How do we get past this?

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 from 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 few days 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 heard the price he quickly recomputed it (without apologising) and said it would be the same as last year.

Now my guess is that probably quite a few customers can’t be bothered to check last year’s premium and automatically renew. Personally, I think the company’s behaviour is verging on the criminal. Imagine if I was leaving a shop and the shopkeeper tried to overcharge me by 30%.

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 that shopkeeper retain my trust?

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 large compensation packages even while their employees are behaving in ways that 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 – “this is just the way it is in this industry”.

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 for the idea 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. It feels wrong; but the fact that everyone else is telling you it’s right makes it harder to put a name to it.

Of course, businesses that are institutionally corrupt will lose loyalty in the long-run, especially in a social-web-enabled world. My insurance company has already lost mine.

But how do we get beyond this – to a better world?

Pete wrote this on 07.07.10 – 1 comment
It's filed in the Accountability, Behaviour, Culture, Institutions, Mistakes, NixonMcInnes box