The H Factor: A behavioral explanation of leadership failures in the 2007-2009 financial system meltdown. (2012)

“the current problems with the financial system and our economy have many of their roots in … words that begin with the letter H – hubris, hypocrisy, hostility, honour, humility, and honesty.

Charles F. Falk, Northeastern Illinois University
Bruce K. Blaylock, Radford University

Journal of Leadership, Accountability and Ethics vol. 9(2) 2012

Blaylock and Falk reconstructed the decision making that led to the 2007-09 failure of financial institutions, the loss of personal wealth, and the world’s sharpest, most globalized downturn since the Great Depression.

While there have been, and will continue to be, many differing explanations of the causes of the crisis, the authors suggest “that the current problems with the financial system and our economy have many of their roots in an area not discussed in the literature: leadership, or more precisely, the failures of leadership in a number of different but highly interrelated spheres.”

They analysed speeches, industry trade articles and pre-recession events to examine the characteristics of key players in the disaster. Coincidentally, the qualities and characteristics they identified all involved words that begin with the letter H – hubris, hypocrisy, hostility, honour, humility, and honesty.

Based on this they have developed a behavioural construct they call the ‘H Factor’, “a form of rating about leadership quality.”

“If one accepts the assertion that leadership played a significant role in the decisions that led to the crisis, then one must … offer ideas that may mitigate the problems in the future.

“Boards of directors, potential business partners, investors, shareholders, voters, and others could benefit by knowing the H Factor profile of an individual with whom they will be involved in business or other transactions.”

Access the full paper here: The H Factor