Goldman Sachs and responding to a public backlash

The Public Relations Princess recently wrote about “What Goldman Sachs Can Learn from Bill Gates and the World Food Prize.” I love her suggestion and I also have a different perspective to offer. First, though, should they even respond?

Factors to consider
1) Is the criticism valid?
2) Do you need to respond?
3) Can you win or work things out?

If the answers to questions two and three are yes, (e.g., damaging regulations be imposed or you could lose a critical volume of business) you need to respond. If not, generally it’s time to move on. Assuming that leadership is committed to the type of response and the resources needed to respond, here is what I recommend for guiding principles:

Guiding principles
•Validate the criticizer. 1) Acknowledge their right to interpret the facts as they see fit and acknowledge the validity of their response if one accepts their interpretation.
•Reframe the issue. If it’s valid, reframe the issue the way you think it should be debated.
•Oversize any positive response. Go a step beyond what’s expected up to the point that it looks like a cover-up or and admission of guilt.
•Acknowledge your mistakes.
•Have the courage to be honest.

Putting the principles into practice: how Goldman might respond
Question one is the key is the key here. If they answer that yes, the only thing to do is reform compensation in an outsized way that makes them a leader in the industry. If their answer is no, then here’s how I would respond:
•Acknowledge that your compensation is “outsized” compared to most Americans’ compensation.
•Make the case for needing “outsized” compensation to compete for outsized talent. Do so succinctly and in a way the average person can understand.
•Address the emotions behind the criticism: give a significant amount-and significant people resources--on an ongoing basis in an area that supports the financial well-being of the average American. They may not be Goldman’s core market, but they are regulators’ core market. At the same time acknowledge this doesn’t address the crux of the criticism but reframe the issue by saying you believe it addresses one of the legitimate underlying problems.

The bottom line
At the end of the day whatever your audience decides is true is what’s true—but being honest and being clear in your commitment will go a long way in resolving any issue effectively.

Handling failure in business

One of the first rules of business is to be consistent. This column will speak to my failure to publish consistently. The intention is to demonstrate the model I live by in handling failure.

If you are the one who failed
Intentions are important. Results are what matter. The impact on the other party is the same where you have a “good” explanation or not.

Where to start
1) Acknowledge the failure as soon as you know about it-especially if you see it coming and it can’t be stopped.
2) Be honest and powerful. Victimhood only makes it worse. Acknowledgeyou’re your failure affected them—and be sure that’s how they see it too. Be honest with yourself as well. If you can’t or won’t do whatever it is then say so.
3) Offer a course of action and ask what they want. Don’t try to “make up for it” and don’t “give away the farm.”
4) Give them the opportunity to clear the air. Give them a set amount of time to say whatever they need to say to put this in the past.

So what’s my story?
1) A family situation out of state had a big impact on me for an extended time. Getting a house ready for sale added to the challenge.
2) I failed to provide a timely explanation and that impacts trust. Out of character for me? Yes. Unacceptable? Yes.
3) My commitment is to write a weekly entry going forward and to tell you in advance if/when I won’t. Next entry: financial services branding in the age of TARP.
4) Any feedback for me? I’d be honored to receive it.