Norm Augustine was born in 1935 and helmed both Martin Marietta and Lockheed Martin corporations. He had a long and distinguished career in public service. We reported on his Committee’s efforts to evaluate and direct the United States’ manned spaceflight program. A glance at his Wikipedia page reveals a life replete with the highest levels of leadership and service.

So when he says something, we think everybody ought to listen to him.

One of our prized possessions is his book, Augustine’s Laws, published in 1997—more than fifteen years ago. We had occasion to page through it once again recently, and we were struck, once again, with the penetrating insight of the man. There are fifty-two Augustine’s Laws. Today we want to share two of them with you.

On audits and auditors—

Auditors, reviewers, inspectors, and other forms of overseers perform a truly important role, but that role can be beneficial only when applied constructively and with considerable moderation. The prevailing trend would suggest the existence of an explosion in the overseer business, with an ominous threat approaching that there will soon be no one left for the auditors to audit. When this day of an infinite watcher-to-worker ratio arrives, it will presumably be necessary to focus audits on the mistakes which would have been made had in fact there been anyone doing anything. … Chuck Mills, a former football coach at Wake Forest, reminds us that a spectator is a person ‘who sits forty rows up in the stands and wonders why a seventeen-year-old kid can’t hit another seventeen-year-old kid with a ball from forty yards away … and then he goes out to the parking lot and can’t find his car.’

An auditor, like any good Monday-morning quarterback, endowed with the 20-20 hindsight of his profession, can never be wrong. This is the beauty of the field. … Auditors are the only people who if four are gathered in a room will have eight opinions as to why whatever went wrong went wrong. But no one can ever doubt that, given the choice, it is better to be the mugger than the muggee. …

A new branch of specialization is now emerging in order to assure that the auditors are themselves performing their assignments effectively; this new branch is called watching the watchers. The possibilities for still further expansion of this specialty are boundless: e.g., watching the watchers watch. The creation of such opportunities represents a breakthrough in that it ensures the perpetuation of the auditing and reviewing trades even in the dread event that the last individual actually doing any work gets fed up and decides to join the legions of watchers overseeing his meager output. …

The process of evaluating proposals submitted by competing companies seeking government contracts serves as an example wherein truly enormous numbers of man-hours are expended not so much to assist the decision-maker in making good selections but rather to build a protest-proof audit trail. … Any bureaucrat worthy of the name will soon strategize that a fail-safe way to guard against criticism is never to take a risk ... Extrapolating the theory that the only people who never make bad decisions are those who never make any decisions, we can logically conclude that the only people whose work cannot be criticized are those who produce no work. …

All of which leads to Augustine’s Law of Perpetual Emotion, borrowed from naval lore and based in turn upon the observation that auditors seldom acquire ulcers, although many are suspected carriers:

Two-thirds of the Earth’s surface is covered with water. The other third is covered with auditors from headquarters.

On controlling overhead costs—

There are probably few areas of management more challenging or fundamentally cantankerous than seeking to control overhead costs. This is perhaps in part because there are few areas in management wherein managers themselves can be said to be so literally a part of the problem—or, as it is sometimes called in moments of descriptive candor, ‘The Burden.’ …

It is, of course, a widely accepted tenet of business economics that in hard times overhead rates tend to creep upward. This is logically explained by the need to spread fixed costs over a smaller business base, exacerbated by less efficient production rates and the need for increased research and marketing to help reverse the downward sales trend. Managers therefore happily anticipate the day of an increasing sales base when the opposite will be true and overhead rates will properly and almost automatically reduce themselves. ...

The figure [in the book] clearly confirms that in times of decreasing base, overheads do indeed increase. But, alas, it additionally confirms, as is widely suspected by most modern-day practicing Don Quixotes of management who have jousted with overhead costs, that in prosperous times overhead rates also tend to increase. … It has been widely observed in this vein that, for example, adding floor space to house more people causes [workforce] employment to decline. The additional cost of the space leaves less money with which to pay a staff. …

Hardly a manager is alive today who has not experienced surprise and puzzlement at finding both base and overheads rising, contrary to all expectations and diligent efforts, during a period of good times. … to the eternal frustration of managers who seek to put major overhead reductions into effect, the principal impact of their actions is usually no more than to set into motion once again what has historically come to be known … as ‘The Great Timecard Hunt,’ wherein all employees immediately shift first priority to seeking each day the timecard which authorizes them to remain on the payroll. …

Any pragmatic manager having had the facts of life explained by his subordinates will thus dutifully realize that Augustine’s Law of Insatiable Comfort must, regrettably, be recognized:

Decreased business base increases overhead. So does increased business base.

Thus endeth this dissertation on two of Augustine’s Laws. Search for the book and buy it; you will not regret reading it.