Liars and Outliers (22 page)

Competing societal dilemmas represent the normal state of affairs. Rarely is the real world so tidy as to isolate a single societal dilemma from everything else. Group interests are often in conflict, and cooperating in one necessitates defecting in another.

Nepotism is a problem in many organizations: companies, governments, and so on.
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For example, President
Ulysses S. Grant
found jobs for many of his relatives. He appointed his brother-in-law as minister to Denmark, his cousin as minister to Guatemala. Another brother-in-law was made counsel to Leipzig, and a third became the White House usher.

It's a pair of societal dilemmas. Grant was a citizen of the United States, and bound by its laws and customs. He was also a member of his own family, and endeavored to further its interests.

Other examples of competing societal dilemmas include:

• A politician who is a member of a political party and also a resident of the district that elected him.
  
• An employee of a department who is also an employee of the whole corporation.
  
• A corporate employee who is also a member of a union of workers of that corporation.
  
• Someone who is an employee of Company A working as a contractor to Company B. Or, similarly, someone who is an employee of Defense Contractor A working for the military of Country B. Think of employees of private security firms working for the U.S. military in Iraq.
  
• A schoolteacher who is both a member of a teacher's union and a parent who sends her children to the school she teaches at.
  
• Married lawyers representing opposing parties,
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  or judges related to lawyers appearing before them.
  
• Legislators who have worked for companies they write laws to regulate, or who expect jobs with those companies after their legislative careers.
  
• Multiple people serving on the boards of directors of the same corporations, known as an
  interlocking directorate
  .
  

Some of these competing groups are nested, meaning that the members of the smaller group are all also members of the larger group. Others are overlapping, meaning that only some members of each group are also in the other group.

Most instances of competing interests are not societal dilemmas, and many are not relevant to security. That voter who lives in one district and votes in another will have to balance her competing interests when voting, but there are no security implications. That changes when the members of one group are expected to conform to some norm, and the members of the other group are expected to conform to some conflicting norm.

Another way to view moral interests is as a group interest. We are all part of the group of “everybody,” whether we define it as society as a whole, the human race, all life on this planet, or whatever. Many people associate morals with the responsibilities arising from that group membership. Relational ethicists do this at all scales, but the moral concepts of “universal justice” and “human rights” are implicitly connected to membership in the human race. People differ on what those terms mean, of course.

When multiple groups have competing interests, it can feel like a battle to see which group has a stronger tie with the individual. Often it's the smaller, more intimate group. This is by no means definite—people don't blindly commit crimes just because their friends are doing so—but it is a tendency. In general, it takes more societal pressure to get someone to defect from a smaller group interest in favor of a larger group interest than it does to get someone to do the reverse.

Think of the societal dilemma that someone who is a member of society as a whole and also a member of a criminal gang might have about cooperating with the police. There are benefits to being a member of society, and there are also benefits to being a member of the criminal gang—especially for people who live in dangerous communities in which the police offer little protection, or even pose an additional threat. Defecting from the broader society is a whole lot easier than defecting from a tight-knit and violent gang. And as long as the criminal gang maintains social ties that are stronger than those of general society, members are more likely to cooperate with the gang than with society in general. This sort of dynamic plays out in organizations as diverse as corporations and terrorist organizations. Such organizations want their members to have a stronger loyalty to them than to society as a whole.

Benefits of group membership are important. In Chapter 12, we'll talk about instances where employees cooperate with their employers in breaking the law—defecting from society as a whole. It can be hard to go against your boss, even when you know that the company's actions are wrong. The benefits of being part of the group—things like the reputational approval of your colleagues and a continued paycheck—are powerful motivators to cooperate with the organization.

Over the millennia, we have developed a variety of measures that enhance group loyalty: initiation rites, rituals, shared markers of group membership, and so on. We talked about these in Chapter 8, as societal pressures to ensure commitment. When there are two groups in opposition, these measures become even more important.

