[steve8918]

It's interesting how the tone of this article is almost exactly the same as the one about the Microsoft employee that recently quit Google.

Something happens to companies as they get larger, where the culture of a company starts dying from a death-by-a-thousand-cuts, and then they start promoting the wrong people into upper management that seem to really poison a very good company culture. It sounds like Goldman Sachs is one of these companies.

The irony is that I think the shift in mentality came from Wall Street itself pushing the idea of "maximizing shareholder value", in the 80s. This lead to a bunch of financially positive but culturally negative (some would say sociopathic) decisions, such as closing plants that were profitable, but weren't profitable enough. I think Michael Moore had a movie on this called "The Big One".

Forbes has an article on this, calling it "The Dumbest Idea in the World":

http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi...

I read the biography on Goldman Sachs, and I don't doubt for one second that there was a historic culture that most of the employees were fiercely proud of. But as the author mentioned, a few mistaken promotions into power and the whole culture of a company can change through death by a thousand cuts. No doubt the same thing is happening at all large companies that started off with great roots. I saw this occur at Yahoo, where completely idiotic decisions were made in order to preserve revenues so that managers' bonuses were left in tact.

Is this something that can be avoided? I'm not sure... corporate culture starts at the top and works its way down. It's something that must be demonstrated by the leaders of the company at every level, and it filters down to the lowest ranks. So if you have a company with strong leadership, then I think it can be staved off for a while, but it requires a relentless focus.

[chime]

> Something happens to companies as they get larger...

I think promotion happens. When you're a fresh grad right out-of-college and the Managing Director says "client is our #1 priority", you take it to heart. That's your new mantra now. Nine years later, when the same Director, now promoted to the Board says the same line, you groan inside because you know exactly how often he calls his clients muppets. Slowly you begin to feel that the company is no longer the same wonderful, inspirational place of work that you signed up for.

Positions of power at any company, non-profit, government, or political organizations are not filled with do-gooders who want to give everyone a hug. They are filled with thick-skinned, ambitious, practical people who have learnt to say the right things at the right time. So if you're a junior exec., you will hear inspirational BS. As you join their ranks, you will hear their real thoughts. If the latter disgust you, it clearly means you aren't fit to join their ranks, not because of any lack of skills on your part but rather the difference in how you view the world.

To me all these execs leaving companies and saying "it's so different now" just means they all grew up and realized they didn't like what they signed up for. It's no different than couples splitting because "we grew apart." I highly recommend people quitting if things aren't working out ( http://chir.ag/200804242130 ) but I do not recommend airing out the dirty laundry, especially when no laws were broken because you're just scaring off the next company you intend to work for.

None of my above comments were in reference to anything at GS/Google/MS specifically. Facebook will start charging for integration some day too and some Dropbox exec will joke in company meetings about all the stupid people who save personal photos on their servers. People are people and companies are companies.

[yajoe]

I agree with your point that part of the cause is getting more senior and actually watching the lies. But I don't accept that we should condone that behavior.

Full disclosure: I left Micosoft last year after I long debated the trade offs of starting my career over. I was a "top performer" and Microsoft makes a point of telling the many people like me to stick around for all sorts of reasons. Deferred compensation. Trajectory. Influence. Etc.

But then I actually got into the VP's circle and didn't like what I saw. This smooth-talking, confident leader within Office was some kind of sociopath. He and his comrades snickered after a middle manager announced he would put the blame on someone for failing to deliver a major feature. I was confused when it happened. Like one big inside joke, that would be my initiation.

This feature was promised three years ago to the previous President of the division, and it turned out to be a top priority for the incoming president. Well, the middle manager miscalculated and let it slip. We've all done this to some degree-- answer an email late, forget to deliver on a request -- it's part of being an engineer working with people. But the middle manager had done it at a big scale and was wrong.

