The scandal that emerged this week regarding the London Interbank Lending Rate (Libor) has shaken up the banking world and now one of London’s biggest and most prestigious banks is under fire for its involvement in manipulation of interest rates. Its CEO, Bob Diamond, has resigned and the rating agencies have now downgraded the bank.
However, the real issue is not with Barclays but rather that the structure and culture of international banking and trading has permitted such manipulation to take place. It is even ossible to argue that companies in other industries as well as public sector organisations might have cultures that are fostering undesirable behaviour from its personnel.
How can we understand these issues better so that we may bring about a change?
An interesting article in the Wall Street Journal last month discussed the almost ubiquitous deceptive nature of humans. The introduction in the article gives an excellent example:
Not too long ago, one of my students, named Peter, told me a story that captures rather nicely our society’s misguided efforts to deal with dishonesty. One day, Peter locked himself out of his house. After a spell, the locksmith pulled up in his truck and picked the lock in about a minute.
“I was amazed at how quickly and easily this guy was able to open the door,” Peter said. The locksmith told him that locks are on doors only to keep honest people honest. One percent of people will always be honest and never steal. Another 1% will always be dishonest and always try to pick your lock and steal your television; locks won’t do much to protect you from the hardened thieves, who can get into your house if they really want to. The purpose of locks, the locksmith said, is to protect you from the 98% of mostly honest people who might be tempted to try your door if it had no lock.
What we have found, in a nutshell: Everybody has the capacity to be dishonest, and almost everybody cheats—just by a little. Except for a few outliers at the top and bottom, the behavior of almost everyone is driven by two opposing motivations. On the one hand, we want to benefit from cheating and get as much money and glory as possible; on the other hand, we want to view ourselves as honest, honorable people. Sadly, it is this kind of small-scale mass cheating, not the high-profile cases, that is most corrosive to society.
In the face of these findings, how do you manage your team, your personnel and those around you to create a culture of honesty and accountability?
If you would feel you could benefit from learning some implementable techniques, we have a course coming up in September 2013 entitled “Executive Leadership in the 21st Century“. We’ll show you how to go beyond just being able to identify lies to actually building an environment that fosters honesty.
The Wall Street Journal article above was from Dan Ariely’s new book, which coincidentally I finished this weekend, called The (Honest) Truth about Dishonesty. His other books are also really interesting and full of insight into human behaviour. If you would like any book recommendations, please feel free to email email@example.com