Managing Hubris: Farrow's Bank Disaster - Essay Sample

Introduction

Having an elaborate management team is a crucial directive factor for any organization or business venture. A state of managerial hubris occurs when individuals in lead power positions are defiant of their outcomes and view themselves as sole leaders with unlimited jurisdiction. Such is similar to the case of Farrow's Bank in which the manager, Thomas Farrow, got inflicted by managerial hubris, bringing significant damage to the corporation.

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How Corporate Culture, Leadership, and Power affects the Farrow's Bank

Thomas Farrow was the lead director for the Farrow Bank, which was a credit bank aimed at availing financial input for unresourceful members of the community. In such regard, the bank was able to flourish under the guidance of Thomas Farrow and, therefore, earned many considerations and credit from its customers and the public (Hollow, 2014). Farrow Bank was a capital powerhead as Thomas Farrow laid out due instructions and implementations for earnings and financial gains. The business venture was solely ruined by him, giving him unlimited power to transact deals on behalf of the company.

As such, Thomas Farrow cultivated a state of managerial hubris in his bank's culture and leadership by enacting powers to only prime candidates of his choosing. The bank was more of a personal moral venture rather than a business leading him to develop grandiose views and perception of the business growth and impact based on his self-efforts. The action of appointing significant heads in positions of power with limited qualifications is also an effect on business leadership (Hollow, 2014). He appointed a deputy manager and accountants whose sole purpose was to influence ideas and decisions based solely on his recommendations with few regards to the ethical practices enacted in the company's legislature.

He cultivated a culture of self-disregard to events of the banks' activities by using capital gains to invest in ventures that were non-profitable and had significant damage to the bank's financial score and report. He rarely imposed or listened to his employee's ideas, which led him to make quite a substantial amount of poor judgments and investments (Hollow, 2014). His view was that the business employees and customers were to be grateful for his remarkable efforts, and each financial decision he made was a sole representative of the banks' efforts, and no questions should get asked. Such unlimited power drove him to make many unfair claims and acquisitions for his gain, drastically affecting other stakeholders and customers.

Managerial Hubris and Pressures in Decision Making in Farrow's Bank

Managerial hubris imposes a state of lawlessness in which people in a position of power make fewer mandates when seeking out equal justice claims. It promotes unethical measures in which disregard for laws and regulations becomes a norm, and inequity claims are profound. It helps uneven and unhealthy competition environments in which leaders in a position of power make implements based on their sole reasoning (Ghazzawi, 2018). They, therefore, make inappropriate choices and business investments. Such leaders have disregard for other people's opinions and do not take sole blame in events of poor returns. They implement inadequate supervisory efforts and management of personnel, leading to poor decision making at critical timelines.

At the Farrow Bank, insufficient jurisdictions led to multiple pressures building up in its mandate and functioning. The bank's manager made unethical measures regarding falsifying financial reports of the company. Such mandates gave the public and employees an unreasonable view of success, while in a real sense, they had significant losses (Van Driel, 2019). His alienation to treat the bank as a personal moral venture than a collective effort led him to make inconsiderable investments basing on ideation (Ghazzawi, 2018). Lack of external influences such as general auditing of their ledgers and financial reports made the management lenient and would falsify reports to their best interest. Such was coupled with the hiring of unqualified personnel in leadership positions, which is unethical and disruptive to the organization's culture and initiatives.

Impact of Managerial Hubris Reduction at the Farrow's Bank

The imposition of managerial hubris at the Farrow Bank led to the organization facing multiple court sanctions and leading to its eventual failure (Cranston & Van Sante, 2018). Having leaders in power positions with total regard to personal gain and image was a significant contributing factor to the bank's failure. Had it been the extent of managerial hubris been reduced, the bank would have experienced substantial growth and financial claim in the competitive market. The level of managerial hubris at Farrow Bank would have been reduced by ensuring that the leaders followed the rules and regulations in terms of financial reports and hiring of qualified professionals in essential positions. There is a need, therefore, to make investments based on collective agreement and not personal gain. The manager should have also acknowledged his employees' and customers' opinions as attributes of an effective leader and rightfully acknowledged wrongdoings on procedures when faced with court mandates.

Conclusion

In summary, a state of managerial hubris would be cultivated depending on what form of ethical practices are adopted by various departmental heads. Continual structuring is essential for leaders and employees to work together for their benefits and the organization. Imposing such developments with equity and involvement is crucial for any business growth and affluence.

References

Cranston, R., & Van Sante, T. (2018). Principles of Banking Law. Oxford University Press.

https://pdfs.semanticscholar.org/f914/3dabe88a01ee88097c86c371f9378037b950.pdf

Ghazzawi, I. (2018). Organizational Decline: A conceptual framework and research agenda. International Leadership Journal, 37.

https://www.tesu.edu/business/files/Documents/ILJ_Winter_2018.pdf#page=38

Hollow, M. (2014). The 1920 Farrow's Bank Failure: A case of Managerial Hubris? Journal of Management History, 20(2), 164-178. https://www.coursemerit.com/download_question/155213635616421.pdf/The-1920-Farrows-Bank-failure.pdf

Van Driel, H. (2019). Financial Fraud, Scandals, and Regulation: A conceptual Framework and Literature Review. Business History, 61(8), 1259-1299.

https://www.tandfonline.com/doi/full/10.1080/00076791.2018.1519026?af=R