Business Ethics Essay Sample

How the corporate culture, leadership, power and motivation affect Thomas’ level of managerial hubris

            Corporate culture, power, leadership and motivation significantly affected Thomas Farrow’s managerial hubris. For one, the regulatory mechanisms for Thomas Farrow’s bank were very complacent. In this light, the senior management (especially Hart and Crotch) and the board of directors of Farrow’s Bank had a neglectful attitude and were irresponsible towards the daily operations of the bank. Hollow (2014) rightly shows that this irresponsibility and neglectful attitude spurred onward, Thomas’ managerial hubris.

            In a closely related wavelength, Thomas’ hubris is further exemplified in him being overly concerned with his self-image. For instance, instead of publicly acknowledging that the bank had incurred losses, Thomas resorted to falsifying balance sheets and other statements of accounts and publishing them. When he was charged with and convicted of this offence, he still adamantly refused to acknowledge his wrongdoing. All these were efforts meant to preserve Thomas’ self-image.

            Again, Thomas’ hubris is seen in him arrogating himself very high discretionary powers. Hollow (2014) further avers that all these were a portrayal of Thomas’ egocentric and narcissistic tendencies.  Similarly, even when the bank saw that the external control mechanism was being inadequate and inefficiently applied, Thomas was further granted more sweeping powers. From this point, Thomas made decisions arbitrarily, and in contravention to regulatory mechanisms and laws. Those regulations that were weak in their regulatory mechanism, Thomas extensively exploited. For instance, Thomas exploited the fact that his bank had been registered under the Friendly Societies Act of 1904 to escape strict auditing of its statements of accounts. The auditing regulations of the Friendly Society Act of 1904 were less strict and weak. Because of this, Farrow’s Bank was able to keep the magnitude of his fraudulent bookkeeping actions hidden for so long.

Relating managerial hubris to ethical decision-making and the overall impact on the business environment

            Thomas’ managerial hubris extensively undermined Farrow Bank’s ability to make ethical decisions, and equally undermined the overall business environment. As has already been mentioned, Thomas took advantage of the pitfalls in the auditing regulations as provided for in the Friendly Society Act of 1904 and falsified balance sheets and statements of accounts for Farrow’s Bank, just to maintain a façade. Again, Thomas used the same weaknesses to prop up an amateurish organizational setup without being accountable to anyone.

            Thomas’ acts of hubris extensively impacted the business environment negatively. Ultimately, Thomas’ indiscretion led to thousands of people losing the money they had deposited in Farrow’s Bank. This development opened up the door for massive business failures as the bank’s clients could no longer access their money to plough them back into their businesses.  

The pressures associated with ethical decision-making at Farrow’s Bank

            The pressures associated with ethical decision-making at Farrow’s Bank are multifaceted. The first issue was lack of professionalism in the management of the bank. Had Thomas been professional, he would have provided for checks and balances and made himself answerable to the senior management and the board of directors. Similarly, the senior management and the board of directors should not have caved in to the pressure from Thomas to emasculate their role of playing oversight. Members of the senior management and the board of directors should have even resigned if Thomas continued to remain recalcitrant and insisted on his unethical deeds and decisions.

Evaluating whether the level of managerial hubris would have been decreased if Farrow Bank had a truly ethical business culture

            To a very large extent, the level of managerial hubris could have significantly decreased if Thomas had observed a truly ethical business culture. First, the observation of ethical business culture would have strongly deterred Thomas from falsifying and publishing Farrow’s Bank’s balance sheet and other statements of accounts. In this regard, the bank’s clientele could have exercised its discretion to withdraw its funds.

            Secondly, the absence of managerial hubris could have encouraged Thomas to trust in systems and principles such as accountability, instead of making all the decisions and crafting an amateurish organizational structure all by himself. The import of this is that the senior management and the board of directors could have provided Thomas with sound and competent advisory and oversight roles. As such, Thomas could not have been overcome with the allure of falsifying and publishing statements of accounts.

Whether this could have affected the final outcome of Farrow’s Bank

            By all means, the removal of managerial hubris could have affected the ultimate outcome of Farrow’s Bank. First, it is noteworthy that Mr. Chamberlain, the then Chancellor of the Exchequer confessed before the House of Commons that both the government and the senior management and board of directors at Farrow’s Bank were privy to the imminence of the bank’s collapse, for some time. This observation means that measures could have been made to reverse the gravity of the bank’s collapse. Customers in their thousands could not have lost their money.

            Again, accurate compilation and publication of balance sheets and other statements of accounts could have informed the public about Farrow’s Bank’s fiscal condition. From this point, they could have made informed decisions by withdrawing their money. Finally, the avoidance of managerial hubris could have nullified chances of setting up the amateurish organizational structures which did not competently play its advisory and oversight roles.

References

Hollow, M. (2014). The 1920 Farrow’s Bank failure: a case of managerial hubris? Journal of Management History, 20(2), 164-178.

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