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Institutional corruption?

5 Comments

Remember institutional racism?  This term was coined in the 1960s in the US and widely adopted in the UK in the 1970s to describe a situation where an entire organisation, rather than just one or two individuals within it, collectively fail a particular group of people because of their colour, culture or ethnic origin. In the UK the term was used to describe the police after a number of high-profile events such those at the Brixton riots, Broadwater Farm and so on.

The idea is that, at least to some extent, the inappropriate behaviours and attitudes of individuals are so widely adopted within the group that they become social norms. Because they are so prevalent, no one questions them. Of if they do question them, their questions fall on deaf ears.

I guess it’s another example of group conformity in action.

Sometimes I wonder whether some organisations today suffer a form of institutional corruption. We all know the extreme examples: Enron, BCCI, Satyam, and so on. Companies where, ultimately, criminal behavior crashed the companies to the ground.

But isn’t corruption sometimes more subtle, and more pervasive?

A while ago, and this is going to begin to sound like an episode from Money Box, my insurance company sent me a renewal notice for my household insurance. Something made me check – and I discovered that they had increased the premium by 30% compared to last year.

When I called them, as soon as they heard the problem was “price”, they put me on to their “loyalty team”. When the salesman (sorry “loyalty consultant”) heard the price he quickly recomputed it and said they could offer the same service for a 0% increase instead.

Now my guess is that probably quite a few customers can’t be bothered to check what last year’s premium was and just renew automatically. Personally, I think that is pretty dubious behaviour for a business. Imagine how I might feel if I went into a shop and they tried to short-change me by 30%?

Wouldn’t I right to be aggrieved? Might it even be fraudulent or criminal?

When I enter into a relationship with a company I expect to be dealt with honestly – I want to trust that company and have them reward my trust. Would the shopkeeper who short-changed me by 30% retain my trust?

So going back to the idea of institutionalised behaviour, is it possible, then, that an entire company can be institutionally corrupt?

Is it possible that the salesman thinks of his role as an upstanding member of the “loyalty” team – when actually he’s in the “covering up our corruption” team?

That his managers and others in the company think that this kind of behaviour is so normal that it’s “commercial best practice”?

Is it possible that even the senior management and the CEO are so institutionally blind that they believe it right and proper to accept favourable compensation packages even while their employees are behaving in ways that are dubious or verge on the criminal?

Could this institutional corruption extend beyond the company to the whole industry? To other companies? To its regulators? To the media? Sometimes there’s not a critical voice to be heard, anywhere, of what some might think are corrupt practices – “this is just the way it is in this industry, it is just the norm”.

When the UK police were accused of institutional racism I can still remember the confused, questioning voices from their representatives: “You can’t be talking about us? We’re not racist”. It took a long, long time to really sink in.

The irony, is, of course, that as with the police force, or any other organisation, the public recognise this institutional racism, or corruption, or whatever it is, much sooner than those inside the organisation.

It feels wrong. But often the fact that everyone else is telling you its right makes it harder to put a name to it. It requires bravery to stand up and make that kind of statement.

Consciousness, even?

But businesses that are institutionally corrupt will lose customer loyalty in the long-run. My insurance company has already lost mine.

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Author: Pete Burden

Strategy, Leadership and Organisational Coach I am an experienced strategy, leadership and organisational coach. I work with the MDs of purpose-led businesses - people using the freedom, flexibility, and practicality of business to disrupt the world in positive ways.

5 thoughts on “Institutional corruption?

  1. Aha! Synchronicity strikes again…and no, you are not alone. The very same thing happened to me just last week, all the way down here in South Africa. Insurance company, price bumped up by similar percentage in the new year, upon phoning to challenge the premium was actually *decreased* to less than it was last year!

    This smacks of institutional corruption. All the points you mention are true and valid, I would wager. Is this an industry-wide practice of insurance companies? I now imagine someone on the Board in South Africa saying, “I heard this great idea from the UK; bump up their premiums by 30% and only if they phone to query do we bring them down. Most people won’t notice, so we’ll make more money on balance.” And then all the other Board members clap each other on the back and say what a brilliant idea to pay themselves even more at the expense of the customer.

    Trust – zero. Customer focus – zero. Credibility – zero. Conscious business – double zero.

    I’ve just finished reading the IBM CEO survey for 2011. Second biggest issue on CEOs’ minds the world over, after complexity, is getting super close and intimate with the customer. These two insurance companies haven’t got a clue.

  2. So: what happens next? Do I: 1. Take the 0% increase and stick with the ‘devil I know’? 2. Take my business elsewhere – to a new ‘devil’? 3. engage with the company – write to the CEO/ chairman to evoke change? 4. Write to the trade body to raise awareness? 5. Write to the trading standards officer to complain and punish?
    All this takes time and energy to consider and move to action; and time and energy away from my business and my life. My open question is how can I keep my integrity whilst knowing I could do more to change damaging behaviour in others but instead focusing on my own priorities?

  3. I wonder whether framing this as ‘institutional’ corruption in part lets the organisation off the hook? Certainly the behaviour/pattern fits the definition of corrupt, if by corruption you mean “dishonest or fraudulent conduct by those in power”. It may be a symantic point, and I suspect framing this as systemic corruption is both more accurate, and places the responsibility both with the organisation as an entity (system) and the agents (people) within that system. If we do that, the possibility emerges of inquiring into what the Simple Rules are that drive the behaviour, and they may – or may not – be conscious.

    So to take the example of the Met Police again, the system itself professes to abide by Simple Rules that support it to be fair/just/unprejudaced, in reality there appear to be Simple Rules at play that support actual behaviour of some of the people within it. Certainly there is a pattern of abuse of particular groups that keeps breaking through.

    I also wonder whether it is true that those inside an organistation are that oblivious as to what is happening. My experience is that if you get people to inquire into what Simple Rules are actually at play, given the space and safety to do so, they will name them, including the dysfunctional ones.

    And I feel your pain, Pete 🙂

    Steve

  4. I think the point you make is a very good one; ‘corruption’ seems to steep itself into both the fabric of the organisation and the wider industry until it becomes un-noticeable to the people there. It only seems odd or outrageous to us on the outside that are affected by their behaviour (or lack of). I wrote about this from a different angle a few weeks ago, that of redefining Groupthink. Just as the Macpherson Report coined the phrase Institutional Racism, we need to do similar for Institutional Corruption and I think Groupthink is a useful place to start. Only when it hits people conscious can there be joint action to address it.

    Rob

  5. Pingback: The Sustainability Opportunity « Conscious-Business.co.uk

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