The Folly of Blame: Why Investors Should Care About Their Managers' Culture

A crosssectional empirical study of 70 investment organizations conducted from 2010 to 2013 indicates that firms that have a strong culture of blame tend to score poorly on attributes of importance to stakeholders. For example, blameoriented investment organizations tend to have poor employee engagement, client experience, and operational performance. The authors use both quantitative and qualitative methods to demonstrate the link between a culture of blame and business outcomes. Using crosssectional regressions, they find that variations in blame in firm culture explain variations in key firm outcomes, such as employee loyalty, employee defensiveness, client service, and performance relative to competing organizations. Interviews and a database of freeform survey responses from 3,435 confidential informants allow the authors to supplement the quantitative analysis with qualitative insights into the toxic effects of blame in investment organizations, especially when the blame culture is rooted in management. © 2015 Institutional Investor LLC. All Rights Reserved.