Friday, August 19, 2005

In Support of Klingon Culture

With all the corporate scandals in America, the recent problems at NKF and the numerous times we have witnessed issues arising because someone was “just following the bosses instruction”, it made me think of the failures in checks and balances that has allowed such things to happen. In most cases, the external institutions (e.g. auditors) that were supposed to act as the check and balance were found wanting. Anyway, external agencies can never know the details of an organization as well as those on the “inside”. So, I am implying that organizations need to police themselves. But is that possible to do effectively? Isn’t that a conflict of interest? That is when I thought about how things are done by the Klingons (of Star Trek fame).

In the Klingon world, it is well known and accepted that the duty of someone in a position of responsibility (lets say an officer) is to keep his/her superior in check. Ultimately he/she is even allowed to kill the superior officer if it is thought that the superior’s actions would endanger the common good. Of course, I am not advocating murder, but you get my point! If all those in positions of responsibility or authority have a deputy whose duty it is to be the check and balance, we would probably have less scandals, although perhaps more debates!

I believe this is similar to the concept of “dual control” which is already commonly used in Financial Institutions where much of the risk is mitigated by separating processes that entail access to money. Such processes are split into separate units (whether it is separate individuals, as in a combination to a safe, or separate departments, as in a trading room and its limits). It is precisely because this principle separation of responsibilities was negated that Nick Leeson was able to rack up such a huge position that ultimately brought down Barings Bank in Singapore.

Imagine, if every President had to look over their shoulder to ensure that the Vice-President agreed with his/her actions before doing something. If every Deputy Prime Minister was watching the PM for any poor decisions, you would probably get slower government and management but you would probably also have less risk and scandals.

Lets have a more Klingon culture I say…!


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