Remembering Managerial Dilemmas — July 8, 2012

Remembering Managerial Dilemmas

A conversation with a friend over brunch reminded me of a really thought-provoking book I reviewed a few years back, namely Gary Miller’s [book: Managerial Dilemmas: The Political Economy of Hierarchy].

The basic idea in Miller is that, if your organization (company, team, university, whatever) is judged on the basis of how it performs overall, then everyone has an incentive to slack and let everyone else do the work. But since everyone is subject to the same incentives, everyone slacks and the whole thing goes to shit (technically speaking).

Likewise, your company has every incentive to screw you and not, say, invest in educating you; after all, why pay for you to get a master’s degree if you’re just going to take their investment to another job?

Somehow both sides need to agree to disarm: the company needs to credibly (and in a certain sense irrationally) signal that it’s going to support its employees, even though it has no guarantee that they’ll reciprocate; and employees need to credibly (and in a certain sense irrationally) signal that they won’t slack, even though they have no guarantee that the company will reward them.

Turns out it’s a hard problem. I don’t recall Miller talking about this at all, but it seems clear to me that government has a role to play here: since companies can’t be trusted to supply me with a pension that will help me in my old age, let’s make Social Security really good. And since companies can’t be trusted to pay for my master’s degree, let’s have the government subsidize advanced degrees. There are obvious problems with this, but it’s not clear that they’re worse than the economy as she already works.