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Trust is essential to efficient business. Which of the two descriptions of Goldman Sachs that you read about in the blog, the client-ethic based firm and the market making firm, do you feel warrants the trust of its customers? Explain why you feel this way.
The client-ethic based firm is one of the best business cultures that a business can nurture. This cultural phenomenon builds a client-business relationship to a long-term business relationship. It is important to note that this concept builds a business public image. Many clients like to be associated with companies that build and grow their wealth. A client-ethic based firm always focuses on the legacy of good customer service.
The performance of such a business is channeled to ensuring that customer satisfaction is the priority of the business. Reputation to a client-ethic based business is a core business value. In this respect, clients will always feel appreciated in a business that cultivates trust. Therefore, for a business to create trust in clients and potential customers, the business must be client-ethic based.
On the other hand, a market-making firm focuses on making more profits for the business. At times, a market-making firm tries to balance the act of satisfying clients and making business profits. Such a business concept allows the undermining of customer service philosophy. In fact, such a business approach focuses on the short-term relationship between the customer and business. The bottom-line in such a business is to make more profits at the expense of the client. In this respect, customers do not trust such business ventures where they are not appreciated.
Consider the three prescriptive approaches to ethical decision making in business that Goldman Sachs can use. Describe them and recommend how Goldman Sachs can use one or all of them.
This approach is based on consequentialist theories (Trevino and Nelson, 2010). According to this approach, any decision making should consider the consequences of the decision results. From this perspective, Goldman Sachs should make decisions that benefit the society, the client and are less harmful. This means that the business should instill a culture of a client-ethic based firm.
Duties, obligations, and principles
This approach is based on deontological theories (Trevino and Nelson, 2010). According to this approach, a business decision should be based on some set of rules and policies. These set of rules determines the morality of a decision based on the perceived outcome of the decision. This approach can determine the morality of decisions at Goldman Sachs. This means they cannot engage in activities that endanger their customers’ welfare or financial investment.
This approach is based on virtue ethics. According to this approach, managers with the responsibility of decision making should make decisions that reflect a sense of ambition and competence (Trevino and Nelson, 2010). The decision made should reflect a sense of internal and self-control in making morally upright decisions. In this perspective, Goldman Sachs can use this perspective in using competent and well-nurtured managers in the decision-making process. This means that banking professionals should be included as a decision making stakeholders.
Are scripts overriding the old values system at Goldman Sachs? Explain why.
Yes, old values at Goldman Sachs are changing. The current crop of management is using the market-making firm approach to do business (Cohan, 2010). This has resulted in a lack of client trust in Goldman Sachs. In fact, Goldman Sachs no longer has long-term goals for the customers.
How can diversity play a role in changing the values system at today’s Goldman Sachs?
Diversity at Goldman Sachs should be based on profession and experience. This means that the decision-making panel should consist of banking professionals and trading professionals. Moreover, age diversity can be used to instill discipline in decision making. For example, consultations from old managers should be prioritized during decision-making process.
How did Goldman Sachs client-ethic change? Can its current values system be changed to one that is more ethical and trustworthy? How can this take place?
The client-ethic changed when more trading professionals were involved in decision making. This can be changed by involving bankers in decision-making process. A good customer service policy that focuses on long term customer-business relationship should be cultivated to foster ethics and trust. This can take place when the current management is completely changed and a new customer-oriented management board is put in place.
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Cohan, W. D. (2010). Goldman: Still greedy, no longer patient. The New York Times, p. 1A. Web.
Trevino, L. K., & Nelson, K. A. (2010). Managing business ethics. Hoboken, NJ: John Wiley & Sons. Web.