Deviant and Criminal Behavior in the Workplace

Steven M. Elias, Steven M. Elias

• Publisher: NYU Press
• Year: 2013
• Print ISBN: 9780814722619
• eBook ISBN: 9780814722893
• Topic: Psychology
• Subtopic: History & Theory in Psychology
• Index: Psychology

Workplace crimes are never far from the news. From major scandals like Enron to violent crimes committed by co-workers to petty theft of office supplies, deviant and criminal behavior is common in the workplace. Psychological factors are almost always involved when an employee engages in such behavior.


Deviant and Criminal Behavior in the Workplace offers insights at the level of the individual employee and also sheds light on the role organizations themselves may play in fostering such criminal behavior. The volume considers psychological factors involved in theft and fraud, workplace violence, employee discrimination, and sexual harassment. It also analyses a number of variables which can influence such behavior including employee personality, employee emotional processes, experience of occupational stress, organizational culture, organizational injustice, and human resource management practices. The book will be of core interest to those interested in the psychology and sociology of work, organizational behavior, and human resource management.

PART I

Introduction

1
Conceptual Foundations

Insights from Criminology and the Sociology of Work

RANDY HODSON AND GARY F. JENSEN

In 1996, the average monthly sewer bill for a family of four in Birmingham was only $14.71—but that was before the county decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase. . . . [The banks used] a blizzard of incomprehensible swaps and refinance schemes—schemes that only served to postpone the repayment date a year or two while sinking the county deeper into debt. . . . The original cost estimates for the new sewer system were as low as $250 million. But in a wondrous demonstration of the possibilities of small-town graft and contract-padding, the price tag quickly swelled to more than $3 billion. . . . Every time the county refinanced its sewer debt, JP Morgan made millions of dollars in fees. . . . In the mortgage business, this process is known as churning: You keep coming back over and over to refinance, and they keep “churning” you for more and more fees. . . . Birmingham became the poster child for a new kind of giant-scale financial fraud, one that would threaten the financial stability not only of cities and counties all across America, but even those of entire countries like Greece. . . . You can see a trail that leads directly from a billion-dollar predatory swap deal cooked up at the highest levels of America’s biggest banks, across a vast fruited plane of bribes and felonies—“the price of doing business,” as one JP Morgan banker says on tape. . . . In Birmingham, lots of people have gone to jail for the crime: More than 20 local officials and businessmen have been convicted of corruption in federal court. . . . But those who greenlighted the bribes and profited most from the scam remain largely untouched. “It never gets back to JP Morgan.”

—Taibbi, 2010

In a review of literature on crime and the workplace in 1999, we noted that “Neither crime at the workplace nor crime generated by workplace experiences has received much attention in criminology” (Jensen & Hodson, 1999). Assessments since that time have yielded similar conclusions. Based on a citation analysis, David Shichor (2009, 175) reports an “absence of scholars who study white-collar crime and corporate crime in criminology and criminal justice journals and textbooks.”

To some degree this neglect reflects the opinion of prominent criminologists who have argued that (1) the public is most concerned with street crime (see Wilson & Herrnstein, 1985) or that (2) the causes of crime rest with characteristics of offenders established at an early age (see Gottfredson & Hirschi, 1990). Although not strongly represented in mainstream criminology and criminal justice journals and textbooks, issues involving workplace crime, white-collar crime, and occupational crime are growing in prominence in new journals and journals dealing with business, business ethics, personnel psychology, occupational health, leadership, and management, among others. An inspection of references for the chapters in this book reveals the sizeable range of outlets for research on workplace crime and related issues.

This expansion of interests and outlets has been quite eclectic and specialized, with little attention devoted to developing a general framework to encompass such a wide range of specific issues. In this chapter we propose that (1) further development of widely shared concepts in the chapters in this volume promises to move the study of white-collar crime toward a vision shared with much of sociology—the study of injustice and the abuse of power—and (2) general theories of crime can provide general frameworks for organizing the study of crime and the workplace.

