Abstract
In response to the catastrophic outcome of the 2008–2009 Financial Crisis we report on a qualitative study of decision maker surprise in the banking industry. Banks use a remarkably sophisticated ensemble of information technologies for supporting their management control systems and enabling oversight by government regulators and industry watchdogs. Banks depend on a global network of data processing and information systems to provide their core banking services and to manage the complex financial and macroeconomic elements of their environment. They are also subject to federal and/or state oversight, which includes on-site examinations and quarterly financial data monitoring, to reaffirm their safety and soundness. Yet, the financial crisis caught them unawares. To get behind the headlines of the crisis, we opted to not study crisis decisions overtly, but rather to explore bankers' general ability to interpret the data that they were receiving via their information technologies and observations and to follow a number of crisis and non-crisis decisions that had surprise outcomes for them.Our focus is on understanding the context, process and patterns of decisions that resulted in surprise outcomes for bankers. We interviewed 23 senior executives from banks in the southeast who recounted fifty-one post-decision surprises that had occurred between 2008 and 2010. From analyzing those interviews, we found that they attributed surprise outcomes of their decisions to specific behaviors, including their complacency and over-confidence, their over-trusting of others, their deviation from protocol, their habitual information reporting and decisioning efforts, and their deficient detection of warning signals. In addition they tended to rationalize surprise outcomes by diverting blame to others. Combined, these symptoms reveal a chronic organizational and cultural susceptibility for being surprised. It was evident from our analysis that the bankers exhibited a narrow focus of attention and a reduced sense of inquiry, refrained from calibrating their mindfulness with the complexity of their decisions, limited their sense of accountability and experienced rigidity in procedures from bank routines and information standardization. Together, these elements nurtured less-mindful behavior and triggered surprise outcomes. Given the important role banks play in our financial world and the ineffectiveness of their elaborate information support systems for reliable management control the results are disturbing.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.