271 online
Most Popular Choices
Share on Facebook 25 Printer Friendly Page More Sharing
OpEdNews Op Eds    H3'ed 6/25/13

Money is Moral Kryptonite for Bank of America.

By       (Page 1 of 2 pages)   No comments

Robert De Filippis
Follow Me on Twitter     Message Robert De Filippis
Become a Fan
  (30 fans)

(Image by Match Financial)
  Details   DMCA

Money by Match Financial

"Bank of America allegedly used dirty tactics to lead homeowners into foreclosures and in-house loan modifications, reaping massive profits for the bank's bottom-line."

Those who did a good job of this were paid bonuses. Those who didn't were fired.

The old saying, "If you can't measure it, you can't manage it," came to mind as I read that excerpt from Thom Hartmann's article about Bank of America's latest scandal on alternet.org.

J. Edwards Deming had the most powerful effect on Japan's productivity boom by teaching companies and employees to measure in order to manage the manufacturing process.

Although he was a hero in Japan, until his later years, he was mostly unknown in America, where much of his work was turned on its head: Like in the Bank of America case mentioned above.

Let me explain. The proper use of metrics is to measure and manage actual performance, not to drive it. But if you drive it and reward it with money or punish it with negative consequences, you'll always get the quotas you set.

In another life, I consulted to a financial institution whose name shall go unmentioned. The management style was one of fear and intimidation. My role was to assist with a change in that style. They went out of business before we could change the style.

Why? Because instead of using measurements to tell us how the organization was actually performing, they were using them to reward and punish performance. Their devices were exactly the same as Bank of America's today. I.e., use dirty tactics to get borrowers into new contracts that raised their debt load at higher interest rates.   

Here's an example, they were having trouble with delinquencies. So instead of measuring and managing the system that caused the delinquencies, they set quotas for   lower delinquencies and threatened to punish employees if they weren't reached.

The employees' answer? Bring in a delinquent borrower. Loan them more money. Report the old loan as a new loan with a higher interest rate. Delinquencies dropped and dropped and dropped. Previously delinquent customers walked out with more money in their pockets and no intention to pay more responsibly. The entire portfolio was sold for pennies on the dollar.

This is not new news. The Sears Auto service scandal in the 1960's was used as a case study in B school for years. In it Sears added commissions to the auto service writers' pay as an incentive. So far, so good.

But then they set sales quotas to drive performance. Guess what? The employees fraudulently wrote enough unnecessary contracts to met the quotas. "Sears agreed to a multimillion-dollar settlement with the state of California and the 41 other states that had filed similar charges."

So I know why corporations do these things. But what is it in otherwise honest human beings that allows them to cheat fellow human beings on behalf of their employers?

From dailyfinance.com by Eamon Murphy, "The mere thought of money can trigger a subconscious mindset that predisposes people towards unethical actions, according to recent research by professors at Harvard and the University of Utah."

So in Mr. Murphy's words, "Is Money Morality's Kryptonite?" I think so.          

Next Page  1  |  2

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Rate It | View Ratings

Robert De Filippis Social Media Pages: Facebook Page       Twitter Page       Linked In Page       Instagram Page

Author, columnist, and blogger with a long career in business management, management consulting and executive coaching. I've authored and published eight books: "You, Your Self and the 21st Century,"The Flowers Are Talking to Me," and "Faith (more...)

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Follow Me on Twitter     Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Illinois Is Now on Board. We Can Carry Concealed Weapons in Every State.

Don't be Fooled: Black Racism Causes White Racism

What Jesus said and What the Christian Lunatic Fringe Hears.

The Primary American Meme: Be Afraid.

This Pope Makes Me Want to be an Atheist

Ethan Couch: An Example of the Pathology of Wealth

To View Comments or Join the Conversation:

Tell A Friend