Managers who have unchecked power, authority, and autonomy are more likely to engage in unethical and illegal behaviors. How can companies check the power of managers without resorting to micromanaging?
I think that the best method for companies to keep control of their managers and make sure they make good decisions is actually to give them some power and then hold them accountable. When people are not held accountable and seem to have no power, they start not doing their jobs well.
I would think the greatest check companies have in this regard relates to their hiring practices. A good manager can only let loose of the reins when they have good people under them. If a company concentrates on hiring and retaining quality personnel in their middle management positions, then it can limit some of the scope and authority of those in the upper echelons and the whole company will run more efficiently. Worker satisfaction will increase as well, and they will have a steady stream of candidates for upper management when those positions become available.
Micromanagement is not defined in a positive light so is never an option of first choice. Micromanagement is attention to detail and desire for others' success taken to the extreme thus turning a strength and advantage (detailed thought) to a weakness and disadvantage. What you are really asking is how to put in place safety features so that managers do not take unethical and illegal decisons/actions.
The safeguard against unethical business practice is ethical business practice. Yet this is hard to pinpoint because ethics is, at least in some part, the product of an individual's sense of virtuous intrinsic behavior. As portd indicates, a company's first line of defense is to formalize its ethical position as company managerial policy. The second line of defense is to see to it that ethical managerial policy is understood, agreed to, acted on and implemented by all. Business ethics is defined in part by The Institute of Business Ethics as:
"[Business ethics] goes beyond the legal requirements for a company and is, therefore, discretionary. Business ethics applies to the conduct of individuals and to the conduct of the organisation as a whole. It is about how a company does its business, how it behaves intrinsically.” [quoted from Adrian Waite (Independent Consultancy Services) Limited]
First off, managers who have unchecked power, authority, and autonomy probably should be micro-managed to some extent. It's unwise for a business owner or group of owners to give this freewheeling authority to a manager - for the exact reasons stipulated in the original question - the possibility that they may engage in unethical and illegal behavior.
Managers given this type of authority must have some type of oversight person or committee monitoring their activities and performance on a regular basis. This oversight can take place without hampering the creative talent of the manager, still giving them ample freedom to run their department(s) as they see fit. However, knowing an oversight mechanism is in place to hold them accountable will help keep them in check and hopefully discourage any illegal or unethical activity.
By definition, you cannot check the power of a manager who has unchecked power. So the problem is really a matter of making sure that you don't give management unchecked power to start with.
1. Clearly establish expectations for management and then have their superiors actually check up on them.
2. Develop a system of feedback in which the manager's employees can anonymously comment on the manager's performance and behavior.
Thank you'll for your responses; this will be very helpful for others and me. Know I have a better understanding.