It's not just formal organizations. When
Larry Froistad confessed
to killing his daughter on an online support group, Lisa DeCarlo alerted the authorities. She was vilified by the other members of the group.

Police solidarity
provides another example. Called the “Blue Wall” or the “Blue Code of Silence,” it can be very difficult to get police officers to incriminate each other. For example, during the Toronto G20 Summit meeting in 2010, several witnesses reported a
policeman beating
a protester. The officer was eventually identified. During the investigation, however, a pretty good photograph of the then-anonymous policeman was shown to his fellow officers, and no one admitted being able to identify him, including eight policemen who were in his immediate vicinity during the incident, and one who was his roommate during the summit.

A huge variety of informal groups can have competing interests in societal dilemmas: social groups, ethnic groups, class groups, and racial groups; and there are many societal dilemmas that involve protecting the rights of minorities.

Families are filled with competing interests. Do you save money for your child's college tuition, or do you help your aging parents with their medical expenses? Do you side with your spouse or your parents? After your parents divorce and one of them remarries, who do you spend holidays with? If you are close friends with both members of a couple and you find out one of them is having an affair, do you tell or remain silent? When your father's driving skills begin to deteriorate, do you take away his car keys? Sometimes security is at stake in family situations: if your parents abused you as a child, do you let your children sleep over at their house? In such cases, the societal pressures are primarily informal: morals and reputation. Only for extreme cases of abuse, or very dysfunctional families, is the legal system brought into play.

Since individuals are members of multiple competing groups, there are often redundant or conflicting societal pressures operating simultaneously. The societal pressures for one group don't always transfer to the other, and the pressures invoked at any time depend on the group that is being secured.

For example, the rules about what you can do in your family are different from the rules about what you can do out in the real world. We don't call the police if one of our children steals from the other, just as we don't call a burglar's parents if we catch him breaking into our house. Sometimes incidents of employee misconduct are dealt with by the corporation, but sometimes the police are called in. Groups of nations have their own organizations to call upon to deal with rogue nations. It all depends on scale.

When the scale changes, it can be confusing to know which rules to follow. We see this in schools, where some teachers and principals have begun calling the police for infractions that they previously would have called parents about. The scale has increased; the rules for dealing with these infractions are more often coming from the school district or larger community than from inside the classroom. This means the more informal moral and reputational systems stop working, and teachers feel the need to shift towards an institutional model. In general, as the size of the group grows, more formal societal pressures are required. And switching scales is messy, because the new systems are unfamiliar and often require new ways of thinking, and initially aren't good enough to work well.

In the next three chapters, we're going to talk about societal dilemmas surrounding organizations: both dilemmas facing groups and dilemmas within the groups. First, we'll talk about organizations in general, and then about specific types of organizations: corporations and (primarily government) institutions. We're going to see a lot of competing interests and societal dilemmas, and some pretty complicated societal pressures.

Chapter 12

Organizations

So far, we've been talking primarily about how societal pressures affect individuals. Organizations—groups as small as several people and as large as hundreds of millions of people—also behave as individual actors. These organizations can be part of larger groups, just as individuals can, and those groups have group interests and corresponding group norms that affect those organizations. And just as Alice has to decide whether or not to steal, break a contract, or cooperate with the police, so do organizations.

It can be hard to think about organizations as a collective object. We often use individual metaphors when we talk about groups, and that results in us trying to use our understanding of individuals when we try to understand groups. We say things like “al Qaeda hates America,” “Google is trying to control the Internet,” and “China wants a strong dollar” as if those groups could have psychological states. It's metonymy, and while there's value to these generalizations, they also have their hazards. We're going to try to navigate those hazards.

Organizations are of course made up of individuals, who bring with them the sorts of societal dilemmas we've already discussed: both the dilemmas between the organizational interest and the individual's own competing interests, and the societal dilemmas that come from the individual being a member of the organization and a member of society as a whole. But we often treat organizations as if they actually were individuals, assuming that societal pressures work on them in the same way they do on individuals. This doesn't work, and results in some pretty bad trust failures, and high scopes of defection.

