Organizational Cultures of Corruption
Updated: Sep 8, 2020
The following guest post is by Alison Taylor.
My new issue brief, published by the Columbia Law School Center for the Advancement of Public Integrity, is based on extensive academic research, a review of primary data from FCPA investigations, and interviews with 23 expert integrity practitioners. The research aims to answer one simple question – what do corrupt organizations have in common? It seemed to me that any attempt to build more sustainable and ethical organizational cultures relies on understanding the answer to this question. I used approaches based on organizational psychology and behavioral ethics, combined with my own experience in corruption risk management.
My work provided a highly consistent, and revealing, set of answers. A full discussion is within the paper itself, but broadly speaking, the following organizational characteristics are likely to be indicators of an ethical problem:
Strategy: Growth is the primary goal, and all others are irrelevant; competition is high, and it is agreed that the ends justify the means. There is little regard for the ‘social licence to operate’.
Leadership: Leadership is complacent; diffuses accountability, opaque and arrogant. Information is hoarded –communication is restricted and top down. There is complacency, and a lack of engagement with business conditions on the front line – just enough to maintain plausible deniability.
Structure: High local devolution and autonomy combines with limited oversight. The group or team isolates itself, by design or circumstance. This isolation creates a sense of mystique.
Authority: Decision-making is strongly hierarchical and directive, with little consultation, and a strong sense of urgency and necessity. Leadership is high status and cannot be questioned.
Incentives: Incentives emphasize high pressure and high rewards. Discretionary bonuses and targets are unrealistic, set without regard to market conditions or risk.
Values and Beliefs: The workplace will hold a pervasive culture of fear, necessity, insecurity, powerlessness, and intense rivalry. The language is of war, games and sport. Corrupt processes are described with jokes and euphemisms, reflecting the need to create distance and reduce shame.
Norms and Behaviors: There is pervasive secrecy, defensiveness, and a lack of pride in the organization.
This research was conducted over a year ago, but recent events seem to definitively support its primary conclusions. It is still early days in the Unaoil investigation, but the massive leak of internal emails provide a treasure trove of information on organizational behavior and ethics. There is apparent evidence that Unaoil’s clients were driven by a sense of urgency, necessity and a desire to eliminate the competition – Leighton Offshore reportedly selected Unaoil because “ they have a plan to win and are hungry and can do the job”. Leadership in Unaoil seems to have been highly top down and directive, with all communications and decisions flowing through Cyrus Ahsani. Even more obvious is the use of code words, jokes and euphemisms to describe the corruption, with bribery referred to as ‘days available’, ‘holiday arrangements’ and ‘train times’.
While such data leaks have numerous dramatic implications for the future of transparency, not least is the opportunity they provide to ethics specialists to understand the intricacies of organizational cultures of corruption. It is a very exciting time to be working in this area, and I am now developing my research further, in tandem with tools to measure and improve organizational ethics.
Alison Taylor is the Director of Advisory Services for BSR (Business for Social Responsibility). Her bio can be found here. Also, here is a link to my video interview with Alison on “How Organizations Impact Corruption.”