Wanted: Executives with Integrity, or At Least a Sense of Shame

I spoke a few days ago with a thoughtful, intelligent ex-management consultant who understands the financial big picture very well. What was his take on the crisis, I asked him?

“The whole thing comes down to a serious misalignment of incentives of all the major players,” he said. “Low interest rates and rising asset prices led banks, lenders, ratings agencies, credit insurance and other markets astray–everyone’s incentives got way out of whack.”

As a description, I buy it. But as a diagnosis, I don’t know whether to be disgusted or depressed. I think I’ll be angry.

“The incentives are out of whack” is the language of behaviorism—appropriate for a Skinnerian stimulus-and-response study of rats and cheese in a maze. Looking at the world through Skinnerian lenses has many virtues—not, however, including the concepts of responsibility or integrity.

In a time of financial faltering and blooming Ponzi schemes, this matters enormously. We have a once in a decade chance to alter the trustworthiness and ethics of the financial industry.

Will our new financial regulators view this as a chance to redraw the maze and manage the cheese distribution? Or will they also focus on restoring integrity?

How bad is it? Another friend told me about a conversation between an investment banker and a regulator—the banker said, with a sly wink, “You know, you folks shouldn’t be letting us get away with this.”

“Letting us get away with this?” Who put the gun in your hand? Who raised the drink to your lips? Who do these people think is responsible for their actions? The chief behavioral scientist at the SEC?

Just 7 years ago, post-Enron, Samuel diPiazza, tCEO of PricewaterhouseCoopers, and Robert G. Eccles, a former HBS professor, wrote, in Building Public Trust:

…even transparency and accountability are not enough to establish public trust. In the end, both depend on people of integrity. Rules, regulations, laws, concepts, structures, processes, best practices, and the most progressive use of technology cannot ensure transparency and accountability. This can only come about when individuals of integrity are trying to “do the right thing,” not what is expedient or even necessarily what is permissible. What matters in the end are the actions of people, not simply their words…without personal integrity as the foundation for reported information, there can be no public trust.”


Trust, integrity, and ethics are essentially about the link between individuals in society. Not between rats and cheese.

It must be tempting for Mary Schapiro, new SEC head, to respond to the political howling with a new Sarbanes-Oxley. Please don’t. As Jim Peterson says, “Any law that passes the US Senate 99 to 1 has got to be seriously flawed.”

What we don’t need more of is behavioralism–more paperwork, detailed regulations, disclosures, and Chinese walls. What we need more of is what diPiazza said—trustworthiness and integrity. On the regulatory side, that means better enforcement and sanctions.

But politics are critical too, and fulminating politicians can be as short-term focused as any banker. The public has a big role to play.

May I suggest shame, humiliation, and public shunning. Maureen Dowd has made a nice beginning  but everyone needs to pile it on.

Consider two contrasting headlines yesterday:

Ford Has Worst Year Ever But Won’t Ask For Aid


What Red Ink? Wall Street Paid Hefty Bonuses.

Which one is about mice, and which about men?

Get mad as hell about this.  Go shame a Wall Street banker today–we expect people to feel shame, not rats, so their response should tell us something.