He who pays the piper calls the tune: The Importance of Structure

I used to work for a company where my job was to set up a system that determines the efficiency and effectiveness of their marketing programs and hence marketing spends. Nothing wrong with that intent. But I was reporting to the marketing department itself.

So what would happen if I found that some programs were not performing well, and so it was not money well spent? Well, some marketing head somewhere would, perhaps, lose his budget. So unless I ‘showed some tact’, I constantly found myself to be at the receiving end of objections on formats, data sources and discussions on ‘whether we are measuring the right things’! That is after everyone agreed that this is important to measure.

So the good intent of wanting to assess marketing spends was of no use. Primarily due to the structure. Or so I thought – may be the intent was also not there. Whatever it was, clearly, my salary was being paid by the same people whose existence I was threatening.

Well, that may be a bit far-fetched, but the point is – structure is important. A few observations over the past few days suggest that a number of problems are structural. And designing structures for people to follow is a big problem. Specially if there is lack of alignment on what that structure is supposed to achieve, who it reports to, and who pays for it. And so people who design structures have to be extra careful, that they are not prey to the universal truth that he who pays the piper calls the tune.

Because no one generally wants to challenge the source of their dough. And if there is a conflict, well – generally, the source of the dough will win.

Like I have never understood how auditors – financial, process or any auditor for that matter – can be fully independent, when their fees are paid by the same management whose functions they are auditing?

Like I wonder how a financial adviser who is used to getting his fees from the fund house whose products he sells, or a stock broker whose revenues depend on how much you transact, can ever provide independent advice that is solely in the investor’s interest?

Even independence needs to be paid for. So unless someone is paying a piper to be independent, the tune he gets will not be independent. So be it policing agencies or regulators like SEBI or IRDA. Their tunes also depend on who is paying the piper and for what tune. And that definition has to be structural.

Like recently a set of cricket commentators were said to toe the administrators’ views in their supposedly unbiased commentary. Well, nothing personal, but how can anyone be unbiased if the structure of their contracts does not support it?

Like how can one expect newspapers or media who are dependent on advertising revenue say anything against the people who pay for the advertising?

Well, these are not unsolvable problems if you have the right structures in place. But they are structural problems, and anyone caught in those structures will face the pressures of conflict. And it is not easy to design such structures.

Like how can the Lokpal structure whose job it is to investigate corruption in government, report to and be paid by someone whom he is supposed to be investigating?

Well, it is a problem of structure. And structure is driven by intent. No easy solutions, but if there is no intent, the right structure will not evolve. And if there is no structure that allows scope for an independent voice, well, then there is no point in even expecting much. Because finally he who pays the piper calls the tune.