It took many years for it to happen, but the collapse of the banking system and resultant recession provided the environment for pent up anger and endless negative press coverage to take its toll on Goldman Sachs (NYSE:GS).
And while there are those continuing to snip at the legs of the financial giant, a slight breather has come about, and now the company can finally begin to work on shoring up its reputation, and that will take a long time to work through; probably many years.
I think the problem for Goldman and why it will take that long is the swagger it walked with for so long, knowing it could pretty much do what they wanted and still be a profitable and growing company.
In other words, even in the economic environment we’re currently in and the enormous hatred of Goldman, they continue to thrive financially. They’re concern, as released in their annual report, is the wearing down of their people could end up hurting the bottom line of the company.
So while Goldman people are determined and can stick through bad circumstances for a long time, ultimately Goldman leadership has finally perceived a threat to the health of the company, and now will embark on a long-term effort to become more palatable to the general public.
What’s interesting about Goldman to me, is they don’t really have to move the barometer a big distance, as the other financial companies in the nation and world have suffered a lot of reputation damage as well. This will always be part of the financial industry because they are the easiest target and will always be attacked when things aren’t economically healthy for the public.
Reputation management in the financial industry thus isn’t the same as it would be in another industry. Look at Wal-Mart (NYSE:WMT). Even though they’ve been unjustly attacked in a lot of the press from union thugs, much of that never filtered down to the everyday person. How do I know that? People vote with their dollars. They continue to patronize Wal-Mart and spend their money there. That’s the bottom line in business.
Banking is different though, and it is largely a commodity business, and very easy for people to take their money and deposit it elsewhere, or do their business with someone else in the industry.
In the short term, Goldman is largely in a no-win situation. It won’t matter what they do, it will be received with cynicism and mistrust. That’s why I say it’ll take years to work their way through this.
Even the best of intentions and great actions won’t change the public perception of Goldman, because some of it was brought on by the media, which in some cases distorted what they did. Of course other times the perception of Goldman was accurate as well.
The point is whether deserved or not, the public perception of Goldman Sachs will be negative for a long time. For now they must manage the negativity factor and not try too hard to get back in the public graces too soon. People are still in the venting and angry stage, and no matter what Goldman does, it won’t work in the short term. All they can do is throw some stuff out there that is positive and let it gradually permeate the minds of people, who will over time let go of their extreme feelings about the company.
I don’t think this will hurt Goldman much, if at all though. They understand what they’re dealing with, and as long as they don’t overdo it, they should gradually wear down the resistance over the years, and end up at minimum a tolerable company operating in the world.
Goldman, because of its success and power, will never be a well-liked company, and that will never change. Again, they simply need to take the sharp edge off, not try to round the corners too much.
