The real cost of not living your brand in professional services

It was fascinating to see the resignation letter of Goldman Sachs’ Executive Director, Greg Smith, published in the New York Times this week. The letter wiped $2bn off the market value of the firm in one day.

Greg joined Goldman Sachs as a graduate twelve years ago and ultimately became head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa. What makes the letter special is that this does not appear to be the rant of a disgruntled employee. Instead, it reads like a considered analysis of a fundamentally changed environment by a key management team member who was actively involved in the recruitment and mentoring of graduates.

In his letter, Greg laments the “decline in the firm’s moral fibre” where he claims the rising stars are rewarded for “ripping their clients off” with no regard for the “client’s success or progress”. His assertions have already been backed up on social media channels from existing clients who feel their investments are locked in to underperforming funds with a perceived lack of transparency in dealings.

This will undoubtedly add fuel to the fire for those calling for increased accountability and social responsibility amongst executives in the financial services sector. It also begs the question, has nothing been learned from the financial crisis we are experiencing globally? When it comes to running a successful professional services business any focus on short term financial gain may deliver results in your year end accounts, but the impact could be detrimental to your brand reputation longer term.

As Peter Doyle articulated in his book Value Based Marketing,

Managers confuse maximising shareholder value with maximising profits. The two are completely different. Maximising profits is about short term management; cutting costs, reducing investment and downsizing. It is totally antithetical to developing long-term marketing strategies and building world class businesses.

In professional services, it is easy to talk about ‘client focus’ and ‘adding value’, but the ultimate test is to be able to demonstrate how those organisational values pervade every aspect and every level within your business.

For me, Greg Smith succinctly hit the nail on the head with his observation “If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.”