Managers are an internal police force hired to protect the interests of owners against theft (or adverse negotiation, overcompensation, etc.) by employees. The difference is that we need police in society. Companies don't need a separate police force; ideally, they're self-policing.

I wrote about these incentive and principal-agent problems in detail: http://michaelochurch.wordpress.com/2013/03/26/gervais-macle... . Essentially, there need be no conflict of interest between employees and investors/owners. In fact, employees are investors-- of time.

Like police, most managers (by numbers) are good people but the dirty ones are really awful-- and usually get rich. In the corporate context, this is because they get so good at taking credit (the actual A players fear them) that they look like high-performers and rise quickly.

What happens in the worst companies is that owners are protected against low-level workers but robbed by the managers. They fall down hard on the "who will police the police?" question.

A small group of people, if there's full transparency about what's going on and how proceeds are divided, can be self-policing. Rick Grimes is no longer the sheriff of his group of ~10 people. They all take on the "police work"; even children. Yet cities of 4 million and nations of 100+ million need a specific police force. They can't do without them. At that scale, it's a necessary job.

By the time your company needs a police force-- it's spending a substantial fraction of its budget protecting against theft (mainly, "time theft" by an employee who favors personal interests)-- it should be scaled back and hiring made more selective, with transparency improved to make sure incentives are aligned and behavior is above-board and ethical. Cities and nations need cops because they don't fully control who gets in (or is born there); small companies aren't the same way and can be self-policing.