Page 17 - Journal of Management Inquiry, July 2018

712670 JMIXXX10.1177/1056492617712670Journal of Management InquiryWright et al.
research-article2017
Reflections on Experience

Journal of Management Inquiry
Journal of Management Inquiry
Further Thoughts on Kerr’s “Folly” and 2018, Vol. 27(3) 316 –324 –324
2018, Vol. 27(3) 316
© The Author(s) 2017
© The Author(s) 2017
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DOI: 10.1177/1056492617712670
https://doi.org/10.1177/1056492617712670
https://doi.org/10.1177/1056492617712670
https://doi.org/10.1177/1056492617712670
Been, and Are Going DOI: 10.1177/1056492617712670
journals.sagepub.com/home/jmi
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Thomas A. Wright , Richard W. Stackman , John Hollwitz ,
and Arthur S. DeGroat 3
Abstract
Steve Kerr’s seminal “Folly” article astutely noted that all too many organizations—and the individuals who populate them—
invariably violate a fundamental law of social nature by rewarding the very behaviors that they are supposedly trying to
discourage, while failing to reward the behaviors they desire to reinforce. But as Kerr notes in his interview, it is simply more
than a faulty reward system that has allowed these malfunctions to continue. Building upon Kerr’s insights, we offer two
proposed “Folly” updates regarding how we can create better functioning organizations. First, we discuss the provocative
option that there are only two, not four, causes to the “Folly.” Second, we offer the context of character as one explanation
(and possible solution) for the fact that even after more than 40 years too many organizations remain frequent repeat “Folly”
offenders.

Keywords
character, integrity, hypocrisy, moral motivation, psychopathy/sociopathy

And what sort of lives do these people, who pose as being moral, in nearly three-dozen countries. The bank had instituted an
lead themselves? “incentive compensation program” that measured and
rewarded its employees for establishing new bank and
My dear fellow, you forget that we are in the native land of the credit card accounts for its customers. Investigators discov-
hypocrite. ered that this simple performance management device led
—Oscar Wilde, The Picture of Dorian Gray to the establishment of accounts—1.5 million bank accounts
and a half-million credit cards in the names of customers
Even though Kerr’s classic “Folly” article has been assigned who had not actually applied for them. Some of these
and, hopefully, read and assimilated by many of our busi- involved fees that were passed on to customers, even
ness students (and ourselves), we appear condemned to though they had neither requested nor authorized the
repeat the “Folly” on a seemingly continuous basis. Oscar accounts in the first place.
Wilde may well have been correct regarding the prevalence Once discovered, the situation produced a great deal of
of hypocrisy—not only in his, but in our current society as reputational cost for Wells Fargo. It also generated substan-
well. Building upon Kerr’s insightful interview published tial material cost. By September 2016, the bank had been
in the current issue of the Journal of Management Inquiry assessed US$185 million dollars in fines, plus US$5 million
(JMI), we engage the readership with several value-added in funds set aside to reimburse customers who had been
contributions designed to further help us put the “Folly” in charged fees for accounts that they did not request (Corkery,
context and stimulate further research on this fascinating 2016). Furthermore, Wells Fargo terminated over 5,000
topic. employees and Standard and Poor’s downgraded the com-
The recent scandal surrounding Wells Fargo demon- pany’s ratings.
strates that the “Folly” remains alive and well, with ease of
measurement (both the fascination with objective and 1 Fordham University, Bronx, NY, USA
highly visible behavior causes) and possibly hypocrisy con- 2 University of San Francisco, CA, USA
tributing to practices that materially affected hundreds of 3 Kansas State University, Manhattan, USA
thousands of their bank and credit card customers (Glazer, Corresponding Author:
2017). The 165-year-old Wells Fargo (founded March 18, Thomas A. Wright, Fordham University, Bronx, NY 10458, USA.
1852), a top Fortune 30 company, has 70 million customers Email: twright17@fordham.edu