Goldman Sachs CEO Embraces Marriage Equality: A Good PR Move?

The Human Rights Campaign’s push for marriage equality follows the PR-savvy methods of similar campaigns, like the It Gets Better project. Boldfaced names from politics, sports, and entertainment star in video testimonials to express support for the right to marry, regardless of gender. The latest videos feature Anna Wintour, the Reverend Al Sharpton, and Lloyd Blankfein.

That’s right, Lloyd Blankfein, Goldman Sachs CEO and Chairman, has publicly embraced a hot-button social issue that, on the surface, has little to do with Goldman’s business. He is, in fact, the first national corporate spokesperson for marriage equality.
It’s an unusual position, particularly for a financial executive. For every Howard Schultz, there are probably a thousand public-company CEOs who shun controversy at all costs. Particularly in today’s polarized political climate, keeping your head down is good risk management.

Or is it? Many have speculated that Blankfein’s position is a PR strategy. But what’s the goal? To humanize the great and terrible “vampire squid wrapped around the face of humanity”? Maybe he was advised to embrace marriage equality because it’s a safe bet, being practically a fait accompli. Or, as Matt Taibbi, the guy who birthed the “vampire squid” meme, writes, perhaps it’s Goldman’s plan to seduce liberals by embracing a socially progressive cause that is risk-free and “utterly inexpensive.” Could it also be the equivalent of Newt Gingrich’s moon colony — a clever distraction from darker and more complicated issues?

All are possible, of course. But if it’s a PR ploy, it’s an odd choice of issue. And according to news reports, Blankfein is a longtime supporter of gay rights who agreed to the HRC gig after being approached by a Goldman employee who’s engaged in the issue.

I’m as cynical as the next person, but, to me, the whole thing has the earmarks of personal conviction. Not because Blankfein is a good guy or a social progressive (though he may or may not be either), but because he’s a shrewd judge of talent and also serves as Goldman’s Recruiter-in-Chief.  Blankfein is a businessman above all, and what he and his company value over all things is the storied, performance-driven Goldman culture. So, for my money, it’s not really a PR play, but a move that coincides with Goldman’s own interests, and that probably has the additional benefit of being authentic. Imagine that.

Maybe, just maybe, Blankfein wants to send a message that performance is sex-blind, and that non-discrimination is simply good business.

The Goldman Sachs Hearings: A Sh**ty Deal For Taxpayers

What more is there to say about this week’s financial hearings? Goldman Sachs executives, including the infamous “Fabulous Fab” Tourre, were grilled, lectured, and scolded by members of a Senate panel in a much-anticipated spectacle this week. But, instead of Watergate redux, the hearings played out more like a group of middle school principals rebuking eighth-graders.

Sure, the Goldman lieutenants were evasive in their answers. Their strategy amounted to trying to run out the clock while pretending to search through huge binders for email printouts. In fact, there’s a funny video mash-up of the stalling and funfering on the Huffington Post. But, to me, the hearings were a PR miss for the panel. The day didn’t damage Goldman’s reputation as much as it embarrassed the Senators who were supposedly in charge.

And not just because it was a master class in political grandstanding. What bothered me was that when Blankfein finally took the hot seat, he actually seemed to know what he was talking about. As smug and defensive as some of his answers were, they pointed up the chasm between his grasp of the issues and that of the panel members. As Senator Jon Tester put it, “It’s like we’re speaking a different language.”

I don’t expect the Senate members to be derivatives experts, even with 18 months to prepare. But, there weren’t many legal or interrogation skills on display either. What does it say about the prospects for real and constructive financial reform that the best our Senators could come up with was used car and casino metaphors and lectures about client service ethics? They seemed out of touch, self-serving, and a bit simple.

Senator John Ensign, currently under investigation for ethics violations himself, was a poor choice for the panel. Senator Carl Levin made a tactical error by endlessly repeating an email description of a “sh**ty deal” the bank was trying to sell a client instead of asking the author of the email to read his own words. The wobbly-voiced Senator Susan Collins chewed up time by chewing out the executives for…well, for chewing up time. Your tax dollars at work.

Perhaps it’s a moot, point, as the Goldman case will almost certainly be settled. And, as entertainment, the hearings gave us a pretty good show. For the legislators, the day may have even helped channel populist outrage into the theatre of democracy. But, unfortunately, good theatre is about all it was. And, that’s a sh**ty deal for the rest of us.

Wall Street’s Apology – So Far, Just PR?

Two former banking executives got another workout last week. So did the “apology PR” movement. This time it was Citibank ex-CEO Charles Prince and former director Robert Rubin. Under the hot glare of cameras – and the even more heated glares from the Financial Crisis Inquiry Commission, each expressed the most sincere-sounding contrition to date on the financial mess.

