28 Jun 2019

Senior execs more likely to get away with white-collar crime

From Afternoons with Jesse Mulligan, 1:15 pm on 28 June 2019

A new Harvard study has found that senior male executives are much more likely to get away with fraud and embezzlement than middle managers or junior staff. 

The findings point to the powerful protection of the "old boys network" says the study's leader Paul Healy, a New Zealander and Harvard University professor of business administration.

Judge talking with lawyers to make a decision in the court room

Photo: 123rf.com

Although most companies claim that they do not condone corporate crime and that they punish everyone equally, the Harvard researchers found little evidence to support that, Healy tells Jesse Mulligan.

“We were interested to see whether companies were true to their to their pledge that they took it seriously, or whether they would be more inclined to sort of brush it under the carpet.”

The research showed that employees received different punishments depending on their status.

“We found that there was that there was a substantial difference between their treatment of senior executives than the way they treated more junior people.”

Healy suspects that the prevalence of the “old boys network” is the reason behind that.

“Senior executives are more likely to be connected with the person who's punishing them and we have this natural tendency as human beings to treat people who are part of our own network or part of our own group more favourably than people who are not.”

The researchers also found that senior men were treated more leniently than their female counterparts.

“Of course women tend to be outside that old boys club.”

The likelihood of an employee being dismissed with action taken against them was halved for senior staff compared with their junior counterparts, he says.

Healy suggests three possible explanations for this:

“It could be that if you're senior you worry more about the reputational consequences for the company.”

Also, the higher up an employee is, the more likely it is that their company will look the other way when they misbehave, he says.

“For example, in the case of Harvey Weinstein, people looked the other way despite the fact that there was evidence pointing to his misbehaviour.”

The third explanation is the notion of homophily (the tendency for people to seek out or be attracted to those who are similar to themselves), he says.

“This is where we tend to be more lenient toward people who are friends or who are members of our own group. It could be our own religion, our gender.

“This something that goes back, actually, to the time of the Ancient Greeks. People have recognised this pattern, the way we behave as human beings.”