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Rise to your level of incompatance? er, competence? ability.

In another sign of a new age of business management theory, the Italians have independently rediscovered a principle of American and Japanese management theory, namely that managers should not be higher ranking positions than laborers.  Management is a separate trade than any other labor, and requires skill sets in statistics and human sciences.

Doctors Alessandro Pluchinoa, Andrea Rapisardaa, and Cesare Garofaloc in their The Peter principle revisited: A computational study (Physica A: Statistical Mechanics and its Applications, Volume 389, Issue 3, 1 February 2010, Pages 467-472) describe new evidence to support this theory of management:

 

“In the late sixties the Canadian psychologist Laurence J. Peter advanced an apparently paradoxical principle, named since then after him, which can be summarized as follows: ‘Every new member in a hierarchical organization climbs the hierarchy until he/she reaches his/her level of maximum incompetence’. Despite its apparent unreasonableness, such a principle would realistically act in any organization where the mechanism of promotion rewards the best members and where the competence at their new level in the hierarchical structure does not depend on the competence they had at the previous level, usually because the tasks of the levels are very different to each other. Here we show, by means of agent based simulations, that if the latter two features actually hold in a given model of an organization with a hierarchical structure, then not only is the Peter principle unavoidable, but also it yields in turn a significant reduction of the global efficiency of the organization. Within a game theory-like approach, we explore different promotion strategies and we find, counterintuitively, that in order to avoid such an effect the best ways for improving the efficiency of a given organization are either to promote each time an agent at random or to promote randomly the best and the worst members in terms of competence.”

 

The American / Japanese system requires that managers be hired separate from laborers, and that instead of promoting a person out of a job in which they excel, to increase their pay.  Or better, the pay of their team: no one is truly great without the help of their friends.  Punishment by decreasing pay is to be avoided, and managers are held responsible for maintaining productive efficiency and productive quality, not total output.  Total output is a function of labor and machinery and to increase total output requires more labor and more machines.

Under the new system, if a team or individual is discovered to be performing outside of statistically sound expectations, the management studies the matter and discovers why.  If they are performing for the worse, the causes of that performance is determined and corrected through assistance to the employee: firing employees is a last resort in the new management because, statistically, you are not going to be finding a better qualified or motivated employee, and when the fear of being fired is removed, performance increases.  If they are performing better than expected, they are rewarded and, if especially good at their job, employed to teach others how to do their jobs better.

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