White-Collar Crime and the Sociology of Work

Since some version of the concept of injustice, and explicitly or implicitly the abuse of power, is found in all but one chapter in this volume, we suggest that these concepts have promise as linking themes between specialists in the study of workplace and the study of organizational crime. Jensen (2011) notes that the concept of justice is intimately tied to conceptions of rights and that “rights refer to that set of normative standards defining the just allocation of positive and negative experiences among people (justice norms).” Injustice refers to the violation of justice norms or rights. Power is what allows the rights of some to be violated by others.

The concepts of injustice and the abuse of power can apply at all levels of analysis from societal to institutional to individual relations. Legal systems and organizational characteristics can be judged in terms of justice. The content of courses on contemporary social problems, as well as the specific sociological specialties dealing with issues such as inequality and racism, are based on conceptions of rights and their violation. It would be safe to propose that the concepts of justice and the abuse of power are widely enough used to be considered basic building blocks of the social sciences across their specific disciplines.

In research on sources of crime or deviance in the workplace, the most common use is “perceived” injustice, which can generate worker anger and potentially underwrite workplace deviance. However, the concepts of injustice and the abuse of power can be applied at the corporate or organizational level, as well as at the individual level. At the corporate level the focus is less on crime as a response to injustice than on unconstrained power as a source of immoral and even criminal corporate behavior. Historically, the thirty years since the ascension of Reagan’s and Thatcher’s conservative revolution with its attendant neo-liberal ideology and its commitment to deregulation have brought into full fruition an era of rampant corporate malfeasance and criminality. The history of corporate scandals of the 2000s has expanded in number and size at an exponential rate. Enron’s “creative accounting” practices were quickly eclipsed by those of WorldCom. For those who thought these were isolated cases with isolated consequences, the worldwide “great recession” starting in 2008 brought about by a systematic pattern of fraudulent banking practices involving the largest banks in the world has clarified the fact that when the largest corporations bilk customers, competitors, and the government out of billions of dollars, the consequences are anything but localized. The rewriting of regulations for offshore oil-drilling practices under the Bush-Cheney presidency that allowed the massive Gulf of Mexico oil spill by British Petroleum in 2010 highlights the fact that the consequences of unconstrained corporate power leading to malfeasance and illegality influence every aspect of our lives from our jobs and pensions to the environment in which we work and live.

It is essential at this moment that students of white-collar and corporate crime step forward and make themselves heard regarding the nature, causes, and consequences of the current era of unrestrained corruption, pillage, and criminality emanating from the largest private-sector institutions. Societies that do not confront rampant white-collar crime are likely to end up in the backwaters as “previous great powers.” Less industrialized nations that do not confront corporate criminality will stay poor and underdeveloped. Capitalism has tremendous potential for spurring economic activity and development, but not when capitalists are allowed unrestrained access to pillage, profiteering, corruption, externalization of the costs of production (such as through environmental pollution), and other easier—though nonsustainable—routes to profits. It is part of the historic mandate of students of white-collar and corporate crime to provide the intellectual tools to forge appropriate controls and constraints on large corporations so that they are forced down the laborious road of creative innovation in order to make profits rather than the quicker and easier road of profiteering. In this task, those who study white-collar crime are not without allies. Increasing education and information access make citizens of many countries aware of white-collar and corporate crime and deeply concerned about the consequences for their lives. Witness, for example, the emergence and rapid spread of the “Occupy Wall Street” movement of 2011 (wearethe99percent.tumblr.com).

The world of white-collar and corporate crime is different today than it was fifty years ago because of advances in electronic technology and the growth of large transnational corporations with expansive operations across both developed and less developed nations (Dodge & Geis, 2009; Rothe, 2010). It is thus a significant ongoing intellectual challenge to develop the concepts and theories needed to adequately depict new forms of white-collar and corporate crime and identify effective remedies to constrain them. In this important way, white-collar and corporate crimes are significantly different, and increasingly different, from street crime. Although the prevalence and causes of street crimes may change somewhat with time, many of the causes remain in play across time and across different settings, and change is significantly slower—murder, rape, and burglary are not dramatically different in nature or causes today than in the past. This pattern of rapid historic change in the nature of white-collar and corporate crime poses special challenges to its study.

