Followers who are not sheep are key in preventing fleecing

The man who did six years in jail for looting $100m from securitysystems group Tyco International may have shed light on the spate of corporate scandals involving the likes of Steinhoff, KPMG, McKinsey and SAP in SA over the past few months.

“We believed our own press … myself and others – even the board,” said Dennis Kozlowski, Tyco’s former DEO and chairman.

“You become consumed … by your own arrogance and you really think you can do anything.”

Kozlowski’s comments highlight the intoxicating effect of power and the sense of invincibility to which people at the top of large organisations can be susceptible, allowing their impulses to run wild and resulting in them taking catastrophic decisions.

The danger of arrogant and corrupt leadership is facilitated by submissive following – when employees of organisations remain silent and uncritical in the face of unethical decisions and behaviour.

In his book, The Wisdom of Crowds, James Surowiecki compares the dangers of blindly following a leader to a bizarre phenomenon observed in the jungle.

Ants, cut off from their colony, move in a large circle, following the ant in front – even though that ant is itself lost. They carry on until most die of exhaustion.

Following the person in front can be dangerous; for Surowiecki, it is vital that we be willing to disrupt the consensus and challenge the conventional wisdom.

In Kozlowski’s words: “When the CEO is in the room, directors – even independent directors – tend to want to try and please him. The board would give me anything I wanted. Anything.”

In 1951, social psychologist Solomon Asch carried out an experiment that demonstrated the power of conformity. Eight people were shown two cards — the first with one line, the second with three of varying lengths.

Seven of the people were actors following instructions, but the eighth person did not know this. Asked which of the three lines matched the length of the line on the first card, the seven repeatedly gave clearly false answers.

Yet in as many as 75% of the cases, the eighth person went along with the group, giving an answer that was obviously wrong.

In another experiment, three actors would enter a lift containing one passenger, facing the door as is normal. The actors would then turn in the opposite direction. A camera showed many passengers swung around to fit in with the group.

These and other experiments have revealed the human propensity towards groupthink, a term coined to describe how people can align themselves with the supposed consensus and end up making irrational and reckless decisions.

Examples abound of the catastrophic consequences that can flow from these kinds of decisions.

One involves Swissair, which despite having been so financially stable that it was dubbed “the flying bank”, suddenly collapsed in 2001.

A major reason for this was the removal of dissonant voices that threatened the cohesiveness of the board, resulting in a disastrous expansion strategy.

US president John F Kennedy assembled an advisory group considered to be one of the most talented to work for the US government.

Yet it was this group that came up with the Bay of Pigs plan, a foolhardy attempt to invade Cuba in 1961 that ended in ignominious failure.

A CRUCIAL BULWARK AGAINST CORPORATE GOVERNANCE FAILURE IS TO CULTIVATE A ‘CULTURE OF DISSENT’

None of Kennedy’s advisers was willing to point out the plan’s glaring errors and this was ascribed to their not wanting to disturb the group’s collegial spirit.

For corporate SA in the wake of the recent ethical scandals, the dangers of groupthink and of blind followership have profound implications.

A crucial bulwark against corporate governance failure – as eminent lawyer Prof Michael Katz argues – is to cultivate a “culture of dissent” within organisations. This is needed so as to challenge, check and counter arrogant leaders and their misuse and abuse of power.

Just as leadership is active and demanding, so too is followership. Ethical and effective leadership is dependent on having a critical and bold followership.

Surowiecki points to another striking finding that emerged from Asch’s conformity experiment. When one of the seven actors was instructed to give the correct answer, the research subject was much more likely to go against the rest of the group.

As Czeslaw Milosz, a diplomat and poet who defected from communist Poland, said: “In a room where people unanimously maintain a conspiracy of silence one word of truth sounds like a pistol shot.”

In a boardroom or some other corporate setting, that pistol shot can encourage and galvanise others to dissent.

Pogrund is director of the Gordon Institute of Business Science ethics and governance think-tank.