Rather than admit it because that would end his career (as I'll explain in a minute), he threw someone else under the bus. He asked this senior PM to take the project over. Rather than give her support, he decided to undermine her. He had people give copious amounts of negative feedback on her specs, held back people from working with her, and lied about progress to management. He was setting her up to fail so he could swoop in and deliver it after she failed without the wrath of being late. We've all seen managers excuse being late because of low performers. The VP and his manager needed to construct a low performer. And all he had to do was signal to the herd to stay away from her with all the negative feedback.

The hell they put her through so they could save their asses. And the fucking snicker. She was a warm, smart, expert in this feature and had she been allowed to work she would have outdone the middle manager. But the middle manager was ambitious. And the VP seemed to like watching people destroy their lives. And he liked loyalty. He knew if he could get dirt on his managers he would keep them for a long time.

I try to be a good person. I try to be honest. I try to stand up for people. But I couldn't help her. For a year I gave as much moral support as I could without the inner circle knowing. But the politics were too thick and toxic to touch. I watched her nervous breakdown. And then I knew I had to leave. Maybe it really was this one bad team. But this was the rising star VP. If this is how he succeeded then the others VPs would have to eventually. And the middle manager was his replacement.

So, I got a different job. I took 3 months to travel in Europe to wash off the filth. And I checked in with my friend, and am pleased to hear that she has landed on her feet and is doing much better. At my current job the people argue about -- gasp -- the customer. What a difference.

But I am still angry that evil people -- the VP, the middle managers -- are allowed to continue. I don't agree we're supposed to be quiet. Food critics used to be afraid of giving bad reviews because they wouldn't be allowed to keep their jobs (in local markets unless you were someone politics would prevail). Now we have Yelp. Really bad restaurants should have a hard time of hiding. I wish there was something like that for managers and companies without blowback. I wish there was a way to give feedback on LinkedIn. The middle manager's profile is really funny to read. Apparently he runs all of big data at Microsoft. From Office. As a middle manager.

Anyway, my point is there is opportunity to expose evil people and good people in their careers. We should find a way to do it safely. People should have an incentive to be good.

EDIT: grammar mistakes

[f33dback]

"Now we have Yelp. Really bad restaurants should have a hard time of hiding. I wish there was something like that for managers and companies without blowback. I wish there was a way to give feedback on LinkedIn."

We are working on this very issue right now -www.feedbackninja.com - coming soon!

[white_devil]

> I try to be a good person. I try to be honest. I try to stand up for people. But I couldn't help her. For a year I gave as much moral support as I could without the inner circle knowing. But the politics were too thick and toxic to touch.

You "could not" help her? That's not exactly true, is it? It's just that if you had, there would have been negative consequences for yourself, and so, you didn't.

Thanks for the interesting story though.

[pdonis]

> You "could not" help her? That's not exactly true, is it? It's just that if you had, there would have been negative consequences for yourself, and so, you didn't.

I think the question isn't so much whether he could have tried to help her, as whether it would have done any good. The end result might well have been no improvement in her situation and a drastic worsening of his. In other words, negative consequences for him without any compensating positive consequences for her. In that situation, I'm not sure I would see much point in openly intervening.

[ClHans]

Perhaps the positive consequence could be the simple matter of having done something because it is right.

Perhaps he could look back on that period of time and reflect that, rather than watch it happen, he took action. Even if it accomplished nothing, he could at least say "I saw something wrong and I worked to right it."

What can he say now? "I saw something wrong, watched it happen, and vacationed in Europe until I felt better."

One of these is morally praiseworthy. The other is not.

[yajoe]

There is a lot of gray with this story. One IC vs many middle managers and a VP will never turn out well for the IC, especially at Microsoft. I don't know what I could have done. To whom would I have sounded the alarm?

What I did: "I told my manager," "realized it's a systemic problem," "I was a friend to someone who needed one," "I helped her leave and get her next job," and "I quit."

I made lemonade and enjoyed time in Europe. But I don't think there was a choice to fight.

