The Perth Leadership Institute, a provider of business acumen assessment and development programs, announced the availability of its white paper on the current credit crisis and its link with leadership development practices, both in financial services companies and in other companies that consume these services. The white paper argues that the credit crisis was due, at least in part, to a lack of business acumen on the part of managers and executives in the industry, which has been perpetuated by the lack of leadership development programs that identify and develop business acumen.
The approach is based on the book by Dr. E. Ted Prince, founder and CEO of the Perth Leadership Institute, titled The Three Financial Styles of Very Successful Leaders.
“Paradoxically, there is a significant lack of attention in the financial services companies and consumers of their products to formally identifying and developing the business acumen of managers and executives,” Prince said. “This, in itself, is a major systemic risk factor. These companies incorrectly believe that business qualifications and experience are evidence of business acumen.
“In particular, the widespread belief that having quantitative models will lead to the avoidance of systemic risk has been proved incorrect, also,” he added. “Our white paper reveals how the very steps that companies took to avoid risk actually contributed significantly to it. Companies that provide and consume financial products that have inherent risk need to take immediate steps to change their systems and processes to adopt new types of behavioral financial approaches that can be harnessed to reduce the risk that a credit crisis like this will occur again.”
The Perth Leadership Institute has developed new business acumen assessments based on its research. These form part of its financial performance training and improvement programs for executives. These include its individual, team and C-level financial performance programs. The Institute has already announced the release of its Financial Outcome Assessment, an online instrument that assesses the business acumen of executives and managers and shows them how to develop it.