This week my thoughts are less on economics, and more on management, ethics, and what happens when management goes bad in both public and private sectors.
Two Irish institutions have had a seriously bad week and both crises are instructive.
The first is with An Garda Síochána. It has been revealed that junior-ranking gardaí have been routinely and deliberately falsifying breath tests – behaviour apparently sanctioned by their superiors.
This is fraud and in this instance the weapon used by upper management is the reward system, which rewards them along with the lower-ranking guards for overstating breath tests. The implication is that the reward system was encouraging exaggeration of the number of people reported as being breathalysed by the Gardaí. Therefore the objective must have been a numerical one (once you’ve checked, let’s say, 100 per night – you are seen to be doing your job). So the guards just made up figures, which were passed up the line and no questions were asked.
It’s quite hard to fathom, isn’t it?
Some politicians are now saying that there shouldn’t be an inquiry because the junior Gardai are innocent and the crimes were sanctioned from the top. However, this misses the point that junior guards eventually become senior guards and if the ethics of the organization are compromised, then the institution will collapse.
This is fraud like Anglo was fraud, like Enron was fraud and you don’t have to watch Narcos to see what happens when the police force becomes compromised.
If this type if thing is happening in An Garda Síochána, what else is happening in the Irish public service, where value for money appears to be something that management doesn’t understand?
The reason this is important to you is that your taxes pay for all this! Watch this space for more revelations.
Now let’s move from the public sector to the scourge of civil servants, Ryanair. Ryanair has been expanding at breakneck speed over the past few years and it now carries three times more passengers than the mighty British Airways.
But, Ryanair has had a bad week with hundreds of flights cancelled because they “messed up” employee scheduling. The question is – is this a glitch or a sign that the management has lost control of the detail?
There are many instances of firms that expand too quickly and forget to invest internally at the same pace. The implication over the longer term for the share price is that if it’s a glitch, buy now. If it’s something more serious, profits have to fall as funds are reinvested in internal infrastructure.
Let’s see how things pan out.