Volkswagen and Weber

A huge scandal has erupted in the United States – but with global consequences – about the German car company Volkswagen. In brief, it has been revealed that VW installed software so that their diesel cars would meet emission targets when being tested, but when in actual use emissions were way greater than permitted.

We don’t yet know the full details of how and why this happened but, for sure, it is an organizational story, and one which well-illustrates some of the core arguments in my book. In particular, I make a lot of use of the distinction, derived from Max Weber’s work, of formal and substantive rationality (introduced pp. 21-25) and the various ways that this sets up conflicts and contradictions in organizations, including goal displacement (where following a formal regulation becomes an end in itself, forgetting the substantive purpose of the regulation).

I go on to say that these “are not anomalies and anyone who works in an organization or reads the news will know how pervasive they are” (p.30), and give a couple of examples. One was from education, and the way that faced with a target designed to raise educational attainment teachers focus on that target to the detriment of educational attainment. Another was from healthcare, with rules about waiting times designed to improve healthcare being followed blindly so that all that matters is meeting the formal target, to the detriment of substantive healthcare. The VW case provides a further illustration of this. The organizational response to a formal rule designed to achieve the substantive goal of protecting the environment by controlling emissions was … to follow the formal rule without regard for the substantive purpose.

The VW scandal also illustrates an aspect of another of the main themes of the book, again derived from Weber, about the inefficiencies of efficiency. Presumably, some person or people in VW decided that the best way to sell cars in the US market was to cheat on the tests. And, indeed, VW enjoyed very successful US sales. But the unintended consequence of this decision has been to wreak massive damage on the company, its brand image and very likely its future sales and profitability, as well as potentially crippling legal actions. Where’s the efficiency in that? My guess – it’s only a guess – is that as with the Enron scandal the decision will have been made by ‘the smartest guys in the room’ – so smart that they are stupid.

So I think that this case once again shows the enduring relevance and explanatory power of the concepts of formal and substantive rationality, goal displacement, bureaucratic dysfunctionalism and so on. This in turn means that the likely proposed solutions – smarter regulations on emission testing, more stringent internal procedures within VW and perhaps other car firms – are unlikely to have much traction: they will just provoke further goal displacements, new rules to blindly work to. Not until emission minimization – in this case – forms as much of the taken for granted for engineers and their managers as any other principle of engineering, rather than being seen as something external and alien to those principles, is anything really likely to change. The same analysis could be applied to huge numbers of other cases: prudential banking regulation being an obvious example.

Finally, although this blog is connected to the ‘very short etc’ book, I will shamelessly plug my next book (Jana Costas & Christopher Grey, Secrecy at Work. The Hidden Architecture of Organizational Life. Stanford University Press, to be published March 2016). Because from what is known so far it does seem likely that the decision to rig the tests was kept secret from VW’s senior managers by those who took it. How and why such a thing might happen is explained by …. well, read the book to find out!

Healthy bureaucracy

This post relates in some ways to my previous one about NHS management, but is both more specific and yet with a wider import. In the current issue of the satirical magazine Private Eye the Medicine Balls column discusses one of the consequences of recent NHS reforms (the column is not available on the Private Eye website, but appears on p.17 of Issue 1394). These reforms, like most or even all public sector reforms, purports to reduce bureaucracy. Yet the column describes how the new rules mean that whereas a doctor’s surgery seeking to run community health services from its premises used to have simply to make a contract with the local health trust, now it involves a negotiation between four different bodies with multiple convoluted procedures.

This is a story that could be repeated endlessly across both private and public sector organizations. Bureaucracy is the enemy above all others (see p.81 of the book) and yet in the name of defeating it ever-more complicated bureaucracies are developed. What sense might we make of this? I think that one answer is that ‘bureaucracy’ has ceased to mean anything very precise (and certainly nothing like Max Weber’s meaning), but instead has become a catch all terms for ‘things we don’t like in organizations’. It takes a brave person to argue, as Paul du Gay does in a book I refer to several times in my book, in praise of bureaucracy (by which he does indeed mean Weberian bureaucracy), and for a practicing manager, civil servant or politician it would be simply unthinkable.

The irony of this, though, is that it is not just thinkable but necessary for managers, civil servants and politicians to devise systems which conform not to Weberian bureaucracy but to precisely its everyday sense of inefficient red-tape. We thus have the worst of all worlds: a crusade against the praiseworthy features of bureaucracy (accountability, impartiality, clarity) in the name of an anti-bureaucracy that embodies the most deleterious features of bureaucracy (complexity, sclerosis, proceduralism).

