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