[white_devil]

> the question isn't so much whether he could have tried to help her, as whether it would have done any good.

How about letting her know what was up, thus preventing several months of intense stress and anguish followed by the eventual burn-out?

She deserved to know she was being used as some sleazy douchebag's pawn in his games of office-politics.

The OP claims he tries to be a good person and do what's right. Well, actions speak louder than words.

[anabis]

Yeah, Goldman Sachs made a predatory loan to Greece in 2002. That is just 2 years after this guy got hired.

[refurb]

Got any details?

Predatory loan usually refers to taking advantage of someone who doesn't know what they are getting themselves into. Are you saying that Greece lacks the financial knowledge to understand what they are signing?

[UrbanPat]

Details abound: http://www.bloomberg.com/news/2012-03-06/goldman-secret-gree...

Greece wasn't innocent in this, but it's pretty obvious that Goldman took advantage of them.

[jflatow]

It might be that things never change and all attempts to bring back the good ol' culture are just reactionary, but that doesn't mean people shouldn't speak up when they feel disgusted by what's going on around them.

Fear(s) motivate(s) people pretty well to do just about anything, including to keep silent (as you recommend), but I'm glad that people are brave enough, or stupid enough, to say what they think is right, even in the face of such fears. It might also turn out that the people who agree with the dissenters outnumber the powerful incumbents who they oppose.

[larrys]

"When you're a fresh grad right out-of-college"

It's called being wet behind the ears. Most people in that situation simply don't realize how much they don't know. And guess what you aren't going to be able to read about it and know either. You will find it out through life experience.

The upside is you aren't jaded and you will try things that older people will avoid because of their wisdom and experience.

[danssig]

That Forbes article is a great one. Personally I think now that the cat is out of the bag, we should start to see things changing at the executive level (though it's going to take years).

For a long time, many of us have speculated that CEOs were overpaid but suggesting this was met with claims of being "anti-capitalist" and other such nonsense. Now thanks to the Forbes article and the book it's talking about, we can demonstrate that CEOs are * clearly* overpaid. Their own pay has gone up, while company performance per salary dollar has gone down. Meanwhile the rest of us produce vastly more than, say, 20 years ago, yet wages remain mostly flat.

[yummyfajitas]

Could you define what you mean by "overpaid"? Is it merely a complaint that CEOs are paid more than you wish they were, or something else?

Meanwhile the rest of us produce vastly more than, say, 20 years ago, yet wages remain mostly flat.

This claim betrays a misunderstanding of how productivity is measured, and how workers are compensated for their productivity (i.e., comp is wages + benefits, not wages).

Wages + benefits is not flat. http://www.minneapolisfed.org/publications_papers/pub_displa...

And productivity can easily go up due to factors unrelated to workers. E.g., if a company replaces workers with robots, the measured productivity (total production / # of employees) of the remainder will go up. Is this a reason to increase their pay?

[monkeyfacebag]

Yeah, except he didn't say compensation was flat. He said wages were flat. The fact that we have a higher percentage of our compensation tied up in the skyrocketing cost of health care only underscores his point.

[yummyfajitas]

I wasn't disagreeing that CPI-adjusted wages are flat, I was pointing out that there is no reason for CPI-adjusted wages to be related to productivity.

[danssig]

Wages are related to creation of value, which itself is related to productivity. By what logic would productivity go through the roof but CEOs realize the gains of it?

You can try to claim that's simply the market value of getting a CEO, but this doesn't hold up: CEO salary-to-revenue has decreased. We're paying more and getting worse performance. Further, your argument depends on efficient markets which don't pass the common sense test and has been shown to be an N!=NP problem.

[Drbble]

You find productivity goes up due to robots, who should get the higher pay? The CEO? If so, why? Or should prices be lowered? It is completely disingenuous to argue over on "deserves" economic surplus, the whole point is that surplus is in excess of everyone's contribution, so social and power factors come into the forefront in determining the distribution.

