Honestly, our regulators are the biggest pack of no-hopers, via the AFR:
The psychologist inserted by the corporate regulator into boardroom discussions of more than 20 blue-chip companies including Qantas, Woolworths and AMP warns that Australia’s financial sector culture is broken.
Elizabeth Arzadon, the regulator’s psychologist of choice, also warns that resistance by boards to public criticism is a mark of bad culture, staff surveys are not enough and that leaders are dragging their feet on culture.
OK, so I’ve taken a little license on what this means. But reading between the lines that is the import.
This should shock nobody. Most large organisations are at risk occupation from psychopaths. Especially so when the job comes with huge power, dough and an ubermensch mythos that will attract every narcissist.
This phenomenon was long ago explored by Paul Babiak in the seminal study Snakes in Suits:
The text covers the nature of psychopaths in the context of employment and purports to explain: how psychopaths manipulate their way into work and get promoted, the effects of their presence on colleagues and corporations, and the superficial similarities (and fundamental differences) between leadership skills and psychopathic traits. The work is interlaced with fictional narratives illustrating how the factual content applies to real-life situations. Characteristics of manipulators are described as shifting to meet stereotypical gender expectations: a female psychopath might make full use of the passive, warm, nurturing, and dependent sex-role stereotype in order to get what she wants out of others and a male psychopath might use a macho image, intimidation, and aggression to achieve satisfaction of his desires. The authors posit that around 1% of senior positions in business are psychopaths.
The authors describe a “five phase model” of how a typical workplace psychopath climbs to and maintains power: entry, assessment, manipulation, confrontation, and ascension. In the entry stage, the psychopath will use highly developed social skills and charm to obtain employment into an organisation. At this stage it will be difficult to spot anything which is indicative of psychopathic behaviour, and as a new employee you might perceive the psychopath to be helpful and even benevolent. Once on to the assessment stage, the psychopath will weigh you up according to your usefulness, and you could be recognised as either a pawn (who has some informal influence and will be easily manipulated) or a patron (who has formal power and will be used by the psychopath to protect against attacks).
Manipulation involves the psychopath creating a scenario of “psychopathic fiction” where positive information about themselves and negative disinformation about others will be created, where your role as a part of a network of pawns or patrons will be utilised and you will be groomed into accepting the psychopath’s agenda. Once on to the confrontation stage, the psychopath will use techniques of character assassination to maintain their agenda, and you will be either discarded as a pawn or used as a patron. Finally, in the ascension stage, the role of the subject as a patron in the psychopath’s quest for power will be discarded, and the psychopath will take for himself/herself a position of power and prestige from anyone who once supported them.
The Hayne Royal Commission was clear evidence of these dynamics at work in our banks.
The answer is not to send in psychologists to put a few executives on the couch. It is to apply regulatory processes that automatically weeds psychos out. That is, you create a regime of big, dumb rules for banking that means the psychos are boxed and their mismanagement is held to account. Before long they will no longer be interested in a banking career at all.
Such rules include very high capital ratios and clear punishment for reliance upon any kind of public support. There is nothing a psycho thrives on more than moral hazard and the cure is same as it is for vampires: sunlight.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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