Margaret Heffernan: (Photo: Mbindyo Kimanthi)As financial scandals daily make the headlines -and not just in the business pages - Margaret Heffernan, well-known entrepreneur and author, opened the ‘Trust and Integrity in the Global Economy’ conference at the Initiatives of Change centre in Caux this evening. She expressed ‘a tremendous sense of urgency’ about the need to ‘salvage our institutions from the infernal combustion of money, power and competition before it’s too late’.

The author of Wilful Blindness, one of the six best business books of 2011, called for ‘building a parallel universe whose creativity, honesty, energy and wholesomeness are so compelling that it exerts a gravitational pull on everything else’. Heffernan continued, ‘At no point in my 30 year career – running businesses in the US and the UK – have I ever been more discouraged. I used to think that business could be a force for good in the world... We need to think about how we bring out the best in others – not to fix them, not to make ourselves feel virtuous, but to repair our world.’

She went on, ‘The problem isn’t ignorance but wilful blindness.’ She saw herself doomed to writing the same articles and books over and over and over again. ‘For the first time in my life, I passionately wish to make myself redundant,’ she went on, noting, ‘underneath all of these institutional failures, are the same themes and causes. We are all in this together.’ Scientific research shows that thinking about money appears to reduce the ability to think creatively according to Heffernan. ‘Money is distracting -- and it changes the choices that we make.’ It interferes with social engagement. ‘Enough money and you can break the rules. Or write the rules.’ Money has the potential to sever the social contract, she warned. ‘When we care about people, we care less about money – and when we care about money, we care less about people. The problem with sky-high compensation and bonuses isn’t just the profound inequality they produce but the moral vacuum they create. This is not about good people or bad people, but about human beings and how our brains work. We have to keep money in its place.’

Heffernan then turned to power. Fully 85% of employees say that they have issues or concerns at work that they do not voice. But too much power damages both those who hold it – and those in thrall to it. ‘Structures that concentrate vast amounts of power and wealth at the tops of organizations create the conditions in which everyone looks up – and few look around.’

Finally, Heffernan noted, ‘competition interferes with our sense of inter-dependency and connectedness. As the competition heats up, the quality of work suffers. Hyper-competition creates the conditions in which fraud flourishes and cooperation fails.’ Demoralization among the many and tunnel vision among the few had produced rising rates of fraud and game-fixing everywhere, she said. ‘When we think to motivate our best minds by getting them to compete against one another for money and status, it’s like trying to put out a fire by dousing it with petrol.’

‘Changing individual behaviour takes vast effort and may have negligible impact. But when you expect the best of people, that’s typically what you get. If the benchmark of a sound institution is the provision for and celebration of truth tellers, much can and will change. The critical sign of health may be no more than the quality of dissent an organization provokes and supports,’ Heffernan concluded.

Heffernan, a former BBC radio and TV producer, was named as one of the Internet’s Top 100 by Silicon Alley Reporter in 1999, one of the top 25 by Streaming Media magazine, and one of the top 100 media executives by The Hollywood Reporter. She sits on the Council of the Royal Academy of Dramatic Art in the UK as well as on the boards of several private companies. The author of several books, she blogs for the Huffington Post, Inc.com and for CBS Moneywatch. See her web site.

The ‘Trust and Integrity in the Global Economy’ conference continues with some 300 participants until Monday 23 July. On Thursday 19 July morning, there will be a plenary of ‘Restoring trust in banking and financial services’, with Lady Susan Rice, the American-born Managing Director of Lloyds Banking Group Scotland, and Richard Sermon, a corporate lawyer who chairs the City of London’s Values Forum.

Listen to Margaret Heffernan's speech.