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How Not to Feed the Beast: Counterintuitive Tips on Restraining Our Bureaucratic Inclinations

March 4, 2011

One perk that comes with being around people who love what they do is that I am constantly being directed to good stuff.  Hat tip to Jared, who is spending his time off reading the book “What Really Matters” by John Pepper, former Procter & Gamble CEO.  He shares this quote from the book:

“Avoid the Pitfalls of Bureaucracy: Uncontrolled bureaucracy is another challenge to a strong community.  Like many other vulnerabilities, it can be the outgrowth of what is good and valid.  “We need better controls,” we say…[w]e staff up quickly to cover a new project.  Yet, the weaknesses that grow out of bureaucracy are deadly:  too many levels; too many check-off points; unclear decision-making rights; lack of accountability; lack of motivation; and, ultimately, lack of timeliness in achieving decisive results.”

So true.  But how do we tame the beast?  Let’s take the example of internal controls.  We need better controls.  But, how do we build better controls without creating too many layers, without diluting accountability and without delaying decisions?

The answer is through good pruning.

Here is what I mean: Taming bureaucracy is about tweaking existing infrastructure to fit the business.  At the simplest, we do it by removing outdated requirements and introducing new activities that strengthen the business process.  That is how processes evolve.

Except that it’s not so easy to do.  Adding controls is no problem.  It makes us feel more secure.  But removing controls?  Restricting the number of controls to strengthen the governance environment is a counterintuitive concept in today’s risk averse environment.  Piling controls on top of controls is easy to do.  It takes more confidence, more discipline and better understanding of the process to selectively prune the control set to achieve the same results.  That is why I am sharing three counterintuitive techniques to help you think through the decision the next time there is talk to add another control into the process.  Because when we add and never subtract, we feed the beast.

  1. Discriminate Often. Preventive controls keep bad things from happening.  Detective controls catch bad things after they happen.  The better the preventive controls, the fewer detective controls you need.  So, before adding another control to “catch” errors, it might be smarter just to perfect the preventive controls that are already in place.
  2. Don’t Share Responsibility. Controls operate best when there is exactly one owner.  Adding multiple owners or multiple review will ensure that the control will work less often and less timely.
  3. Don’t Rely on Colleagues. If a control must be added, automate as much as possible to lessen the burden of the control owner.

My friend Kristen is sharing a case study on exactly this topic at a Chicago Roundtable I am chairing in a few days.  The topic is officially called Optimizing Controls.  But it could just as well be titled Becoming Less Bureaucratic. Hear it from someone whose confidence and expertise come from years of building internal controls “from scratch” at up-and-coming companies and stripping down key controls for the Fortune 1000.  If you are in Chicago and would like to attend, you can email me to RSVP.  It’s free for The Institute of Internal Auditors (IIA) members.

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2 Comments leave one →
  1. March 5, 2011 4:44 am

    I really like point number two. Shared responsibility and accountability ends up with finger pointing. The buck should always stop with one person.

  2. March 5, 2011 12:41 pm

    It also promotes a false sense of security and the illusion of having more coverage, when in fact the opposite is likely true. Thanks Daniel.

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