In all the blaming and arm-chair quarterbacking that has been going on regarding the U.S. financial crisis, little is being said about the performance cultures of large financial institutions. In an article titled, Eyes on the Wrong Prize: Leadership Lapses That Fueled Wall Street's Fall, the author, quoting several Wharton School professors, attributes the problems with Freddie Mac, Fannie Mae, Lehman Brothers, and AIG, the latest financial institutions needing rescue, to a lack of alignment between rewards and the factors that lead to organizational sustainability and to a culture that puts up barriers to employees surfacing important problems and risks in the market. Thomas Donaldson uses the term “mokita”, a term used by a tribe in New Guinea which means “…the truth that everybody knows but agrees not to speak about.” Donaldson is quoted as saying, "When it came to subprime and many of the other problems that have tripped up Fannie and Freddie and so many others, there was mokita."
This sounds much like what Chris Argyris wrote about in his 1990 book, Overcoming Organizational Defenses. In that book, he warned about workplace cultures that put up barriers to “discussing the undiscussable.” Would a trader in Lehman Brothers say to his boss that a particular investment is too risky for their clients, even when the potential payoff to the company is very high? Would a manager discuss business ethics with co-workers in a departmental meeting?
Of course, the U.S. Congress must consider new regulations that will hold large financial institutions accountable and the U.S. Treasury must consider interest rates and borrowing limits and many other financial factors. However, long-term solution must include the workplace culture of these organizations. What do they value? What do they reward? What kind of communication is encouraged? What kind of communication is discouraged openly and unintentionally by what is said and done by managers and co-workers?