Guest Author Blog by Ray Fisman and Tim Sullivan, co-authors of "The Org: The Underlying Logic of the Office."
You may not know Laurence Peter's name, but you almost surely recognize his principle: "In a hierarchy, each employee tends to rise to his level of incompetence."
The idea struck a chord among America's managed masses. "The Peter Principle," a book-length treatment of Dr. Peter's theory of management, spent a year at or near the top of the New York Times bestseller list in 1967. It gave voice to the notion that workers' efforts to get their jobs done were constantly butting up against incompetent and meddling managers.
Not much has changed.
But we shouldn't hate managers. We should pity them instead.
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Managers are tasked with balancing the need to provide incentives and monitor the workforce without destroying the intrinsic motivation and initiative that many employees got hired for in the first place. Indeed, the seeming incompetence and obstructiveness of managers is really just one aspect of what seems, from the worker's perspective, the strange mix of red taped bureaucracy and disorder that is inherent to organizations themselves.
But it's this essential dysfunction that ensures that stuff actually gets done.
In fact, that dysfunction is baked into the nature of organizations. As Ronald Coase, a Nobel laureate in economics, pointed out in 1937, "easy" jobs –like data entry or landscaping, where you can write a description of the task that needs to get done, and verify that it's been accomplished as specified – get left to the market.
It's the fuzzily defined and hard-to-measure tasks – the jobs that most of CNBC's readers do – that the org needs to keep inside, under the watchful eye of the manager, who works at the center of this confusion borne of unmeasurable demands and unquantifiable expectations.
Who has to motivate workers who have complicated jobs, often with multiple components, some more easily tracked than others? The manager.
"They may be disruptive, obtrusive, and their demands often time-consuming."
You might think managers could get results through pay-for-performance. But if a software manager tries to motivate programmers to find bugs in their code, they'll find bugs – but they'll also be motivated to slip in a few programming glitches deliberately, to collect on the bug-finding bounty.
Carefully balancing incentives – quality versus quantity, individual versus team performance, and so forth – requires a lot of information and intelligence-gathering, which the manager can only gather through reports and meetings (oh, the meetings!) that, from the worker's perspective, only serve as interruption to his efforts to get stuff done. And much of what employees do can't really be measured at all, which is why the rest of the manager's time is seemingly spent keeping tabs on who is working diligently and who's slacking off.
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But why can't your manager just leave you alone to get stuff done? You are surely one of the good ones who needs neither motivation nor monitoring. But aren't we all? Organizations, after all, spend vast resources to hire and retain the right talent, which in many cases means those who will do their work whether or not there are hidden cameras to keep them honest or financial rewards and promotion for a job well done.
Zappos, the internet shoe company, is legendary for its extreme customer service. After a week's worth of the month-long customer loyalty training that each new employee receives, the new recruits are offered $2,000 to quit, plus the week's salary they've already earned. Only those with an intrinsic desire to make other people happy will pass up the cash. Other orgs can be nearly as fanatic in employee selection.
But every job has its mundane components. Customer service agents may love to interact with customers and solve problems, but they also need to process orders. Cops might be hired for their love of upholding the law, but they need to file paperwork for each arrest. And let's face it, given the choice between work and slacking off, everyone wants a nap now and again.
This brings us back to the manager, checking in one more time to make sure you got that report done.
But it's all to the greater good, at least as far as the organization is concerned. . Researchers have found that businesses with effective management practices are more profitable. Similarly, they've found higher student test scores at well-managed schools, and even higher heart attack survival rates at well-managed hospitals.
Dr. Peter certainly understood just how hard the manager's job actually was: After the blockbuster success of "The Peter Principle," he was flooded with offers to advise companies on how to better run their organizations. He refused – to do so would be to rise to a level that exceeded his competence.
Playful cynicism is certainly a step up from hate, but, really, managers, stuck between the needs of the organization for incentives and monitoring, and the desire of carefully selected employees to do the right work, deserve our pity and understanding. They may be disruptive, obtrusive, and their demands often time-consuming. But without them, the orgs that actually let us get stuff done couldn't exist at all.
Ray Fisman and Tim Sullivan are the authors of "The Org: The Underlying Logic of the Office."