Advantages of incompetent management

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2024-07-04 17:30:06

What constitutes managerial competence? As a vague starting point for an answer, we could say that competent management sets achievable objectives and then achieves them, by organizing and incentivizing the necessary work.

It turns out that even this near-tautological banality is enough to see why competent management puts many desirable things out of reach. This becomes apparent when looking at examples where incompetent management does better than most well-run places can hope for.

Improving efficiency tends to be against the interest of most people in an org, because it’s equivalent to shrinking your budget. Here’s what I’m told is a true story about how things work with actual budgets. A relatively inexperienced VP attends a meeting where senior management is asked to shrink their budgets due to the adverse economic climate brought about by the coronavirus pandemic. He eagerly cuts his equipment budget from $10 million to $6 million - over the loud and desperate objections of his team (whom the VP nearly accuses of lacking patriotism, loyalty to the company and commitment to the common good.)

Next year, the coronavirus mutates some more, and profits go back up. Our VP submits a $10 million equipment budget to the finance department, where they cheerfully inform him that the extra $4 million will not go well with the CEO. Why, a 66% increase over last year’s $6 million!

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