The success that any organization achieves hinges almost entirely on the capabilities of its leadership. On the one hand, when able leaders direct the operations of an organization, it can be expected that the organization will accomplish sustainable success. The leaders steering these organizations take steps to inspire employees to join them in pursuing the goals and mission of the organization. On the other hand, firms that are being guided by ineffective and unwise leaders often experience negative growth. These leaders are incapable of offering inspired or effective direction. Goldman Sachs UK is one of the firms whose success can be attributed to the insight and competency of its leaders. The US division of this company stands in sharp contrast as it has witnessed challenges and scandals resulting from poor leadership. A comparison of the styles of the leaders of the two companies reveals the direct and significant relationship between leadership and organizational success.
Goldman Sachs UK vs US
A review of the case study shows that there were stark differences in the operations, leadership values and culture between the UK and the US divisions of Goldman Sachs. In the discussion below, these differences are explored in detail.
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Leadership
Embodying the values that defined the companies is one of the issues that distinguished the leadership of Goldman Sachs UK and US. On the one hand, the leaders of the former division sought to reflect the company’s values in their leadership styles and behavior. By leading by example, these leaders inspired employees to work tirelessly to achieve the vision of the organization. The success that Goldman Sachs UK is not surprising given the commitment of the leadership to the firm’s values. Research shows that when they demonstrate dedication to the values and vision of the companies that they head, leaders help to establish a culture of ethical conduct, high performance and excellence (Piccolo et al. 2010). Whereas the leaders of Goldman Sachs UK strived to pursue the company’s vision, their counterparts in the US disregarded employee wellbeing and betrayed the company’s values. The case study mentions that instead of cherishing employees, the leaders reminded them that their employment at the company was an underserved favor. Furthermore, these leaders betrayed customer confidence by placing profitability ahead of customer wellbeing. When one considers the unacceptable behavior of these leaders, they are able to understand why Goldman Sachs US was involved in the 2008 financial crisis. When leaders disregard company values, they essentially create an atmosphere that encourages illegalities and immoral conduct (Ho et al. 2015). Goldman Sachs US faced hardships because its leaders failed to uphold its values.
The distinction between the leadership at Goldman Sachs US and UK extends beyond how the leaders approached the values of the company. A critical exploration of the approaches that the leaders adopted reveals that they differ regarding the treatment of employees. Whereas the leaders of the UK branch of Goldman Sachs endeavored to promote employee engagement, those in the US took no steps to ensure that the employees were motivated and involved in the company’s process. Thanks to the insight and the steady hand of the Goldman Sachs UK leaders, this organization’s employees felt that their effort was appreciated and rewarded. It is mentioned in the case study that this company achieved levels of employee engagement that were so high that the employees had “excessively low working hours”. In essence, Goldman Sachs UK’s leadership instituted measures aimed at safeguarding its employees. It is generally understood that to secure employee engagement, leaders need to make it clear that they are committed to employee wellbeing by creating an environment that enhances productivity, performance and satisfaction (Leroy, et al. 2015). As regards its treatment of the firm’s employees, the leadership of Goldman Sachs US demonstrated utter disrespect and failed to understand the critical role that the employees play in driving the organization’s performance. As noted above, the leaders displayed arrogance that led employees to experience low satisfaction levels. It is not surprising that Goldman Sachs US was unable to achieve high engagement levels. Leaders who refuse to invest in employee welfare cannot expect high satisfaction or productivity levels (Truss et al. 2013). An employee who is disrespected and not rewarded for their effort has no reason to deliver beyond the basic demands of their job.
Values
The values that characterized their operations and their treatment of employees are another issue that set Goldman Sachs UK and US apart. Basically, values refer to the principles and philosophies that firms use to inform their processes and strategies. Such values as integrity and unwavering commitment to customer satisfaction are among the principles that allow organizations to gain a competitive edge. Upon an examination of the practices of Goldman Sachs, one recognizes that this firm had a solid dedication to a number of positive values. Among these values is social responsibility. This firm challenged its employees to participate to “give something back”. Basically, this firm understood that it had an obligation to promote the welfare of stakeholders with whom it works. Today, more and more firms are integrating corporate social responsibility (CSR) into their operations. CSR plays the vital role of enabling firms to build communities while enhancing their reputation (Schwartz 2011). It is little wonder that Goldman Sachs US was consistently voted as among the best firms to work for. On the other hand, Goldman Sachs US displayed selfishness and greed, to the detriment of such stakeholders as customers. Originally, this firm was established on the principle of developing and conserving its relationships with its customers. Instead of upholding this principle, the firm engaged in practices that raised questions about its loyalty to customers. This organization was relentless in its pursuit of profits at the expense of customers who expect better level of service. Goldman Sachs US reflects the culture of greed that defines Wall Street. Polls indicate that many Americans regard financial institutions negatively due to the questionable and greedy practices of these companies (Bump 2016). If it is to restore its image, Goldman Sachs US needs to look to its UK branch for inspiration and guidance regarding how to uphold ethics and values.