The sociology of work is an area that similarly faces the challenge of constant change in the nature of its object of study (Hodson & Sullivan, 2011). In response, it has developed a large arsenal of both broad and mid-range concepts that are useful for organizing our understanding of the rapidly changing world of corporate behavior, including malfeasance and illegality. Most central among these concepts is that of social power—the ability to bend resources and people to one’s objectives. Large corporations, and more broadly those in privileged positions, have the power to ensure the reproduction of their privileges and to garner an ever larger share of resources. To understand how power is deployed toward the preservation and enlargement of privilege, it is essential to understand white-collar and corporate crime at three distinct levels: (1) the macro-level of government policy and political economy, (2) the meso-level of organizational behavior, and (3) the microlevel of individual and small group actions.

Macro-Level Concepts about Political Economy. One of the most serious issues confronting the study of white-collar and corporate crime is the prevailing, socially constructed definition of legality itself. Through campaign contributions and hired lobbyists, corporations and powerful actors in society play a decisive role in writing the legislation that defines what is legal and illegal. The capture of regulatory agencies by those they are intended to regulate has received renewed interest with the coming to fruition of the neo-liberal era of deregulation in which admissions such as “the oil industry writes the government’s energy regulatory rules” have become commonplace (Lipton & Broder, 2010). The resulting laws are extremely generous in allowing harmful behavior under the guise of encouraging economic development. And if nothing else, lobbyists at least succeed in making sure the regulations are sufficiently vague so that prosecution can be avoided or tied up indefinitely in the courts. It is thus important that students of white-collar and corporate crime not accept too quickly the bright red line of the existing laws as the definition of corporate criminality and instead look to the more theoretically defensible concepts of justice or of “harm to others” (Friedrichs, 2009). Indeed, the latter concept—harm to others—is closer to the definition more typically used in definitions of street crime. And where the criminals write the laws, as is often the case in white-collar crime, it is essential that this more realistic marker of “harm to others” be used. The greatest part of corporate criminality occurs in this opaque regulatory terrain between what the law specifically disallows and what is actually harmful to others. Much confusion can be avoided if we start with the commonsense definition of criminality as harm to others rather than limit consideration to the specifics of politically brokered (dis)regulations.

Corporate crime thus typically involves some collusion between governments and corporations (Braithwaite, 2008). Only the tip of the iceberg in such cases is ever detected and prosecuted. Indeed, the bulk of the behavior is so commonplace and accepted that its most typical manifestations are considered routine practice. Only extraordinary cases that threaten to unmask the widespread nature of corporate criminality are brought to light and prosecuted. And, interestingly, it is almost always only the politicians who are brought to law. The corporation is seen as only trying to pursue its self-interest, and we have come to accept that the buying of government officials is a failing of the officials, but not of those who attempt to buy them.

An important potential area of rich theoretical insight about the political economy of white-collar and corporate crime lies in international comparative work. Many less developed nations have extraordinarily lax laws and enforcement against white-collar and corporate crime. In these situations, graft and corruption are commonplace and are required for securing many services in society. Many analysts believe that the U.S. war in Afghanistan against Islamic extremists is being prolonged and may be lost because of pervasive corruption in the pro-Western government there that has brought economic development virtually to a standstill. Make no mistake, national development, world events, and world history itself frequently hinge on white-collar and corporate crime. Similar examples of the retarding effects of white-collar and corporate crime from Asia, Africa, and Latin America indicate that such corruption is one of the chief impediments to economic development and prosperity for the poorer people of the world (Evans & Rauch, 1999). Many lessons are to be learned from comparative work, including the potential for corruption to pervade society at every level of economic transaction.

