Managers in well-established corporate entities and bidding firms often tend to perceive themselves as better managers than managers in lower target firms. This perception is shaped by attributes such as egocentrism and overconfidence. Other management malpractices, unethical business practices, and inappropriate organizational culture instigate managerial hubris, negatively affecting the business performance and outcomes. Thomas Farrow, being born in Norwich, he was hardworking, with great ambitions. After his disinterest in school, he left for London to take up a confidential secretary job of Hon. Smith who later died in 1891.
Farrow’s level of managerial hubris was affected by corporate culture, leadership, power, and motivation. He had an egocentric character that later on instilled managerial hubris in him eventually costing him his bank, Farrow Bank. His confidence was drawn to his previous successes among them, publishing his first book “ The Money Lender Unmasked ” which later gave him the chance to give evidence of usury subject before a committee selected by the government. The bank was a success, but later on, crumbled due to his management hubris. Farrow bank adopted cultures that would later affect the company as a whole. The bank was handled in an unprofessional way that was not acceptable. First, it was registered under the Friendly Society Act of 1904 (Hollow, 2014) . The bank was supposed to be registered as a conventional joint stock bank. With this in play, Farrow bank was in actual sense a ‘credit bank’ and was therefore subjected to less strict rules when it came to auditing regulations. This was not the case with the competitors.
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With a lack of professionalism and less knowledge in the financial sector, Thomas Farrow appointed his staffs based on a personal relationship other than professional proficiency and skills exhibited in individuals (Hollow, 2014) . This was evident when Farrow employed Fredrick Hart, the son of George Hart, his former Chief Accountant. Fredrick had no previous experience and any professional academic qualifications to hold that position. An evaluation also revealed that Farrow had delegated a key role – the auditing balance sheet – to the bank’s chief accountant, a role that was supposed to be taken in by an external auditor (Eckhaus & Sheaffer, 2018) .
Due to a lack of concern by Thomas Farrow in the organization, a trait of managerial hubris, other board members picked managerial deficiencies. The directors in their part lacked supervisory responsibilities assigned to them. Employees revealed that he would lock himself up in the boardroom, a lack of communication skills that would propel the organization to higher heights. Farrow would also exercise a norm that would disregard the standards of bookkeeping due to his lack of professionalism. Bank clerks were never involved in the composure of Annual Meeting balance sheets (Hollow, 2014) . This role was left to incompetent employees who lacked credibility and experience to draft annual balance sheets. George and later Fredrick Hart, in a closed office and at home, would draft annual balance sheets without consultation from the company's clerks (Eckhaus & Sheaffer, 2018) .
In a business perspective, the impact of managerial hubris on the business is immense. Employment of unqualified individuals to the business is always a mistake no matter what kind of a relationship the employer has with the employee. Favoritism and nepotism are great impediments to the prosperity of a business entity. When Thomas Farrow decided to employ F.C Jonvrin on personal relationship grounds as a senior board member, this crippled the company. Jonvrin lacked a basic understanding of banking and how the whole system worked yet he worked for the company.
Ethical decision making at Farrow bank was ignored. With a lack of communication from the director to lack of professionalism in the whole system, highly effective employees’ decisions would not pass through to the board. The Bank’s assets were never discussed in board meetings (Hollow, 2014). With an egocentric character, Thomas Farrow was always veered towards maintaining his self-image other than facing reality. This led to the appointments and even assigning the core business tasks to incompetent individuals. His knowledge was based on his understanding, and he veered off from reality. The whole system failed in regulating the banking industry during the time as the regulators were either not competent or they never existed.
The outcome would have been different if Farrow Bank adhered to ethical business culture. Adherence to business ethics and inculcating the appropriate organizational culture could have lowered managerial hubris in the organization. Perhaps it would currently be one of the world’s most profitable banks. With the right business culture, I believe the outcome would have been different. By the right culture, this means Farrow should have had a great leadership team which would be effective. Board members who live their lives with a great personality trait. Senior employees should have great ethical conduct at every level of the company (Tang et al ., 2015). The integrity of the company to its clients and shareholders compels the management of a business to detect issues affecting the organization and take pre-emptive measures
Focusing on the long-term perspective of organizational growth trumps the short-term perspective that Farrow Bank had. With a low ego and service to clients, the management would have a great relationship with stakeholders and the community at large boosting their profit margins. Competence of every employee and employment criteria based on merit and not favoritism are an imperative role in changing the core values of the company. Management hubris was integral in orchestrating for the collapse of Farrow Bank and failure of Thomas Farrow. Without clear goals and ineffective management, any organization can be taken down by the vice. Instead, one would consider making goals clear and have well-elaborated standards that regulate the organization. With the right employees, a clear goal and lack of management hubris, any Bank or other organization requiring human resource are bound to be a success.
References
Eckhaus, E., & Sheaffer, Z. (2018). Managerial hubris detection: the case of Enron. Risk Management , 20 (4), 304-325.
Hollow, M. (2014). The 1920 Farrow's Bank failure: a case of managerial hubris?. Journal Of Management History , 20 (2), 164-178
Tang, Y., Qian, C., Chen, G., & Shen, R. (2015). How CEO hubris affects corporate social (ir) responsibility. Strategic Management Journal , 36 (9), 1338-1357.
