The consequences of bad management decisions can be severe. Institutions get destroyed, reputations suffer and sometimes, for everyone associated with the organization – their lives can get ruined.
A general perception is that at the helm of these decisions is a bad manager – which at most times is correct and a fair assessment of the situation under focus. These references then become case studies and are then taught in business schools to teach the aspiring business managers on what not to do to become good managers.
But what about those corporate failures behind which, bad managers are not the ones calling the shots. How do such situation arise in these cases?
That happens when good managers make a bad ethical choice—willingly!
The Case of Johns Manville
Then known as Manville, found itself at the center of controversy back in 1970s, when its management was accused of suppressing evidences against the health hazards of asbestos, which was at that time the company’s principal product.
Information had reached Manville’s medical department—and then to company’s top level executives—implicating the hazards of asbestos. The employees that were working for Manville at the production and packaging floors, were being subjected to the risk of contracting asbestosis and other respiratory diseases.
The company’s management decided to suppress the research. They even decided to not to disclose information to the company’s employees. There are testimonies that reveal the management found it more convenient and feasible to pay worker’s compensation claims, rather than phase out the product or take measures to ensure safe working environments for employees.
It was a cold-blooded business decision made on absolute grounds of immorality.
The Case of Continental Illinois Bank
Continental Illinois Bank does not exist anymore, but once it was the seventh largest commercial bank in the United States, with a very rich history behind it.
Their downfall started with a decision made during the mid-1970s, following which the bank’s management embarked on an aggressive lending approach. Their target industry was the gas and oil sector, which was at that time witnessing exponential growth.
The company’s approach became so aggressive that they decided to buy loans, originally made by other lending institutions and small banks. On surface, it appeared a sound strategy and one that would have enabled the bank to establish itself as the undisputed lender in the oil and gas sector. However, due to lack of controls in place, when the price of oil plummeted in the international market, all the bank had left were some mining drills as a return on their sanctioned loans.
The ripple-effect of that decision was so strong that the bank finally had to cease its operations in 1994. The management could only see the goal in sight, and ended up ignoring the road to accomplish that goal.
Why Good Managers “Willingly” Make Bad Ethical Choice?
Reading these cases, we genuinely have to ask how the usually good and intelligent business managers acted in ways that they did. How could they not rationalize what they were not supposed to do?
The answer is clear: Because they were too busy in rationalizing what they were doing.
- The management at Johns Manville rationalized that it was in the best interest of the company and so they decided to make a bad ethical choice.
- The management at Continental Illinois Bank never believed that the aggressive lending approach was in any way unethical or illegal, and that they could be bringing the whole institution down.
And to be honest here, it’s easy to criticize and question in retrospect, but management is hardly ever done in retrospect. It’s real time, it’s instinctive and the situations that we just read appear to be the type of problems that managers confront on daily basis.
As such, in those times, even a good manager is liable to make a bad decision – an unethical choice. Good managers and bad managers, sometimes they both end up down the same road.
About Manal Haddad
Manal Haddad is a business consultant with more than 25 years of experience working with top organizations in different roles. He runs his own blog to educate aspiring business leaders, entrepreneurs and marketers on what it takes to be successful in their endeavors.