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Tuesday, 15 October 2019

How do you quantify the impact of managers on an organization’s performance?

How do you quantify the impact of managers on an organization’s performance? A recent study using behavioral economics and psychology seeks to assess the degree to which preferential treatment designed to incentivize managers can affect workplace productivity, the Economist writes. It examines the role of hierarchy in team collaboration, using a public-goods game — a standard of experimental economics that assesses the individual propensity to contribute to a group, in a situation where a person could potentially benefit from freeriding on the contributions of others — and adding key variables. In one game, the group was divided into “managers” and “workers,” with the managers subject to different rules than the workers, and the rules themselves varying from round to round. The results were then compared to those from a game in which there was no hierarchy.

The takeaway: Giving more incentives at the top of the pyramid and more work at the bottom is dangerous. Ultimately, the study supported the idea that, while the mere presence of managers can boost team collaboration and individual contributions, providing special incentives to managers can have an overall dampening effect on performance. Workers are less inclined to be collaborative when they feel they undertake a disproportionate amount of work and receive fewer benefits than their managers. More worryingly, the study also found the managers benefitting from their incentives in “sneaky” ways when they had discretion over the amount they could receive from group contributions, shortchanging the workers.

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