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Smart modern companies arrange it so that upper management never has that sort of moment. They break the law by setting up perfectly legal incentives and requir

Smart modern companies arrange it so that upper management never has that sort of moment. They break the law by setting up perfectly legal incentives and requirements that just happen, by their combined effects, to encourage or even require the minions to break the law. At no point is this ever acknowledged, and there is almost always a clear written policy stating that employees are expected to obey all relevant laws and regulations. This ensures that, when systematic fraud like this is uncovered, there is nobody to take responsibility and nobody has to go to jail, or at least nobody who matters.

baroffoos 8y ago
So just apply a massive fine to the company itself.
- simonh 8y ago
  All fines come out of executive bonus payments first.
  - koolba 8y ago
    No they don’t. On the contrary executive pay, is often locked in and any fines come out of shareholders bottom lines. If anything, rank and file employee bonuses are the ones that will take a hit as their “bonus” compensation is not guaranteed by contract.
    - AlexTWithBeard 8y ago
      The pays are locked, the bonuses are usually not. There may be a sign-up bonus (rarely) or a golden parachute (even more rare), but the whole idea of the bonus is to be tied to the company performance.
      - DataWorker 8y ago
        It seems like there are numerous examples that prove you wrong from Goldman Sachs to PG&E.
        AlexTWithBeard 8y ago
        Can you elaborate your point about GS, please? I don't think they had a single year of losses, at least since 2006. https://www.macrotrends.net/stocks/charts/GS/goldman-sachs/net-income https://www.macrotrends.net/stocks/charts/GS/goldman-sachs/n...
        DataWorker 8y ago
        It was very well covered in the news at the time. http://mobile.nytimes.com/2009/07/31/business/31pay.html http://mobile.nytimes.com/2009/07/31/business/31pay.html
    - tome 8y ago
      I think simonh was making a proposal rather than a statement of fact.
thaumasiotes 8y ago
> They break the law by setting up perfectly legal incentives and requirements that just happen, by their combined effects, to encourage or even require the minions to break the law. I don't see why this is supposed to be a problem. (Barring "require", but I'm betting you're just exaggerating there.) Any incentive is going to encourage the incentivized party to break the law. That's the point of the law, protecting some people from what other people want to do to them. Right now, I'm incentivized to take all your money, because more money is better than less money. And there have been people who saw this fact and decided the problem was the concept of money. But those people were and are insane.
- mikeash 8y ago
  > (Barring "require", but I'm betting you're just exaggerating there.) I don’t think so. All you need is a simple quota that is too high to be achieved naturally. A common example is credit card signups. The company requires some percentage of a worker’s customers to be signed up for the company card. That percentage is too high to be achieved by honest means. Result: workers lie about the card, get people to fill out the form by saying it’s just a bonus card, or just sign people up without their knowledge. I’d bet the same sort of thing happened here. They had a quota where a certain percentage of customers who came in for a free diagnostic had to be sold services. The actual percentage of customers who needed work done was lower than that. Result: workers fake the need for service, and executives keep their hands squeaky clean.
  - Bartweiss 8y ago
    > a simple quota that is too high to be achieved naturally As I recall, Dilbert nailed this one decades ago. "Welcome to sales training. We don't ask you to act illegally, but it's pretty much the only way to reach quota. That's it for training." It works best at large, high-turnover companies; even if only 10% of the people you hire are willing to break the law, you filter out the honest people pretty quickly. And once fraud is common enough, it becomes culturally accepted, or inescapable via rules like "fire the bottom 20%". Sometimes it even ends up taught as a "best practice" to honest hires who don't know better. Hence credit card signups, hence fake Wells Fargo accounts, hence Comcast assigning reps to upsell on a percentage of all calls, even cancellations and complaints. Heck, this is pretty much how game dev 'crunch time' works too; it's not scheduled, so there's no one to blame, but development targets get set so that it's a predictable outcome on every project.
BucketSort 8y ago
The ability to make accountability disappear seems to be one of the greatest tricks we've learned in modern society. You hit the nail on the head, this idea of setting an environment where criminal behavior is emergent is a great trick. If you do it right and the emergent behavior is revealed, you will always have the defense of "I did not intend for this to happen," deferring blame to complexity and other things outside one's control. Is there a handbook or something that outlines these types of tactics?
- colonelpopcorn 8y ago
  The Prince by Niccolo Machiavelli?
  - BucketSort 8y ago
    Maybe. The art of war may be a good candidate as well. It is all games of power in the end. The only twist in modern dealings is that you have to maintain an identity of innocence while doing nasty things, but I guess deception like this has always been a key part of warfare. We just have a greater focus on the innocence game than ever before. Then again, there has always been questions of piety and alignment with the greater good. Things just look different now, but they are the same old games. It's like we are adding different numbers and claim it to be entirely different from previous calculations, but in the end it's the same game, just different characters.
    - chessturk 8y ago
      > Then again, there has always been questions of piety and alignment with the greater good. The intresting thing is there's no specific source of "piety" in the religiously/ philosophically divided West. Even if someone's moral failings get exposed, currently, every devil has an advocate.
- Nasrudith 8y ago
  I don't think it is all that modern - see the infamous "rid me of this turbulent priest". As for a handbook likely not as it would be what turns a perfect crime to a convictible one.
jasonwatkinspdx 8y ago
While this is a cynical thing to say, unfortunately it's rather true in my experience. When I was younger I briefly worked for Wells Fargo as part of their mortgage pipeline. It was immediately clear to me that their quality control system was deliberately designed to incentivize employee fraud in favor of getting mortgages sold.
cameldrv 8y ago
See, to me, this isn't that big of a problem. Corporations have in many ways been granted personhood. Besides, as people are saying, sometimes violating the law is more of an emergent property of the corporation rather than the misdeeds of any individual. So, the solution is simple. If the penalty for a multimillion dollar fraud is going to prison for a few years, send the company to prison for a few years.
naveen99 8y ago
Maybe one can just refuse to do the implicitly illegal behavior, before they make the illegal policy explicit and which then gets completely repealed.
- mikeash 8y ago
  Sure, and then you’ll get fired for failing to follow perfectly legal policy, or failing to meet perfectly legal goals.

