Stories of Compliance

My post “Cultures of Compliance” in September 2016 led to quite a few responses from readers.  I noted then that a culture of compliance laced with administrative incompetence is particularly lethal.  Many readers’ responses built on this theme.  In this post, I highlight some of the stories they related.

Many stories related to food, primarily in terms of justifying expenses for meals with customers and other employees.  Many organizations prohibit purchase of alcohol.  Some control desserts, for example allowing dessert to be purchased for customers but not employees.  A couple of stories related requirements to report what food was consumed and whether everything was eaten.

There were many stories about travel, particularly extremely inefficient processes for booking travel and getting expenditures reimbursed.  Requirements to book the lowest airfares often resulted in employees contributing much personal time to traveling very circuitous but inexpensive routes.  One person reported spending an additional eight hours on a multi-stop flight to save ten dollars.

Another travel story involved providing proof that a trip was taken, in conjunction with requesting travel reimbursement.  Employees were asked to provide proof of attendance, for example, via a picture of them at the conference registration booth.  Visits to sponsors required that the sponsor provide a letter indicating that the meeting had taken place.  Letters had to be on sponsors’ letterhead, not just an email.

When a Dean was meeting with a senior executive of an agency, he requested the required letter.  The sponsor responded, “If your organization has such a low level of trust in you, why would I fund your research?”  A variety of responses like this resulted in the policy being revoked, to everyone’s great relief.

People often have to certify that they spent their time in exactly the proportions budgeted.  For example, time may have been budgeted with 33% for project X, 45% for project Y, and 22% on project Z.  At the end of the reporting period, the employee has to certify that this was exactly how their time was spent.  Unless the organization employs time sheets, such certification is clearly a sham.

Reporting on the location and use of equipment can be a compliance challenge, particularly for portable equipment.  Who used each laptop, what did they use it for, how much time was involved, and where were the costs of use charged?  Reporting on the use of room space poses similar difficulties.  Keeping track of assets in this way can undermine productivity, but certainly assures compliance.

Perhaps the best story came from a university where the existence and location of all assets must be certified at the beginning of each fiscal year.  Somehow this requirement included buildings.  Consequently, the Deans and Provost had to certify the existence and location of each building every year.  This would seem like a useless but an easy task to perform.

However, faculty members from architecture, civil engineering, and geology argued that the buildings actually move, perhaps a few millimeters each year as they settle.  A member of the State legislature encountered this observation and subsequently introduced legislation requiring the university to report buildings’ new positions each year.

The legislation passed, various sensors were installed, and the university dutifully complied with the requirement.  When students learned of this, they started a competition that involves projecting when buildings will disappear.  As not all buildings are sinking at the same rate, and rates vary by year, there are heated controversies about which building will “win.”

So, there is an upside to a compliance culture, particularly if the level of administrative incompetence is quite high.  There tend to be endless jokes and much levity in general.  People get used to being bogged down in endless, useless processes.  The mission of the organization recedes into the background.  Organizational outcomes steadily diminish, but fewer and fewer people notice.

An extreme story involved a senior government official who asserted, “I would be happy to spend $10 to assure that every $1 is appropriately spent.”  Several people in this conversation argued that, in effect, this would result in compliance becoming the agency’s mission rather than its original mission.  The goal would become one of providing jobs to compliance personnel.  Absent that goal, the agency’s budget could simply be zeroed.

In compiling these stories, a central theme emerged.  The most feared person in many organizations is the Chief Compliance Officer.  The CCO is empowered to force people to jump through endless hoops, draining their time and energy from doing their jobs.  The lowest risk approach to assuring compliance is to avoid customers, projects, and travel.  This leads to zero revenue and no jobs, but organizational risk has been minimized.

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