The last essay ended on a concession, and I owe the reader a proper account of it. I had described a sequence of decisions—appoint on the visible signal, buy the training that produces a document, deploy the tool that raises productivity—and treated the deference that followed as an accident nobody intended. That account was, on sober reflection, too generous. Some of the deference is accidental and we should be leery to presume nefarious motives when naïvety is the true cause. However, not all of the deference is accidental; authoritarian leadership is strong with many organisations.
This essay concerns itself with the part of the deference process that is not accidental. My argument is that some organisations do not merely fail to develop judgement in the people they appoint. They actively select against it, because a person who exercises judgement is a person who will, sooner or later, tell an executive they are wrong, and there are organisations in which that is the one thing that cannot be forgiven.
Because this claim is uncomfortable, and because I have spent my working life inside organisations, I have built it entirely from the public record. Nothing below is drawn from anywhere I have been employed. I pen this disclaimer not for legal reasons, but for a more essential one: a reader should be able to check every step, rather than take an essayist’s word about what happens behind closed doors. The evidence below allows you to do exactly that, and then apply it wherever you are.
The Egalitarian Paradox
The obvious objection comes first, and it is a good one. Australians do not stand on ceremony. On the power distance index devised by Geert Hofstede (1928–2020) in the 1970s (Hofstede, 2011), which measures how far a society’s less powerful members accept that power is distributed unequally, Australia sits at 38 on a scale where Malaysia scores 100. Examples of this in practice are when we “first-name” the chief executive or distrust anyone who takes themselves too seriously. At face value, organisations where this approach is redolent are the last place one would expect to find a culture of deference.
I want to suggest that this is precisely why the problem is so hard to see here. The most influential account of organisational silence, by Elizabeth Wolfe Morrison and Frances Milliken, predicts that it will take hold where senior teams come from cultures of high power distance, in which the boss is assumed to be right because they are the boss (Morrison & Milliken, 2000, p. 711). On that account Australia ought to be well protected. The public record suggests otherwise.
In 2018 the Australian Prudential Regulation Authority published the findings of its inquiry into the Commonwealth Bank (CBA). The panel identified four cultural traits behind the bank’s failures. Three were what one would expect: complacency, reactivity, insularity. The fourth was not. It was collegiality—a working environment of high trust in peers, teams and leaders, which the panel was careful to describe as a positive element of any sound culture. Its downside was that the pursuit of consensus had lessened constructive criticism, and that “good faith” had come to be used as an excuse for poor outcomes ((APRA), 2018, p. 4).
That is the argument of this essay in a regulator’s prose. The trait that did the damage was not fear, and it was not a hierarchy of rank. It was pleasantness. Nobody was shouting at anyone. Everyone was on first-name terms. And the effect of all that warmth was that nobody said the difficult thing. Nor is this a local eccentricity. James Detert and Amy Edmondson found that people withhold what they know even where the current context includes a good boss and a supportive culture (Detert & Edmondson, 2011, p. 484).
The year after the findings into the CBA were publish, APRA asked thirty-six of the country’s largest banks, insurers and superannuation funds to assess themselves against the findings. The weaknesses, it concluded, were not unique to the Commonwealth Bank ((APRA), 2019, p. 4). Two details in the regulator’s report are more telling than the headline. The self-reporting institutions, unsurprisingly, found plenty to fix in risk management and in the escalation of issues (i.e. problems with junior staff), but comparatively little wrong with their boards or their senior leadership—and they largely rejected the suggestion that complacency, insularity, and collegiality were present in their own organisations (2019, p. 11). APRA’s stated response was to examine whether boards and senior leadership had been sufficiently self-critical (2019, p. 5).
That rejection is the paradox. In a formally hierarchical culture, everyone at least knows where the power sits and what contradicting it will cost. In an egalitarian one, the price is paid just the same, but nobody will admit that a bill exists. Informality is mistaken for openness. First-naming the chief executive is not a mechanism for contradicting them.
There is also a harder explanation, and I think it does more work than any account of national character. Morrison and Milliken predicted, a quarter of a century ago, that the beliefs which breed silence would be most common in organisations operating in mature and stable industries, where the environmental pressure to hear new ideas is weakest (2000, p. 712). Australian markets are notably mature and concentrated—four major banks, two dominant supermarket chains, a handful of large players in most sectors that matter. Jonathan Hambur’s analysis of administrative tax data finds that mark-ups have risen by around five per cent since the mid-2000s, partly reflecting an increase in market power (Hambur, 2023, p. 32). The rise is modest—slightly below the average for advanced economies—and I would not rest the argument on it. The point is less the trend than the setting. In a volatile market, an organisation that silences the people who could have warned it tends to find out quickly. In a stable, concentrated one, the cost of being wrong arrives slowly and tends to land on someone else: a customer, a regulator, the next chief executive. Suppressing dissent becomes cheap. It is worth noticing what APRA named as the root of the bank’s trouble. It was not a crisis. It was continued financial success, which had dulled the senses of the institution (2018, p. 3).
