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Topic:

The 1920 Farrow’s Bank Failure: A Case of Managerial Hubris?

Case Study Instructions:

influence of corporate culture, including leadership, power, and motivation, on business ethics in the workplace

Your assignment for Unit VI
For this assignment, read the case study, The 1920 Farrow's Bank failure: a case of managerial hubris. This case is located in the ABI/Inform Complete Database found in the CSU Online Library (see reference below).
Hollow, M. (2014). The 1920 farrow's bank failure: A case of managerial hubris? Journal of Management History, 20(2), 164- 178.
Thomas Farrow had been evaluated as having been inflicted by managerial hubris at the time of the bank’s collapse in 1920. With this in mind, address the following questions, with thorough explanations and well-supported rationale.
1. How did corporate culture, leadership, power and motivation affect Thomas’ level of managerial hubris?
2. Relate managerial hubris to ethical decision making and the overall impact on the business environment.
3. Explain the pressures associated with ethical decision making at Farrows Bank.
4. Evaluate whether the level of managerial hubris would have been decreased if Farrow Bank had a truly ethical
business culture. Could this have affected the final outcome of Farrow Bank? Explain your position.
Your response should be a minimum of three double- spaced pages. References should include your required reading, case study reference plus a minimum of one additional credible reference. All sources used must be referenced; paraphrased and quoted material must have accompanying citations, and cited per APA Guidelines
In Unit VI, you will learn that the race to achieve wealth, prosperity, and physical goods push some people towards unethical behaviors. Even in companies where personal greed is minimized, the pressure within a results-driven organization to perform to the standards of stockholders drives some people to take short-cuts and illicit opportunities. Some people do not realize that this is wrong. There is a name for this type of mental illness called “hubris syndrome”. Some people would recognize the traits of this sickness by other descriptions such as exaggerated pride, overwhelming self-confidence and contempt for others.
Hubris syndrome has been studied and there are specific symptoms that when clustered together, are indicative of this syndrome. For example, people with this syndrome see their world as an arena in which to exercise power and seek glory at the expense of others. Image and achievement are paramount. One unique symptom is a tendency to speak in the third person or use the royal “we”. It can be said that people with this syndrome have lost contact with reality while others see their actions as reckless and impulsiveness. There is a tendency for these people to rise through the ranks as they are risk takers and quite often their efforts are successful for which they are promoted to higher levels of responsibility.
One purpose of this particular assignment is to shed light on this type of behavior. Ethical decision-making is non-existent in people with hubris syndrome. So what can be done to minimize the impact to the organization? It goes without saying that each organization should take heed to minimize the motivation and opportunity for unethical outcomes.
The Godfather, originally released in 1972, is one of the most highly regarded films of all time. The producer based the story on the very powerful Italian-American crime family of Don Vito Corleone. As each generation grew up within this high-ranking crime mob family, there followed a series of infidelities, domestic violence, and blatant executions of anyone who did not line up with the philosophies of the family and “the business.” Through these unscrupulous dealings, power, money, and influence played a significant role in the decision making. Don’s youngest son, Michael, attempted to remove himself from what Michael considered the family’s unethical behaviors. Michael married a woman outside of the mob world who eventually the mob gunned down. Through a series of family power struggles and influences, Michael eventually, and reluctantly, moved back into the family business, demonstrating equally unethical behaviors.
The Godfather continues with a series of brutal scenes of execution and one uUnNetIhTicxaSl dTeUcDisYioGnUaIfDteEr another, all driven by power and money. Although the plot line seems incredulous to the average movie viewer, one
has to remember the culture within the family business grew so strong that it did not consider these behaviors unethical, but instead, the behaviors were considered as a part of everyday business dealings.
The Enron story represents a real-life example of how a culture within an organization can grow so powerful. This story is about a group of executives who continuously made unethical decisions related to extortion, bribery, and financial irregularities. Business people considered the executive team at Enron to have some of the most intelligent minds in the world. The question contemplated is how so many brilliant minds get influenced to act in such an unethical manner. The answer lies in the example of The Godfather film, with the establishment of a strong unethical culture within the entire organization. Incredible pressures supported this culture. In Enron’s case, the government prosecuted many people from the executive team who later served jail time.
Greed is another component of unethical financial dealings. The race to achieve wealth, prosperity, and physical goods pushes some people toward unethical behaviors. In many circles, people consider maintaining a certain standard of living important. Family responsibilities and obligations are yet another pressure faced by individuals. The Godfather drama demonstrates a significant amount of greed throughout the entire film.
Beyond greed, the health of an organization revolves around shareholder interests. By virtue of the definition of a shareholder, earning profits and receiving a favorable return on investment are the basis for shareholder interests. This group represents a significant pressure to leaders within a results-driven organization to perform to the standards of stockholders.
In spite of these pressures, organizations have taken significant strides toward maintaining an ethically sound financial decision-making environment. Although satisfying the interests of stockholders and all stakeholders is important, sound ethical practices is the protocol at this time in history. Consumers look to conduct business with organizations not practicing unscrupulous financial dealings.
Sidebar:
Hubris came from an ancient Greek word that meant the intentional use of violence to humiliate or degrade. Hubris was considered a criminal act at least from the 6th century BCE and any citizen in Greece could bring charges against a perpetrator. The word has since evolved to describe a wrongful action against a divine order (or an ethical guideline).
Source: The Editors of Encyclopaedia Britannica. (2017, May 18). “Hubris”. Encyclopaedia Britannica, Britannica.com
Reading Assignment
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Case Study Sample Content Preview:

