Checks and balances is one of the most important principles for making decisions and getting things done in a highly complex organization. While we primarily associate checks and balances with the US system of government, I believe that it equally applies to any other complex organizational system. It implies an organizational structure and a set of procedures to ensure that no one unit or individual has too much power over major decisions, especially those decisions that, if wrong, could have serious consequences. It forces the different parts of the organization to cooperate. It trades off short term efficiency and speed in favor of the longer term stability of the institution.
Most large companies have set up some form of check-and-balances organizational structure, often embodied in the separation of line and staff management. There is a built-in contention system in such an organizational structure. In addition to supporting the line functions, the staffs serve as the checks-and-balances of the company, making sure that the activities of all departments and individuals follow the company’s strategy and are in compliance with business, legal and regulatory requirements.