Do Organizations that 'Fess Up Do Better?

Geoffrey W. McCarthy, a retired chief medical officer for the V.A., wrote, in a letter to the NYT on 9 August in response to an article on radiation overdoses in medical tests about two approaches to how organizations manage information about organizational errors. He notes that the issue illustrates the contradictions between "risk management" and "patient (or passenger or client or consumer) safety."

He notes that the risk manager will say "don't disclose" and "don't apologize" because these could put the organization at legal or financial risk. A culture of safety and organizational improvement, though, would say "fully disclose," not because it will help the patient, but because it is a necessary component of organizational change. The organization has to admit the error if is going to avoid repeating it, he asserts.

This suggests a number of sociology of information connections, but we'll deal with just one here. This example points to an alternative to the conventional economic analysis of the value of information. The usual approach is to "price" the information in terms of who controls it and who could do what with it (akin to the risk manager's thinking above). But here we see a process value -- the organization itself might change if it discloses the information (independent, perhaps, of the conventional value of disclosure or non-disclosure). One could even imagine an alternative pricing scheme that says "sure, Mr. X might sue us, but by disclosing the information we are more likely to improve our systems in a manner that lets us avoid this mistake in the future (along with the risk it poses to us and the costs it might impose on society). Why pour resources into hiding the truth rather than into using the information to effect change?

One rebuttal to this says that an organization can do both, and maybe so. Another would say that this is just mathematically equivalent to what would happen in litigation (perhaps through punitive damages).

But I think that Mr. McCarthy is onto something in terms of "information behaviors." There are, I expect, a whole bunch of "internal externalities" associated with what we decide to do with information. In other places I've examined the relational implications of information behavior. This points to another family of effects: organizational. More to come on this.