The Undercover Economist Strikes Back: How to Run-or Ruin-an Economy by Tim Harford

Author:Tim Harford
Language: eng
Format: mobi
Publisher: Penguin Group US
Published: 2014-01-15T18:30:00+00:00

9

BOSS-ONOMICS

What upsets me about the job? Wasted talent. People could come to me, and they could go, “Excuse me, David, but you’ve been in the business twelve years. Can you just spare us a moment to tell us how to run a team, how to keep them task-orientated as well as happy?” But they don’t. That’s the tragedy.

DAVID BRENT, in The Office

Surely it’s obvious that management matters—David Brent and Michael Scott, the awful bosses in the British and American versions, respectively, of The Office, inadvertently prove that every day of their sad, fictional lives.

Of course. But while unemployment is generally regarded as a key concern for the economist, the frustrations of office life have not tended to be regarded as any of our business. As far as economic performance is concerned, management has been viewed as one of those exogenous things, like the supply of Red Cross parcels to a prison camp. Maybe management improves over time, and maybe it doesn’t—either way, it has just not seemed to be the sort of thing an economist can sensibly discuss. Fortunately, that is now starting to change.

What’s enabled the change is that we now have better data. For a long time, we’ve known that there’s been a puzzling discrepancy in the productivity of different firms within the same industry. Some scrape by, some go bankrupt and some are hugely profitable and successful. It wouldn’t be a huge surprise to hear that good and bad management played an important part in explaining that trend. The difficulty has been proving it. John Van Reenen and Nick Bloom are members of a small group of economists who have started to do so, taking management seriously as an explanation for why some economies work well and others do not. Van Reenen and Bloom have developed a large, carefully administered survey designed to measure management practices.1

I sense a problem here. The likes of David Brent and Michael Scott are unlikely to give an honest and self-aware account of their management practices in a survey.

Indeed not. That’s why the surveyors—confident, chatty MBA students with a reasonable amount of business experience themselves—arrange to conduct long, open-ended telephone interviews with middle managers in the firms that are being surveyed. (These interviews are long enough and open-ended enough that the interviewees have been known to attempt to chat up the interviewers, in ways that revealed intriguing cultural differences. In the UK, a British manager told his Australian interviewer, “Your accent is really cute and I love the way you talk. Do you fancy meeting up near the factory?”; the response was, alas, “Sorry, but I’m washing my hair every night for the next month.” In India, the conversation, between two Indians, was a little different: “Are you a Brahmin?” “Yes, why do you ask?” “And are you married?” “No.” “Excellent, excellent, my son is looking for a bride and I think you could be perfect. I must contact your parents to discuss this.”)

When not fending off romantic advances, the interviewers are

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