In the case, as presented by Hollow (2014), Thomas Farrow had been evaluated as having been inflicted by managerial hubris at the time of the collapse of Farrow’s Bank in 1920. This work is based on the case and explores some pertinent issues related to the case: the effect of corporate culture, leadership, power, and motivation on Thomas’s level of managerial hubris, relating managerial hubris to ethical decision making and the overall impact on the business environment, the pressures associated with ethical decision making at Farrow’s Bank, and the level of managerial hubris in the context of a truly ethical business culture. The analysis suggests that Farrow’s Bank would have survived and continued to receive acceptance if it had a truly ethical business culture.
How Corporate Culture, Leadership, Power, and Motivation Affected Thomas's Level of Managerial Hubris Assignment Help
Managerial hubris was entrenched in the corporate culture of Farrow’s Bank and had a profound bearing on Thomas’s level of management hubris. Much like a strong unethical culture characterized the family business of the crime family of Don Vito Corleone in the film The Godfather, Farrow’s management operated in a culture that upheld managerial hubris as a norm. The success and growth of Farrow’s Bank reinforced Thomas’s self-confidence and cultivated a belief that the Bank’s role transcended conventional role boundaries in groundbreaking ways (Hollow, 2014, p. 169). Consequently, the Bank’s corporate culture embraced the “spirit of camaraderie” whereby the interests of customers were viewed to be identical to those of the Bank (Hollow, 2014, p. 169). This corporate culture suggests the Bank’s inclination towards managerial hubris as it came to view the interests of customers as identical to its own.
Thomas’s leadership role in Farrow’s Bank alongside his power also had a significant effect on his level of managerial hubris. As noted by Hollow (2014), Thomas, after founding the Bank and overseeing its initial success, fulfilled the role of Chairman and Managing Director upon the official listing of the company. This position of elevated leadership and power provided Thomas with the opportunity to continue imposing his views, as noted above, on the company. Leadership implies a position to influence followers to embrace one’s views. In this regard, Thomas’s leadership and power gave him favorable conditions to further hubristic ideals. Practices such as utter disregard towards the norms and conventions of standard financial reporting that prevailed in the Bank indicate that Thomas’s views and behavior permeated the Bank. Therefore, leadership and power enhanced his level of managerial hubris by enabling him to impose his views on his staff and entrench them further in the Bank’s corporate culture.
Thomas’s motivation increased his level of managerial hubris to a significant extent. With little in his way in terms of regulatory and organizational checks, he pursued his grandiose visions for Farrow’s Bank as denoted by his “Farrovian” tag (Hollow, 2014, p. 172). The resultant conflict of interest is likely to have only increased his level of managerial hubris. The earnest pursuit of his personal vision for the Bank implied that the interests of other stakeholders, most notably customers and investors, were secondary to his. According to Jamnik (2011), conflict of interest is a major source of unethical behavior by fiduciaries and agents (p. 156). Thomas’s motivation created a conflict of interest with the potential for increasing his level of managerial hubris.
Relating Managerial Hubris to Ethical Decision Making and the Overall Impact On the Business Environment.
The connection between managerial hubris and ethical decision making largely lies in the nature of the role of the business in providing services to customers. According to Jamnik (2011), uncertainty or misunderstandings about the nature of the role of a financial services provider is a source of many concerns over unethical decision making (p. 156). Such concerns are heightened by managerial hubris because of the associated blurred role of the provider. In the case of Farrow’s Bank, managerial hubris led to a more prominent role for management and a diminished role for customers, investors, and other stakeholders. The scenario created a conflict of interest as Thomas pursed his interests at the expense of those of other stakeholders.
Unethical decision making was bound to follow as it became increasingly difficult to reconcile the clashing interests. Accordingly, managerial hubris encourages unethical decision making and with a negative overall impact on the business environment American history assignment help. As in the case of Farrow’s Bank, managerial hubris encourages unethical financial reporting practices, including disregard for reporting standards (Hollow, 2014, p. 173). The resultant culture of unethical decisions detaches the business environment from the expectations of the general public because ethical decision making is largely tied to such expectations (Aminu & Oladipo, 2016, p. 226). Therefore, managerial hubris undermines ethical decision and this association has a negative overall impact on the business environment.
