Crap organisation: An occasional series. No. 1: the circle of escalation

A phenomenon that may happen in an organisation of a certain size and is guaranteed to in a big one, the circle of escalation resembles a 4x100 medley relay, only one where contestants carry a stalk of limp celery rather than a stiff baton.

It plays out as follows:

A salesperson approaches you with what is, on its face, a narrow and uncontroversial question — one to which, in your direct recollection, the salesperson already knows the answer. This is a sure sign she is indulging in compliance arbitrage where, while after a fashion she presents the whole picture to the internal control functions, she does so in several* instalments, each so thinly-sliced as to present only those facts the salesperson considers sufficiently germane to question (and helpful to her cause).

As a seasoned compliance professional, you adopt the standard approach: ostensible approval, hedged around with caveats deep enough for you to jump into and hide in later on, should shots ring out in the aftermath:

“I would be inclined to be okay with this, subject to you confirming the withholding position with Tax,” you say, happy that you have passed the tangled skein off your desk.

Of course, the tangled skein has not magically winked out of existence. It has ascended from your desk, hovered momentarily, and thudded on some one else’s. The poor blighter who owns that desk, in the Tax department, will have the same aspiration as you: efficiently to pass le petard on. To fulfill it, she will take the same approach:

“There may be an increased risk of retrospective withholding which is hard to quantify,” she will say, “but as long as the desk is prepared to absorb that additional risk then I have no objections.”

So, along the chain it goes to the trader, a young whippersnapper who will neither know nor care what “absorbing additional tax risk” is, and certainly won’t want to be responsible for it. He will pass it up his line management, a better-coiffed version of himself, but possessing no greater insight into tail tax risk, who will in turn steer the query to his chief operating officer, a chap who is nothing if not expert in retrospective withholding risk**.

And so on.

Eventually this query will get to a level of exaltation in the firm whose personnel are known by all — not to their faces, of course — by only familiar versions of their Christian names. Chuck will say, “In principle I would be inclined to be ok with this at this stage, but can you just run this by Chip to make sure he has no issues.”

Chip is the general counsel, a handsome silvered fifty five year-old with the bearing, and legal acumen, of a 747 pilot.

You know exactly where he’s going to send it, don’t you.

And so the wheel of corporate existence revolves. Sales will demand that you now confirm your approval in writing. You will wantonly neglect to do so, and through the effluxion of time this organism we call the modern multinational will resolve on the course of proceeding, along the way having neatly tranched up, distributed and diffused all responsibility for its direction in a way that will never come back to bite anyone (at least until all concerned are elsewhere in the financial firmament).

Notes

*Legally several, that is. As in the sense of “not joint”.

**That is, he is nothing.