The bad leadership in health care that we frequently discuss now appears to exist in a context of an increasingly corrupt society. In particular, we have discussed how the leadership of major health care organizations, such as teaching hospitals, and the universities within which medical schools operate, now frequently interlocks with the leadership of finance. The ongoing global financial problems have been blamed on bad leadership in finance.
A Survey of Finance Leaders
Now, a survey by a law firm that supports corporate whistleblowers offers some quantitation of the corruption within finance. The press release for the survey is here, and a summary of results is here. The survey respondents were 250 US based, and 250 UK based "senior individuals within the financial services industry."
Key results were:
- 24% of those surveyed believed that the rules may have to be broken in order to be successful.
- 25% of UK respondents believed financial services professionals may need to engage in unethical or illegal activity to get ahead; US respondents were only slightly less inclined to engage in wrongdoing at 22%.
- 12% of total respondents believed that it was likely that staff in their company have engaged in unethical or illegal activity in order to be successful.
Perhaps exhibiting ego bias, the senior professionals thought that there competitors were even worse:
39% of total respondents believed it was likely that their competitors have engaged in illegal or unethical activity in order to be successful.
A substantial number of respondents admitted that they would be willing to engage in illegal activity were the circumstances favorable:
16% of total respondents were at least fairly likely to engage in insider trading if they could get away with it. Perhaps more troubling, only 55% of all respondents could say definitively that they would not engage in insider trading if they could make $10 million with no risk of getting arrested.
An important fraction thought that the worked within organizations that encouraged unethical and illegal behavior:
- 30% of all financial services professionals reported feeling pressure to compromise ethical standards or violate the law as a result of their compensation or bonus plan.
- In assessing other pressures that may lead to unethical or illegal conduct, 23% of all respondents also reported feeling other pressures to compromise ethical standards or violate the law.
Note that due to social desirability bias, the survey likely understates these problems.
Also note that at least so far, this survey is not much less anechoic than much of the evidence of corruption in health care that we have discussed. Although it has been briefly noted in the financial blogs and press, like Reuters, BusinessWeek, and also in the New York Daily News and Los Angeles Times, no other main-stream media has commented yet.
One post on a Forbes blog by Peter Cohan made the weary observation:
Business corruption follows a well-worn path. The boss tells you to bend the rules, and knowing that ignoring that request will cost you your job, you do what you’re told. At the end of the year you get a big bonus and promotion.
Then a disgruntled customer or employee leaks the shady activity to the press or a regulator and your company pays a fine and gets a few weeks of bad headlines. Time passes and the cycle restarts.
He concluded in part:
The conditions that make business corruption pay off have not changed despite numerous scandals — recent ones include Enron, WorldCom, Madoff, and Lehman Brothers – all of which reflect the same conditions that prompted me to write Value Leadership a decade ago: Let executives write their own report cards, base bonuses on those numbers and you will get corruption every time.
The solution is as clear to me as it is impossible to implement. First, all corporate financial reporting must be conducted by highly paid government auditors –rather than by auditing firms that are paid by the companies they audit. Second, performance-linked bonuses must be set aside in escrow accounts for a decade until it’s clear whether the true benefits of business strategies exceed their costs.
As long as there is no limit to how much money companies can put into politicians’ pockets, this fix will never be implemented. That’s because money puts big business in control of politicians who — if they were responding to the interests of the majority of Americans — would eliminate the conditions that make the benefits of business corruption exceed its costs.
But business corruption pays for those who finance Washington campaigns so the soil in which it flourishes remains fertile.
The same is likely to be true of unethical practices by and corruption of health care leadership. After all, health care leaders now mainly come from business management backgrounds, and so have been trained in the same way as financial professionals, and exposed to the same culture that they have experienced. As we have noted, the leadership of health care and finance often overlap. For example, see ours posts on the finance influence on the board of Dartmouth College; the role of the former CEO of bankrupt Lehman Brothers on the board of New York-Presbyterian hospital; the role of finance leaders who derided the Occupy Wall Street as "imbeciles," among other things on the boards of miscellaneous health care organizations; the role of finance leaders on the board of Pfizer, etc, etc, etc.
True health care reform may require larger reform in the greater society. In any case, we need to reform the culture of health care organizations so that leaders put patients' and the public's health first, and self-interest last. Furthermore, health care organizations should not provide positive incentives merely for exceeding financial or volume benchmarks, and should provide strong negative incentives for unethical behavior.