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The Consequences of Stupid Management Concepts

From the Game Theory in Management Blog
Modelling Business Decisions and their Consequences

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This last January 8th, David Schepp posted an article on AOL® Jobs entitled “Dish Network: The Meanest Employer in America?” In the article, Schepp examines some of Dish Network’s employees’ complaints about how their professional experiences have been, well, bad, due to the decisions of upper management at that organization. The AOL article cites a BloombergBusinessweek article by Caleb Hannan from January 2, describing some of the “draconian” tactics employed by Dish’s then-CEO, Charlie Ergen, including a fingerprint scanner replacing badge scanners for Dish’s Englewood facility access. Employees who were late – even by a few minutes, and even if they had put in 12 hours the day before – would trigger an automatic e-mail to the human resources department noting the late arrival.

As I discuss in my recently-released, must-have book Game Theory in Management, many commonly-held management concepts in use today have their roots in what is actually asset management, and are the theoretical children of the old axiom that the ultimate purpose of all management is to “maximize shareholder wealth.” Slavish adherence to the family of management concepts that are derived from this axiom lead to policies and tactics that are monumentally stupid, and do a lot more damage than just to an organization’s bottom line. In the cases of the unfortunate employees of Dish, both current and former, I would speculate that the dots were connected so:

·         The point of management is to maximize shareholder wealth.

·         Shareholder wealth is maximized when the organization’s assets are performing optimally.

·         Human resources are assets.

·         Optimally performing resources put in many hours, and are not late reporting to work.

·         Therefore, a valid function of management is to ensure the human resources put in many hours, and are not late reporting to work.

It all seems so logical, doesn’t it? But the entire argument’s structure is easily overturned with one simple intellectual exercise. Suppose you had a Dish employee who could completely execute all of the activities expected of the position, but did so in only 4 hours per day. Organizations not blinded by the asset managers’ take on reality would quickly recognize such a one as valuable, and probably seek to advance them within the organization. Other, less enlightened organizations would dismiss the employee for failing to put in more than 40 hours per week.

According to Wikipedia[i], the first reference to the term “going postal” was from a December 17, 1993 article in the St. Petersburg Times, where it cited that 35 people had been killed in 11 shootings associated with United States Postal Services’ facilities in the previous ten years. I would further speculate that certain vulnerable employees become so frustrated in attempting to get ahead in a system designed to ensure that the taxpayers’ money is never, ever wasted, that they arrive at a state of intellectual and professional despair, and employ murderously desperate remedies. Again, a focus on the performance of assets, I believe, led to a working environment that allowed management decisions to appear so rigid and disconnected from the macro organization’s mission that it literally drove the morally weaker elements of the workforce crazy.

And yet, the number of text books and business literature that are entirely predicated on the idea that the point of all management is to maximize shareholder wealth is legion. There’s a major sea-change coming in management science, and, when this Khunsian shift occurs, at its core will be the wholesale rejection of the many management science “truisms” foisted upon us by the asset managers (and, a little bit later, the risk managers). And I am so looking forward to this particular paradigm shift.

[i] Going postal. (2013, January 3). In Wikipedia, The Free Encyclopedia. Retrieved 05:32, January 13, 2013, from

Posted on: January 13, 2013 11:16 PM | Permalink

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