Monday, January 12, 2004
It seems like many modern day business theories/issues are based on Ayn Rand’s belief that man’s survival is based on his ability to reason and think, and when a man exercises that ability, he should only do things in life that result in value for value. Take a look at the concept of middle management for example. The reason that people believe middle management is bad for an organization is because it allows “vice presidents” to get away with not thinking, of not accepting the responsibilities of senior management (bringing in clients) while not having to deal with processing the work, passing along that responsibility to junior staff. Take a look at why people are not happy at work, at movies such as office space. We work to exchange value for value. We work so that our firm pays us a salary…and money is only a commonly accepted “IOU” that simplifies the exchange of value (working for clothing, haircuts, food, education, etc.). We when work hard, we expect to be compensated fairly with equal value. People do not like their work when they are not compensated fairly, when they feel that they are not getting equal value for value. If we were in the ideal corporate world, where we are compensated fairly at all times, many more individuals would be happy and content with their jobs. Instead, we live in a world where people in power (CEOs, senior management, board of directors, etc.) pay themselves much more than the value they bring to the table, and to offset this pay raise, they lower the compensation of the junior staff. Eventually, the junior staff becomes fed up and unions begin forming to counteract this imbalance. Unfortunately, the union then becomes too powerful and demand too much pay relative the value of the individuals in that pool. Individuals are now incentivized to not fully exercise their ability to think, because, hey I’m in a union and I will receive my 7% increases every year until I retire. Why should I exert extra energy when I can get this regardless through the power of my union?
As a result, individuals that believe in their true value, leave to start their own business. What’s left behind are supposed “educated” men with MBA rubber stamps from HBS, Wharton, etc. who are only staying within the corporate world because they KNOW that they are being paid more than they are worth, more than the value they are bringing to the table. And maybe a few stay because they are able to find a position and a firm where they are being compensated entirely fairly for the value they bring. When I eventually have my own company, I think I will run it completely different from corporate America today. It will be like the 21st century motors company, but instead of having able individuals pull the weight of the unable, it will truly be an environment to attract the best and brightest, the most able will make the most, regardless of age, degrees, education, etc. If a person that grew up in Kansas with little formal education understands better about running a business from his experiences running a farm, then he will be my operations manager. Ability is ability…regardless of how you acquired it.