Character’s Essential Role in Addressing Misconduct in Financial Institutions

CITATION

Furlong, W., Crossan, M., Gandz, J., & Crossan, L. (2017). Character’s Essential Role in Addressing Misconduct in Financial Institutions. Business Law International, 18(3), 199–197.

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ABSTRACT
This article examines one of the critical causes of misconduct that has persisted in the global financial services industry despite the warning flags raised from the financial crisis of 2008–09 and the very public shaming of major financial institutions (FIs) that have violated various regulatory regimes.1
The authors argue that many acts of misconduct are consequences of failure of judgement owing to weaknesses in leader character. By so doing, the article pivots away from the prevailing popular wisdom that such acts of misconduct are consequences of the moral or ethical shortcomings of ‘bad’ people. Rather, it takes the view that these acts of misconduct are usually the result of poor judgements made by people with underdeveloped character dimensions working in organisational cultures that allow or encourage them.
The article defines character as an amalgam of virtues and values that, individually, collectively and interactively affect the way leaders perceive situations, as well as make and implement decisions. The principal dimensions of character are integrity, drive, collaboration, humanity, humility, justice, courage, temperance, accountability, transcendence and judgement (see Figure 1). The authors’ research suggests that character can be assessed and developed, and that leaders with character can infuse character-based decision-making into the culture of the organisations they lead.