There are so many examples that it is difficult to know where to start in naming them but they range from the impossibility of switching internet service provider without a ‘key’ from your current provider to allow it, through to the chaos caused in courts because of ‘efficiency savings’ to interpreting services. But to take one recent example, last week a new system for driving licences was introduced in the UK. According to the government minister responsible this would “reduce unnecessary red tape” (aka bureaucracy). The result? Chaos.

Of course any one example can be dismissed as both minor and specific. But the cumulative effect is general and major. A huge array of transactions, both economic and civic, are becoming all but impossible. Weber would have found this completely understandable because it is emblematic of some of the problems to which bureaucracy was as a solution. He might also have observed, had he been alive, that bureaucracy would be the best way of addressing the FIFA corruption scandal. Or, at a more local level, a way of controlling free-wheeling head teachers, freed from bureaucracy to do their own thing.

The association of bureaucracy with ‘something bad’ goes back many decades but it’s a misnomer. It’s difficult to imagine an effective campaign for bureaucracy. Yet a good dose of bureaucracy, in its healthy sense, would make all our lives better.

Reference

Du Gay, P. (2000). In Praise of Bureaucracy. Weber, Organization and Ethics. London: Sage.

Inquiring into Inquiries

I want to pick up on something I mentioned in passing in my last post, namely issues of accountability and trust in public sector organizations. I’m prompted to do so because the other day I was listening to a news bulletin and several items were to do with the publication of reports by inquiries into various scandals or failures. There were reports from the inquiry into deaths in the maternity unit at Furness Hospital; the inquiry into the Oxford child abuse grooming cases; and in the US the inquiry into the Ferguson police shooting. The week before the news was dominated by inquiries into the Jimmy Savile sex abuse case. A couple of weeks before that the big story was the delayed report of the Chilcot Inquiry into the Iraq war, which has been running since 2009 and is itself the third public inquiry about the war, following the Hutton Inquiry which reported in 2004 and the Butler Inquiry which also reported in 2004.

Public inquiries are not a new thing, but the frequency with which they occur (in the UK) is increasing and their scope is becoming broader – moving away from being about specific events towards examinations of whole institutions and cultures, as with the Leveson Inquiry into the press. They have an obvious tactical attraction for politicians: by setting up an inquiry into a controversial issue it is possible to show decisive action whilst at the same time avoiding talking about it until the inquiry has reported, which in some cases may be a very long time, and by that time the political charge may have gone out of the issue, or the government has changed.

But I think that there is more at stake than political expediency. What is striking is how the increased use of inquiries goes hand in hand with the increasing emphasis on public sector accountability, so brilliantly described in Michael Power’s now classic book The Audit Society. One might have thought that this increased accountability would have obviated the need for public inquiries: after all, if organizations are more transparent, why would we need them? In fact, the obverse is the case, and increased accountability and transparency has eroded trust, exactly as predicted by the philosopher Onora O’Neill in her prescient Reith Lectures in 2002.

This is a new twist on an old question, formulated as ‘Quis custodiet ipsos custodes?’ by the Roman poet Juvenal, but present also in Plato’s The Republic. Who will guard the guards? No matter how much public disclosure there is, it is never enough. Thus we see arraigned around public sector organizations regulators who check on them. But these regulators are themselves not to be trusted, and requiring further inquiry. Thus, for example, this week’s Furness Hospital report was concerned not just with the failures of the hospital but with those of its regulator, the Care Quality Commission (CQC). The CQC itself has been repeatedly criticised and has been subject - really, you couldn't make this up - to at least one major independent inquiry (the Rider Inquiry in 2012) into its operations.

So there is a kind of infinite regress here. All the time what is being looked for is an outsider or ‘independent’ person. But now even that it is a problem. The UK historic child abuse inquiry was originally to have been chaired by Baroness Elizabeth Butler-Sloss, but she was discredited as insufficiently independent because of her family connections. A new chair, Dame Fiona Woolf, was announced but she too had to stand down because of her ‘Establishment links’. Now, it is to be chaired by a New Zealand judge, Lowell Goddard. It’s not too difficult to imagine an inquiry into the decisions to appoint these inquiry chairs. It’s actually quite easy to imagine an inquiry into the use inquiries.

It’s no coincidence, I think, that the increasing stress on accountability and the increasing use of inquiries when things go wrong has been accompanied by decreasing trust in public institutions. We don’t even trust public inquiries any more, as was illustrated with the Hutton Inquiry which was almost immediately discredited, in large part because it had been ‘open’ in publishing its evidence which all too clearly did not square with its conclusions. A shocking thought, then: perhaps we trust more when we inquire less. Indeed, isn’t that what trust really means?