The term corporate, as used throughout this article, is defined as acts “done by or characteristic of individuals acting together; ‘a joint identity’; ‘the collective mind’; ‘the corporate good’&quot; (Corporate, 2009). The term corporate criminal has been used to describe a myriad of deviant acts in the course of business. For the purposes of this article, the terms white collar crime, deviant corporate behavior and corporate criminal are used interchangeably. All three terms for this article will pertain to illegal acts engaged in by a company.
Felo (2001) indicated corporate governance structure can lead to conflicts of interest when directors have direct affiliation with the corporation and/or its management team. Their relationship with the corporation and/or management team may result in the director’s reluctance in confronting and disciplining ineffective managers. Directors having financial interest in the organization may be reluctant to confront wrongdoers for fear of losing the organization’s business. The lack of director oversight and confrontation with wrongdoers relates back to the situational factors of low social control and deterrence theory. Felo’s (2001) findings suggested the need to look at the organization’s checks and balances system; specifically, whether the checks and balances systems are inside or outside the control of the organization. Felo’s findings suggest the need to look at the leader’s organization and whether or not the accountants provided consulting services to the firm and/or directors had an affiliation with the firm or its management team other than as a director.
Dr. Husted cautioned in her dissertation that the results leading to a Preliminary Dark Leadership Profile should not be used by Human Resource Specialists and organizations to isolate or discriminate against current or potential employees. The Dark Leadership Profile should be used in conjunction with the Dark Leadership Framework to analyze organizations’ current infrastructure, policies, environmental, economic, and other situational factors, composition of Board of Directors and checks and balances systems to determine if these elements are conducive to the manifestation of Dark Leadership. The research findings suggested personality characteristics by themselves do not lead to the manifestation of Dark Leadership. Environmental and situational factors, combined with personality characteristics give rise to a propensity towards Dark Leadership.
Some of the components contained in this framework led to further hypotheses of situational and relational factors being supporting factors in the development of corporate wrong-doing such as: 4. Robert Merton’s (1938) strain theory was based on the notion that society dictates what is considered valuable within their culture. In capitalist society it is believed to be: money, power, wealth, material goods, and status. Society also dictates what acceptable means to obtaining these items are. 10. Interactionists see motivation as a symbolic construct. The meaning that individuals attribute to a particular situation and to social reality in general, structures their experience and makes certain courses of action seem appropriate while others are excluded or ignored. (Coleman, 1987, p. 410) Moore (1992) believed corporate crime is the result of the organization’s goals, rules, policies and procedures being imposed upon the leader. She believed the corporate culture and its conduct are transcended to the organization’s leader. Moore’s discussion on leaders being socialized into criminal behavior through the organization’s corporate culture is reminiscent of Sutherland’s (1934) discussion on differential association. Sutherland (1934) believed individuals engage in criminal activity as a result of their association with others who teach the individual behaviors and instill attitudes and beliefs conducive to criminal conduct. Sutherland claimed some individuals belong to associations who are more accepting of and/or expose the individual to higher amounts of criminal behavior. 14 & 15. Leads us to our next slides on justification, yes men and cognitive dissonance
A common justification used for unethical and often criminal behavior, is that others (competitors) are also engaging in the same behavior. Failure to engage in the same unethical / criminal behavior would lead to a fall in stock prices, which in turn, would lead to a reduction in company worth. This in turn would lead to fewer returns for the investors. (Gray et al, 2002, p. 49-51) Cressey (1971) found white-collar criminals used neutralization and justification to deny harm. This allowed the white-collar criminal to maintain and portray a non-deviant image to themselves and society. For example, most white-collar offenders “would not have committed their offenses if they had defined such activities as simple theft instead of borrowing” (Coleman, 1987, pp. 410-411). The white-collar criminal’s ability to neutralize and justify their behavior helps to minimize his/her culpability in the eyes of the public. White-collar crimes are viewed by the public with apathy. This helps to confirm the offender’s notion that they are engaging in acts that are not considered by society as being harmful and deviant.
