Macroeconomics

The case about Jerome Kerviel and the firm Socit Gnrale should provoke you to think about how incentive structures can fail, but even worse, how incentives provide strong signals to your employees about what you believe in and what is important to your firm (i.e. company culture).Your response to this case study should focus on what was happening at Socit Gnrale and what caused the company to lose $7.14 billion. It is obvious that the three legs of the organizational stool (i.e. allocation of decision rights, incentive systems, and performance evaluation systems) were imbalanced, but how did each of the legs of the unbalanced stool affect the outcome. Furthermore, the incentives system at Socit Gnrale seemed to create cultural issues within the firm that were suggestive of an Economic Darwinism effect, how did this culture seem to affect Jerome Kerviel?

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