Goldman Sachs Banks on Cultural Capital
In July, 2007, because of the American subprime mortgage crisis. U.S had a Financial Storm. At the beginning, the five largest U.S investment banks were showing despite the subprime challenges. But then, to be accompanied by one of the five largest investment banks in U.S which is Lehman Brothers declared bankruptcy. The other investment banks suffered the storm. Even though the Goldman Sachs had also been buffeted by the Financial Storm. But “Goldman was still rewarding the firm’s CEO that named Blankfein with a pay check for $68.7 million.” Every one of their 30,000 employees from traders to secretaries earned an average of $600,000, and Goldman Sachs also got many rewards. That means Goldman still earned money, when the other investment banks met their waterloo. Basically, Goldman Sachs always changes their culture to fit the economy environment. No matter in the year 1999 when they went public, in mid-1970s, or in the year 2006. They always change. Such as “High-risk, high-return”, “Getting to the top means mastering a culture”, “Run by co-managers”, “Never had a strict hierarchical structure”, and “As nimble as a star-up.” When they faced the Financial Storm, their main actions are “Avoided large subprime write downs and Achieved a net profit due to significant losses on non-prime securitized loans being offset by gains on short mortgage positions.” When their culture showed some problem, for instance, when they realized the “High-risk, high-return” culture showed that heavily vested senior executives tend to value the difference between high-risk investing and overly risky adventuring, they would change that as soon as possible. But at the same time, they still have their three core strengths, “the loyalty of its employees, its approach to recruiting, and its command structure.” They encourage their employees treat the firm as a family. The employees’ ranks decide their value in Goldman family. Actually, Goldman’s culture closely knit culture. Just because
References: Griffin text: Page 91-94 Fundinguniverse : GeorgeW.Mantor