A Righteous Arbiter for the “Game”

Game Theory and Management

Making sure employees do the work they’ve been assigned, and do it well, is one of the most taxing burdens of any manager. How does one make sure the work gets done, and is up to standard, without becoming a micromanager? Let’s look at a bit of game theory to get a grip on this.

There was a time when managers would heavily rely on what has become known as the “carrot and stick” method of managing staff. This means that they would offer rewards (the carrot) to those who delivered results and punishment (the stick) to those whose work would not live up to expectations. At first glance this might seem an effective approach as it helps managers to modify the behaviour of their employees, guiding them to avoid the actions that are punishable and engage in the actions that will earn rewards. However, would it really be sustainable to always have to reward people for just doing their job? I don’t think so. Moreover, it seems to me that the “carrot and stick” approach will only be effective if there’s a clear difference between those doing the work and those who don’t. If this is not the case, then what should a manager do? Let me show you what I mean through the use of a bit of game theory.

Let’s say that two young baristas at a successful coffeehouse, Zoë and Ryan, are vying for a promotion. They both know that if they work hard and deliver a certain standard of excellence, this might, over time, lead to a promotion. In other words, if they work well their chances for promotion increase whereas if they slack off those changes decrease, but this isn’t as straightforward as it seems.

First let me clarify what I mean by working well and slacking off. To work well here means that the employees do the work they’ve been asked to do, put in proper effort and double check their results, i.e. the work has been done and it has been done well. To slack off, in this context, means that the work has been done but with minimal effort and no checking of results on the employees’ part. 

To analyze what this would mean for Zoë and Ryan, we can create the following propositions:

• If Zoë works well and Ryan slacks off, Zoë’s chances for a promotion increase;
• If Ryan works well and Zoë slacks off, Ryan’s chances for a promotion increase;
• If Zoë and Ryan both work well, there’s no real change in their chances for promotion;
• If Zoë and Ryan both slack off, there’s no real change either but, at least, neither did much work. 

If we place these propositions into a strategic game grid as used in game theory models and add the expected rewards (0-3) to each one, we get the following:

As you can see, the best possible outcome for Zoë is that she works well and Ryan slacks off and, of course, the opposite is true for Ryan. Even if Zoë and Ryan have no experience with game theory, they will intuitively know that if one of them works well and the other slacks off, this creates a clear “carrot and stick” situation. As a result they will try to avoid this at all cost but this is also where it gets tricky; whether both of them work well or slack off doesn’t really make much of a difference. If both work well, neither will positively stand out to be eligible for a promotion and if they both slack off neither will negatively stand out to not be eligible for a promotion. The unfortunate result of this is that the best option for Zoë and Ryan is to both slack off, the worst possible outcome for their manager. So what should the manager do?

Well, the one thing managers should never do is regress to micromanagement. Instead they should act as a kind of righteous arbiter. First and foremost, managers should be supportive. They should make sure that the employees have the tools, space and time they need to complete a task. In addition to this, managers should also be approachable and create an environment of trust. If employees don’t know what to do or make a mistake, they should not fear to come forward about it and trust that they will get the help they need. 

In contrast to this, managers should also be provocable. If employees do slack off or don’t own up to mistakes, they should be punished and they should know upfront what kind of punishment to expect. It is also essential that there won’t be any exceptions to set standards; misbehaviour needs to be handled with the stick. However, once an employee has been punished, managers have to be forgiving. Anyone who has been punished for a previous mistake has paid their dues and deserves another chance; don’t hold any grudges, just let it go.

Finally, managers should be straightforward. What this means is that their rules and behaviours should be consistent and the tasks they set should be Specific, Measurable, Achievable, Relevant and Timeboxed (SMART). 

SMART Tasks

Specific here means that, when the task is set, the employees know exactly who will be involved, what they should do and how they should do it. 

Measurable means that the employees should know exactly when a task has been achieved.

Achievable means that the task set can realistically be achieved, given the available resources and timeframe.

Relevant means that the task set is consistent with other work the employees do and that it fits in an overall “bigger picture”.

Timeboxed simply means that the employees should be given a clear deadline for their work because people procrastinate; ALWAYS.

To conclude, it seems crystal clear to me that if managers are supportive, provocable, forgiving and straightforward, and the work they set is SMART, there should be enough incentive for employees to prefer to do the work rather than slacking off.

    [T]here you are.