Goldman Sachs: Anchoring Standards after the Financial Crises Case Study Solution
Reputational risk facing by the Goldman Sachs:
Almost all the organization which were affected by the financial crises of 2008-09 faces severe reputational issues. The confidence of the stockholders, debt providers and general public have been undermined by the financial crises. The investors incurs substantial losses which is the main reason for the deteriorating confidence, and the demand for almost all types of goods and services have been affected by the financial crises which are the primary reason that the reputation of general business environment have been affected. Particularly the financial institutions such as Banks and investment companies have faces severe bad publicity issues because they are directly responsible for the great financial crises of the century.
Goldman Sachs is not exempted from this negative publicity issues, the media reported very aggressively regarding the financial crises which was responsible for affecting the reputation of the company. Furthermore, numerous investigations have been made by the regulatory authorities and the government officials which have also impacted the reputation of Goldman Sachs and other financial institutions.(Doyle, 2010)The financial crises has been covered by all the mainstream media and the general public is also very curious about knowing the main factors responsible for the financial crises which makes the reputation risk even more material for the company. (Leder, 2010)(Page number 3 from the case study).
The future earnings of Goldman Sachs can reduce drastically because of the bad publicity, the customers of Goldman Sachs may cease to associate with the company because of this poor reputation. They might perceived Goldman Sachs as the main party responsible for the financial distress, the management of Goldman Sachs gives great importance to the values and perceptions of customers, the customers are getting losses and the company is generating good profits in the times of financial crises which might force customers to think that their money is used by Goldman just for the sake of their profits not for the profits of their customers which may cause great reputation issues for the companies and its management. (Tannen, 2010)
This reputational risk materializes after the few days of the annual financial statements published by the Goldman Sachs, the company faces harsh media trials, the media was blaming the management of Goldman Sachs and some media personnel gave bad titles to the company use of which can have very consequences on the reputation of the company. In addition to this, the government have also injected capital in the company which also trigger the media officials and they were criticizing the management, the stance of media, customers and general public is that Goldman Sachs have been awarded for damaging the economic and financial systems of the whole world.(Page Number 2 and 3)
Leadership Style of Lloyd Blankfien:
The leader and his style of managing the company is one of the most crucial factor in bringing out the company from many adverse developments. The CEO and head of the organization is sometime responsible for bringing the company into the issues and is always responsible for taking the company out from this bubble. Mr. Lloyd Blankfien of Goldman Sachs has the ultimate responsibility for managing these reputation issues. It can be said that he is successful in executing this duty and is mainly due to its leadership style.
Goldman Sachs Anchoring Standards after the Financial Crises Harvard Case Solution & Analysis
The main quality of the leadership of Mr. Blankfien is the democratic essence in its leadership, a democratic leader is the one who gives consideration to all the legitimate stakeholder and listen them carefully and implement their ideas and strategies. The financial institutions are responsible for creating the financial crises to some extent, he faces severe bad comments from the media officials regarding this issue, but he didn’t play blame game and listens to their claims with sufficient responsibility and tried to resolve them as quickly as possible. He didn’t blame other financial institutions and regulatory authority for this great financial crises.(Daniels, 2010)
In addition to this, he promotes healthy culture of communication in the organization in this tough time. In the difficult times, usually the leader wants to maintain autocratic style of leadership in the organization and avoids listening and telling the course of actions to many of the management personnel except for some key managerial employees. However, the Blankfien was continuously avoiding the autocratic style of leadership as maximum as possible. In an interview he tells that he daily sends voicemails to the upper and middle management regarding their appropriate duties and encourages them to communicate more with the other members.(DeChillo, 2009) And he also ask questions from the employees whenever he was passing from the office corridors.
This leadership style of Mr. Blankfien is reflected from the fact that he establish the Business Standard Committee which will be responsible for identifying and addressing the main weaknesses in the business model and operations of the company. He provides the member with appropriate levels of autonomy and authority in finding the main conclusions of the committee. His basic idea of democratic leadership style reflects from the formation of the committee, he didn’t includes himself in the committee instead he equipped the committeewith sufficient power to recommend even himself the most appropriate way to manage the strategic issues of the company...................
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