Friday, July 11, 2008

Public versus hidden faces of organizations

Think of a range of complex organizations and institutions -- police departments, zoning boards, corporations, security agencies, and so on indefinitely. These organizations all have missions, personnel, constituencies, and policies and practices. They all do various things -- they affect individuals in society and they bring about significant social effects. And, in each case there are at least three aspects of their realities -- the ways they publicly present themselves, the ways their behaviors and effects are perceived by the public, and the usually unobservable reality of how they actually behave. Usually the public persona of the institution is benign, fair, and public- spirited. But how close is this public persona to the truth? In many of our basic institutions, the answer seems to be, not very. We are daily confronted with cases of official corruption, corporations that abuse their power, legislators who take advantage of insider status, and the like. So how can we conceptualize the task of getting a reasonably accurate perception of the hidden workings of our major institutions and organizations?

First, let's consider whether it is possible to specify a minimum charter of good organizational behavior in a democratic society. This would be a partial answer to a part of our question: what defines the conditions of a socially acceptable and publicly defensible organization? Consider these aspirations --

  • The organization should have goals that are compatible with enhancing the public good.
  • The organization should have appropriate policies about behavior towards employees and the public.
  • The organization should genuinely incorporate a commitment of compliance to law and regulation.
  • The corporation should embody a faithful commitment to exerting its efforts on behalf of its stated mission and stakeholders.
  • The organization should be committed to transparency and accountability.

Bad business practices and corruption can often be traced to a violation of one or more of these principles. The most offensive practices by powerful organizations -- predatory behavior, asset stripping, the use of coercion and threat to achieve organizational goals, fraud, deception, illegal behavior, toxic waste dumping, evasion of regulations, and bribery -- all fall within the categories identified here.

So how are we to determine whether our existing organizations and institutions satisfy these minimal conditions? We might imagine a routine "scan" of major institutions and organizations that asks a small set of questions along these lines:

  • What are the real operational goals and priorities of the organization?
  • What are the operational policies that govern corporate action?
  • How do agents of the organization actually treat members of the public in carrying out their tasks?
  • To what extent are there discrepancies between policy and practice?
  • To what extent do powerful leaders and managers use their positions to favor their own private interests? (conflict of interest)
  • To what extent do business crimes occur -- accounting fraud, investor deception, evasion of regulations for health and safety?
  • And, most generally, to what extent is there a discrepancy between the official story about the organization and its actual practices?

It is very easy to think of examples of bad organizational behavior illustrating each of these questions -- waste management companies fronting for organized crime groups, pharmaceutical companies producing defective generic drugs, police officers accepting bribes from speeding drivers, mining companies hiring "security workers" to evict "squatters." And it would be a very interesting exercise to try to provide brief but accurate answers to each of these questions for a number of organizations. Based on the answers to questions like these that we are able to establish, we could then make an effort to answer the question of how great a discrepancy there is between the benign public persona of major institutions and their actual workings.

In theory we might say that answering these questions is no more difficult than putting a man on the moon -- costly but straightforward. However, as was said twenty years ago in the context of anti-ballistic missile technology, the difference is that the moon doesn't fight back. Organizations -- particularly large governmental and corporate organizations -- are very adept at covering their tracks, concealing bad behavior, and re-telling the story in their own interests. So the investigative challenge is a huge one -- we might speculate that corruption multiplies geometrically, while investigative capacity multiplies arithmetically (a sort of Malthusian theory of misbehavior). Any given abuse can be uncovered in the New Yorker or on the 6 o'clock news -- but bad behavior outstrips investigative resources.

So the task of understanding this aspect of modern society amounts to finding effective ways of shining a light on the real practices and priorities of important organizations and institutions. And the practical interest we have in controlling bad organizations -- controlling corruption, ensuring good environmental and labor practices, eliminating coercion and violence -- comes down to the challenge of enhancing the ability of democracies to investigate, regulate, and publicize the standards and outcomes of behavior that are required.

(Earlier posts have addressed aspects of this issue, including comments on corruption and publicity.)

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