Fairness and justice are other values that distinguish Goldman Sachs US and UK. Whereas the former treated its stakeholders with contempt and arrogance, the latter strived to uphold fairness and justice. This distinction can be seen in the company’s human resource management strategies. Goldman Sachs UK developed a compensation package that most employees found to be fair and adequate. Basically, this firm understood that in order to sustain high engagement and satisfaction levels, it needed to reward the employees fairly and adequately. It has been established that competitive and fair compensation packages help to drive employee satisfaction and performance. This research finding explains why Goldman Sachs UK’s employees were satisfied and strived to execute their mandates faithfully. The situation at Goldman Sachs US is starkly different. The firm refused to create an environment that would allow its employees to flourish. While it may be true that this company offered its employees generous pay, it is difficult to ignore the poor treatment of the employees. For example, as noted in the case study, Goldman Sachs US encouraged a culture of workaholism. Essentially, this means that as opposed to the UK branch which did not overwhelm its employees with work, Goldman Sachs US require its staff to work for long hours. It is important to note that a workaholic culture has detrimental effects on employee health (Andreasson, Pallesen & Torsheim 2018). Furthermore, as they work for long hours, the employees are unable to invest time in personal pursuits. Overall, Goldman Sachs US is a representation of the companies which impose high demands on their employees without accompanying these demands with working conditions that promote excellence.
Culture
Organizational culture is among the factors that have significant impacts on the performance of an organization. The culture is concerned with the heritage, traditions and the attitudes that an organization holds regarding such issues as the pursuit of profit and the treatment of employees. From the discussion above, there is a clear pattern: while Goldman Sachs US has a toxic culture, the UK division of this institution is under the leadership of visionary individuals who recognize that a friendly and conducive atmosphere is needed for employee engagement. Focus on employee wellbeing and growth is the main feature of the culture at Goldman Sachs UK. At this company, employees are treated with respect and the firm has taken steps to motivate and engage the employees. This cannot be said about the culture of Goldman Sachs US. Here, employee welfare is an afterthought. Instead of adopting strategies that enable employees to feel valued, this company demeans and insults employees by failing to recognize their input. When one compares the cultures of the two firms, they are able to determine the role that culture plays. Whereas a toxic culture discourages employee satisfaction and productivity, a warm and healthy working environment motivates employees to work hard and stay committed to their organizations (Edmonds 2014). The challenges that Goldman Sachs encountered show that when a firm neglects its employees, it suffers hardships that threaten its future.
The approach to ensuring profitability is another issue that distinguishes the culture of Goldman Sachs UK from that of the institution’s US division. To be sustainable, firms need to adopt practices which allow them to stay profitable while safeguarding the wellbeing of stakeholders and the environment. Goldman Sachs UK clearly understood this truth. This company was able to achieve growth and enjoy the confidence of its customers and employees without neglecting its commitment to stakeholders. For example, as already mentioned, the firm ensured that employees were compensated fairly and that they achieved personal growth. On the other hand, Goldman Sachs US established a culture where profits were pursued at all costs. Customers and employees bore the brunt of the company’s greed and desperate pursuit of profits. It is unfortunate that this company is not isolated as it is common practice for companies in the US to seek profits at the expense of the welfare of stakeholders. For example, it has been observed that financial institutions operating on Wall Street are so focused on impressive quarterly earnings that they neglect their obligation to employees and lose sight of long-term objectives (Pearlstein 2013). By examining the toxic culture at Goldman Sachs US one is able to make sense of the accusations that this company is partly responsible for the financial crisis that rocked the US and other markets in 2008. If the US is to prevent a similar crisis, it should encourage its companies to uphold ethics in all their operations.
