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Organizational Culture

The science behind collective lying: How and why employees cheat

Roxanne Bauer's picture

It’s well understood that everyone has the capacity to be dishonest and almost everyone cheats— even if it’s just a little. Sometimes we fill our water cups with soda, we take the pens from the credit union, or we may speed when we’re running late. But what is going on when institutional deception, involving multiple people, occurs?

As most of us are now aware, Wells Fargo recently received a $100 million penalty from the Consumer Financial Bureau of the United States after it was uncovered that its employees were engaging in illegal banking practices. This brought the bank's total bill for these infractions to $185 million and coincided with the firings of about 5,300 Wells Fargo employees. According to reports, the 5,300 employees who were allegedly involved secretly issued credit cards that customers never requested, set up fake bank accounts that resulted in customer fees, created fraudulent email accounts to sign up customers for additional services, and actually transferred customers' money between accounts— without permission.
 
Such an outrage might remind you of the Volkswagen scandal last year in which the German car manufacturer admitted that it had used sophisticated software to trick emissions regulators. If a car was being tested, the emissions controls would operate as they should, but if the car was not undergoing a test, the emissions controls would switch off, resulting in cars that emitted 40 times the legally sanctioned levels of air pollutants.  Volkswagen has since has admitted that 11 million vehicles worldwide were equipped with the program that duped emission testing and had to recall a total of 8.5 million diesel vehicles in Europe alone.
 
How in the world did that many people get involved with such unscrupulous behavior? How could over 5,000 Wells Fargo employees engage in such obviously deceptive and fraudulent behavior? And how could so many Volkswagen employees, from software technicians to senior management, go along with blatantly circumventing the rules? How does a group of people end up lying together?

Establishing Norms in Large Organizations (Or: How to Win the Turf War)

Anne-Katrin Arnold's picture

Wharton Professor Galit Sarfaty just published a paper on changing norms in international institutions, using as an example the advance of the human rights agenda in the World Bank. The study describes the process of how new norms are adopted - or not - in large organizations and how different factions negotiate their positions. It's well worth a read and spells out the difficulties of reforming organizations and establishing new norms.