Organizations' competing interests include:

• Selfish interest.
  Organizations can have selfish interests, just like individuals. Depending on the organization, it might be profit, power, authority, influence, notoriety, or some combination of those things.
  
• Self-preservation interest.
  Organizations have strong self-preservation interests. They want to survive, just like individuals.
  
• Ego-preserving interest.
  Organizations have an analogue of self-image, and do things to preserve that image. For example, some organizations have a mission statement and go to great lengths to make sure their actions are consistent with their words. (Google's “don't be evil” motto is a good example.) Some organizations have particular reputations they want to preserve, for being honorable, ruthless, quick, and so on. Other organizations take pride in their geographic origins or in how long they've been in business. Still others have charitable foundations.
  
• Other psychological motivations.
  Organizations don't have psychologies, but they do have cultures. Examples are the not-invented-here syndrome, where companies become reluctant to adopt solutions from outside the organization; a “CYA,” or “cover your ass” mentality, which predisposes an organization towards some solutions and away from others; dysfunctional communications, which lead to defection at one level that other levels don't know about; a caste system that can breed resentment in one group and lead to sabotaging behavior; or a skunk works dynamic, where a group inside the organization operates autonomously and in secret for a while.
  

Organizations also have competing group interests with other groups: rival organizations; groups of organizations, such as industry associations or geographical chambers of commerce; or society as a whole. Multinational organizations have potentially competing interests with a variety of countries.

An example of organizational interest is the March of Dimes. It started out as an organization to raise money to fight polio. After the polio vaccine was developed and polio almost eradicated, the March of Dimes didn't have a big party and wind up its accounts. Instead, it reconstituted itself as an organization to prevent birth defects in general, which should keep it going roughly forever.

Even though organizations have interests, the societal pressures we've already talked about work differently on organizations than they do on people.

• Moral pressure.
  Organizations are not people; they don't have brains, and they don't have morals. They can have group interests that are analogous to morals, though. Charities can have lofty mission statements, and a corporate mission statement like “don't be evil” is effectively a moral.
  
• Reputational pressure.
  For groups, reputation works differently than for individuals. Organizations care about their reputation just as individuals do: possibly more, due to size. They also have more control over it. Organizations can spend money to repair their reputations by undertaking advertising and public relations campaigns, making over their images, and so on—options that are simply unavailable to most individuals. On the other hand, because organizations are larger, their reputations are more valuable, and can be significantly harmed by the actions of a few of its members.
  
• Institutional pressure.
  Laws can be effective, but organizations cannot have sanctions imposed on them the way people can. They can't be put in jail or executed. In the U.S., there are occasional instances of physical-like punishments to corporations—the breakup of Standard Oil in 1911 comes to mind—and sometimes political parties are outlawed, such as Iraq's Ba'ath party in 2003. In extreme cases, individuals within organizations are jailed in punishment for organizational activity, but those are exceptions. Sometimes organizations are prohibited from certain actions by law as a punishment. For the most part, however, financial penalties are the only sanctions organizations face, which leads to all the issues of financial interests taking precedence over other moral interests we talked about in Chapter 9.
  
• Security systems.
  Security works differently against organizations than it does against people, primarily because they're
  not
  people. For the most part, security works against individuals inside the organizations rather than on the organization as a whole.
  

Organizations can be actors in all of the societal dilemmas discussed above. They have to decide whether to cooperate with the police and defraud people they do business with. They are affected by societal pressure. In addition, though, people within organizations have their own societal dilemmas with the organizations.