The 1920 Farrow’s Bank Failure: A Case of Managerial Hubris?
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The 1920 Farrow’s Bank Failure: A Case of Managerial Hubris?
The absence of ethical compliance measures was prevalent in the United Kingdom in the 1920’s and resulted in misappropriations across various industries as a result of the poor corporate cultures adopted by the various organization. Instead, of being ethical models for their employees, the management of this era exhibited unethical behaviors characterized by a delusional self-belief of being powerful and beyond the controls or demands for ethical behavior in the society. The unethical behavior by the management of this generation is what is known as managerial hubris that proved detrimental to some of the most promising business ventures of the time. The case study, The 1920 farrow’s bank failure: A case of managerial hubris? Provides an excellent platform upon the effects of corporate culture, leadership, power, motivation on managerial hubris can be analyzed and elaborated. The study further provides an insight into the impacts of managerial hubris on decision making and the business, while also highlighting the role and impact of the regulatory authority in discouraging the vice and enhancing compliance to ethical conduct in business.
Farrow’s Bank collapsed in 1920, at which time its founder and Chief Executive Officer, Thomas Farrow, was found to be symptomatic of elevated levels of managerial hubris CITATION Hol14 \l 2057 (Hollow, 2014). Thomas Farrow viewed himself as being above the constructs of the law in conducting financial transactions at the bank. He also elevated himself to be above the laws of both the financial institution's regulatory authority and the society at large CITATION Hol14 \l 2057 (Hollow, 2014). Thomas Farrow further indicated enhanced symptoms of managerial hubris by disregarding the advice of his peers and went on to make fraudulent assets disclosures of the bank to cover his recklessness in investments that resulted in huge losses for the bank. Several factors contributed to the development of hubris syndrome in Thomas Farrow including the bank’s corporate culture, his leadership and motivation, and power.
The corporate culture at Farrow’s bank, for instance, consolidated all powers about key decisions of running the entity to the bank’s president who also doubled as the owner CITATION Hol14 \l 2057 (Hollow, 2014). Thus, Thomas Farrow wielded a lot of power at the institution which might have been the culmination of the hubris syndrome. The bank’s president exercised his powers in total disregard for the regulations of the external authority as the structure of the bank empowered him to do whatever he chose and thought was right irrespective of the adverse repercussions to anyone affected by the actions. He falsified documents and information on the bank’s assets to entice customers to transact and continue dealing wit...
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