baroffoos 8y ago

So just apply a massive fine to the company itself.

simonh 8y ago
All fines come out of executive bonus payments first.
- koolba 8y ago
  No they don’t. On the contrary executive pay, is often locked in and any fines come out of shareholders bottom lines. If anything, rank and file employee bonuses are the ones that will take a hit as their “bonus” compensation is not guaranteed by contract.
  - AlexTWithBeard 8y ago
    The pays are locked, the bonuses are usually not. There may be a sign-up bonus (rarely) or a golden parachute (even more rare), but the whole idea of the bonus is to be tied to the company performance.
    - DataWorker 8y ago
      It seems like there are numerous examples that prove you wrong from Goldman Sachs to PG&E.
      - AlexTWithBeard 8y ago
        Can you elaborate your point about GS, please? I don't think they had a single year of losses, at least since 2006. https://www.macrotrends.net/stocks/charts/GS/goldman-sachs/net-income https://www.macrotrends.net/stocks/charts/GS/goldman-sachs/n...
        DataWorker 8y ago
        It was very well covered in the news at the time. http://mobile.nytimes.com/2009/07/31/business/31pay.html http://mobile.nytimes.com/2009/07/31/business/31pay.html
  - tome 8y ago
    I think simonh was making a proposal rather than a statement of fact.

thaumasiotes 8y ago

> They break the law by setting up perfectly legal incentives and requirements that just happen, by their combined effects, to encourage or even require the minions to break the law. I don't see why this is supposed to be a problem. (Barring "require", but I'm betting you're just exaggerating there.) Any incentive is going to encourage the incentivized party to break the law. That's the point of the law, protecting some people from what other people want to do to them. Right now, I'm incentivized to take all your money, because more money is better than less money. And there have been people who saw this fact and decided the problem was the concept of money. But those people were and are insane.

