The tenor of political debates on the crisis is that unethical behaviour is part and parcel of organizational culture in the financial sector and that a change in culture will prevent a new crisis. Economist Dr. Andre van Hoorn of the Rijksuniversiteit Groningen discovered, however, that the norms and values of financial experts are really not that different from those of the general population. Moreover, persons who value self-enhancement more than self-transcendence are anything but more successful in the sector. Politicians, therefore, must take action themselves, via improved regulations.
André van Hoorn’s research is the only systematic, worldwide academic research in the area of organizational culture in the financial sector and it was published in the Journal of Business Ethics in two articles (August and November 2015).
“Unethical behaviour is not in the organizational culture, and with hindsight, I do not really find that surprising,” says Van Hoorn about his own conclusions. “After all, fraud and unethical behaviour can be found in all sectors, just think of faked data in academia, or medics making false insurance claims. ‘People will be people’ and ‘perverse incentives’ can have an effect: not only with stock traders or fund managers but with all employees in any sector there is a chance that they go for enormous sums of money if they can do so with impunity.”
Insisting on a culture change in the financial sector is therefore pointless according to Van Hoorn: “A bank that sends its employees on a course on ethics is only engaged in window-dressing. Regulation is the only option left to prevent a new crisis, and that must be done by politicians. Insisting on a culture change is also, of course, nice and easy: politicians dismiss the sector as bad, so they themselves cannot be blamed and they do not have to come up with a solution. On the contrary, we need rules and regulations to ensure that perverse incentives are removed and that banks, for instance, cannot speculate on the failure of financial products they sell themselves”.
To study whether or not unethical behaviour is ingrained in the organizational culture, Van Hoorn used a new indirect method for his research: “For naturally, we had to prevent financial professionals from deliberately presenting themselves better.“
The researcher examined the personal characteristics necessary for a successful career in a particular organisation or industry. “Concretely, I looked at self-enhancement versus self-transcendence values, so at values that are about personal gain versus personal values that are about caring for others. You might perhaps expect that more self-enhancement and less self-transcendence are more important for a successful career in the financial sector than for successful career in other sectors.”
However, the researcher discovered no differences between sectors, and found almost exactly the opposite : “If anything, strong self-enhancement values and weak self-transcendence values seem to go hand in hand with a less successful career in the financial sector. All in all, the culture in the financial sector does not really suit professionals who aim for personal gain at the expense of the welfare of others.”
Articles in the Journal Of Business Ethics:
For more information: dr. André van Hoorn
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