When building an organization, there are lots of ways to prevent financial corruption of personnel. But what are the ways to prevent corruption via social status, political power, etc.?
post by M. Y. Zuo · 2023-10-17T18:51:47.127Z · LW · GW · No commentsThis is a question post.
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Answers 5 Gordon Seidoh Worley None No comments
Nowadays, even fairly sophisticated accounting and auditing concepts are well known by those with on-the-job work experience in any sizeable firm.
Such as systems for controlling the flow of money from spending accounts, corporate cards, etc., procedures for leaving a highly legible audit trail, and so on.
And to a fairly large extent, these methods are successful in preventing the anyone from messing with financial numbers in too obvious a manner, at least not without leaving a lot of warning signs along the way.
However, in the realm of controlling for those unduly desiring of social status or political power, there seem to be a much sparser set of methods.
Most of the ones discussed in popular literature only work at a large scale, such as parliamentary procedures, multiple branches of government checking and balancing each other, etc...
What are some of the proven methods that work at the scale of an average organization?
(say 100 to 10 000 people)
And if there aren't any, what are some of the theoretical proposals?
Answers
Corruption and power seeking are common among managers of businesses, and especially among middle managers. One way this power is most often abused is within the power structure of the organization itself by "misappropriating" promotions and pay. Controls are commonly employed to prevent managers from acting unilaterally to either hand out promotions and pay raises as favors to loyal employees or to game their way into undeserved promotions for themselves.
A popular control mechanism is to vest authority for promotions with someone other than the manager of the person under consideration for promotion. For example, suppose Alice reports to Bob. Bob would like to promote Alice and increase her compensation. The details vary, but a procedure might be for Alice and Bob to create a promotion packet that argues why Alice should be promoted, then this is sent for review by a committee of managers that does not include Bob, and ideally does not include anyone who manages Bob directly or indirectly. This committee decides if a promotion is warranted based on the packet.
This isn't perfect because Bob might still orchestrate trades—if the committee promotes Alice then Bob promises to approve promotions the committee members put forward—but this can be further controlled by setting explicit standards for how promotions should be made and have senior managers (ideally officers of the company) enforce the standards, either by checking every promotion if there are few of them or doing random spot checks if there are many.
Such systems generally work so long as managers are held accountable for real, measurable business outcomes and not internal, derivative metrics, since this helps keep them aligned with generating value for the business, and they will stand to lose by handing out promotions to those who are not qualified. If there's no accountability for outcomes, though, then such systems are likely to be gamed since there are no long term consequences for undue promotions.
↑ comment by Samuel Hapák (hleumas) · 2023-10-18T13:25:23.744Z · LW(p) · GW(p)
Wow. Once you start doing things in this bureaucracy manner it’s pretty much Game Over. The Moloch won.
I actually believe in a simpler solution: trust but verify. Let your managers make whatever decisions they decide and make sure that no form of corruption/nepotism will be tolerated. Then, if you happen to find an occurrence, fire the manager immediately and make it clear to his peers that this will happen to anyone who crosses the integrity line.
Replies from: gworley↑ comment by Gordon Seidoh Worley (gworley) · 2023-10-18T19:34:15.717Z · LW(p) · GW(p)
Trust and verify is a great idea, but it's also been the downfall of many businesses. The larger an organization gets the harder it is to verify what's really going on, and the executives who need to do the verifying have many other things to do, so it's easily abandoned, hence why processes are implemented to allow the organization to work even when the some of the agents inside it are not aligned with the best interests of the business.
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