Recently, we learned that Lloyd Blankfein, CEO of Goldman Sachs (NYSE: GS ) , has become the Human Rights Campaign's first national spokesman for same-sex marriage. The organization, which promotes equal rights for gay, lesbian, bisexual, and transgender people, believes that Blankfein's advocacy for marriage equality is "further proof that a diversity of Americans" are starting to support this issue.
Blankfein's decision raises a number of interesting questions. Was this a personal choice or was it related to Goldman's thinking on this issue? Is this an attempt to repair his company's image, which has been tarnished by fallout from the financial crisis and other issues? Finally, will this move have a meaningful effect on the company in any way?
Vampire squids have hearts, too
The first question is easy to answer. I think it's very unlikely that the CEO of Goldman Sachs would take such a stand unless it had the support of his fellow leaders at the company. This is a controversial issue that would greatly affect public perceptions of the firm. I'm pretty confident that Goldman's leadership team weighed in on this decision before Blankfein went forward.
Secondly, I'd say it's definitely an attempt to improve the reputation of the company. The year 2011, which saw the emergence of the Occupy Wall Street protests, was an "annus horribilis" for most Wall Street firms. We witnessed Bank of America (NYSE: BAC ) retreat on unpopular debit card fees, while Citigroup (NYSE: C ) remained embroiled in a controversy with the SEC over toxic mortgages. And the MF Global (OTC: MFGLQ) collapse resulted in its customers calling for a boycott of JPMorgan (NYSE: JPM ) , which was viewed as unfairly advancing its own claims in the case. With seven out of 10 Americans viewing Wall Street firms negatively, the issue of same-sex marriage is an opportunity for Goldman to improve its image among its numerous and growing critics.
Talent rules
This leads us to the final question. Does this issue really matter to Goldman?
Paul Argenti, a professor at Dartmouth, doesn't think so. In yesterday's New York Times, he said that, "Mr. Blankfein's decision isn't likely to have any positive impact on the reputation of the firm -- or Mr. Blankfein." Argenti went on to say, "equality is simply not an issue you associate with Goldman."
I think Argenti is wrong about this, and I believe that Blankfein's support for this issue will benefit Goldman in the long run.
If you think about what Goldman does, talent issues are extremely important, and all the evidence suggests that Goldman takes them very, very seriously. In William Cohan's book about Goldman called Money and Power, he writes: "The recruiting, the talent management and retention is probably one of the great strengths they have." The company even has its own learning academy called Pine Street that is dedicated to developing outstanding leadership and management talent. If a company wants to hire the smartest and most talented people, then aligning itself with issues of fairness and equality makes smart business sense.
Second, the reputation of an investment bank matters a lot, and Goldman's has suffered dramatically in recent years. Many of its biggest critics are also supporters of socially progressive issues, so I think this is an effective way for the company to improve its perception among those groups. Goldman doesn't just want to be liked, it needs to be liked.
Finally, I think this issue highlights something about Lloyd Blankfein that many people don't know. He was born in the South Bronx; raised in public housing in Brooklyn; and then went on to Harvard. His Horatio Alger story illustrates many of the best aspects of the American Dream, so being an advocate for equal rights seems like a natural fit for him. Ultimately this will reflect very well on him and Goldman Sachs, and both will benefit as a result.
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