracy at Oxford ... He has misunderstood what makes Oxford great." In a letter to Oxford Magazine, David Palfreyman, bursar of New College, said: "Will we dispose of 800 years of genuine academic self-governance to curry favour with folk ill-informed about just what is a world-class university?"
One of the things the recession did was it allowed top managers who were less than scrupulous to exercise power over their employees in inhumane ways, all behind the guise of coping with economic stresses and the need for cutbacks. The recession was and has been a carte blanche to do a lot of creative hiring and firing, which allowed some higher level positions to be retrenched. It cleared out a lot of immediate Gen X competition with their superiors. Xer workers who were moving up the ranks, and were poised to be promoted, were instead fired. From the comments filtering out of this nasty recession, it appears that some of the brass who used the recession to retrench their positions are the very people who thrive in, and perpetuate, a vicious workplace culture and cut-throat business tactics.
It is also arguable that inhumane corporate greed and anti-democratic, uncontrolled corporate management techniques helped to cause the recession in the first place. It's not that businesses should not be competitive. But all of these former employees are repeating a similar line. They say there was (once) a professional culture of mutual positive values. These conventions of mutual decency blunted the worst sharp edges in their respective jobs and gave those jobs larger meaning. They feel that these values actually made the businesses more competitive in the long run. And so, no one should deride Greg Smith because viciousness is the trumpeted norm in corporate culture.
Do these reports merely concern isolated, embittered, unhinged individuals? Or have these individuals shown, in moments of terrible personal vulnerability, that it is possible to question the crushing gross mindthink of corporate business, which pays lip service to human values, but has in fact completely lost sight of them? There is a mandate at hand for Generation X to call their senior bosses and junior rising competition on the collapse of workplace values. Or must Generation X continue to declare our collective moral bankruptcy, until we can either begin to repair our value-gutted institutions, or start anew?
See all my posts on Gen X.
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