[danssig]

>Could you define what you mean by "overpaid"?

I already did. We can now prove that revenue has actually decreased per dollar paid to a CEO. One might say that that that is because salaries have gone up, but for everyone else wages have stayed mostly flat. So by what possible logic would CEOs now make more money for accomplishing less? And why wouldn't these same factors apply to anyone else?

>This claim betrays a misunderstanding of how productivity is measured

I understand the theories of how it's supposed to work just fine, thank you. In theory, if I can accomplish more than those before me I should make more because I'm creating more value. In my career I've made an uncountable number of jobs unnecessary through automation. But did I capture any of this productivity boost? No, the executives took it all.

The system is broken because CEOs have been gaming it ever since this idiotic "Shareholder value" focus came about. Everyone has known this deep down for years and now we're finally starting to prove it concretely. To me it's going to be funny watching so-called "experts" explain why they spent decades preaching nonsense about CEO pay being correct as it's systematically shown to be a product of system exploitation.

[yummyfajitas]

We can now prove that revenue has actually decreased per dollar paid to a CEO...CEOs now make more money for accomplishing less?

Your metric is a ratio and it does not prove that CEO's accomplish less.

For example, suppose a CEO doubles revenues (did you mean profit?) from $1B to $2B and their pay increases from $10M to $30M. They have accomplished more, but revenue/pay has gone down.

In my career I've made an uncountable number of jobs unnecessary through automation. But did I capture any of this productivity boost?

Most likely. Pay for programmers has skyrocketed, unlike pay for ordinary workers.

Besides, the productivity of the few people you failed to replace has also gone up. If you make 8/10 jobs redundant, should the pay of the remaining 2 increase commensurately with their drastically increased productivity?

[polyfractal]

I post this link every time this topic comes up:

http://www.econtalk.org/archives/2011/11/kaplan_on_the_i.htm...

EconTalk interviewed Kaplan about this very subject. His research shows that CEO's pay has _not_ risen faster than any other "highly skilled labor", such as doctors, lawyers, etc. If you listen to the podcast, it is a very convincing set of data backing up his conclusion.

Instead, hedge fund managers are the ones that have absolutely rocketed out of the stratosphere in terms of inflating pay.

[danssig]

I'm afraid you've been tricked. CEOs used to make 40-70 times as much as the average worker. Now it can be hundreds of times. All the while, revenue per dollar of CEO salary has gone down. The cat is out of the bag. Everyone who defends the status quot in regards to CEO pay is either benefiting from it (and wishes to continue) of suffering from Stockholm syndrome.

[cromwellian]

It's a little hyperbolic to compare Goldman Sachs culture to Google culture. Little has changed as far as I can tell about Google culture internally. People still care about the same things, management for the most part, still cares about the same things, and all of these public assertions that G+ is an all consuming diversion to the detriment of everything else is a gross hyperbole.

Googlers are not sitting around making fun of their users, joking about them, giving them funny nicknames.

With these types of rants, it is hard to derive truth from fiction. Once a narrative is set up, everyone starts to keep feeding into it. It's easy to believe the worst about Goldman, so everything said "fits" and makes it believable. My own biases make it more likely to believe in stories of greedy people selling snake oil.

Still, one should be skeptical and avoid piling on.

[silverlake]

> Something happens to companies as they get larger

They went public. My gf is a senior manager at GS (200+ drones in her department). When the company went public the partners could easily cash out. Without as much skin in the game, they could squeeze as much profit (aka bonus) from GS without worrying about the long-term viability. Also, hedge funds are now a more lucrative place to work for many people. So if GS doesn't pay, then a hedge fund will. Another thing is that prop trading made vastly more money than IBanking for the last decade, which changed who got promoted and rewarded. Finally, the company grew very rapidly in the last 10 years and much of it's culture got diluted with all the new people. It's not a bad place, it's just a normal IBank now.

