Spero Consulting

Archive for November 18th, 2008

…And Your Mother Wears Com­bat Boots!

Back on Hal­loween we wrote that Sarah Palin’s expe­ri­ence as mayor of a small town was greatly under-​appreciated, and that lack of appre­ci­a­tion said more about her crit­ics’ inex­pe­ri­ence and lack of empa­thy than did it about her.

In fact, we related her expe­ri­ences to Henry Kissinger’s quote about acad­e­mia: the (in)fighting is so vicious pre­cisely because the stakes are so small. 

We went on to reit­er­ate that what’s true in uni­ver­si­ties is true in small towns and many other orga­ni­za­tions, as well. So, Mrs. Palin was likely very expe­ri­enced deal­ing with con­tentious, resource-​allocation deci­sions and their asso­ci­ated ani­mosi­ties, espe­cially since her expe­ri­ence included a per­sonal ele­ment, which is often absent or can be eas­ily dis­missed at the national level. 

At that broader level, there is more abstrac­tion, and one is less likely to have daily or even occa­sional con­tact with one’s foes. So, while dis­agree­ments are cer­tainly more pub­lic at the national level, such dif­fer­ences are usu­ally taken “with a grain of salt,” e.g., wit­ness the recent cor­dial meet­ing between President-​Elect Obama and Sen­a­tor McCain.

As we have men­tioned, in one of our own vol­un­teer activ­i­ties, we allo­cate a pre­cious, scarce, and first-​class resource among a group of indi­vid­u­als who do not pay for its use. They’re vol­un­teers; so, they can’t pay for it, but they do derive ben­e­fits from it; so, substantial excess demand exists.

Hav­ing taught the pros and cons of var­i­ous cost allo­ca­tion method­olo­gies to MBAs for many years, we joke that the best evi­dence of fair treat­ment arises when every­one is dis­sat­is­fied with their allo­ca­tion. Seri­ously, much ten­sion is alle­vi­ated by (1) cre­at­ing very clear and sen­si­ble poli­cies that pri­or­i­tize usage and (2) hav­ing the dis­ci­pline to stick to those poli­cies. Addi­tional ten­sion is alle­vi­ated by deal­ing with folks who have some degree of empa­thy (for the unpaid allocator’s plight). On that dimen­sion we ben­e­fit and note that it is not the case in for-​profit organizations.

Also in that role, we hire sup­pli­ers for cer­tain ser­vices and try to diver­sify the sup­plier base to sat­isfy our organization’s goals rather than the sup­pli­ers’ wants. Except for the lower eco­nomic classes of third-​world nations, most indi­vid­u­als would con­sider these arrange­ments to be of very small dol­lar value.

Need­less to say, very much like acad­e­mia, and cer­tainly counter-​intuitive for those lack­ing small-​town expe­ri­ence, that’s exactly when the fight­ing is fiercest, and thus we were deemed “…basicly…clueless a coach…” (among other things) by the gram­mat­i­cally and spelling challenged.

Now, clearly with regards to our own expe­ri­ence, our post is some­what “tongue-​in-​cheek.” How­ever, the reader should not under­es­ti­mate the vit­riol spewed by those with a sense of enti­tle­ment when out­comes aren’t just so (to their lik­ing). In fact, we were accused of other worse things, includ­ing giv­ing more and bet­ter busi­ness to our friends. (As it turns out, we’ve never met the other suppliers.)

We write this not to “make moun­tains out of mole­hills,” but to note to the dear reader that inside both large (for-​profit) firms and non-​profit orga­ni­za­tions, on a fre­quent if not daily basis, such resource and cost allo­ca­tion deci­sions affect employ­ees and groups of employ­ees – pos­si­bly struc­tured as divi­sions, depart­ments, or busi­ness units.

As most know, within orga­ni­za­tions it is socially accept­able to express one­self as our for­mer sup­plier did; however, resource allo­ca­tors should know while they may not hear dis­cour­ag­ing words and may see the smiles on the faces of sub­or­di­nates (and oth­ers), those indi­vid­u­als may feel no dif­fer­ent than our upset acquaintance.

Whether that mat­ters depends upon the impli­ca­tions – mean­ing the costs and ben­e­fits – of induc­ing such (hid­den) ani­mos­ity as well as the resource allo­ca­tors goal. In our case, we’ll live with the stigma of being clue­less as a coach if it achieves our goals. (We’ve been called much worse.)

In that respect, within orga­ni­za­tions senior man­agers must deter­mine whether they want har­mony or prof­its as the two are not nec­es­sar­ily mutually-​achievable. In fact, mechanisms like trans­fer pric­ing pur­posely intro­duce fric­tions, ani­mos­ity, and dishar­mony into firms as a way to max­i­mize prof­its (or value if you will), and in those cases attempts to mit­i­gate the fric­tion will likely reduce long-​term prof­its (and leave one of the par­ties qui­etly seething.