Surviving a “Cultural Recall”

March 27, 2012

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Greg Smith's very public resignation from Goldman Sachs is an employer's (and employee communicator's) worst nightmare come true. Regardless of whether there is truth to his claims, his incendiary letter amounts to the cultural equivalent of a major product failure or safety recall in a product-driven organization.

Most communicators are prepared to deal with an external crisis. As internal communicators, we've found many of the same principles can apply to cultural crises. Here are a few applicable lessons learned from the recent Goldman incident.

Understand that perception is reality. Goldman Sachs may or may not have a “toxic and destructive” culture, as Smith asserts, but now that the claim has been made, the organization needs to address it head-on with its employees. Such high profile criticism erodes morale. Not only does the firm need to underscore its many policies and programs currently in place to support ethical business conduct, but leaders at all levels of the company must model that behavior and instill it within their staff.

Engage in honest dialogue. Successfully addressing internal challenges in any organization requires honest dialogue. It takes courage, especially on the part of the senior leaders who often are several steps removed from the “truth” of the organization. If Goldman Sachs is in fact suffering a moral decline, Smith wouldn't be the only employee aware of it. This is a great opportunity for leaders to open up, be more candid and talk about what they've learned from Smith's resignation. They need to identify any cultural weak spots and share what changes they're making to improve the situation. Even more important, this is a time for the firm to listen to employees' reactions to the resignation – and to the firm's business practices – so concerns can be both heard and addressed.

Seize the opportunity. Painful though it might be, every crisis provides opportunity. For Goldman Sachs, this is an opportunity to draw a line in the sand and honestly assess the state of their organization, then change what needs to be changed. Think about it from a personal standpoint: We've all had wake-up calls that force us to become better people and teams. What separates great leaders and teams from others is their ability to learn from mistakes and exercise resiliency through their crises.

Make it last. Finally, Goldman can turn these lessons into a compass for future behavior. Making tough cultural changes now (if needed) and reinforcing them through behaviors and programs over the coming months and years gives them a “never again” moment around which they can continue to rally.

Most organizations have taken and survived hits to their culture (though few quite as public as this one). What are your tips for survival?