[mattwrench]

I agree that going public hurts companies but not because the partners/founders can cash out. At least in the tech world once a company reaches a certain size, it seems as though founders can liquidate a large portion of their stock pre-IPO; Mark Zuckerberg doesn't need to worry about Facebook's IPO in order to get rich. Rather, I feel that having a somewhat-arbitrary, short-term indicator in the form of stock price is what hurts public companies and their culture much more than the loss of its leaders.

[bpyne]

What you say is IMO correct. But, I think there is something more fundamental. A company cannot function to full potential when beholden to 2 masters - customer and investor - with opposing needs. The customer wants the best product/service possible; the investor wants the maximum ROI.

[jonnathanson]

I think your last paragraph aptly explains it all. A fish rots from the head down. If we take a broad and intangible concept like "culture" and reduce it to its mechanical workings, we see that it's usually the net result of everyone's incentives. If people at the top are setting perverse incentives, then their lieutenants will meet those incentives, and on down to their lieutenants, and so forth. Those at the bottom of the ladder will model the behaviors of those they're seeing get ahead. And one day, when they're moving up, they'll carry out the behaviors they've been conditioned to exhibit.

The other tricky thing about culture is that it's a lot like trust: very hard to earn, very easy to squander. Once lost, it's difficult -- sometimes impossible -- to recover.

[crag]

"Something happens to companies as they get larger, where the culture of a company starts dying from a death-by-a-thousand-cuts, ..."

Goldman (or Google) is no where near death. But Goldman is still in crisis mode. The primary focus now is profit margin. making money for you and your clients isn't the point any longer. It's your position that matters. But Goldman, used to award your bonus not just based on your position. They used to survey your clients. And their opinion mattered. Not sure if they still do this. I haven't worked in Wall Street since 1996.

And Goldman isn't the only firm in this position, by the way.

And Google is sort of in the same place. FB scares the hell out of them. And instead of innovating (and taking risks) they copy.

Google and Goldman are blinded now. They can't see beyond their own models.

[JanezStupar]

I would strongly advise reading Machiavelli's Discourses on Livy on the subject of emergent culture in sovereign institutions.

These companies are small empires in their own right, creating a lasting and prosperous empire is an monumental undertaking where chasing fads has little effect.

In business circles I find Bosch and IBM to be prime examples of quality in this regard.

[jrwoodruff]

Goldman survived for 140 years without promotion problems. My personal theory is these problems - corporate profit before clients, short-term gains, lack of long-term vision - is a symptom of our current culture and, more broadly, the shifting information landscape. 100 years ago, few people even knew what the DOW index was, let alone followed it daily.

[polyfractal]

Funnily enough, the Dow was a relatively unimportant indicator until the Great Depression, when the media seized upon it as something to watch on a daily basis. It was originally intended not to be checked more than a few times a month, and only as a brief snapshot of the economy.

It's importance in popular media and culture is vastly overblown. The rising and falling of the Dow on a daily basis is basically worthless from an economic point of view - it's just noise.

[larrys]

"financially positive but culturally negative (some would say sociopathic) decisions, such as closing plants that were profitable, but weren't profitable enough."

This is something that is inherent in a certain type of investor and Wall Street and you see it in YC as well as VC firms and (startup) angel investors.

While you might be able to get a local businessman on Main st. to believe in your idea which is profitable (but not sexy and not "billion dollar") that will probably make both of you money, you won't get anyone in the de facto startup community to take you seriously. They won't give you money unless you are shooting for the stars.

[5teev]

"It's interesting how the tone of this article is almost exactly the same as the one about the Microsoft employee that recently quit Google."

An interesting difference, though, is the Goldman-Sachs employee sees a problem with focusing on short-term gains, while the Google employee sees a mistake in a long-term bet (that Google can compete successfully with Facebook in the social realm).

[mmj48]

I genuinely thought this piece was a satire of the ex-Google MSFTer.