Understanding our terminal goals is the core challenge of governance. Our terminal goals are to have world-class research and excellent teaching. Our governance activities should focus on promoting these strategic goals, and limiting the effects of other goals on these strategic goals.
It’s easier for me to get reimbursed by stodgy European universities, where I am not an employee, than at Berkeley, where I am an employee and have agreed to the code of conduct. Administrators’ over-compliance incentives cause this dynamic.
All organizations have many “important” goals, so many that there have to be degrees of importance. The most important goals are our strategic goals. Other important values are operational or tactical-level, that is, they are important, but not strategically significant. Operational goals should not displace strategic goals.
In my opinion, compliance is an important, operational goal. But at Berkeley we have elevated the importance of compliance to the strategic level. That is, we allow compliance concerns to interfere with strategic research and teaching goals.
Here are tools we can use to address the problem of compliance-driven leadership:
- What exactly requires us to engage in compliance with respect to this issue?
- Secret: most compliance requirements are not in “law.” The law generally requires “reasonable” efforts. For instance, in reimbursements, tax law requires businesses to engage in reasonable substantiation of employee expenses. Thus, we can define—within reason—what is required.
- Do not accept the argument, “the auditors require this.” All compliance involves professional judgment. We are entitled to question whether the professional judgement is sound. We can push back against the “auditors” and claim that their preferences are unreasonable.
- Example: when I first joined Berkeley, the compliance folks required travelers to keep their airplane boarding passes, and to submit them, taped to a piece of paper, to prove that they actually boarded. We eliminated this burdensome requirement. No law actually required us to keep boarding passes; this was a compliance “requirement” invented by administrators.
- Example: when I first joined Berkeley, many departments required wet signatures for internal compliance exercises—not external ones like sending information to a sponsor, but rather internal ones where an employee is verifying some set of facts to other employees! This was despite the fact that federal laws passed in 2000 allowed e-signatures on much more consequential documents. This is an example of a compliance “requirement” that wasn’t actually a requirement.
- What happens if we do not comply? What is the downside risk?
- Well run organizations accept some business risk. When you eat at a restaurant, the restaurant is accepting the risk that you will dine and dash. At Berkeley, our compliance measures assume you will dash. We don’t need to treat our own employees as dishonest.
Key takeaway: at Berkeley, we’ve allowed compliance to interfere with our terminal goals. To change this, we need leadership at the top (Chancellor and Vice Chancellor level) to go out on a limb and push back against the forces that push over-compliance.
What is the source of over-compliance? UCOP is one major source of compliance obsession. But another is administrators themselves.