Rules and procedures are the strategic link between an organization's goals and its day-to-day operations. Well laid down rules & procedures allow employees to understand their roles and responsibilities within predefined limits. Policies and procedures identify the key activities that provide a general strategy to decision-makers on how to handle issues as they arise. This is accomplished by providing the reader with limits and a choice of alternatives that can be used to "guide" their decision making processes. There may be a case when the authority may not dispatch his duties as proscribed. Such an abuse of entrusted authority for personal gain is known as corruption. Fundamentally there are two distinct types of corruption. The former occurs where services or contracts are provided "according to the rule." and the later when transactions are "against the rule." In the first type, the decision maker is receives private gain illegally for doing something that he or she is ordinarily obliged to do by law. In the second type, a bribe is paid to obtain services that the official is prohibited from providing. In addition corruption in an organization may take several forms and involves a wide range of actors. It may involve bribes, theft of public funds or property, cronyism, political interference, criminal extortion, embezzlement or hierarchical pressures within the organization. So a meticulously laid down set of guidelines is necessary to govern the behavior of officials under such circumstances. Hence the role of rules and procedures in curbing corruption for any business is pivotal one.
Proficiently laid down rules and procedures will help eliminate common misunderstandings by identifying job responsibilities and establishing boundaries for powers of the job holders. These procedures will aid in doing away with the illicit use of position. Consider the case when a company employee is not delivering the goods. Without policies and procedures a manager or owner could be creative or capricious in how he/she handles the situations. They may give the employee more help in terms of training, let the employee slide on discipline or terminate the employee. Management has complete discretion to do what they want. Moreover, in a few cases the employee concerned may use external influences or grafts to stay in the organization. But with rules and procedures expertly jotted down, the governing body will not have any trouble in making accountable and impartial decisions.
At the same time, rules and procedures help the larger organizations in reaching decisions under debatable circumstances and maintain transparency. Let us say that employee X (minority) was terminated and employee Y (majority) was given additional training. Without a framework of guidelines it could be concluded that the company willfully discriminated against the minority employee. They had no legal basis for the decision they made. The termination was questionable and could have been initiated out of personal interests. While in reality, Employee X was terminated because he/she had accrued a number of negative disciplinary actions but employee Y was given additional training because it was his/her first infraction. Since this was outlined in the manual the company has justified its decision. With a policy & procedure manual the decision makers have adhered to an implied contract of terms of employment between the company and the employee, willingly or forcibly, thereby avoiding conflict with personal gains and hence promoting transparency and equity.
Furthermore, as the organization grows larger the vision and motives of the employees may not be aligned with those of the company. As the grades of employee increase, so do the chances of their decisions being clouded by corruption or externally influenced. Having well drawn rules keeps everyone thinking along the same lines and keeps corruption under check.
With all said, excessive rules and procedures too can be harmful to an organization. As the complexity and number of rules and procedure grows the propensity of unregulated behavior increases. The lack of requisite information makes the employees or customers unaware of their rights and vulnerable to discretionary treatment and exploitation. In addition greater the number of procedures, greater will be the window of opportunities for corruption. Besides lack of information, assigning a high degree of discretion power without adequate vigilance, monitoring and reporting system will lead to higher subversion rates. The greater the discretion, the greater the opportunity the officials have to provide “favorable” interpretations of rules and procedures to their customers in exchange of illegal payments.
Another detrimental effect of elaborate rules and procedure is slow dispatch of vital decisions and retarded growth which in turn feeds corruption. This red-tapism has a snowballing effect starting from higher administration to lower echelons. The officials take advantage of their positions to hold up or change decisions for personal interests. Administrative efficiency is at a low level because patronage and nepotism tend to encourage the recruitment of incompetent people. This induces a corrupt mindset in the organization and even honest individuals abet as “team players” in the whole exercise. In addition to the time taking decision making progress, the rigid rules also deter innovators leaving them at the mercy of corrupt officials. Lack of flexibility and the slow progress frustrates innovators, thereby forcing them to resort to corrupt ways. Finally, even businesses do not want a lot of rules and procedures because they limit management’s control and creativity.
Corruption is like diabetes, can be controlled, but not totally eliminated. A more realistic goal will be to restrain it within tolerable limits. Rules and procedures, if designed according to the needs of the region and business, have the potential to check and combat corruption. But a delicate balance should be established between rigidity and flexibility of these rules, avoiding either extreme. This must be rightly coupled with a check and balance mechanism to ensure efficacy. Taking everything into account it can be safely concluded that rules and regulations have a crucial role in the reduction of corruption in a large profit oriented organization.