Right Type of Leader
The case of Goldman Sachs US underscores the importance of effective leadership. This company failed to honor its obligations because it was being guided by leaders who did not fully appreciate the need for an ethics-based culture that empowers and celebrates employees. To be effective in steering their companies toward growth and ethical operations, leaders need to possess a number of key characteristics. Integrity and accountability are among these traits. When they uphold integrity, leaders are able to create a culture of compliance with the law and ethical guidelines. Furthermore, integrity and transparency challenges the leaders to pursue programs and initiatives that serve the interests of stakeholders (Kiel 2015). Goldman Sachs US is in desperate need of a leader who embraces integrity. This principle would allow the leader to take all necessary steps to promote ethics and to secure the wellbeing of employees.
While important, integrity alone does not make a good leader. It is also important for leaders to possess the ability to inspire and to rally employees to pursue particular objectives. Effective leaders understand that without the support of such stakeholders as employees, they will be unable to steer their organizations toward growth. They urge the stakeholders to join them in working together to accomplish organizational goals (Nelsey & Brownie 2012). It is evident that the leadership of Goldman Sachs failed to inspire the employees. Instead, these leaders insulted and dismissed the value of the employees. As a result, the employees experienced low satisfaction and engagement levels. This firm needs a leader who commands the respect of stakeholders and can collaborate with them to pursue objectives and strategies.
Being visionary is another critical trait that leaders should possess. This trait provides the leaders with the skills and insight needed to plan for the future. Vision is important as it enables organizations to learn from their past and present to prepare for the opportunities and challenges of tomorrow (Ihlenfeldt 2011). One of the challenges that ailed Goldman Sachs is the fact that its leaders lacked vision. These leaders placed too much focus on short-term success while ignoring long-term growth. They invested huge amounts of resources and effort into endeavors that offered temporary rewards at the expense of such issues as employee welfare which plays a more important role in securing a company’s future. For Goldman Sachs to return to its roots, it needs a leader with vision and the ability to prepare the organization for the future.
During the period covered in the case study, Lloyd Blankfein served as the Chief Executive of Goldman Sachs US. An evaluation of his leadership reveals that overall, he was ineffective and is largely responsible for the hardships and failures that the company experienced. Under his leadership, the company failed to promote employee wellbeing and was relentlessly desperate in its desire to maximize profits. Furthermore, his leadership condoned practices that precipitated the 2008 financial crisis. Were he an effective leader, he would have rallied the firm’s employees and other stakeholders to uphold such values as honesty and transparency. Given his numerous and catastrophic failures, there is no doubt that Blankfein was an ineffective leader.
Pros and Cons of High Employee Engagement
Employee engagement refers to the pride and satisfaction that employees feel about their jobs. By promoting engagement, firms persuade their employees to commit to their mandate. There are various benefits that accrue to firms that encourage employee engagement. Motivating employees to work harder and enabling them to develop a sense of belonging are among the main benefits of employee engagement (Bin 2015). Thanks to its efforts to boost engagement, Goldman Sachs UK managed to inspire its employees to feel valued and to strive towards the company’s mission. The success that this company has experienced shows that employee engagement initiatives deliver tremendous outcomes. Enhanced decision making is yet another advantage that employee engagement brings (Whittington et al. 2017). Engagement empowers employees to participate in decision making processes. The decisions that are developed through employee involvement tend to be richer. Higher satisfaction and retention levels are other advantages that firms experience when they invest in employee engagement (Lu et al. 2016). Since they feel valued, the employees experience satisfaction. The satisfaction gives them reason to stay loyal to their companies.
It is true that employee engagement presents numerous benefits as shown in the discussion above. However, it is worth noting that engagement has its drawbacks. The financial cost of promoting engagement is among the limitations (Phillips, Phillips & Ray 2016). To keep employees engaged, firms need to offer incentives such as higher pay. The provision of these incentives is a capital-intensive undertaking. Another disadvantage of employee engagement is that in extremely high levels, engagement may hamper performance. When employees are tied too closely to their companies, their emotional attachment may hinder ouput. The small number of disadvantages relative to the pros of engagement shows that overall, engagement has a positive impact and firms should endeavor to ensure that their employees are fully engaged.
