Game Theory and Organisational Politics.

“The achievements of an organization are the results of the combined effort of each individual.”

-Vince Lombardi        

One of my clients took pride in calling itself competency based organisation. Competency structure was central to all its HR related developmental activities like appraisal, recruitment, succession and career planning, training etc. I found one competency quite interesting- “Puts organisation before self.” An employee was expected sacrifice his self-interest and work for good of organisation.

But employee satisfaction survey showed that most of the managers were interested in protecting their own turf. So there was gap between what organisation desired and what real culture of organisation was.

Defending turf is a time-honoured tradition in most large organizations. The organization is seen as a collection of competing interests held by various departments and groups. As each group attempts to expand its influence, it starts to encroach on the activities of other groups. Turf protection is common in organizations and runs from the very lowest position to the executive suite.

Game theory can help you in understanding why managers are more interested in protecting their turf than collaborating with others. It is trade-off between costs and benefits. Where the costs exceed the benefits, the manager may act to protect his or her position.

We will design a payoff table for two managers- Lee and Leslie. The problem concerns a decision as to whether or not they should allocate resources from their unit to a special project of organisation.

 

If both managers authorize the resources, the project gets completed on time and organisation wins client. Unfortunately, if they do this, both Lee and Leslie spend more than they have in their budgets. Taken on its own, a budget overrun would be bad for the managers’ performance records. Obviously, any organisation would want this to happen. But this selfless act of “Organisation before self” is rare.

We will see more common scenarios.

One likely scenario could be either Leslie or Lee allocated resources for special project, while other person does not. Here organisation will lose client, one of them will upset his/her budget, but other person is able to manage his/her budget and improve his/her appraisal score.

But most likely scenario will be both Lee and Leslie fail to act, each stays within the budget and therefore gains, but the organisation loses the client.

While the organisation wants both Lee and Leslie to act, they rarely do so. It has lot to do with organisational culture and way it rewards its employees. Would you take the risk of overspending the budget, knowing that your colleague may refuse to do the same?

The question of trust is critical here, but building trust among co-managers and other workers can be difficult and takes time. The involvement of higher-level managers may be needed to set the stage. Yet in many organizations both Lee and Leslie would fail to act because the “climate” or “culture” too often encourages people to maximize their self-interest at minimal risk.