mikeash 8y ago
> (Barring "require", but I'm betting you're just exaggerating there.) I don’t think so. All you need is a simple quota that is too high to be achieved naturally. A common example is credit card signups. The company requires some percentage of a worker’s customers to be signed up for the company card. That percentage is too high to be achieved by honest means. Result: workers lie about the card, get people to fill out the form by saying it’s just a bonus card, or just sign people up without their knowledge. I’d bet the same sort of thing happened here. They had a quota where a certain percentage of customers who came in for a free diagnostic had to be sold services. The actual percentage of customers who needed work done was lower than that. Result: workers fake the need for service, and executives keep their hands squeaky clean.
- Bartweiss 8y ago
  > a simple quota that is too high to be achieved naturally As I recall, Dilbert nailed this one decades ago. "Welcome to sales training. We don't ask you to act illegally, but it's pretty much the only way to reach quota. That's it for training." It works best at large, high-turnover companies; even if only 10% of the people you hire are willing to break the law, you filter out the honest people pretty quickly. And once fraud is common enough, it becomes culturally accepted, or inescapable via rules like "fire the bottom 20%". Sometimes it even ends up taught as a "best practice" to honest hires who don't know better. Hence credit card signups, hence fake Wells Fargo accounts, hence Comcast assigning reps to upsell on a percentage of all calls, even cancellations and complaints. Heck, this is pretty much how game dev 'crunch time' works too; it's not scheduled, so there's no one to blame, but development targets get set so that it's a predictable outcome on every project.

BucketSort 8y ago

The ability to make accountability disappear seems to be one of the greatest tricks we've learned in modern society. You hit the nail on the head, this idea of setting an environment where criminal behavior is emergent is a great trick. If you do it right and the emergent behavior is revealed, you will always have the defense of "I did not intend for this to happen," deferring blame to complexity and other things outside one's control. Is there a handbook or something that outlines these types of tactics?

colonelpopcorn 8y ago
The Prince by Niccolo Machiavelli?
- BucketSort 8y ago
  Maybe. The art of war may be a good candidate as well. It is all games of power in the end. The only twist in modern dealings is that you have to maintain an identity of innocence while doing nasty things, but I guess deception like this has always been a key part of warfare. We just have a greater focus on the innocence game than ever before. Then again, there has always been questions of piety and alignment with the greater good. Things just look different now, but they are the same old games. It's like we are adding different numbers and claim it to be entirely different from previous calculations, but in the end it's the same game, just different characters.
  - chessturk 8y ago
    > Then again, there has always been questions of piety and alignment with the greater good. The intresting thing is there's no specific source of "piety" in the religiously/ philosophically divided West. Even if someone's moral failings get exposed, currently, every devil has an advocate.
Nasrudith 8y ago
I don't think it is all that modern - see the infamous "rid me of this turbulent priest". As for a handbook likely not as it would be what turns a perfect crime to a convictible one.

jasonwatkinspdx 8y ago

While this is a cynical thing to say, unfortunately it's rather true in my experience. When I was younger I briefly worked for Wells Fargo as part of their mortgage pipeline. It was immediately clear to me that their quality control system was deliberately designed to incentivize employee fraud in favor of getting mortgages sold.

cameldrv 8y ago

See, to me, this isn't that big of a problem. Corporations have in many ways been granted personhood. Besides, as people are saying, sometimes violating the law is more of an emergent property of the corporation rather than the misdeeds of any individual. So, the solution is simple. If the penalty for a multimillion dollar fraud is going to prison for a few years, send the company to prison for a few years.

naveen99 8y ago

Maybe one can just refuse to do the implicitly illegal behavior, before they make the illegal policy explicit and which then gets completely repealed.

mikeash 8y ago
Sure, and then you’ll get fired for failing to follow perfectly legal policy, or failing to meet perfectly legal goals.