• Sat
  • Aug 23, 2014
  • Updated: 3:13am

The vital art of ignoring daft company rules

PUBLISHED : Sunday, 27 September, 2009, 12:00am
UPDATED : Sunday, 27 September, 2009, 12:00am

The human resources department at Caritas Medical Centre must be very pleased with the level of staff compliance with company policy. Getting employees to ignore what must be their natural instinct to help people in favour of administrative procedures is something that most employers can only dream of.

The first example of this was the odd suggestion by a hospital employee last year that a man suffering from a heart attack outside the front of the hospital ought to call 999, whereupon an ambulance could be dispatched to bring him to the hospital where he was currently located. This was apparently in accordance with a spectacularly bizarre company policy.

A more recent example was the decision of the hospital last week to bring a patient from Princess Margaret Hospital to the Caritas Medical Centre in order that he could get better treatment, and then not treat him at all because strangely he was not carrying his birth certificate when he had the accident that caused him to be at Princess Margaret Hospital in the first place.

To have a small boy with an eye injury wait while his grandma ran around trying to find his birth certificate seems an odd thing to do. But it was apparently a correct implementation of policy.

Unlike the Caritas Medical Centre, here at the bank we don't have administrative procedures that could endanger anybody's health. We do, however, have some awkward policies that our compliance department struggles to get anyone to follow. Having read these two stories about Caritas, I'm willing to bet that our compliance folks have tried to get in touch with the Caritas Medical Centre to see if they can look at their training programme.

The banking equivalent of a hospital policy that is bad for your health is a bank policy that makes it more difficult to make money. For example, someone in our compliance department recently came up with a rule that says that each banker can spend only a maximum amount per client per year on client entertainment - a paltry HK$5,000. The idea is that if we are spending too much, there must be something underhand going on, and in the current climate of cost-cutting, this particular number was easily agreed on.

The reality, however, is that client entertainment is an important way of generating revenues, underhand or not. If I stop taking my clients to fancy lunches and my mainland counterparts stop taking their clients to karaoke, we're going to lose money. And in the same way as the Caritas Medical Centre staff's natural instinct would be to help people, our natural instinct is to make money.

But unlike the Caritas Medical Centre staff, instead of ignoring our instincts, we ignore the policy. It is possible to do this without having to make things up, although it requires some level of creative expense reporting, not to mention complicity between the banker spending the money and the banker approving the expense claim.

For example, say we are chasing a juicy equity mandate that will generate millions in fees. In order to make it easier for the client to make the decision to hire us, one of my staff is taking them to dinner at Petrus. The client will bring at least four people, we will order Crystal champagne and probably some equally fine red wine. The bill will easily run to HK$10,000. As this is above the annual maximum, we will have to invite at least two more bankers to ensure that each banker individually claims less than HK$5,000, despite this actually increasing the cost of the dinner.

When I subsequently take the same people to lunch the following week, we are going to have to invite someone from one of the client's subsidiaries so we get a different name on the claim form. The time after that we'll bring along a lawyer or some other third party and put their name on the claim form.

This is no secret and is an accepted part of doing business. Getting around daft internal procedures in order to get the job done is a necessary skill for anyone in a large organisation. The only people who actually care about such policy are the compliance department, and the only people who care about the compliance department are also the compliance department.

There are of course circumstances where internal policies actually make sense and it's hard to ignore those. Rules about not breaking any laws or not leaving confidential information on the bus actually benefit everybody. But when the only people who are interested in the policy are those who make the policy, it's easy to choose between complying and doing the right thing.

Alan Alanson is an investment banker who writes under a pseudonym. Contact at alan@alanalanson.com

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