But, the Wall Street chieftains still have a lot to learn about apology communications. Morgan Stanley’s John Mack offered up a statement of regret in February. Others have released carefully worded apologies, or non-apologies, since most are short on specifics. (An exception is that of former Bear Sterns chief executive James Cayne, who expressed regret and personal responsibility after his firm folded. Losing $900 million of your own cash will do that.)

The bankers might do well to look at JetBlue’s 2007 response to the Valentine’s Day PR storm that nearly grounded the company. Founder and former CEO David Neeleman’s mea culpa might be the perfect corporate apology. It didn’t happen a year later under legal or regulatory duress. It was offered in many forms, from a major media apology tour, to a YouTube video. Most importantly, it was timely, heartfelt, and part of a larger plan to prevent future incidents.

By contrast, the Wall Street apologies are more like the muttered regret of a misbehaving child being dragged through the motions by reproving parents. What I find most amusing is the groupspeak. For an industry known for the healthy egos at the top, there’s an awful lot of royal “we’s” being used. As the Goldman Sachs fraud investigation ripples through world markets, we can expect even more, um, sharing of responsibility, and maybe more creative mea culpas.

Yet, an authentic apology shouldn’t point the finger at subordinates, ratings agencies, interest rates, homeowners, regulators, or anyone else. One of the first rules of crisis PR is to take responsibility. The executive who stops the buck will, paradoxically, see his personal stock go up, liability notwithstanding.

But the most glaring omission here is the eye to the future. That’s what Wall Street really owes Main Street. Not just heartfelt statements of regret. Or admissions of responsibility by top management. Or generous philanthropy. Those amount to nothing if the banking industry continues to oppose basic financial reform measures like, say, those covering derivatives. The buck – and the spin – stops there.

Goldman Sachs And The Cost of Bad PR

What’s a reputation worth?

For most businesses, there’s an obvious cost to negative publicity. Sure, a few are still stuck in the “any PR is good PR” camp.  And then there are those for whom public perception simply doesn’t matter.  A year ago, I would have put Goldman Sachs in that category. With a track record of breathtaking profitability, a well-deserved reputation for arrogance, and no public-facing businesses, it could afford to shrug off bad press and even public outrage.

That’s why Goldman’s latest annual report is so interesting. It includes a lengthy warning about the risks of the PR battering it has received. According to the disclosure, the “current political and public sentiment” will cost it time and money to respond to regulatory investigations; substantially increased penalties and fines; distraction from ongoing business; possible deterioration of staff morale; and, finally, a potentially negative impact on employee performance.

The disclosure is unprecedented, but it reads a little like lip service to PR. It wasn’t until the last part – about employee performance – that I was impressed. But even that risk is hard to measure.
Goldman’s market performance, on the other hand, is quantifiable. There are rumblings that its stock price has been depressed by the PR crisis. Financial blogs refer to worried investors. One warns that Goldman’s management of its bad PR “will likely be a major factor on where the stock goes from here.” Bloomberg’s Jonathan Weil says restoring Goldman’s reputation is Blankfein’s job number one.

I’m not convinced. The stock price, though below its 52-week high, has doubled in the past year. While Goldman paid out less in 2009 bonus compensation than expected, the $16.2 billion figure is still an embarrassment of riches. And, if I were Blankfein, I wouldn’t worry about my future workforce. In a 2009 survey of 6,207 MBA candidates about most desirable workplaces, Goldman ranked fourth. (Interestingly, Google was #1.)

But, the real problem is that Goldman has no strategy for rebuilding its depleted reputation reserves. Its response to public sentiment continues to be haughty, at times hostile, and nearly always reactive…the opposite of what you need to replenish a bankrupt public image. Its posture is embodied by communications chief Lucas van Praag. Recently parodied to hilarious effect on Twitter, van Praag has become a symbol of a communications approach that  The Observer‘s Max Abelson famously called “a stiffly extended middle finger.”

So, with all of Goldman’s skill in making valuations, I don’t think it has crunched the numbers on this one. The price of a good reputation – and the material impact of doing business without that most intangible of corporate assets – remains to be seen.

What Goldman Can Learn From Toyota: Apology Communications

Lately, the public apology has been cheapened to the point of commodity. Hardly a month passes without a tearful, televised mea culpa from a politician or athlete. On the corporate front, the typical PR offering is more along the lines of “mistakes were made” – a masterful mouthful of nothingspeak. The banking industry’s contrition is epitomized by Goldman Sachs CEO Lloyd Blankfein’s stilted apology last November, followed by an orchestrated move to throw money at the problem. But, like the actions of a guilty husband trying to gift his way out of the doghouse, it smacks of insincerity.

