From a young age, we are governed by rules yet free to make our own decisions. With few alterations, our nation operates within this same context—the same goes for firms, both for- and non-profit. More formally referred to as the principal-agent framework, the decision rules that organizations rely on to function feature an ‘agent’, as characterized by an individual or entity subscribed with the task of making decisions or taking action on behalf of another individual or entity—the ‘principal’.
Practiced anywhere from the drafting of legislative bills to initial public offerings, it becomes clear that delegation (assigning responsibility or authority to another person) is not only a key element in allowing an organization to achieve its goals but a necessary one at that.
Moreover, the overarching rules that govern the framework itself—such that of law—play an even larger role. This comes in part from the infinite stock of contingencies that must be accounted for when attempting to arrive at the optimal decision rules a regulator can adopt: “Who’s affected?”; “Is it fair?”; or, “What does ‘fair’ even look like?’—a tall-order, nonetheless.
HUMANS, RESOURCES, AND RESERVES
One frailty that comes with both the titles of ‘Chief Business Officer’ and ‘Governor General’ is the condition of being human, and over the years, we have come to better understand the hard limits that accompany being one.
Dating back to Darwin’s The Descent of Man, the notion of willpower, or, the ability for one’s self to control one’s own thoughts and actions, was viewed with great respect and honour. After the turn of the Victorian era, however, this portrayal began to deteriorate when prominent figures such as B.F. Skinner and Walter Mischel began discrediting the concept. It was not until recent years that Baumeister and Tierney1 gave laboratory-grade clarity to the forces behind self-control thus reestablishing its significance for managers, decision-makers, and the like.
Naturally, this brings us to the question of: “Radish or cookie?” Studies have revealed that simple decisions as such can have profound implications on both our capacity and ability to exercise self-control.2
Think of willpower as being both a finite resource and a uniform stock. Each and every thought, decision, and the motivations behind them eat away at your reserve—some more than others. When it’s depleted, decision-making processes suffer. You are more likely to procrastinate, cut corners, or snap at that token annoying and/or obnoxious colleague.
Framed in this light, delegation should serve to maximize the principal’s willpower reserve—a complementary relationship. Improper, or rather, ineffective, delegation neutralizes the potential efficiency gains that most commonly result from the dispersal of responsibilities throughout the organization. Dynamic workflows, as evident in successful corporate structuring, help circumvent some of the challenges that can arise (e.g., information overload, task failure) as well as act as a buffer between the decision-maker’s responsibilities and their reserve.
Sure, one may argue that incompetent decision-makers should be replaced by competent ones, but this sort of thinking lies on the fringe of the point being made here. It is imperative to recognize that perceived incompetence is all too often the result of crude corporate structuring rather than a reflection of the individual in his- or herself.
Alternatively, sound corporate structures allow top decision-makers to leverage delegation by outsourcing decisions to those who are qualified to make them—and willing, at that.
Sound corporate structures also hold accountability in high regard as the acknowledgement of assigned responsibilities quite literally lays the foundation for the structure in the first place. Without it, the entire structure is reduced to a string of disjointed titles and empty (willpower) reserves.
1 Baumeister, R. F., and Tierney, J. 2011. Willpower: Rediscovering the Greatest Human Strength. New York: The Penguin Press.
2 Boucher, H. C., and Kofos, M. N. 2012. “The Idea of Money Counteracts Ego Depletion Effects.” Journal of Experimental Social Psychology 48(4): 804–810; Job, V., Dweck, C. S., and Walton, G. M. 2010. “Ego Depletion—Is it all in your head? Implicit Theories about Willpower affect Self-Regulation.” Psychological Science 21(1): 1689–1693.