Three reasons why impropriety in financial institutions are no surprise and nothing will change

Posted: 2/05/2018

1. Homo Economicus or economic man mindset

The Australian review of the banking and finance industries, under Justice Kenneth Haynes, will almost certainly recommend changes to corporate culture, as has become the norm in similar reviews in recent years. Culture is a complex set of relationships, norms and attitudes that are hard to change. At the root of culture is the mindset of what motivates humans, themselves and clients, which for people in the financial industry is homo economicus. This is a mindset that views humans as rational, self-interested agents who pursue measurable financial outcomes or near equivalents, like status or power, which are believed to contribute to financial rewards. Ethics, social responsibility and other considerations that are hard to convert into financial consequences in ex-ante calculations tend to get ignored. The homo economicus mindset leads to the types of norms and attitudes that result in bending of rules to hit targets and achieve bonus and incentive structures reinforce these. Business, including financial institutions, do donate large sums to social causes, sometimes in very public displays for reputational benefits, but often quietly and unheralded. These contributions are like business people described as “weekend Christians” (or Muslims, Jews, etc.), who practice religious values, such as compassion and virtue, with family, friends and others on the weekend but not in the business from Monday to Friday.

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How a simple act of inclusion saved BlueScope hundreds of thousands of dollars

Posted: 07/06/2018

Acts of real inclusion happen in the most unusual places. This one was on a Coke Ovens Battery, and it saved BlueScope thousands of dollars in costs each year. As David Bell, general manager of BlueScope’s Port Kembla operations tells it, the efforts of a manager to understand and act on the ideas of an engineer from a non-English speaking background has already produced documented savings of over $1million between their Baghouse and Oven Filling Optimisation operations; with projected savings of $300,000 in the Battery Heating and Charging Unit.

Over the last decade, a glut of surplus steel coming out of China has flooded global markets putting downward pressure on global steel prices and margins. These pressures have meant that to remain internationally competitive BlueScope’s Port Kembla steelworks has had to lower its cost base significantly. Improvements in operational efficiency required innovation in processes. Enter Charles Chen, originally from China, who works as a Technical Development Engineer at BlueScope’s Cokemaking operations at Port Kembla. Coke is a fuel made from coal and is a major input into the iron making process. Like most people for whom English is a second language, Charles speaks English with an accent, which may require more patience than when speaking to a native English speaker.

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Lessons from a Corporate Failure, Sexism and Quotas

Posted: 22/05/2018

Few have not been shocked by the revelations of financial impropriety emerging from the solemnly but descriptively named Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, being led by Justice Kenneth Hanes AC.

In terms of the dollar amounts involved in the mistreatment and misleading of customers, AMP has been a minor player compared to other institutions. But it remains in the glare of press attention and public approbation for its efforts to cover up its misdeeds in reports to ASIC. All this has led to the forced resignations of the AMP Chair, Catherine Brenner, the CEO Craig Meller and the Chief Legal Counsel Brian Salter. Following Catherine Brenner’s departure, the three-remaining female AMP board directors have also chosen to resign rather face re-election at the stockholders Annual General Meeting. All this is to be expected in reaction to the revelations emerging from the Royal Commission.

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Cultural diversity targets in corporate leadership are merely lip service.

Posted: 24/04/2018

Cultural diversity targets in leadership have failed to be met according to Leading for Change, an examination of corporate cultural diversity in Australia by Australian Human Rights Commission, University of Sydney, Asia Society Australia and Committee for Sydney. The 2018 follow up to the original 2016 report showed ‘there was not significantly more cultural diversity at the group executive level (C-suite) of Australian organisations’. Organisations included ASX 200 companies, federal ministries, federal and state government departments and universities.

According to the report “97% of chief executives have an Anglo-Celtic or European background. This is a dismal statistic for a society that prides itself on its multiculturalism”.

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The Precarious Glass Cliff

Robert Wood March 2018

Posted: 23/04/2018

So you’ve made it past the glass ceiling. But what of the glass cliff?

Back in 2003 a Times article in London reported that top companies with women on their boards of directors experienced decreased annual share price compared to companies with boards with less, or even no women. Sounds suspicious?

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Well-meaning but still sexism: Why the Liberal party needs enforceable targets for female representation

Posted: 30/05/2018

Even though his party’s percentage female representation has fallen into the low 20’s, Liberal backbencher Craig Kelly opposes quotas for female positions in the pre-selection of candidates. Why? Not just because he believes that substandard women will be selected under quotas but, also, as he announced in an interview, “I have spoken to female parliamentarians who find it hard to leave their children on Sunday nights to travel to Canberra.” Kelly’s view is one that is widely held by members of parliament and is openly expressed by Liberal members. His and their views are antiquated, inconsistent with the evidence, and out of step with the more enlightened view of diversity and inclusion held by many in the business community.

Legislation granting women the right to vote and stand as candidates for government bodies has been in place in most of the industrialised world since the first quarter of the 20th century. Isn’t it time we removed the barriers to their full exercise of those rights and took positive steps to increase female representation? Without enforceable targets or quotas, the representation of women in the Liberal party will not increase significantly any time soon.

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Mary Magdalene: A Victim of Backlash?

Professor Robert Wood March 2018

Posted: 17/04/2018

Anyone familiar with the story of Jesus will know of Mary Magadalene, the fallen women forgiven and raised up by Jesus. A childless prostitute who provides a contrast to the purity of Mary, the Virgin mother of Jesus. One to demonstrate God’s forgiveness, through Jesus, and the other the exemplar of the chaste good women to which all girls should aspire. None of this comes, literally, from the Bible, but was started in the sixth century by Pope Gregory the Great who refers to Mary M. as a penitent prostitute possessed by "seven demons" that were exorcised by Jesus. This is the Mary M. portrayed in paintings, religious teachings and popular characterizations, as in director Mel Gibson’s portrayal in the “Last Passion of Christ”. Gibson is a very public Catholic and his portrayal of Mary M. as a sinner, albeit an attractive and sexy young woman, fits with the teachings of the Catholic Church and the public image of Gibson.

Her recent recasting as Jesus's wife and mother of his child, popularized in the book and movie, The Da Vinci Code, is of dubious historical validity and again does not place Mary M. as an equal among the apostles who advised Jesus. She is the wife of the great man, but not a respected advisor or equal.

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Sex and Emotions

Professor Robert Wood March 2018

Posted: 14/11/2017

Not that sex! Sex as in woman and man, and the question “are women more emotional than men?” Conventional wisdom, pan cultural stereotypes, and readily available examples, all tell us that women are more emotional than men. But are they? Women score higher than men on neuroticism trait scales, which ask respondents about their tendency to experience negative emotions “in general”. But, studies that assess the actual experience of negative emotions, such as distress, frustration, anger, sadness, etc., in response to actual situations, such as crises, setbacks, goal blockages, etc., find no differences between men and women.

Why would men and women report different levels of emotionality when reflecting on the frequency of experiences over some unspecified periods and situations in the past, but report the same levels when reporting on their experiences of emotions as they occur in response to a specific situation? Which is the most accurate?

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