The investment banking giant showed reporters little respect for years, and bringing on a new communications chief came a little too late
In the course of working with RIAs to establish their key messaging and positioning, I have heard a particular phrase on at least three occasions: “We are the anti-Goldman.”
Now, as messages go, that’s a touch too vague for my taste, but the fact that it is so important for RIAs to make that distinction speaks volumes about how low the Goldman Sachs Group’s public image has fallen. Prior to gaining a reputation for contributing significantly to the 2008 financial meltdown, the firm enjoyed very strong publicity. Negative articles on the company were few and far between, and if they did hit, they had little impact. But after 2008, the way that the public viewed financial behemoths such as Goldman, and financial institutions in general, would never be the same. In turn, for the financial press, the gloves came off.
Negative publicity began to build up: Fabrice Tourre, ABACUS 2007-AC1, Paulson and Co. Inc., an SEC settlement for $550 million, “Vampire Squid,” “God’s Work” and now a New York Times op-ed depth charge by Greg Smith. See: RIAs line up behind Greg Smith as Goldman Sachs reels from exec’s New York Times op-ed grenade.
In a mine field wearing snow shoes
In the post-2008 financial universe it will not go away quickly. Due to the dramatically changed public perception of the financial industry as well as a PR approach that was more condescending and bullying than collaborative, Goldman Sachs suddenly found itself trying to run through a minefield wearing snowshoes. See: One-Man Think Tank: Inside the legal issues of the Goldman Sachs hearings.
I have spoken to a few journalists I work with, one from a national newspaper and a couple from the wealth management trade press, on the subject of Goldman’s position at the center of this latest media firestorm. Not one of them seemed surprised that the Times published the Greg Smith op-ed. The general impression I got, never spoken aloud but hanging in the air, was that “Goldman had this coming.” One of the key questions for me as a PR person is not whether or not the Times should have published the article, but whether it would have published it four years ago. I doubt it. See: 'Reformed Broker’ and blogger 'Downtown’ Josh Brown joins BrightScope’s advisory board.
A stale and caustic process
Goldman’s former head of global PR, who held the post from 2001 until Tuesday, March 13, 2012 (the day before the Times op-ed appeared), was a guy named Lucas van Praag. If you look him up, it becomes clear very quickly that many in the press, while begrudgingly respecting him, had also come to loathe him. According to one reporter he is summed up as “. . .a waspishly elegant Brit who gained fame among the financial press for his wittily abusive putdowns of their criticisms of the investment bank.” And another, when summing up van Praag’s efforts in a 2010 piece, ruminates on “. . .How much worse they’ve made things for themselves with a continuing communications and PR policy that’s basically a stiffly extended middle finger, waved in the air for all to see.”
Prior to 2008, Goldman had the luxury of holding all the cards. It was so powerful, so untouchable from a PR perspective, that van Praag’s style was very effective. If a negative piece would run, he would attack, skewering the offending publication. Yet post-2008, he continued to deploy the same approach to working with the media. In 2010, Matt Taibbi’s Rolling Stone article, stated: “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Van Praag went to Reuters and trashed it. But by now his punches were more like slaps. Taibbi was quoted as saying, “If I were in their position, I would have just ignored us. We’re a music magazine.”
Changing of the guard — and the approach
Apparently Goldman recognized that a fresh face, and fresh approach, were needed at the helm of its PR efforts. Amazingly they made the shift and announced it a day before the New York Times piece hit. Van Praag was transitioning out — and taking the reins would be Jake Siewert, who has experience in crisis PR as a member of President Bill Clinton’s communications staff, then as head of Alcoa PR, and most recently as an aide to Treasury Secretary Timothy Geithner. Most notable about this shift is that Siewert is known for understanding how to work effectively with the press — he respects them, acknowledges that they have challenging jobs and takes a collaborative approach. Siewert knows how to handle scandal, and to stand firm in his dealings with the media, but he also realizes that you gain little in the long run by leaving seething journalists in your wake.
While Siewert, according to online reports, did not draft the internal letter to Goldman’s staff that was sent by chief executive Lloyd Blankfein and president Gary Cohn, he apparently pushed for it to be expedited and sent within 24 hours of the Greg Smith roasting. The internal letter is very vanilla, but smart. It shows restraint and takes the high road toward Smith, with even a hint of understanding (“It is not shocking that some people could feel disgruntled”). And make no mistake that a company of Goldman’s size, when sending an internal memo like that, treats it exactly as it would a press release. Siewert undoubtedly had the busiest second day of work on the planet, among all of the people who had also started a new job on March 13. See: Your public relations horror story: It’s not as grim as you think.
Remember that PR is not an action, it is a process. Take the long-term view. If you employ PR people, make sure they are personable and that they view the press as a group of serious professionals who want, more often than not, to get the story right and bring good value to their readers. Your PR efforts must not only yield coverage of your messages and your expertise in the short term, they must also be laying the foundation for great media relationships, long-term. See: Advisors should go all-in to make PR worthwhile — otherwise, steer clear.
Goldman Sachs learned this lesson the hard way, but it did indeed learn it, and is clearly addressing it. It should be very interesting to watch the firm adjust its approach to PR over the next couple of years. If you make sure you are represented by communications people who have respect for the media and are in turn respected by them, then you will be free to focus on your key messages and on providing a good outward-facing impression to the market, when the right opportunities arise. See: The Grossian formula for PR: Why Bill’s press is good press, even when it’s bad.
Jason Lahita is the Managing Partner at FiComm Partners, LLC, a specialist communications firm that works with advisers and advisory oriented B2B firms to raise their profile, put forth their messages and market their hard-fought credibility. www.ficommpartners.com