*Gosh... maybe "WHAT'S IN IT FOR ME?" denominated in dollars, is NOT the long-term answer to every social, political and economic relationship.
I know that's counterintuitive... but Yochai Benkler here is an Ivy League professor, we pay him a lot to think these matters through.
http://www.edge.org/documents/archive/edge279.html#benkler
(...)
"In organizational sociology, in management science, you look — Toyota production system was the big ah-ha moment, when Toyota came to the U.S. for the first time and created the first NUMMI plant in GM's Fremont plant in the early '80s. All of the stories that used to be "oh it's Japanese culture, it's something completely different, it's not about us," were flipped. One of the worst performing GM plants in 1980 closes down, opens up two years later under Toyota management, almost the entire same employees said the entire union leadership. Within a couple of years it becomes the most productive plant in the U.S.
"Who knows what the situation is now, but as of the numbers last year, it continued to be one of the three most productive plants in the U.S. Same people, same industry, very different organizational structure built a lot less on hierarchy, a lot less on precise specification of exactly what everybody needs to do. Much more on teamwork, much more on supporting normative commitment to innovation, to process innovation. And still relatively very constrained. It is the automobile industry.
"We're not talking about high-tech industries. But there you have a very different orientation in terms of setting up the motivation and relationships among workers, between workers and management. You move from having 70 process engineers on the floor telling each employee exactly what to do, to having none. And having the teams have a lot of autonomy on how they do things.
That started a movement, again, in organizational sociology and management science, of people starting to say, wait, maybe we shouldn't be thinking purely in terms of whether workers shirk or not, and how the firm exactly monitors against shirking and how it employs rewards and how it employs monitoring up and down the line, because we assume that everyone, from the top management down to the last employee, is going to be try to shirk and therefore we need to set up the incentives just right. (((Maybe we could boil this down to "why do people shirk?" Because, you know, "work" is hateful. If it's not hateful you don't have to pay 'em.)))
In all of these disciplines, the last 20 years and particularly the' 90s onward, have seen emerging studies, some models, some experiments, some observational field studies, that are showing, A) that people systematically do not behave according to the traditions of selfish rationality under controlled conditions; B) that when you set up systems with different assumptions, you get different behavior, and you get actually better results.
There is a beautiful study, for example, from two or three years ago about knowledge workers. Knowledge work is one of the hard things to get precise in contracts. How do you tell somebody, "How creative have you been at 11:00 in the morning?" And so that's a classic place where having precise contracts to precisely monitor what you do and what you don't do becomes very difficult. (((Yeah. Why do creative people write novels in minority languages when nobody pays 'em to do that? A situation American novelists are keenly likely to be facing soon, along with their brethren the American journalists.)))
They did observational studies, and they built a model and they built observational studies. What happens to knowledge-sharing within teams if on the one hand, you create explicit incentives, monitor the incentives, you share more, you get more; on the other hand, you build much more team spirit and you make it the thing that's the right thing to do as a member of this team and create much more social relations within the team. What they found was ... setting up a social dynamic that's a team dynamic, and what's understood to be the right thing to do achieves much greater internal knowledge flows than setting up an effort to create incentives. So you have very real implications. (((Yeah: you write fiction for your fans, if the readership means enough to you.)))
"As we're sitting here talking, and GM is teetering on the edge, one of the ways that's interesting to think about it is to see that GM in many of its structural components is the quintessential output of models based on selfish rationality. (((Look out, Alfred P. Sloan.)))
"If we look both at the shop floor structure, at the supply chain structure and at the executive compensation structure, along all three of those dimensions, it's implementing theories of organization that assume shirking unless you get the material incentives just right. At the shop floor level, a lot of process engineering, a lot of monitoring, very precise specification of actions. You basically have to specify the actions, you have to monitor, you have to compensate for successful action and punish for not, and you have to then have the managers have more managers on top of them, until you go all the way up. That's one level in terms of the internal. It's a very monitoring and controlling hierarchy system.
"Then starting in the late '80s but really reaching a peak in 1990, we have this invention by Jensen and Murphy of agency theory. The theory there was, everybody's trying to shirk. And the way you solve is somebody above the monitors. Well, who monitors the monitors? Somebody above them. When you get to the very top executives, what do you have to do? You can't monitor them. (((Uh-oh.)))
"It straddles all the way down up to a point. The answer is, what you have to do is you have to align the incentives of the person at the top with the company. That way they don't want to shirk, because for every dollar that the company is making, they are making ten cents or however much they're making. The result? Executive compensation packages that emerged in the 1990s. If you look at the U.S. around 1980, its executives are making roughly the same multiple of what an aligned employee is making as European counterparts. Japanese counterparts making somewhat less. This is on the order of 30 to 50 times as much.
"Fifteen years later, you see multiples of 200 and 500. Across the board. You get to a point where you look in the mid-2000s, and the CEO of GM is making more than the top 21 executives at Honda put together. (((And if you think THAT's something, you oughta see the payscales of their bankers.)))
" But it's theory-driven. You need to align the incentives just right, because otherwise, the person at the top will shirk. Well, the fact of the matter is we didn't get this alignment. In the last five or six years, even Jensen and Murphy themselves in later studies became very cautious about the degree to which they thought that it worked.
"You had more fraud. The percentage of companies that had questionable tax filings, for example, was correlated to the degree of executive compensation, because you're looking for quick fixes. You are drawing people who are particularly motivated by these high returns, and you're compensating them in ways that allow them to pull out returns very quickly. Essentially you actually didn't get even what you wanted there. You got a mis-alignment of incentives... (((You got collapse.)))
(((After demolishing the traditional car biz, the tireless Prof Benkler reinvents all media:)))
http://blog.p2pfoundation.net/yochai-benkler-on-the-new-news-infrastructure/2009/03/21