Meso-Level Concepts about Organizational Behavior. The most serious corporate malfeasance arises not from rogue employees, but from repeated systematic actions that have acquired the status of “normal operating procedures.” The payment of outrageous salaries in the hundreds of millions of dollars to CEOs is among the most obvious of these practices. Corporate boards that set top salaries are staffed by other CEOs and their willingness to pay exorbitant salaries to fellow CEOs rests on undisguised self-interest. The absence of a connection between these salaries and economic performance is evidenced by the steep rise in CEO salaries in the last fifteen years during a time of faltering growth and declining performance. The criminal nature of these salaries is further evidenced by the discrepancy between American CEO salaries and those of their competitors in Europe and Asia—whose companies often perform better.

The injustice and indefensibility of CEO salaries is, however, only the most obvious corporate criminality (meaning “harm to others”). A more profound contemporary example is the pattern established by banks of fraudulently misrepresenting risky derivatives while simultaneously betting against the success of their own financial instruments by aggressively buying insurance against their predestined decline in value (Partnoy, 2003). Similarly, the classic situations of stockbrokers churning their customers’ accounts for sales commissions or selling poor quality financial instruments because of kickbacks are prime examples of criminality among professionals. Note that these practices, except in extreme cases, are not typically illegal and even extreme cases are difficult to prove. Myriad retirement accounts, however, have mysteriously dwindled through such practices. The amount of money involved in such white-collar criminality far exceeds the combined total for all types of street crime (Coleman, 1994).

For much corporate and white-collar criminality, the prevalence of bureaucratic rules governing the organizational context in which these activities occur provides an effective façade to hide the activities. People believe that there must be rules preventing such practices and that, surely, such practices could not occur within large organizations. The problem is that the bureaucratic rules are written by people who benefit from such criminality. The result is rules that either allow such practices or are so intentionally vague that the practices are allowed by omission.

Professionals working in large organizations are often complicit in such corporate criminality. For example, in the Enron scandal, the accounting firm Arthur Andersen was found to be criminally culpable for fraudulently over-representing the value of Enron assets. Similarly, doctors who receive salaries many times the average for American workers are unlikely to report overcharges and unnecessary procedures since they get fees based on these procedures, as well as kickbacks from drug companies for prescribing their most popular drugs.

Why are such practices not prohibited by regulators? There are two main reasons. First, as already mentioned, regulatory bodies are often captured by the industry they are intended to regulate. Second, the complexity and rapidly changing nature of many work practices means that there would need to be many regulators for adequate enforcement, which would be economically unfeasible. Regulatory bodies are thus chronically understaffed.

The solution to organizational criminality, both corporate and professional, instead lies in empowering all the stakeholders involved to negotiate, bargain, and make transparent ongoing practices. Thus, employees, the community, and customers all need to have a say at the corporate table if corporate criminality is to be effectively curtailed (Braithwaite, 2008). This solution may seem unlikely in the American context of corporate secrecy and the purity of neo-liberal ideologies arguing that the only path to economic efficiency is the unregulated and unconstrained pursuit of profit. However, many European nations have longstanding Works Councils and other avenues of involvement by employees, unions, and communities. The long-term consequences of involving these additional stakeholders have not been a decline in profits. Rather it has been a decline in criminal approaches to achieving profits and the highlighting of creative innovation as a necessary strategy for corporate survival (Streeck & Thelen, 2005). The criminology literature, in fact, already utilizes a similar concept acknowledging the pivotal role of stakeholder involvement in deterring street crime—in the routine activities model of criminal behavior the concept is known as a “responsible guardian” who preempts criminality. Similar responsible guardians are needed throughout corporations as empowered stakeholders if corpor...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Preface
• Part I: Introduction
• Part II: Employee Characteristics Associated with Deviant Workplace Behavior
• Part III: Organizational Influences on Deviant Workplace Behavior
• Part IV: The Role of (In)Justice and Social Power in Deviant Workplace Behavior
• Part V: Violence in the Workplace
• About the Contributors
• Index