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Reputability LLP are thought leaders in the field of reputational risk and its root causes, behavioural risk and organisational risk. Our book 'Rethinking Reputational Risk' received excellent reviews: see www.rethinkingreputationalrisk.com. Anthony Fitzsimmons, one of its authors, is an authority and accomplished speaker on reputational risks and their drivers. Reputability helps business leaders to find these widespread but hidden risks that regularly cause reputational disasters. We also teach leaders and risk teams about these risks. Here are our thoughts, and the thoughts of our guest bloggers, on some recent stories which have captured our attention. We are always interested to know what you think too.

Saturday, 9 November 2013

Cover-up at Colchester

Targets create incentives to behave in ways that will achieve a particular result.  Sometimes the incentives are hidden - such as when staff fear to report bad news.

The latest example, explained in more detail in the Guardian, is that National Health Service managers at Colchester hospital  now "fear that at least 6,000 patients may have had their records falsified to meet treatment targets".

We humans are versatile. Face with a target, we can see many paths to the appearance of success. We can embrace the principles behind the target-setter’s good intention; or we can cover up poor performance or cheat. Culture also plays an important role in how we behave. 

It’s not as simple as a matter of how targets are designed and enforced. Human characteristics include behaviours such as creativity, guile and dishonesty. That is why targets, and the incentives they create, should also be seen - and managed - as risks. This creates a vital independent feedback loop that can deal with the risk of self-delusion by leaders and managers.

Risks from unintended or poorly designed incentives regularly bring big organisations to their knees. If you need evidence, read the case studies in ‘Roads to Ruin’, the Cass Business school report for Airmic. Subsequent research, ‘Deconstructing failure – Insights for boards’ found that 40% of the 40 major crises dissected had incentives emanating from board level  as one of their root causes.

It may be that the targets saved lives overall.  But if it did so at the cost of developing a culture of lying and covering-up at the hospital, that is dangerous.  The studies in 'Roads to Ruin' show how easily a small lie turns into a huge one, with disastrous consequences.  Patient safety depends on an open learning culture.  That only works if the truth is welcomed however unpleaseant.

Mike Bell
Reputability LLP
London
www.reputability.co.uk




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