Retensa’s Top 10 “Biggest Quits” of 2012
Annual review of the most significant voluntary resignations in the United States.
New York, NY, January, 2013 – The departure of a leader can symbolize a fresh turning point for an organization or the immeasurable loss of vision. Retensa’s annual “Biggest Quits” list captures resignations that most represent the issues and trends of the time. However, we’ve never seen some of these quits before. When was the last time you saw 12 executives quit? When have you seen heads of 2 different organizations resign on the same day for the same reason? (Yes, sex scandal) Or two executives from the same company resign on different days for the same reason? (Yes, sex scandal) When was the last time someone published an Op-Ed resignation letter trashing a worldwide investment bank? (Surprisingly not a sex scandal)When they depart, we do not mourn all losses. Our intention here, in the eighth year of publication, is to identify the “Biggest Quits” across all industries to highlight the year’s most significant resignations. Though not always for the “right” reasons, these are the quits that do not help the remaining institution. We now present Retensa’s Top 10 “Biggest Quits” – the most intriguing turnover stories of 2012..
Goldman Sachs: Greg Smith (Vice President)
Greg Smith, who started at Goldman Sachs in 2000 as an intern would become the head of equity derivatives business for Europe, the Middle East, and Africa. His very public resignation in the New York Times was due to his belief that clients’ interests were irrelevant due to cultural change from leaders, including Goldman’s chief executive, Lloyd Blankfein, and its president, Gary Cohn. In Smith’s letter, he wrote:
“I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival…It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you…Weed out the morally bankrupt people, no matter how much money they make for the firm.”
The company’s PR team underestimated the power of Smith’s opinions. The incident alone could have passed over with minimal damage. However, by denying, and not giving honest credence to accusations that resonated with the public, Smith’s letter cause a tweetplosion and drove the market value of Goldman down by $2.2 billion. The long term effect is more cultural than financial. Goldman Sachs will continue to make money, however investment banks remain reputationally challenged among much of the general population.
Most of us do not choose our employer’s leaders, but we do choose to follow them. In the case of Goldman Sachs, as in most cases, people don’t follow the money. Money does not retain employees, trust in leadership does. Another resignation/termination trend is lower tolerance for under performance. Though generally a good idea, what are the consequences for stock chasing at the executive level? In 1960, the average time that one holds a stock on the New York stock exchange, was 8 years. Today it is 4 months. As a correlation, corporate executives are taking more risks than ever. Consider, if I am a leader, I need to take risks at work to innovate. Might I be more likely to take risks to fornicate? The leaders of some companies are taking risks that the organization cannot afford, but what is the consequence? The leader gets a $6 million severance. If that is the worst thing that can happen, is there any risk to taking risk anymore?
There certainly is a cost. As there is a cost to turnover, regardless of reason. Though some employee hires have more risk than others, there is great potential for returns. Organizations invest in talent, like stocks, intending to get a high return. The difference is that employee turnover almost always reduces your assets, because unlike stocks, you don’t get cash value when they leave.
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