Neutralization and justification was found to further perpetuate the Dark leader’s perception of being a martyr. They saw the laws and rules as unjust. They had a sense that they were owed something in return for their plight. They began deceiving themselves as well as others, when they failed to entertain reality; opting instead to surround themselves with “yes people” who along with the leader engaged in “group think.” Thus, the Dark Leader surrounded himself with people who would support and not question his decisions, providing nourishment for the leader’s cognitive dissonance. Groupthink can occur where the leader’s advisors delude themselves into agreement with the leader. Research in impression management indicates not only that one’s self-descriptions are effective in deceiving an audience, but also that they may deceive the presenter as well. This is especially true when the audience reinforces and approves the individual’s image. (pp. 50-51)
Dark Leaders surrounded themselves with “yes people.” They were found to demand loyal lieutenants to transact their wishes out of fear of reprisal and repercussion. Thus, resulting in unquestioned authority. The organizations were decentralized. Also found was a transactional nature in asserting their authority, coupled with decentralization reduced the likelihood of an effective checks and balances system to deter illegal and/or unethical behavior from occurring. These situational factors are believed to lead to an organizational culture of what this researcher calls “organi-cultural deviance”. This deviant sub-culture is believed to be similar to gang cultures, and pack mentality found in the study of common crime. The researcher suggests further research in the areas of the leader’s and follower’s influence upon one another; socialization into a culture of deviance and peer pressure.
Debate continues in social responsibility whether to hold the individual or corporation responsible for violations of law. Velasquez (2003) believed organization’s actions are products of its members’ and leader’s intent. This ongoing debate results in this paper’s exploratory discussion between corporate social responsibility and employee relational dynamics in preventing wrong-doing.
It is believed organizations with an ability to assess their current infrastructure, policies, environment, economy, and other situations, composition of their Boards of Directors and checks and balances systems will be able to devise policies and procedures for oversight to avoid placing themselves and their leaders in a situation that gives rise to Dark Leadership It is not possible to prevent all situations in which corporate wrong doing will occur. What is possible, is to reduce the situations in which the likelihood for wrong doing increases. One situation in which a board member or executive can take preventative measure, is in the relationship between the board and the CEO.
Corporations must be watchful of charismatic leadership. It is not the charisma per se, rather the type of interactions between the leader and the teammates. Characteristics of pseudo-transformational leadership, antisocial personality disorder, psychopathy and what Husted described as being characteristics of “Emotional Ignorance” are believed to be significant contributors in the development of Organi-cultural Deviance. These characteristics include traits included on this slide. If the leader prevents any proper outside oversight, prevents non-members from reviewing the work or is hostile to a periodic change in group membership (to prevent group think and to prevent a cult-like mentality), are warning signs that something may be unhealthy in the group dynamics.
Organizational culture has been defined as “written and unwritten expectations of behavior (rules and norms) that influence members of the organization”(Ross, 1995, p. 346).How likely is an organisation to place restraints and punishment on deviant behaviour, determines levels of deviant behaviour (Tittle, 1995)
Levels of control are “reflected by the control experienced across any number of situational and global domains” Piquero and Piquero (2006)Relationship between CEO and board i) little contact between CEO and board ii) controlling – CEO sets direction board just “rubber stamps” iii) collaborative relationship, iv) focus on each partys strengths (Cady & Soukup, 2008)
2008 Ph.D Dissertation by Husted: Systematic Differentiation Between Dark and Light Leaders: Is a Corporate Criminal Profile PossibleDark Leadership, defined through Edwin Sutherland (1949) coining of the term “white-collar crime”, defining it as a criminal act of respectable individuals in the course of their occupations Led to questions about leadership Concerns about group interactions
DARK LEADERSHIP 15. Cognitive 1. Egoism Dissonance 14. Justification 2. Motivation Neutralization 13. Deterrence 3. Opportunity Theory 4. Strain Theory 12. Pleasure/Pain 5. ConflictPrinciple Theory 7. Stakeholder 6. Stockholder Theory 8. Culture of Theory Competition 9. Capitalism 10. Interactionist 11. Symbolic Theory Constructs Figure 1: Dark Leadership Framework
Arthur Levitt, Former Chairman of theSecurities and Exchange Commission (SEC)from 1993 - 2001, stated there was A “Culture of Gamesmanship” where it was considered okay to bend to the pressures of analysts. A culture which believed it was okay to tweak the numbers and bend the rules and to allow discrepancies to slide” (Smith et al., 2006).
