The BBC has recently announced that it trusts its employees to approve their own expenditures up to 100 sterling pounds. Is this sensible at all? Cynics could argue that the management is actually motivating employees to do the managers job and hope to free- ride the benefits without adequate responsibility; they also may run the risk of white collar misdeed, which is generally on the incline. Many, however, recognize that the BBC`s bold decision may be full of sound economic reasoning and probably not just due to a rush of trust in their employees. The move reminds us of the well-extolled experiment of the Brazilian Recardo Semlar in his Semco, even if this is a minor step in that direction.

Recardo turned the rules on their head and started asking his employees to take charge by forming employee driven committees and trusting them to decide what the pay rises should be, what their working hours ought to be, about their dressing, surroundings, office set up, welfare provisions and the like. It was so drastic that the unions couldn’t trust this new dispensation in the initial days. Recardo proved that empowerment of this type in fact increases responsibility, teamwork and of course, productivity and performance. We also have familiar stories from the Toyota experiment at the NUMMI plant as also the AT & Ts empowerment policy, inspired by Peter Block. These companies found real benefits for the company and the shareholders by trusting employees to set their own rules under adverse competitive and economic conditions. (It is another matter, probably an embarrassing one that the Yugoslav experiment of self-managed companies did not succeed as well in the socialist regime).

In another experiment some years ago, I had the opportunity to question the interpretation of the “four-eyes” principle. The extended version of the four-eyes principle says that in financial transactions of certain value it is best to have two people signing than one. In many traditional Banks, the next signatory is the boss of the initiator. In this situation, bosses will be required not for developing business or calling on clients but for counter-signing every piece of paper. On the other hand, it is indeed possible to give the countersigning authority to another employee of equal rank or even one who is in a lower position subject to subsequent confirmation. Such a system would relieve the boss to do work that is more valuable, render quicker service and lower the cost of the time spent by the second set of eyes.

Typically, these initiatives, of trusting the employees with doing things that managers/supervisors were otherwise doing, may arise for two reasons. Firstly, from a sense of belief that people no longer need to be controlled and commanded breathing down necks but that they must be given space for using their discretion, thinking and initiative. Employees, it has been clear for decades arising from the work of Douglas Mc Gregor and others, want to be trusted, given the responsibility and challenge to be able to apply their competence well and grow to their full potential. This results in feeling full and satisfied as a personality. Secondly, that such an approach lowers the costs of transaction without necessarily increasing risks.

Most current structures have been created from the hang over of the army and bureaucracy that gave us a supervisory chain that thrived on peddling power in the name of a good system of control. Tasks have been divided so finely that coordination mechanisms actually perpetuated tyranny – the supervision tyranny. In many large corporations, the flow of paper justifies several otherwise unnecessary roles and offers a sense of activity that has little scope of any value accretion. Work flows in fits and starts along the way – like a rivulet that has several cesspools along the way. Take the case of procurement of a simple office calculator – the office can be starved because the tendering procedures require three quotes that cannot be routed through electronic means apart from a proof that the last one issued has actually not been stolen.

It is reminiscent of George Orwell’s Animal Farm. The pigs take over the farm and start controlling other animals saying that it is for their own good. The pigs and their crony dogs start drinking milk, alcohol and enjoying special privileges despite the earlier tenets of equality. Squealer, the spokesanimal, tells all the other animals how hard the pigs had to work everyday on files, reports, minutes and memoranda. He would tirelessly say that “there were large sheets of paper which had to be closely covered with writing and as soon as they were so covered, they were burnt in a furnace. This was of the highest importance for the welfare of the farm, Squealer said. But still, neither pigs nor dogs produced any food by their own labour; and there were very many of them, and their appetites were always good.”

Do some of our rules, procedures and forms give a feeling of the Animal Farm? Sometimes yes. Take the case of the application for sick leave in a typical large corporation by a worker for three days due to a viral fever. On application, it has to be endorsed / recommended by the supervisor who in turn sends it to the concerned HR / Administration section to verify and write the leave balances upon which it goes to the approving authority at a managers level. The manager would probably not know the face of the individual whose application form he is approving. Cannot even guess if the worker is genuinely sick or feigning with the complicity of a doctor. Yet, he signs the stack of such leave applications as put up by his secretary. Take also the case of an employee wishing to purchase a book he thinks is good reading. The cost of the entire transaction may exceed the value of the book.

There are several such areas of misplaced controls devised and perpetuated keeping the possibilities of misuse in mind than economics or rationality. The BBC experiment does not imply that employees can easily choose to misuse this facility. Hopefully, the expenditure will be monitored by computer generated time series analyses that would alert abnormalities and audited on a sample basis. These should be good enough controls. By making employees responsible for their own performance behaviors, the organization is also making them accountable to the bosses that they are indeed acting in the best interests of the company. The bosses are possibly not expected to question the decisions per se but ensure that the employees apply sound criteria and rationale for their self-certification.

However, it remains to be seen if employees seize such an empowered culture happily or shirk taking the responsibility. Like the dutiful employees I found in another organization who obediently take the “advise” of the boss before exercising their authority – reminiscent of the statement that is by now trite “I am the boss. I have the permission of my wife to say so”.