Let’s start with a question. ‘Does a trader from a Swiss bank on a trading floor in Tokyo have more in common with a trader in the same market in a different bank in London or New York than (say) a teller in a branch in their bank in Switzerland?’
And another question. ‘Does an engineer working for BP have more in common with an engineer from another company working on the same project than (say) an accountant from BP in London?’.
HSBC has been in the news a lot just recently and the UK Parliament Public Accounts Committee (PAC) were grilling three more executives on Monday 9 March to delve further into the tax evasion scandal that happened at the banks Swiss subsidiary. It was a grueling encounter even for the most hardened company executive not helped by the live television screening which no doubt provided some members of the PAC with the opportunity to play to the camera.
Both the Chairman and CEO of the banking behemoth HSBC have recently appeared before the Treasury Committee of the UK Parliament in connection with the Swiss Tax Scandal . The bank’s Board had previously issued an apology for the scandal to its shareholders and the public in general .
The argument made by the HSBC Board is basically “We didn’t know, how could we? We are a huge organization. It would not happen today”.
Ignorance is bliss.
In January, the US Securities and Exchange Commission (SEC) announced that Standard & Poor’s Ratings Services (S&P) had agreed to pay almost $80 million to the SEC and other regulatory agencies for a series of federal securities law violations involving “fraudulent misconduct in its ratings of certain commercial mortgage-backed securities (CMBS)” . S&P was also banned for one year from issuing ratings in the commercial bond market.
A recent research report  suggests that an ethnically diverse group is better at making decisions than a group that are all alike. These results build on other studies that show that diverse groups in general are better at making decisions . Irving Janis, who first identified the concept , argues that ‘homogeneity’ is one of the key prerequisites for Groupthink, which is a bad outcome. So all we have to do to prevent Groupthink is to insist on diversity, especially at the Board level?
Whoa, hold on, it is not as easy as that! It turns out that it doesn’t come down to ‘diversity’ per se but ‘Trust’.
A recent article in the Wall Street Journal (WSJ) was headlined “How You Make Decisions Says a Lot about How Happy You Are”. The journalist then asked the question, “Are you a ‘Maximizer’ or a ‘Satisficer’”? She then reported that ‘Satisficers’ are happier.
But what does this mean for business decision-making, if anything?