Senior Leaders Shaping Organizational Culture
One of the mandates of senior leaders is to define the direction that their organizations take. Shaping the culture is among the ways that these leaders can influence organizational direction. While it is true that there are limitations that they face, in general, leaders enjoy immense influence that they can leverage to shape organizational culture. Essentially, the expectation that leaders can shape culture is reasonable and realistic. The fact that a majority of leaders believe that they can influence organizational culture is among the issues that indicate that the leaders can reasonably expect to shape culture. In his article, Victor Lipman (2017) observes that as many as 51% of senior leaders are convinced that they take part in defining the cultures of their organizations. Since most leaders are actually involved in shaping organizational culture, it can be said that senior leaders are indeed capable of directing the development of the internal processes that inform organizational performance.
The fact that most leaders are involved in shaping organizational culture is significant. However, on its own, this fact does not dispel the concerns that the leaders are incapable of defining the cultural practices, values and traditions of their organizations. It is also important for leaders to be equipped with the tools that they need to influence organizational culture. As Lipman points out, there are various resources and tools at the disposal of the leaders. For example, the leaders rely on organizational values and principles (Lipman 2017). Furthermore, these leaders work together with other executives in defining the culture. Training and reward programs are other resources that the leaders are leveraging (Lipman 2017). The fact that the leaders have access to various resources means that they can be reasonably expected to shape organizational culture.
Lipman’s article is extensive in its discussion of how leaders influence corporate culture. One of the issues that he addresses is that leaders are always being monitored and their behavior informs the practices and beliefs of their employees (Lipman 2017). Essentially, by the virtue of being the heads of their organizations, the leaders define culture. To ensure that the culture that they establish is positive, the leaders need to serve as good models that employees can emulate. The change that the modern workplace is undergoing is another factor that underscores the role that leaders play in defining culture. Today, more and millennials are joining the workforce and they expect to be guided by their seniors (Fabian 2017). Leaders are faced with the challenge of creating a culture that enables the millennials to thrive. Therefore, since the reality of the modern workplace forces leaders to be involved in the development of culture, those who expect the leaders to shape culture are acting reasonably.
The pressure that leaders face to develop a healthy workplace culture can be overwhelming. Without support, the leaders may be unable to fulfill the expectations that stakeholders have. However, there are a number of simple and practical yet effective strategies that the leaders can adopt. These strategies include setting the example, investing in the aspects of culture that drive growth while discouraging the elements that hamper progress (George, Sleeth & Siders 1999). Combined with the resources mentioned earlier, these strategies make it possible for leaders to participate fully in the culture formulation process. Therefore, the expectation that senior leaders should be involved in shaping the culture of their organizations is reasonable.
It is generally true that senior leaders have the authority, competence and resources to shape the culture of their companies. This has been made clear in the discussion above. However, it is important to recognize that there are various limitations that the leaders encounter. Incompatibility of the leader’s style and the culture of the organization is among these limitations (Tsai 2011). For a leader to successfully influence culture, their approach to leadership needs to be consistent with the culture. For example, suppose that an authoritarian leader is required to implement a culture of democracy and openness. It can be expected that this leader will fail. Unfavorable market conditions and a complex organization are other limitations that hinder leaders as they strive to influence culture (Kargas & Varoutas 2015). The case of a manager who wishes to establish a culture of ethics and employee wellbeing can be considered. Suppose that the company operates in an intensely competitive market where rivals are engaging in questionable practices. To compete effectively, the manager may be forced to create a culture which prioritizes profits over employee wellbeing. This example shows that complex forces beyond the control of senior leaders influence the culture shaping process. Therefore, leaders should be forgiven when they fail to shape culture as expected.
In conclusion, leaders continue to play a vital role in defining the success and overall directions of their companies. The case of the UK and the US divisions of Goldman Sachs highlight the tremendous impact of leadership. On the one hand, as a result of effective leadership, Goldman Sachs UK witnessed success and was able to leave its employees and customers satisfied. On the other hand, poor leadership caused Goldman Sachs to suffer low levels of employee engagement. Furthermore, the company was embroiled in a damaging scandal linked to the 2008 financial crisis. Firms should endeavor to replicate the success that Goldman Sachs UK achieved. They can accomplish this level of success by investing in employee engagement. The leaders of these firms should spearhead efforts to offer competitive compensation and establish a culture that encourages ethical conduct.
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