Is Pope Francis a good manager?

By Luigi Zingales     
December 15, 2014

From: Magazine

Illustration by Chris Morris.

The Catholic Church is the largest and oldest organization the world has ever known. With all its flaws, if it survived this long it must have something to teach us. Until recently, these superior traits were not easy to identify; but, with the election of Pope Francis, I had to change my mind.

After committing himself to a profound cleansing of the Vatican Bank—with the sacking of the controversial Cardinal Bertone, and the removal of spendthrift prelates (such as Limburg’s bishop, who spent €31 million to remodel his offices), Pope Francis has led a head-on attack of pedophile priests and all those who cover up cases of abuse.

In September he gave the green light to arrest Monsignor Józef Wesolowski, found guilty in the first degree for serious crimes of child abuse by the Congregation for the Doctrine of Faith. Two days later, the pope ordered the transfer of Monsignor Livieres Plano, a Paraguayan bishop accused of having covered up sexual abuses by priests in his diocese.

Apart from Wesolowski, none of these prelates has been convicted by the Vatican judicial system. Even Wesolowski himself was only convicted in the first degree and is awaiting an appeal. Maybe Pope Francis does not know that everyone is innocent unless definitively proven guilty?

Of course, the pope does not ignore civil rights; yet, unlike our own commentators and analysts, he appreciates the difference between criminal conduct and managerial responsibility—two concepts that are too often mixed up in our companies (let alone our political world). Every citizen has a constitutional right to be considered innocent until proven guilty, but an organization does not have the duty to protect its members’ positions of power until a definitive sentence is pronounced.

Mistakes of omission—such as those the Paraguayan bishop is accused of—are not easy to prove in a court of law. It is unfair to preemptively convict the bishop. Yet, there is no reason why the pope should put thousands of innocent children in danger in order to protect the position of Monsignor Plano.

For a criminal conviction one needs proof beyond a reasonable doubt, while for disciplinary action, removal, or layoff, the standards are and should be much lower, especially in the case of top managerial positions. In fact, in some cases, such as that of the bishop, proof is not even needed: it is enough to have reasonable doubt. It is merely a managerial “cost versus benefits” calculation.

On one hand, there is the cost for the church of keeping within its ranks a prelate who potentially covers up child abuse by priests; on the other, the risk of demotivating the ecclesiastic structure by unjustly removing a prelate. It is the difference between a right (the right to freedom) and a privilege (the position of power).

Paradoxically, in Italy, job protection is strongest when it comes to companies’ top brass—not to mention government ministers.

In fact, you cannot remove a manager without just cause. And the cause ends up being considered just only in the presence of a definitive criminal guilty sentence that, given the “speed” of the Italian justice system, never arrives. Therefore, nobody is ever responsible for his or her actions.

Not by chance, in Italy, there is a shortage of large companies. There is either a fatherly entrepreneur who implements his will, or Italian companies that end up being devoid of internal discipline and consequently have a hard time keeping up internationally.

A recent study shows that, in terms of the quality of people-management, Italian companies are worse than Chinese ones, and only slightly better than Indian ones. This evil runs deep in Italy’s economic system and costs us dearly in terms of productivity, competitiveness, and growth.

Decisions such as the ones the pope made are important not only for an organization’s internal discipline, but for credibly communicating to the outside the values of those who sit at the top and, by extension, of the organization itself. By removing the Paraguayan bishop, the pope communicates to the world that the protection of children is more important than the well-being of prelates. Such a decision is worth more than a thousand speeches because it is costly for the members of the organization.

An executive from a large Italian company once told me that only after he fired an employee who had violated an internal rule did all others begin taking his directives seriously. Too often, company leaders make proclamations solely for the purpose of image. Employees know it and ignore them. Only when statements are followed by facts do employees begin to listen. From today on, the church’s war on pedophilia is not only a proclamation: it is a reality.

Too often, instead, in Italy, a false “good-heartedness” tends to prevail; many attribute it—erroneously—to Catholicism. Yet, the catechism of the Catholic Church clearly says that “freedom makes men responsible for their actions to the extent they are voluntary ones.” After all, the Lord holds Adam accountable—and punishes him—for his actions. He does the same with Cain.

 If our misplaced good-heartedness is not a Catholic byproduct—and Pope Francis clearly demonstrates that it is not—why is it so widespread in Italy? I am afraid the reason is much less noble. More than protecting simple employees, good-heartedness protects the top brass. If the principle of responsibility applies within an organization, it ends up being applied at its summit as well.

If laws and rules are enforced, the first who should follow them are the leaders. Pope Francis has nothing to fear: he, himself, is an example. But is the same true for the leadership of Italy’s large companies?

If the leaders of an organization are the first ones who fail to respect the rules, they have all the reason in the world to forgive, in order and in turn to be, themselves, forgiven. The more they operate by violating the law, the more they will show internal “good-heartedness.”

This is the most devastating result of our “worstocracy.” Italian companies would do well to mimic Pope Francis’s management style.

Luigi Zingales is Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance.

This essay first appeared in print, and is reprinted with permission from Il Sole 24 Ore.