What would your customers say if they could see your expenses claim? The abstemious can rest easy. But extravagant restaurant receipts, first-class travel and accommodation, huge taxi fares – such things might not endear you to the people you are supposed to be serving. You should expect a tough conversation about the prices you charge if customers get the impression you are enjoying the high life with their money.

That is why smart business leaders advise their colleagues to imagine they are spending their own money when they are out on company business. Act like an owner, the adage goes. Be responsible. Think before you splash the company’s cash about.

This is a micro-level example of what has been called the “principal-agent problem”. Even the most senior managers are not, usually, the owners of the business they are working for. It may not be easy for them to think and act like an owner. At the same time, can owners be confident that managers are working in the company’s best interests and not simply pursuing their own selfish agenda?

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July 7, 2009 1:29am in Corporate culture, Management | Comment