Just Let Me Do My Job (2.2)
Fred Kofman
Executive Coach | President at Conscious Business Center International - CBC
People with targets and jobs dependent upon meeting them will probably meet the targets - even if they have to destroy the enterprise to do it." W. Edwards Deming, Founding Father of the Total Quality Movement
The economic problem of (an organization) is rapid adaptation to changes in its particular circumstances. Then, the ultimate decisions must be left to the people who are familiar with these circumstances, who know directly of the relevant changes and of the resources available to meet them. This problem cannot be solved by first communicating all this knowledge to a central board which then issues its orders. But the "man on the spot" cannot decide solely on the basis of his limited but intimate knowledge of his immediate surroundings . There still remains the problem of communicating to him such further information as he needs to fit his decisions into the whole pattern of changes of the larger ( organizational) system .” Friedrich Hayek, Nobel Laureate in Economics
If you play defense in a soccer team that pays for performance, would you rather win 5-4 or lose 0-1?
If you play offense, would you rather win 1-0 or lose 4-5?
Your commitment to the team may lead you to chose the former, but your coach's commitment to "rewarding excellence" may lead him to cut you off the team.
This is the hardest problem any organization has to solve: How to incentivize its members to pursue the best for the whole (global objective)--which requires them to not do the best for their part (local objective)--, while evaluating these same members based on the performance of their part (local objective)--which will lead them to not pursue the best for the whole (global objective).
In soccer terms: How to incentivize the defense to win the game--which requires them not to focus only on preventing the other team from scoring--, while evaluating these defensive players on the performance of their part (goals scored against the team)--which will lead them to not pursue the team's goal.
In mathematical terms: How to optimize the system--which requires subsystem managers to sub-optimize their subsystems--, while evaluating these same managers on the performance of their subsystems--which will lead them to optimize them, and therefore to sub-optimize the system.
In this video, you will understand why this is the hardest problem and why, as I will describe in my next post, it can only have a "soft" solution.
*Should you have any difficulty viewing the embedded video please click here to view on Fred’s Slideshare page
Further Reading: Doing Your Job May Be Hazardous To Your Career
Fred Kofman, Ph.D. in Economics, is Vice President at Linkedin. This post is part 2.2. of Linkedin's Conscious Business Program. You can find the introduction and structure of this program here. Follow Fred Kofman on LinkedIn here. To stay connected and get updates please visit Conscious Business Academy and join our Conscious Business Friends group.
Head of People & Culture | Gaming & Tech | EMEA & APAC | MBA, PMP
5 年This topic is crucial for companies with vertical organisation, especially if they are also spread geographically. In this case local incentives should be adjusted to global ones, since cultural and economical differences.?
Restaurant and Hotel Leadership Coaching | THRIVE GLOBAL? Top 20 Mindful Thought Leaders | Executive Leadership and Personal Coaching | Restaurant and Hotel Industry Pro
5 年Great and simple example of the global/local incentive challenges that exist in a well meaning yet flawed system. I have already used this example of game scores in a couple of conversations during the last 24 hours. Awesome example!
CEO and Co-Founder of the Jazz Leadership Project, and Co-Director of The Omni-American Future Project.
5 年Global vs. local incentive systems is only resolved at the so-called soft level: culture, personal motivation, and alignment of individual belief systems with the organizational vision, values and goals. The "Why" becomes the key engine. Great overview of the dilemma, looking forward to . . . the way forward!
Head of People and OD and Non Executive Director (Solace)
5 年The job of the leader, whether team leader or CEO has to be to communicate the message - your job is to help the company win - and be very clear what winning looks like. the day to day management of the team and the organisation has to be about helping people get the most out of sub-optimal local systems and dealing with the issues that causes in the most effective way possible. Sounds straightforward... not necessarily easily teachable?
Soluciones integrales, disruptivas que garantizan a los directores generales el desarrollo de habilidades de liderazgo y evolución sostenida de negocios
5 年I have to confess that this one was not easy for me to digest and now I have a feeling of not knowing what to do, especially when YEAH this seems to be a very challenging or impossible problem, however as Fred said somehow these are good news because if? ANYBODY does something to improve for sure will improve and it will make their business better........ my biggest thought at this moment is: How critical and important is to define the "right" KPI (if any). Looking forward to see the next videos!