Note to Leaders: Shift Happens

Two giants in their fields, Google and Goldman Sachs, found the spotlight this week. I’m not sure the leadership of either will be happy about it. Both lost employees who decided to explain to the world their reasons for leaving. These are cautionary tales about the enormous consequences that occur when a corporate culture shifts away from its core values.

Google

In his blog Why I left Google, James Whittaker, the firm’s former Engineering Director, explains the culture of the company he was once passionate about: “Google was run like an innovation factory, empowering employees to be entrepreneurial through founder’s awards, peer bonuses and 20% time.”

He attributes the cultural shift to one big decision: to compete with Facebook. To him this was a shift from attracting ads through good content creation, to targeting ads by collecting more and more private user information. The competition with Facebook, he argues, changed the culture.

He writes, “Suddenly, 20% meant half-assed. Google Labs was shut down. App Engine fees were raised. APIs that had been free for years were deprecated or provided for a fee.” He explains that “the trappings of entrepreneurship were dismantled” as the focus shifted solely to social media innovation. That’s when he knew he had to leave.

Goldman Sachs

In his recent New York Times article Why I Am Leaving Goldman Sachs, Greg Smith – a former Executive Director of the firm’s equity derivatives business – explains the values that attracted him to Goldman Sachs this way: “It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.”

Mr. Smith describes a shift to a focus on making money for the firm without regard to the best interests of the clients, who, he claims, were often cynically referred to as “muppets.” His advice as he leaves is, “Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons.”

These two perspectives touch on one of the most important topics for leaders in any industry: the values that drive the culture. Leaders must be aware of how employees are experiencing the culture of the firm. Especially in these times of rapid change and fluctuating market conditions, everyone looks to leaders to set the vision and hold the cultural center.

These could just be two very disgruntled employees, or they could be the canaries in the coal mine. We’ll never know for sure. But the larger point is that leaders who want to attract and retain passionate high performance employees should always ask, “What are the values that drive our culture? How are our employees experiencing them? Is there a shift in our business practices, away from our core values?”

Your employees – and clients – are always watching and they are always texting, tweeting, blogging and talking. If a company’s leaders don’t notice a shift, it’s just a matter of time before someone else will.

 

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