An example:
Carol Braun was
described as a “dedicated, dependable, competent and conscientious” 27-year employee of Goodwill Industries of North Central Wisconsin. She must have had some pretty good skills at reputation management, because over seven years, she used her position as comptroller to embezzle more than half a million dollars. Her actions were discovered when auditors found a $77,000 discrepancy and conducted a comprehensive fraud investigation. Braun pleaded no contest to a single charge of embezzlement in 2003, and was sentenced to five years in prison and another five years of extended supervision. Braun's actions resulted not only in significant financial loss to the Wisconsin Goodwill, but also in financial loss to her colleagues, whose pay had to be cut to make up the budget shortfall, and reputational damage to the agency.

That's a particularly egregious example, but organizations teem with societal dilemmas. We often don't notice them because we're intuitively adept at dealing with groups of people. We understand hierarchies and authority, and the difference among superiors, colleagues, and subordinates. We're facile at office politics because we've evolved to deal with social groups. But the societal dilemmas are still there, and sometimes it only takes a little nudge to bring them to the surface.

Every employee of an organization is faced with a societal dilemma: should he do what he wants, or should he do what the organization wants him to do? Stripped of context, it looks like this:

In economics, this is known as the
principal–agent problem:
the principal (in this case the organization) hires an agent (the employee) to pursue the principal's interests, but because the competing interests of the principal and the agent are different, it can be difficult to get the agent to cooperate.

Defection isn't all-or-nothing, either. Defections can be as diverse as coming in late, not working very hard, venting, whining, passive-aggressive behavior with coworkers, stealing paper clips from the office supply closet, or large-scale embezzlement. Remember the employee traveling for business from Chapter 10. He can cooperate with the organization and limit his expenses, or he can put his own self-interest first and spend wildly—or anything in-between.

We've all had experience with these sorts of defectors. Whether it's company employees, government employees, or members of any type of organization, there are always people who simply don't do the job they're supposed to.

There's another kind of defecting employee: someone who doesn't think of his employer's best interest while doing his job. Think of the officious employee who cares more about the minutiae of his procedures than the job he's actually supposed to do, or the employee who spends more time on office politics than actually working. The comic strip Dilbert is all about the dynamics of defecting employees and their defecting managers.

The fact that organizations almost never stop functioning because of defecting employees is a testament to how well societal pressures work in these situations. Organizations pay their employees, but there's a lot more than just salary keeping people doing their jobs. People feel good about what they do. They like being part of a team, and work to maintain their good reputation at work. They respond to authority, and generally do what their superiors want them to do. There's also a self-selection process going on; companies tend to hire and retain people who set aside their personal interests in favor of their employer's interests, and individuals tend to apply to work at companies that share their own balance between corporate and personal interests. And if those incentives aren't enough, corporations regularly fire employees who don't do what they're paid to do—or employees quit when they don't like their working conditions. There are also other financial incentives to cooperation in the workplace: commissions, profit sharing, stock options, efficiency wages, and rewards based on performance.

The poorer the job is—the less well-paying, the less personally satisfying, the more unpleasant, etc.—the more restrictive the security measures tend to be. Minimum-wage employees are often subject to rigorous supervision, and punitive penalties if they defect. Higher-level employees are often given more latitude and autonomy to do their job, which comes with a greater ability to defect.

This means that the ability to defect, and the stakes of defection, generally increase the higher up someone is within an organization. The overall trade-off is probably good for the organization, even though the occasional high-ranking defecting employee can do more damage before being discovered and realigned or fired than some misbehaving staff on the bottom rung. A senior executive can modify the organizational interest to be more in line with his own. And since he is in charge of implementing societal pressures to ensure that employees act in the organizational group interest, he can design solutions that make employees more likely to cooperate while still leaving him room to defect. He can build in loopholes. Additionally, because he can implement societal pressures to limit defections among the other employees, he can minimize the Bad Apple Effect that would magnify the adverse effects of his defection to the organization. In extreme cases, a CEO can run the company into bankruptcy for his personal profit, a ploy called “
corporate looting
” or “control fraud.” His power makes it possible for him to impose his personal agenda on top of the organizational agenda, so the organization becomes—at least in part—his personal agent.