Bad barrels or bad apples? The three root causes of corrupt cultures

29 March 2018 -

The Australian cricket team. The Weinstein Company. Why do crime, corruption and toxicity occur, even thrive, in some organisations, but not in others?

Why do some people turn a blind eye to, even attempt to cover up, illegal and immoral behaviour at work? Why are some organisations beset by what is called “counter-work” behaviours while other are comparatively free of them?

There are, essentially, three causes of corrupt cultures.

1. Bad people

Three types of factors are usually involved. The first is bad people – morally bad people: bullies, psychopaths, and the like. Those who are essentially Machiavellians. They harass, manipulate, cheat, steal, and often get away with it. Their greed and lack of conscience enables them to act with impunity.

Organisations favour this “bad apple” explanation as it finds fault with specific individuals. That is, when corruption and bad behaviour is discovered, it is much easier to pin the blame on a few bad apples: those who were alas mistakenly selected or promoted. It is much more difficult to admit the fault (dear Brutus) lies in the corporate culture.

It is possible to distinguish between active corrupt behaviour and passive corrupt behaviour. The former refers to deliberate and active participation in the corruption as the perpetrators/accomplices. Passive refers to employees tolerating the corruption as silent observers.

2. Bad management

The second factor is poor management. People have expectations and experiences of bad management. They develop overtime a psychological contract – an emotion-laden concept that captures the nature of the implicit exchange between worker and organisation. All workers are sensitive to unfairness and to bullying. They may try to take revenge before leaving. Organisations do not like these explanations for why people do bad things in organisations. They would prefer to blame the individual: the bad apple rather than the bad barrel, namely the organisation. 

Alternatively, supervisors may condone or even encourage theft and other forms of corruption. This may occur because of parallel deviance or passive imitation: people follow the lead of their bosses who they notice abusing the system. If the supervisor calls theft ‘a perk’ so do the staff.

3. Bad culture

The third factor is corporate culture: the well-established patterns of beliefs and behaviours that are in fact corrupt. Some people cheat at work because cheating is the norm. In their job they may be able to cheat customers, the taxman, and the company. They may receive bribes – called tips, or favours, or thank yous.

Corporate culture is a pattern of prescribed behaviour that most people in the organisation follow. And these cultures can be ‘sick’ in every sense of the word.

In many cases, an organisation either turns a blind eye or encourages bad behaviour because it is an alternative source of pay. Frustrated supervisors, unable to reward materially their hard-working staff, may quite simply put in place a system that provides rewards: stock may be removed and charged to customers; days off are approved, or sick days become a perk of the job. This is the “bad barrel” thesis.

So what causes a bad culture?

There are two internal antecedents of organisation-level corruption. The first is organisation structure: this provides opportunities for isolating sub-units allows managers to be ‘wilfully blind’. Compartmental insulation limits exposure, making it more difficult to reveal corruption. The more decentralised a company, the more managers will engage in behaviours to make them look impressive at board meetings.

The second is results orientation. This could include performance emphasis, incentive systems and pressure for performance/output. When these systems are in place, low-performing units are likely to engage in corruption. Equally those organisations where compensation is not strongly linked to business results, the high performers may experience injustice and are more likely to act corruptly to redress the experienced inequality.

Similarly there are two external antecedents of organisation-level corruption. The first has been called environmental scarcity. Competitive pressures are the most important external pressures for organisational crime through the need to acquire resources and meet targets. In high-profitability or monopoly industries with weak control/monitoring over expenses, employees could adopt a ‘denial of injury’ technique of neutralisation in which they feel the company has so much money, stealing will not do any harm.

Second there is industry structure and norms. Organisations in certain industries are more likely to commit corrupt acts where other firms in an industry have similar rates of corruption. In highly regulated industries, regulators may be bribed to ‘look the other way’ or an agency may decide to protect the organisation it is overseeing. Industry norms (also known as industry culture) are taken-for-granted assumptions that most describe a cohesive industry’s character.

Are individuals or the organisation to blame?

It is possible to distinguish between corrupt organisations and an organisation of corrupt individuals. This involves the scaling up of personally beneficial corrupt behaviours to organisational level, or a group of employees carrying out corrupt behaviours on behalf of the organisation. An organisation of corrupt individuals will have people acting for personal gain at the expense of the organisation, yet a corrupt organisation will have groups collectively acting in order to benefit the organisation.

What is more common?

We know quite a lot about business corruption. It is true that bad people (psychopaths, Machiavellians) do bad things on their own. Psychologists have, quite rightly, been accused on pathologising individuals and neglecting to understand the social forces acting on them. There are Bad Apples and many high-profile examples of them.

But the research suggests that the “Bad Barrels” thesis is usually a better explanation for counter-work behaviours. As we have seen there are many social and organisational factors that appear to promote counter-work behaviours, and workers seemed rather skilled at disengaging their moral sensitivity and rationalising what they are doing.

Adrian Furnham is a business psychologist and author of 80 books and 1,000 scientific papers. He is an adjunct professor at the Norwegian Business School. Find his website here.