Middle Management Tragic Heroes

  1. History Of Management: The science of management is an emergent body of knowledge from a post-Industrial Revolution experience of deconstructing work and aggregating workers, whence patterns manifest and allow us to observe, manipulate, and formulate such theories as operational cycle time, bottlenecks and bullwhips. An empirical science of management means we can quantify failure and success to such minute degrees that efficiency can practically be stimulated in real time. So a Manager is simply a proficient exponent of the science of Management, scientifically approaching his medium of study. As margins become razor thin in an intensely competitive environment, the amount of a firm’s work that falls under the scope of management science increases. More importantly, the frequency with which things need to be actively managed increases disproportionately for those things that can be most easily managed, creating a skew in the distribution of tasks. Like a fractal respiratory system, the simple set of instructions gets replicated at each level, with the Manager at each level operating under the same assumptions as those given by Management science to the very top, ie that no task is outside the purview of management, and no frequency is too frequent. This creates a huge sagging belly of middle managers completely divorced from the reality of value-addition, because there is no Middle Management Science.
  2. Game Theoretic Hierarchies: It is a natural consequence of a logically organized hierarchy to have the CEO, the Alphette-Dog get disproportionately high rewards for her position, ie disproportionately higher than the value she adds to the organization. This isn’t corruption, it’s game theory. This practical sinecure serves as a huge incentive for the many Beta-dogs all competing for the single Alpha position. The additional value created by the competition among Betas chasing a heroic prize makes up for the gap between the CEO salary and the actual value she adds to the organization. As the organization grows and fragments into more and more divergent branches, the principle remains intact, ie Salary of A (Sa) — Salary of B (Sb)= Output of B given A’s salary (Pb/Sa) — Output of B normally (Pb). At each level this equation is replicated, at lower intensities because as absolute salary decreases, the sensitivity of productivity decreases too. I’d work much harder for a $1M hike than a $1000 hike. This means viewed from below, every single level of the hierarchy has a remuneration based on a subordinate’s productivity, a seemingly parasitic relationship that we intuitively find unfair.
  3. Status-Seeking Individuals vs Goal-Seeking Organizations: We are all selfish creatures maximizing our individual gains. Corporations are doing the same thing. The task of management is to align these two gains such that selfish creatures in the course of their self-regarded actions will also contribute to the objectives of the firm. A simple sales commission structure, for instance. This can quickly lead to market failures where incentives are either imperfectly aligned or perfectly misaligned. Hence Nick Leeson took down Barings on his own. Competitive office politics reduces the productivity of a work environment instead of increasing motivation. Most insidious of all, the currency of motivation ceases to be simple quantifiable things like salary, benefits, insurance and free coffee, instead turning to the one drive that rules them all, Status. The fractal organization is a petridish for a lethal status infection, by creating a multitude of levels, the reptilian Status-seeker is forever titillated, never satisfied. Every level has a level above to be submissive to. Every submission causes a larger drive for dominance over the levels below. Since the firm exists only to make money and not to institutionalize status in society, the objectives have quickly become misaligned.
  4. Game Theory Mediated Equilibrium: We get annoyed with middle managers who are simply supervisors, adding no value except as sentries in a corporate panopticon that ensures we churn out as much output as is expected from us. These managers are glorified Geiger counters measuring human productivity, badly, idiosyncratically, and with too much glee. But that’s a classical view of Management that has no place in the world of today. If 5 people have outputs 100 alone, there are 2 ways a firm gains from active management. 1) Motivating them to each produce 120 through incentives, hence creating 100 extra in production, and 2) Realizing gains from cooperation, unlocking synergies such that 5*100 > 500. Middle Management has no role to play in the first, yet is dominantly involved in it because of our archaic philosophy of management. MMs have a huge role to play in the second. Removing redundant overlapping tasks. Providing the channel for flow of information. Exploring non-zero sum opportunities. This is a very different skill from the ones we ordinarily recruit or train.
  5. Peter Principle: If ABCDE work at Level 1, reporting to Level 2. Who gets promoted? Currently we either promote the best performing Level 1 worker, say A. Or we promote the one best suited to lead the others, B with highest status or respect or authority for instance. That’s why the Peter Principle exists, A and B are promoted until they reach peak incompetence. An inescapable local maxima. Instead, the worker we’re trying to promote needs to be the one who’s best abstracted the competences of all 5 workers at his level, identifying connections, conflicts and cooperative opportunities that arise between them rather their competence at interacting with the outside world (doing their job) or with the level below (doing their boss’s job). We promote C, best placed to unlock non-zero sum interactions between a team of individuals hence adding more value than workers operating independently would. A mediated Nash equilibrium where the MM isn’t the boss at Level 2, but worker F at level 1 who understands the other 5 workers as a unit and assigns them tasks. A dispatch worker for cops, as opposed to their captain.
  6. Tall Poppy Syndrome: There’s a curious Indian attitude I seem to have internalized without question, one that sneers at the nouveau riche. Old money aristocrats sneer at the nouveau riche for being posers. But why do we, us casuals boasting neither oldness nor money? What exactly do we find trashy about new money? I seem to be saying, despite all that money you’re still acting like the poor trash you are inside. This is hard to pull off without admitting 1) Poor people’s behavior, tastes, and mannerisms are trashy, and 2) Your behavior shouldn’t reflect who you are inside, but what your financial status dictates appropriate behavior should be. But 2 is a capricious goal. Your behavior should reflect your financial status, but it shouldn’t be a change from your previous behavior, that would be posing or trying too hard. Hence, it is impossible to achieve social mobility the way modern capitalism has made financial mobility eminently accessible. We hate the nouveau riche because they’re accessible. The same reason we hate middle managers. Even our wise fables counsel us not to rise above our station, and to punish those who would rise above theirs.

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A novel insightful exercise to determine the pragmatic difference in intellectual payoff between a novel insight and an obvious fact mistaken for novel insight.

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