How cronyism corrodes workplace relations and trust
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“Omertà — the code of silence” — says Steve Turner, searching for a way to describe what happens to organisations when cronyism takes hold.
In the mid-2010s, Turner was working on patient safety projects as an independent consultant to an NHS trust, a healthcare provider in the UK’s public health system. The work was rewarding, but some things bothered him. Nurses confided to him that they had been bullied for highlighting risks and comments that clinical incidents were not investigated thoroughly. On one occasion a governance team member pressed him to downgrade an amber risk warning. He refused.
After raising his concerns with various executives, he says the chair responded: “I don’t want to hear anything bad.” In 2014 he approached the Care Quality Commission (CQC), the sector regulator, which instructed the trust to undertake an external review. He says he has never been told what it concluded, either by the CQC or the trust, which stopped answering his emails. “There was a group of managers that stuck together rigidly around an unwritten rule that to progress they must protect the organisation’s reputation at all costs, regardless of patient safety,” he says.
When colleagues go back a long way, workplaces can resemble “a management club”, says Shah Qureshi, a partner at Irwin Mitchell, a law firm. He mentions an investment bank that hired a client of his to overhaul its HR and curb a tendency among some of its managers to cut corners. Yet, his client alleges that when she used the grievance process to complain that the bank’s chief financial officer had sexually harassed her, the leadership tried to oust her. “Many of the leaders had known each other socially and professionally for many years and moved across from other companies as part of a management team,” says Qureshi. When push came to shove, they stood together.
It is only natural for humans to ally for advantage and rally to the defence of friends. For our ancestors “providing benefits to pals [in] a constant tit-for-tat” was a survival mechanism, says Michael Bang Petersen, professor of political science at Aarhus University. Yet what made evolutionary sense for our forebears goes against modern ideals of equal opportunity and the practices of corporate governance — as Barclays discovered when, in 2016, a whistleblower accused its then chief executive Jes Staley of covering up the personal problems of a colleague and friend from his JPMorgan days. To support his ally, Staley tried to unmask the whistleblower, landing the British bank with a $15m regulatory fine.
The effects of workplace hierarchies closing ranks can blow back on organisations, splitting employees into in-groups afraid to challenge poor decisions and demoralised and resentful outgroups. When people who are willing to work for rewards suspect the system is rigged in favour of a particular clique, they may look for ways to get even, such as slacking off, studies suggest.
Just as our ancestry predisposes us to seek advantage through cronyism, says Petersen, it primes us to be “hyper-vigilant in detecting when others are enjoying an unfair advantage”.
There are plenty of tips on how to outsmart our crony instincts. Choosing recruiters that know how to find good candidates from marginalised groups and setting objective tests of ability can counter the instinct of higher-ups to sponsor younger versions of themselves. Practising putting ourselves in others’ shoes forces us to see past unhelpful stereotypes. But what if helping allies is not a blind spot that people fall into but a deliberate strategy?
While some companies “will absolutely hold themselves to account”, says Hina Belitz, an employment lawyer at Excello Law, others “sidestep the law” with settlement pay-offs and concoct diversity programmes to tick an audit box. To illustrate the dilemma, Belitz cites a client who “was left in no doubt her days were numbered” after she became the only senior female to have a child while working at a notoriously “macho” city firm. To avoid legal action, she suggested her employer finance her to study for a masters and the employer agreed — provided she left the business. Both sides moved on, but the company’s “boys’ club” survived intact and its women lost a role model.
Our instinct to collaborate also creates a potential for conflicts of interest. In 2015, the CQC made a routine inspection of the trust Turner had complained about. However, when the report appeared it made no mention of the 2014 review his complaint had triggered or what actions had resulted. Turner contacted a CQC inspection manager expressing disappointment and his opinion that the inspection process relied too heavily on poorly evidenced “reassurances of changes of behaviours” by trust leaders. A few years later, the inspection manager to whom Turner had complained moved to a senior governance post at the same trust. Turner does not allege impropriety. Yet, he says, his experiences have heightened his concerns that “regulatory staff may be too close to those they inspect”, and too ready to believe what leaders say.
The CQC said in a statement: “CQC inspections are thorough and methodical in approach, which includes gathering intelligence and feedback about the service and using it to challenge the provider on any areas of concern. To carry out their role our staff must demonstrate high standards of professional conduct and impartiality at all times.”
Anecdotes about staff switching from regulating organisations to working for them crop up widely. Less clear is how revolving doors affect the public. One argument is that regulators join organisations they admire, and companies hire regulators to gain knowhow. On the other hand, there is suspicion that regulators with an eye on well-paid career opportunities may judge prospective employers leniently. A 2018 working paper by the National Bureau of Economic Research, which analysed 1m US patent applications, found examiners granted significantly more patents to organisations that later hired them. The researchers saw this as suggestive of “regulatory capture” — protecting the interests of regulated organisations — though not collusion.
Even a suspicion of cronyism can sow discord. “For people to believe outcomes are fair they have to believe the process by which they are achieved is fair,” says Blaine Landis, an assistant professor of organisational behaviour at UCL School of Management. In other words, if an opaque process produces a good appointment then people will still cry foul, as arguably happened when the well-connected, but also able, venture capitalist Kate Bingham was made the unpaid head of the UK Vaccine Taskforce by prime minister Boris Johnson. But, if lack of transparency fuels allegations of underhand dealings, are there better alternatives?
To tackle systemic unfairness, Belitz suggests empowering a statutory body “to compel organisations to engage in confidential mediation”. Focused on achieving fair and proportionate settlements, the body would probe organisational culture and, where there were problems, call for improvements. That could make sense. As Petersen puts it, “when we know others will be able to scrutinise our work, we feel more motivated to fight our biases”.
For public bodies, the best scrutineers could be the public itself, suggests Turner who argues for appointing patients to healthcare boards as non-executive directors. Management insiders would no doubt grumble. But, with mentoring and support, lack of experience need not be a bar. It might even be an asset that changes how decisions are made. “Some of the things said in board meetings simply wouldn’t be said if patients whose lives depend on services were present,” he says. “Boards would have to think much more carefully about what they’re saying and planning — it would bring something extra to the table.”