It’s been suggested by accountants PwC and the London Business School that we shouldn’t scold ‘bad boy bankers’ but treat them like babies and give them the equivalent of a cuddle (Sunday Times today).
The study says threats of punishment for bad behaviour are counter-productive when trying to improve ethical standards. Instead praising good performance and good behaviour is much more effective.
The research also says that competition is damaging and bankers are twice as likely to behave unethically when they feel anxious about competing with colleagues. Then they are more likely to cut corners and make mistakes. Or just cheat perhaps?
The research among 2,500 bankers, insurance companies and wealth management firms which suggests that the key to changing behaviour and improving ethical standards is praise rather than retribution is just wrong-headed in my view.
Some of these ‘bad boy bankers’ at the top of companies are sociopaths and narcissists and praising them will only feed their belief that they are always right.
But you might expect people from financial services to say that (even if one of the PwC team is said to be a behavioural science specialist). Given that banks are reported to have paid out over $200 billion dollars in fines since 2008 but no banker has been convicted of fraud or theft I wonder what cloud these researchers are sitting on.
The report says regulators and financial services leaders should focus on the positive outcomes of good performance – and I’d like to see a definition of that – instead of the negative behaviours they want to stamp out. But where is the evidence that it will work? Is it just the bankers etc being surveyed saying “be nice to us and we’ll behave better‘? Given the outlandish financial rewards financial services seems to offer do you think they are motivated by anything other than money?
After the fiascos of recent years most people would be happy to see bankers and similar financial sector workers taken down a peg or two, not least in respect of their ridiculous bonus levels. The bottom line is that we don’t trust them to behave honourably.