Here’s an interesting story about structured competition within an organization. By Michael Flaherty and Sarah White, as appearing in the Globe and Mail: Gap in bankers’ bonuses spurs discontent
Annual bonuses at top global banks are causing friction that could drive an outsized round of defections as weaker profits and tougher rules widen the pay discrepancy between star performers and everybody else.
That growing difference between a small number of top-fee earning investment bankers and the bulk of their colleagues may see an exodus from big European and Wall Street banks to smaller upstarts or different industries in the weeks and months ahead….
Actually, what we see here are several nested levels of structured competition:
- Competition between bankers, structured by the banks that employ them, in order to incentivize them for maximum productivity;
- Competition between banks (structured by the legal and regulatory environment) to see who can offer an incentive structure that attracts (and retains) the best talent;
- Competition between industries to see which industry can attract (and retain) the best talent, at least to the extent that such talent is mobile and involves transferrable skills.
Did I miss any layers?
Each of those competitive structures of course implies its own set of ethical norms, both for those who design the institution and for those who are subject to it. The intersection between, and conflict between, those alternative sets of competition-specific ethical regimes, seems a fertile ground for investigation.
This Bnet blog entry by Margaret Heffernan is right up our alley: Debunking the Myth that Business is “War”
Much of what Heffernan says about the differences between business and war is true. But some of the disanalogies are more important than others. She notes, for example, that one important difference is that “It is possible for societies to flourish without war — but they won’t do so without business”. Others are weaker. She points out for example that “In business, your adversary will never be defeated.” That’s not always true (sometimes competitors are driven into bankruptcy). And sometimes adversaries are not defeated in war: sometimes one or both sides opts to limp off the field. Who won the Korean war in the 1950s or the Iran-Iraq war in the 1980s, for instance? Neither side was really “defeated”, though though both suffered serious losses.
There are significant similarities between war and business, and not just in the simplistic sense that is often appealed to as a way of justifying the most brutal of business behaviours.
Both war and business are, in the sense in which this blog is interested, structured competitions. In both cases, competitors seek to win, but they generally do so in a way that observes at least some rules. Focusing on the differences obscures the fact that both war and the market represent structured competitions with social benefits. Now, of course, the idea that war as an institution has benefits may be hard to swallow — at least until we make some qualifications.
First, I’m talking about the kind of limited war that we saw most frequently during the 20th century, wars fought by professional armies on battlefields, constrained (at least to some extent) by the laws of war, including most significantly the Geneva Conventions. Second, we need to think of the costs and benefits of that kind of war in comparison to other ways of doing things. To see the social benefit of that way of solving international disagreements, you only need to look at what the alternatives are: wars of population-against-population, wars fought using chemical and biological weapons, etc. So while war of a certain kind isn’t — unlike the market — a competition designed to produce a net benefit, it is a competition designed to produce less bad outcomes than might otherwise be obtained.