Suppose you were reading the Wall Street Journal and up popped an article describing how one successful foreign company achieved substantial competitive advantages. That company's secret? Its managers are hands-on to the extreme. They are detail oriented and believe their workers can achieve challenging goals quickly, provided managers stay on their backs. These managers are constantly looking over their shoulders and demanding progress. If their employees are on track, all is fine. But fall short and they are shouted at, in front of peers, until they're performing according to expectations. The managers defend their tactics. "We believe in our employees. We believe they can be the best. We just have to be vigilant to ensure they do so."
Many managers reading that account may consider that there is something wrong. To be sure, results are great, but at what cost? Surely there is something intangible — workplace culture, perhaps — that would suffer under this approach. In any case, who wants to be constantly hovering over employees to see if they are well-behaved?
Of course, no such article has appeared in the WSJ — not recently anyway. But what did appear was this account by Amy Chua — a Yale law professor — of her parenting style, whose "hands-on" approach looks very much like the meddling management style I just described. And the conflict parents felt while reading her story reflected the conflicts managers often feel about hard-nosed versus softer approaches to managing.
Just in case you were on another planet this week, Amy Chua's daughters were brought up without many of the usual trappings of childhood (playdates, school plays) and pressured to perform at school and musically. This meant practice, and lots of it, presided over by Chua herself. Of course, being normal children, they resisted this.
Chua's methods were constant monitoring and, sometimes, somewhat ruthless punishment. It worked, at least for one child who is a concert pianist, while it failed for the other — the main subject of Chua's book. (By the way, the book paints a significantly different picture than the article.)
Chua's methods carry with them the cost that children may emerge from the process with emotional scars and also a lack of independence. After all, if you have learned only to do things under the threat of punishment, what happens when, as an adult, that threat isn't present? But what alternatives do parents have in managing agency problems?
One option is to take a hands-off approach. You can give children opportunities to develop excellence and the tools to do so but leave it to themselves to motivate themselves to practice. You might reward them for good performance &8212; especially, with deals like "if you play this instrument well, we will buy you a better one or pay for more lessons." But don't kid yourself. This too is hard work. Rather than spending your time nagging for specific performance you instead have to monitor your child's interests to ensure that they are not facing barriers that can be easily removed.
Chua would argue that her more, ahem, active approach reflects the belief she has in her children that they can achieve excellence. However, it also reflects a large doubt that they would want to do so if left to their own devices. In contrast, a hands-off approach reflects a belief that children can find their own way. But while you may be keeping your hands off, your attention must be on to ensure that opportunities are not missed.
Managers face the same trade-offs in considering what economists term an agency problem. Like Chua, who wanted her children to do things they would have preferred not to do, so do managers try to figure out how to motivate and monitor their employees. So while being a hands-on manager may appear to require high effort, it is, in many respects, a gut reaction. It can be a much harder job to keep your distance while ensuring that things are still on track by engaging in managerial thought and vision. To an economist like myself, these notions seem intangible, even fuzzy, but that doesn't mean the trade-offs in choosing one approach over another are any less real.