Long ReadMar 6 2023

Greed, power, shame: the psychology of criminal managers

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Greed, power, shame: the psychology of criminal managers
Photo: twinsterphoto/Envato

There is certainly no shortage of scandals in which managers turn to crime in various shapes and forms. 

Wirecard, Fyre Island, Elizabeth Holmes and many others are reported extensively in the press, and many others presumably get away with it, at least for far too long.  

However, much less attention is paid to the underlying psychology, especially in a business context.

A German forensic accountant by the name of Benjamin Schorn has devoted his new book – Greed, Power, Shame? Explaining the Psychology of Criminal Managers – to just this issue: the heady mixture of greed, power and perhaps some half-hearted (rationalised-away) shame too, that leads managers into the depths of truly horrendous financial crimes. 

Writing such individuals off as 'a bunch of psychopaths' is simplistic and fundamentally incorrect.

Furthermore, the lessons learned apply to many lower-profile crimes that affect so many of us, such as crooked bicycle dealers, phoney plumbers and a host of other activities that literally or de facto constitute crimes.

Finally, there are managers who are not criminals in the legal sense, but distinctly dishonest. They too are well captured by Herr Schorn.

No easy categorisation

The essence of the matter is the complexity and black-box nature of the psychology, mindset and associated motives that have various practical, legal and regulatory implications.

A simple good-and-evil dichotomy, or writing such individuals off as 'a bunch of psychopaths' is simplistic and fundamentally incorrect. 

There is no easy categorisation of such people, who are driven by a compound and multifaceted range of factors, some of which are inherent and some of which are acquired or learnt. 

These in turn are shaped by external corporate, economic and other societal factors, such that outsiders are constantly amazed that these once-trusted business leaders can perpetrate such massive and catastrophic crimes. Furthermore, early detection and prevention are thus extremely difficult.

Schorn divides the psychology at its basic level into a mix of narcissism, Machiavellian rule-breaking and classic psychopathology.

But this is just the beginning, and the list of what constitutes each of these is long and involved. 

Superficial charm, an exaggerated sense of self-worth, emotional coldness and impulsive behaviour are just a fragment of the whole.

Such managers are generally, but not always, about forty years old, male, do not have a criminal record (yet), well-educated and inconspicuous (so far).

But sorting out these perpetrator types meaningfully remains a major challenge. 

There is a long history of attempts to do so, ranging from early misguided efforts to figure out what such people look like, to much more sophisticated analyses of background, emotional and career development, skills and ambitions, interactions with others, organisations and legal systems. 

And all of this in the context of situational opportunities, pressures and expectations.

Myth and reality

Of particular interest is the chapter on moral decisions, which provides an incisive analysis of the various myths associated with criminal managers.

These revelations are extremely compelling and reveal an unforgettable picture of human fallibility in the realm of big business and the dangers it poses for society and the unsuspecting victims.   

The first myth is that criminal managers are immoral. It is so easy to pigeonhole them simply as bad (to the bone). 

However, much depends on what we and they consider as morally reprehensible, and is thus to some extent a matter of perspective. 

Schorn points to different ways one may perceive a friend who evades taxes, as opposed to reading about some top manager whom one has never met, but is reported in the media as having done the same thing on a grand scale.

And then there is the uncanny ability of some people to simply switch off their capacity for morality, through focusing entirely on the “exciting stress” of “doing a breakthrough” in which “everyone was ecstatic”, as stated by Andrew Fastow of Enron notoriety.

The intoxicatingly hectic drive to “find solutions” resulted in decisions that were devoid of any moral component

Myth number two is that criminal managers rationally weigh up the costs and benefits.

It is tempting to think of top managers as astute and rational – strategic thinkers who meticulously balance the potential gains, losses and risks and whose criminal tendencies, as well, are subject to all manner of high-level skills. The reality, however, is often very different.

Those who are blinded by greed, ambition or corporate pressure, are also blind to a host of other factors that lead them into downright foolish and doomed activities.

The next myth is that criminal managers do not care about their victims.  In fact they may well do so, but rationalise it away: out of sight is out of mind.

Other curious processes run wild in criminal minds, such that they frequently think that on balance, they were really 'trying to help people', and are themselves victims of adverse circumstances.  

Self-delusion and self-deception play a fundamental role in the process, and temporarily shut out the real causes of the disaster and the fate of those on the receiving end.

Conclusions and implications 

If potential managerial criminals are to become more identifiable in advance, and their acts thus preventable, the above issues and many more need to be understood better by other managers, auditors, the media and directly relevant parties.

A case-by-case, investigative approach is needed, together with monitoring and early-warning systems that are sufficiently sensitive to this bigger and highly differentiated picture. 

It is clearly not enough to rely on conspicuous character traits and profiles, rationality, integrity, or on the threat even of severe sanctions.

Brian Bloch is a freelance journalist based in Germany

Reference: “Gier, Macht, Scham? Krimineller Manager Psychologisch Erklärt", Benjamin Schorn, Frankfurter Allgemeiner Buch, December 2022.  (Greed, Power, Shame? Explaining the Psychology of Criminal Managers)