Control Vs Accountability

Living in a post Sarbanes-Oxley world, businesses have placed more and more controls on their internal processes. This does, however, come with a cost. Increasing control can, paradoxically, diminish accountability and responsibility, and ultimately lead to bigger problems. When designing controls, it’s vital to keep sight of the costs to make sure the controls don’t act counter-productively.

With any business computer system of size, it doesn’t take long for the topic of data quality to rear its head. One of my customers in the early 90’s was a major UK insurance company. They relayed to me what the most important thing that they discovered from their data warehousing exercise. Apparently a large proportion of their customers were eighty year olds.

As they drilled deeper, they found that these customers were not just pensioners, but that most of them even shared the same birthday. At this point they smelt a rat. All of these individuals were born on the 11 November 1911.

The insurance company sold primarily over the phone using call centers supported by order entry terminals. In those days they were using old green screen terminals connected to a mainframe – a classic IBM CICS system. It was considered important to always collect birth date information. Whilst not necessary for all insurance products (e.g. home contents), it was for some (e.g. car) and having it would make it easier to cross-sell and understand their customer demographics. At the time it seemed like a really good idea to make birth date a mandatory field, “that way, we’ll always have it”. Computer System 1, Lazy Call Center Rep 0.

Pretty quickly though, the reps discovered push back on getting birth dates – “why do you want that?” especially from 40-somethings still imagining themselves to be 30-somethings. Not much, but a bit. Added a few seconds to the call. Made a few % not buy in the end. Not much, but it adds up. This got noticed, and so with the full support of first line management, the reps would either not ask for birth date at all, or certainly not push for an answer, instead bypassing the field by entering the easiest acceptable date for an IBM 3270 terminal keypad – ‘111111’. Sales went back up. Computer System 0, Human Ingenuity 1.

Mix together management, systems analysts, flip chart paper and coffee, then eight hours later out will pop a comprehensive list of business rules and processes, many of which will be marked “mandatory”, but only some of which will actually play out that way at the coal face. You might think that a rule such as “always credit check a new customer before accepting order” is a good one, never to be violated. But it’s 4:40pm on December 31. there’s no time for a credit check, and Wal-mart have just faxed through a million dollar order. Do you really want process to be followed?

The cost to automating mandatory process is that until such time as we imbue computers with real intelligence and pass the Turing test, there will always be exceptions. Closely related to Murphy’s law, and just as universal – “There’s ALWAYS an exception”. Which is where humans come in. We may be useless at accurately adding up hundreds of numbers compared to software, but in terms of exercising judgment, then it’s a slam-dunk for wetware.

The real cost in a blanket approach to automating mandatory process is that it diminishes accountability. The call center manager mentioned above earned their salary (not to mention increased commission), by using their own judgment that increased sales was more important to the company than knowing everyone’s birthday even when irrelevant to the insurance product .

The fact your employees aren’t using your shiny new software properly is actually good news. Nine times out of ten, it’s because they have to workaround the artificial rules to get the real job done. The issue is the system, not the staff. Enforcing more rules is seldom the solution.

I sometimes hear people say they can’t trust their employees to make the right decision. That’s sad. It may be true, but if it is (and I suspect in many cases, it isn’t), then you have a whole different problem, and not one that is amenable to fixing with software. In any case, the real comparison is with whether can you anticipate every single scenario ahead of time (hint: you can’t).

Of course you wouldn’t want to trust every hospital employee dispensing methadone. I’m not saying that placing mandatory controls in an automated system is bad. But there are costs involved in removing the ability of people to handle exceptions. Blindly deferring to the “system” is now a major cause of air crashes. As my mum used to scold me, “if someone told you to jump off a cliff, would you do that?” “I was only following orders….”

The cost of controls is a loss of individual responsibility and accountability that hinders your company effectiveness (even if you improve efficiency), undermines management and eats away at employee morale.

Use with care.

Photo Credit: Brent Payne / Flickr