Group think occurs in a situation in which agroup is extremely cohesive and there is a strongdesire to reach consensus among members.Signs of group think: i) illusion of Invulnerability ii) collective rationalisation iii) illusion of morality iv) excessive stereotyping v) pressure to conform vi) self-censorship vii) illusion of unanimity viii) mindguards: people protect group from outside information
Organisational culture starts at the topRey (2002). Without that creative dynamic, of being able to openly constructively criticize, an environment of fear, antipathy and stagnation sets in.
Truab & Little (1975) defined deviance as “ behavior which violates institutionalized expectations, that is, expectations which are shared and recognized as legitimate within a social system”Alison et al. (2002) identified the need to approach behavior using a holistic approach; focusing on the interaction of the Person x Situation
Argument to include internal organisational people-processes and people-dynamics in the definition of “Corporate Social Responsibility”CSR must also include how an institution monitors and manages the human interactions occurring in itFocus on people-dynamics not just for corporations, but also NGOs, government institutions, private firms
Internal human-processes of any organisation, including corporation that may lead to devianceHuman-processes include but not limited to: Supervision: Too much, too little Validation: Yes Men, Group Think, Gang/Cult Mentality, Justification
A cult was defined by Robbins andAnthony as a group having manipulative,authoritative leadership and coercivepower. Likely to have: Authoritarian leaders Totalitarianist in their organization Have a specific form of indoctrination (Richardson, 1993, p. 351)
Pavlos Points on a cult Business Cult – like BehaviourA cult has a living leader in A living leader; whosewhich the direction of the cult charisma is used tois set by the revelations of manipulate followers intothe leader working towards the leader’s personal vision, not the company visionA cults religious leader has A person whoabsolute authority over the micromanages, whogroup squashes any sort of independent thought, who refuses to hear the input of staff or colleagues and uses transactional relationships and coercive power to gain compliance of followers
Pavlos Points on a cult Business Cult – like BehaviourA cult promises converts In business terms, this cansalvation through hard work be translated into greaterand loyalty profits, subsequently equating with higher pay as long as the individual is willing to conform and transact the behaviors prescribed by the group and its leaderCults require the members Those who consistentlydo demeaning work for the question the leader’s visioncause or strategy are relegated to work which is far below their capabilities, and are subject to coercive power and reprisal for not transacting the wishes of the group and its leader
Pavlos Points on a cult Business Cult – like BehaviourCults promise everlasting As long as memberssalvation for their faithful continue to do what thefollowers leader tells them to do, they will maintain high financial rewardsConverts must remove Increasingly the businessthemselves from the greater becomes more opaque, evensociety to auditors and regulatorsCults strongly discourage The company’s leadercritical thinking surrounds him/herself with yes people and encourages group think.
Pavlos Points on a cult Business Cult – like BehaviourCults create strong feelings Workers directly involved inof dependency between cult the fraud or criminal actmembers become increasingly hostile to outsiders.Cults indoctrinate members Workers becomethrough extreme personality, increasingly consumed byattitude, belief and behavioral their employment, theirchange techniques personal lives are out of balance with their work lives.Cults practice rituals which Work related performance isare psychologically increasingly judged by hardunwholesome to members metrics instead of a combination of hard and soft metrics.
Too much supervision: Enron executives led Wall Street analysts through the trading floor (previously empty rooms). It looked like people were working – they were pretending.Too much supervision can led to micro- managing, bullying, loss of critical thinking in staff; over-dependence on a few people
Superficial charm GrandiosityManipulation DeceitLack of remorse Shallow affectFailure to accept responsibility Failure to conform to social normsImpulsivity Irritability and/or aggressivenessDisregard for safety for self or others Lack of self-awarenessLack of self-monitoring Inability to manage emotionsSelf motivation Inability to relate well to others
Dr. Christie Hustedchusted[@]sbmconsultingservices.com Renée Gendron, MA, Ph.d candidatereneegendron[@]hotmail.com orrgendron[@]ciian.org Folders with full article and presentation available
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