The Pressures Associated with Ethical Decision Making at Farrow’s Bank.
The pressures associated with ethical decision making at Farrow’s Bank include regulatory environment, general public expectations, employee expectations, investors, and customers. Farrow’s Bank had unethical financial reporting practices, but the company’s annual reporting endeavors suggest underlying pressures from the regulatory environment to adopt ethical decision making. Whereas the regulatory environment mainly deals with standards, it sets the bar for ethical businesses to go beyond just meeting such standards. The pressure from the general public is noteworthy for one main reason, namely, ethical decision making is tied to the expectations of the general public (Aminu & Oladipo, 2016, p. 226). At Farrow’s Bank, the pressure to make ethical decisions due to general public expectations is visible in Thomas’s approach to publicity. As noted by Hollow (2014), Thomas believed that depicting Farrow’s Bank and all its stakeholders as a family with shared values and mission would evoke a sense of community. The belief suggests the pressure of the expectations of the general public to act ethically.
Employee expectations at the Bank represented another pressure as Thomas felt the need to “just lock himself away” to sidestep employee engagement that would otherwise push him to adhere to norms (Hollow, 2014, p. 173). Investors and customers alike pressured Farrow’s Bank to embrace ethical decision making. Thomas, for instance, tried to hide his Bank’s unethical practices when William Read, a partner charged with negotiating an investment deal on behalf of his company, sought to cross-check Farrow’s Bank’s accounting records. These pressures are consistent with Leonidou et al.’s (2017) view that businesses face both internal and external pressures associated with ethical decision making. Farrow’s Bank’s employees represent internal pressure whereas the regulatory environment, the external public, investors, and customers represent external pressures.
The Level of Managerial Hubris and a Truly Ethical Business Culture
For Farrow’s Bank, the level of managerial hubris would have been decreased if the Bank had a truly ethical culture for three main reasons. First, the Bank would have minimized conflict of interest due to misunderstandings about the role of the Bank in providing financial services. A misinformed decision led the Bank to merge the interests of customers with its own and in turn focusing on its interests at the expense of those of its customers.
Second, Farrow’s Bank would have adopted transparent practices with sufficient checks to decrease the level of managerial hubris. Thomas did not engage employees and other stakeholders in decision making and maintained an opaque decision making process that encouraged managerial hubris (Hollow, 2014). A truly ethical culture would have promoted collaboration and shared decision making in a manner that balanced the interests of different stakeholders.
Third, a truly ethical culture would have created long-term value for Farrow’s Bank and provided incentives for decreasing managerial hubris. Following the initial success of the Bank, Thomas believed that his grandiose vision for the Bank was the only path to success, a belief that increased managerial hubris (Hollow, 2014). In this history dissertation help, a truly ethical culture would have presented a viable alternative with the potential for contributing long-term value to the Bank.
The three reasons suggest that a truly ethical culture would have led to a positive final outcome for the Bank. As noted by Giannarakis (2014), ethical decision making is important for the long-term value of a firm as it contributes to the continued acceptance and existence of the business (p. 569). The Bank would have survived and continued to receive acceptance as its practices would not only create value but also balance the needs of various stakeholders.
Conclusion
The discussion indicates that Farrow’s Bank would have had a different final outcome and continued to exist and receive acceptance if it had a truly ethical business culture. The Bank’s corporate culture as well as Thomas’s leadership, power, and motivation reinforced his level of managerial hubris. Managerial hubris tends to encourage unethical behavior with negative implications for the overall business environment. The pressures associated with ethical decision making at Farrow’s Bank were diverse and included the regulatory environment, general public expectations, employee expectations, investors, and customers. A truly ethical business culture would have guided the Bank towards a sustainable path