Finance News & Insights

The cost of a disgruntled employee: $2 billion

 

Here’s some very expensive proof that “soft” issues like employee morale can have a very hard impact on your company’s bottom line.

Check out the lessons for every company in last week’s Goldman Sachs fiasco, known as “Muppetgate.”

You’ve probably heard about it; maybe you even read it yourself: Greg Smith, long-time director at Goldman Sachs wrote an impassioned op-ed piece for the New York Times, explaining why he was resigning from the financial institution. The now-former employee attacked the corporate culture, the management team and the treatment of its “customers.”

Sound familiar? No doubt at some point you’ve heard similar grumblings by disenchanted staffers, whether they were accurate or not.

Only Smith chose to vocalize them in a very public forum … with some very big consequences.

The day the article ran, Goldman lost a staggering $2 billion in market value.  And that was just the first day! Because the article cast serious doubt on the way the bank treats its clients, there are likely to be further very costly consequences, impacting even former colleagues’ bonuses.

Gulp.

And while it’s unlikely any of your people are going to air their grievances with your company to a major media outlet, you could still take an expensive hit from a morale problem.

Keep it from happening to you

To keep little issues from getting out of hand fast:

  • Keep your ear to the ground. What some managers dismiss as little grumblings could blow up into something bigger. You and your other finance managers want to stay attuned to what’s being said in the hallways, the break room, etc. Watch in particular for repeat rumblings, which could indicate a wider-spread issue.
  • Have a few inside sources. You also want to have one or two trusted people “on the inside” who will give you the real scoop on what people are thinking. Of course, you need to be extremely careful never to violate that person’s trust; he or she must know you won’t ever ID that person as someone who spoke up. But that trust must go both ways: If you need an opinion on how people are feeling about that new round of promotions, you have to know you’re getting an honest answer.
  • Open your door even wider. Better than having to hear about a concern secondhand? Having someone approach you directly with it. Now’s a great time to reemphasize with your staffers that you welcome any issues they want to bring to you … and that you’d prefer to hear from them sooner rather than later (or before you read it in the New York Times!).

 

 

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  • Kevin

    If an employee is so self-righteous that he believes he has the answers and others do not, and the employee is so self-centered that he decides to “get even” for being passed over, he was never a fit for that, or probably any, organization in the first place. Unfortunately, for a person determined to “get even” I do not believe there is ever any fool proof method to bring them around to respect the organization. Who among us does not disagree with various parts of the many many organizations that we belong to? He should have worked for progress within the system and not betrayed the people and the system that trusted him and gave him a job.

  • Kevin

    If an employee is so self-righteous that he believes he has the answers and others do not, and the employee is so self-centered that he decides to “get even” for being passed over, he was never a fit for that, or probably any, organization in the first place. Unfortunately, for a person determined to “get even” I do not believe there is ever any fool proof method to bring them around to respect the organization. Who among us does not disagree with various parts of the many many organizations that we belong to? He should have worked for progress within the system and not betrayed the people and the system that trusted him and gave him a job.

  • Joanna G.

    And how about simply conducting your business with integrity, treating your employees and subordinates with honesty and respectfully? instead of having “your people” on the “inside”?
    How about going back to basics that if you do the right things, you will receive only positive results. Man of integrity doesn’t have to fear, he can sleep peaceful sleep and doesn’t have to watch his/her back and worry what people are saying.

  • DJR

    I think part of the problem is that people took a lot of opportunity to skimp on employee perks during the recession and justifiably so. Now that the economy is back on track, they’re not only reluctant to start hiring again, but also reluctant to reward again. A lot of people buckled down to help get companies through the more difficult periods by taking on extra work when layoffs were happening. But those same companies don’t want to give increases and don’t want to reward out of fear of a double dip, legitimate or not. And out of greed, sadly.

  • Fred F

    Joanna: Sadly, there are some people who will become aggrieved even within companies with the highest standards. And yes, having a support network of employees who “get it” about the good points of the organization can sometimes head off the self-appointed victim.

    I decided many years ago to only work in companies with high standards and that treat people with dignity

    However, this whole thing raises a question. In a dog-eat-dog company where no one has any expectation of decency, will there be fewer disgruntled employees than in a company filled with wide-eyed idealists who will be morally outraged if every single thing doesn’t meet their highest expectaton? A good balance of realism and high standards, especially in larger companies, is probably as good as it gets. Ideas?