Read the case and answer the questions that follow. Studying this case will help you better understand how concepts relating to organization culture can be applied in a company such as Goldman Sachs.

When the real estate bubble, financial crisis, and major recession triggered waves of home foreclosures and layoffs, many saw investment banks as the villains. Among the supposed bad guys was Goldman Sachs, which recently settled with the Securities and Exchange Commission for $550 million. However, defenders—including CEO Lloyd Blankfein—have pointed out that Goldman’s strong culture enabled it to weather the storm and continue to lure great employees and prominent customers.

If Goldman’s culture is so great, how did the firm get caught up in the financial collapse at all? One explanation is that several forces caused management to drift away from upholding its traditional values. The investment bank was founded more than 140 years ago. Growth during the 1970s prompted the firm to lay out in writing its principles for business conduct. Today, the 14 principles, starting with “Our clients’ interests always come first,” appear on Goldman’s website and are handed out to all new employees. But for a time, Goldman struggled to compete while putting clients first. Deregulation brought more firms into investment banking, and larger banks were willing to take risks that Goldman had avoided taking. When those risks were profitable, Goldman looked bad if it did not play. In addition, growth itself was a challenge because taking on more clients meant being less selective in choosing those clients.

Nevertheless, Goldman has remained a desirable employer. The firm hires less than 3 percent of those who apply to be analysts or associates—jobs that involve working 70 or more hours per week. In addition, Goldman has landed a spot on Fortune magazine’s list of great places to work every year since 1998, when the magazine started publishing the list. Because the rankings are based on feedback from employees, at least some employees must love Goldman. Their reasons could be the six- and seven-figure earnings common of jobs in the financial industry or perhaps perks such as the on-site health club and lectures by celebrities. But what employees consistently tell Fortune is that they primarily value the chance to be part of an elite team in a close-knit working community where their ideas are valued. They are also making major investment decisions that keep capitalism operating globally.

Artifacts of a prosperity-valuing culture abound at Goldman’s headquarters in Manhattan. Like elegant attire, the building itself is a model of understated luxury, with no logo on the outside. Employees converge away from public view in the 11th-floor Sky Lobby, which features a beautiful coffee bar intended to promote informal communication. A spiral staircase leads from the Sky Lobby down a floor to the fitness center, which charges a monthly fee. The cafeteria not only is unsubsidized but also adjusts prices based on demand, just like the prices of financial securities are adjusted. Goldman assumes that its employees would rather take their compensation in dollars and decide what to buy—say, lunch at the cafeteria or in one of the restaurants the firm lured to the block.

As Goldman moves forward, it is trying to reinforce the healthiest aspects of its culture and to fix where it has drifted away from those aspects. In selecting employees, recruiters continue to focus on teamwork skills, such as flexibility and communication. At the same time, the firm has crafted additional rules for limiting risks and has rolled out a training program to help employees apply the values of making ethical, client-focused decisions.46

1. 16-7. How would you define the organization culture of Goldman Sachs? Is it an environment where you would enjoy working?

2. 16-8. Using the Competing Values Framework, what type of culture exists at Goldman Sachs? Why do you think so?

3. 16-9. What advice would you give Goldman’s management for maintaining a healthy culture, especially regarding the ethics and customer dimensions of its culture?