I'm a big proponent of treating people like grownups. Hire the best candidates you can afford, help them accomplish the goals set out for them and stay the hell out of their way so they can get stuff done. If someone betrays that trust, then you let them go and give someone else a shot at the job.
Implicit and, I would think, obvious is that the boss has to check up on things from time to time.
Someone at the SEC totally dropped the ball on the checking up part. Dozens of folks were surfing porn. One guy even had a bunch of "access denied" errors logged for porn. The article doesn't punch in to job specifics, but you have to wonder if these folks were working instead of... well, doing other things on government time how much of the financial disaster could have been averted.
The worst part is how easy it is to check the internet access logs for abuse.
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