Toyota’s recent response to its accelerating business and PR crisis reminded us that apology communications is in part shaped by culture. The “apology gap” between the U.S. and Japan is profiled in an entertaining New York Times column by Alina Tugend. Most telling, however, are the photos. (I couldn’t find the exact images online, but it’s worth looking at the hard copy of the paper if you have it.) The image of three U.S. bank  CEOs – looking frustrated and combative at a government inquiry – is juxtaposed with a shot of Japan Airlines executives in a deep bow of contrition after filing for bankruptcy. The contrast couldn’t be more striking.

The piece echoes the observations of Bob Pickard, recently named CEO of Burson Marsteller’s Asia Pacific region. Pickard blogs that, after relocating to Asia from North America, “I increasingly found my own culture’s approach to apology callous and calculating; a tactic of last resort.” In Asia, perhaps, former Time Warner chief Gerald Levin’s mea culpa for “the worst deal of the century,” and his call for CEOs to take responsibility for poor decisions, wouldn’t have been quite so startling.

Yet, it’s not just culture. Most PR pros agree with me that it’s our legal system that gets in the way. In our litigious society, it’s hard to accept responsibility and pledge to change when it can be used against you in a class-action suit.

So, does Toyota have a strategic advantage over a typical U.S. company? In theory, yes. Its president took the first step by communicating regret over the massive product recall caused by a gas pedal problem. A U.S. spokesman went further by making it clear that Toyota takes responsibility for the problem rather than blaming it on a supplier.

Yet, the Toyota case also reveals when saying “I’m sorry” isn’t enough. When a risk to public health, safety or security has occurred, the infringing company must not only show contrition and accept responsibility. It must spell out how it will make things right, and convince stakeholders that it has done everything possible to eliminate the risk for the future.

Toyota will get there. The repair of its brand reputation will pick up speed when it announces its remedial plan with a full-court PR and advertising campaign, probably next week. That’s where Lloyd Blankfein and his colleagues might want to listen up. Until they’ve convinced us that the problem can’t happen again, their apology will be a little like a penny stock – cheap, not very credible, and lacking value over the long term.

How Goldman Can Beat Its Bad PR

When news broke last week that bankers at Goldman Sachs had received the H1N1 vaccine amid shortages at doctors’ offices and hospitals, it was one more public relations headache for the firm.

And there was a feverish reaction from the blogosphere and the mainstream press, including a hilarious Saturday Night Live sendup. As the bankers got their shots, everyone wanted a shot at them.

Actually, Goldman was one of over 20 companies to receive the vaccine, and the decision was made by the CDC. But, in the public view that’s irrelevant, because the brand has become synonymous with greed…you know, the long-term kind. Should it care? Though some have argued otherwise, I think it’s pretty clear to Goldman’s chiefs that it needs an image bailout, and not just on principle. The Fed has announced a crackdown on investment banking pay packages. Granted, it has loopholes, but as public outrage builds, the pressure for more regulation will grow. And, nothing’s likely to stoke public outrage like the mind-boggling $21 billion in bonuses Goldman expects to pay for 2009.

So, is there a PR cure for Goldman’s reputational ills? CEO Lloyd Blankfein’s charm offensive, though a sound strategy in principle, has been met with mixed results. A recent interview in which Blankfein said the firm “does God’s work” didn’t help. I’m told Blankfein was being tongue-in-cheek, but I’m not sure if people got his inflection. Blankfein had to have been joking, though, since, as Wall Street Journal blogger Matt Phillips suggests, “God couldn’t afford him.”

Some have opined that Goldman should make a single large donation – as much as $1 billion is rumored – to a worthy charity at year end. That would be impressive for sure, but I don’t think it’s the way to go, unless it’s part of a broader plan. I’d counsel the company to go longer-term with its philanthropy, and to put a face behind it. It should do more to re-engineer its Foundation than quietly kicking in an extra $200 million when the heat is on, as it did recently. And though its 10,000 Women initiative is exciting and creative, it’s not enough. Goldman needs to up the ante in terms of giving, and in the philanthropic goals it sets.

Remember when Bill Gates was CEO of the Evil Empire and his image was that of a monopolistic geek with tightwad tendencies? A few years and a mere $30 billion later, the picture’s very different. Say what you will about Microsoft, Gates will go down as one of the greatest philanthropists in history. It’s not a perfect analogy, and the companies and industries are too different. But, there are learnings.

Whether through the existing Goldman Sachs Foundation or the philanthropy fund launched in 2007 (hmmm…another record year), Goldman should be consistent in its giving. And it should be tied to a single, high-visibility public need, like education for at-risk youth, rather than the pet charities of its partners. It must then articulate a clear and ambitious goal, and a far-reaching agenda. Finally, it needs to place someone with real credibility at the helm. The philanthropic dimension of its brand should have a human face, in my view.

Heaven knows Goldman’s got the cash. With the right leadership, and a long-term philanthropic and communications commitment, it also has an opportunity to turn an embarrassment of riches into a dramatic move for social good. Long-term good.