Broken Business

STEP 5 – STRENGTHEN STRUCTURES TO PREVENT, DETECT AND RESPOND TO MISCONDUCT

The best time to plant a tree was 20 years ago. The second best time is now.

—Chinese proverb

We have discussed the tendency of companies in an ethical crisis to assume that their problems were caused by a few so-called ‘bad apples’, and of corporate leaders to distance themselves from these rogue players. We have noted why this thinking is misguided. As we saw in Parts II and III, the roots of corporate misconduct are considerably more complex than the ‘bad apples’ view would suggest, as they arise from unavoidable psychological and sociological factors, the corrupting effect of unchecked power, and the inevitable pressures of financial markets and capitalism.

The research shows us that these systemic conditions can have very damaging effects on an organization. For example, they can:

• turn good apples bad;
• enable bad apples to rationalize their bad behaviour and believe they are doing nothing wrong; and
• reward bad behaviour and help create an environment within a company where the most powerful and creative of bad apples are empowered to set its tone.

In other words, no one is truly immune from becoming a bad apple. And, more often than not, it is a tainted barrel – that is, the overall context, culture, and incentives of the organization – that corrupts the apples within. It is critical to understand this because falling for the tired ‘bad apples’ myth leads to inadequate remedies when issues of ...