“The 1920 Farrow’s Bank Failure: A Case of Managerial Hubris.”

Paper details:

Regulators evaluated Thomas Farrow as being inflicted by managerial hubris at the time of the bank’s collapse in 1920. With this scenario 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 Farrow’s Bank.

4. Do you think that if Farrow’s Bank had a truly ethical business culture, the level of managerial hubris would have been decreased? Could this have affected the final outcome of Farrow’s Bank? Explain your position.

Your response must be a minimum of three-double-spaced pages. References should include your textbook, the case study, and a minimum of one additional credible reference. All sources used must be referenced; paraphrased and quoted material must have accompanying citations, and be cited per APA guidelines

Solution

Introduction

There is evidence in the history of organizations which arose and did their business and operations powerfully and effectively but due to one reason or the other, they came tumbling down and only remaining as part of history but not as one of the once powerful and successful organization. One such organization is the Farrow’s bank. It has been detailed that one of the major causes of the fall of the bank in 1920 was the managerial hubris of the then manager, Thomas Farrow. The hubristic behavior usually results from some sustained duration of well-doing and success which ends up making the individual in question to unrealistically view themselves as error proof. This paper, therefore, seeks to explore the impacts of managerial hubris on the success of an organization while examining keenly issues such as leadership, motivation power and organizational culture affected Farrow’s hubristic behavior. The relationship that exists between ethical decision making and managerial hubris, the extent to which hubris can be decreased or avoided in addition to the pressure which comes with bank ethical decision making.

Role of leadership, motivation, corporate culture and leadership in managerial hubris of Thomas

            Corporate culture affected Thomas level of hubristic management in various ways, the corporate culture of the bank gave close to almighty powers to Thomas as the owner of the bank as well as the president of the bank. He possessed huge power and was able to what he deemed to fit within the Farrow’s bank operations without the fear of any external controls or regulations leading him to finally mismanage the business falsify documents which he published online to cover up for the financial failures (Hollow, 2014). In fact, the board of management were never bothered by some of the decisions which he made and no one in the organization dared to check the balances of the operations. He, therefore, became drunk with power through the leadership was given to him by the organization letting the hubris syndrome to possess him.

            As far as leadership is concerned, Thomas headed the organization with a lot of arrogance, resisting advice from outside sources. Coupled with limited external controls or lack of it, Thomas managed to practice poor leadership skills and got away with it for such long. The poor leadership skills demonstrated by Thomas towards the fall of the bank are strong indicators of managerial hubris. He also abused the power which the organization entrusted him with by mismanaging such a precious organization, getting into questionable business deals, mismanaging the bank money and even his own funds (Hollow, 2014). When he saw that the business was doing well, he developed a motivation to make more money, opening more branches which were a sign of sheer greed. The motivation prevented him from reality which is another sign of managerial hubris.

Managerial hubris and ethical decision making

            Research has proven the unsurprising relationship between ethical decision making and managerial hubris.  One of the relationships is that managerial hubris may lead a manager to make unethical an amoral decision which in the end prove to have a negative impact, not only on the person’s image but to the image of the employees and the organization as a whole. The unethical decisions made by Thomas (which he denied to the very end) ruined the image of Farrow’s bank and the convicts alongside the losses which the investors incurred (Hollow, 2014). Managerial hubris results into overconfidence which bars the managers from having or developing an accurate understanding of the real world, secluding themselves and demeaning the observations made by others as biases and fallacy; statements which if treated with the right attitude could be of great importance and benefit to the operations of the organization at large. Out of pride as exhibited by managerial hubris, managers end up making unethical decisions in a bid to impress a few individuals and for their self-gratification instead of seeking advice from other resourceful persons. They therefore in most cases make own decisions while turning a blind eye to their own flaws which in the end impact negatively on the organization.

Ethical decision making at Farrows Bank and associated pressures

From the case study of the Farrow’s bank, there was literary no external pressure on the decision making at the Farrow’s bank, in fact, the pressure which built on Thomas was majorly self-induced since he put in place promises he could not keep. He kept on giving higher dividends without checking at the deteriorating returns the bank was posting (Hollow, 2014). The investments went wrong thereby losing his and the investors’ money. With the absence of external controls and regulators to make him aware that he is answerable to the customers, government and the public, there was little pressure if any on ethical decision making.

Truly ethical business culture and Farrow’s bank

            If the Farrow’s bank had in place a truly ethical culture, then yes I believe that the Farrow’s bank would not have gone down but could be in business and operational today. Thomas only had a few individuals in his circle, a people who never bothered to check on his activities and therefore assuming that the business was doing ok.  This is a position I support because there have been cases of proper ethical culture culminating into stronger organizations. The former president Obama’s regime bailed out many American banks and after the bailouts, the administration put in place competent rules for the banking industry that would ensure that no other bailout takes place as he had received a lot of criticism for the move of bailing out the banks (Collins, 2015). Such rules have since ensured that many of the banks were helped to remain afloat and are definitely doing better today than before the intervention step to bail them out. In addition, the United States Federal Reserve ensures that the banks meet and maintain in their banking practices the required ethical protocols and standards and thus ensuring that the American banking industry continues to be profitable.

Conclusion

            In conclusion, the Farrow’s banks provide a perfect example of an organization whose downfall was majorly caused by the managerial hubristic syndrome as depicted by Thomas unapologetic behavior even during trials, his arrogance and his deceptive nature. It is a clear proof that managerial hubris eventually lead to the fall of an organization sooner or later.

References

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

Collins, M. (2015, July 14). The Big Bank Bailout. Retrieved from https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-bank-bailout/

Do you want your assignment written by the best essay experts? Then look no further. Our teams of experienced writers are on standby to deliver to you a quality written paper as per your specified instructions. Order now, and enjoy an amazing discount!!