.

A Consultant's View

Prairie Trail Software, Inc. ............................................................. April 2010

Power corrupts.

"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that. All power corrupts; absolute power corrupts absolutely." Lord Acton.

We all have seen that last part of the quote. Yet, the human dynamic that occurs when someone has a position of power is something that we rarely take a hard look at. When there is a position of power, people who are corruptible are attracted to that position and those who want to corrupt are attracted to being around that position. Those who hold power face constant pressure to use that power to benefit themselves or their friends.

Every election season, we hear people claim they will not be corrupted when elected. However, over time, few can stand up against the constant pressure to compromise. When in power, people lose the ability to resist. Dana Carney, a researcher at Columbia Business School, has found that when people view themselves as having power, they do not have the physiological reactions to saying lies that people who do not have power do. In other words, people in power can violate their values and not feel the pain.

In businesses, people are trusted with power and then abuse that power. History is full of both the large scandals and the small pilfering. What retailer does not know about both shoplifting and "employee shrinkage"?

The human dynamic is that power attracts those who would corrupt the people who hold power. For example, remember back in your teenaged days when a friend first got a job as a store clerk? How many people you knew who would ask him to give them a "deal" or to try to get him to sell them something the law forbade? People try to corrupt those who have power.

Look around any state capitol. The place is packed with those who would corrupt. One famous chicken producer caused a scandal when he walked onto the floor of the Texas legislature and started handing out $10,000 checks in order to affect some bill. Currently, it is estimated that financial institutions are paying $1 million per Congressperson to lobby for their interests.

It was after experiencing such corrupted power that the framers of the constitution put the checks and balances into that document. In business today, we still need checks and balances to keep the honest people honest.

As businesses need to be leaner and leaner to cope with the economic situations of today, we give more and more power to individuals. However, we need to verify that people are using that power for the good of the company and not taking on huge risks that will bring the company down.

The American Founding Fathers knew about corruption. They designed a system that had checks and balances. In business, we need to have both trust in people, but also verify how they are using that trust.