November 01, 2007

Why do we pay them so much?

"... After studying twenty firms that were facing crises, Dunbar and Goldberg (1978) concluded that the chief executives in these troubled firms generally surrounded themselves with yes-sayers who voiced no criticisms. Worse yet, the yes-sayers deliberately filtered out warnings from middle managers who saw correctly that their firms were out of touch with market realities; many of these middle managers resigned while others were fired for disloyalty.

Top managers' perceptual errors and self-deceptions are especially potent because top managers can block the actions proposed by their subordinates. Yet, top managers are also especially prone to perceive events erroneously and to resist changes: Their promotions and high statuses persuade them that they have more expertise than other people. Their expertise tends to be our-of-date because their personal experiences with clients, customers, technologies, and low-level personnel lie in the past..."

William H. Starbuck, "How Organizations Channel Creativity"

(Dunbar, R. L. M., and Goldberg, W. H. (1978). "Crisis development and strategic response in European corporations." Journal of Business Administration, 9(2): 139-149)


N.B William H. Starbuck's fascinating online autobiography is worth a post on its own. Is this yet another example of purposive drift?

Posted by richard at November 1, 2007 04:50 PM
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