Micro-management as a contributor to economic development



I once had a boss, two levels up from me, who had control of literally billions of dollars in the company in which we worked. His oft repeated view of how people should work was that they should “follow the written procedures” and, so long as they did that, whatever the outcome then it must be correct, even though the result may not be the desired one.

It’s very tempting to dismiss such a view as complete rubbish, of course, but at some levels it is defensible—in repetitive production line operations, for example, where using individual initiative can make things go wrong further down the line, or even in surgery where certain steps must be followed in a predetermined way.

It assumes that there is an inbuilt infallibility in the procedures, whatever they may be, so they must be slavishly followed, otherwise there would be criticism and trouble for doing things not in accordance with them and if the desired result was not achieved, then there would be no defense available in saying “but I followed the procedures.”

Creativity, critical thinking and the chance of improvement is stifled, and in a blame culture where jobs are hard to come by, the only option is to rigorously follow the procedures.

In the Philippines “the procedures” manifest themselves in very detailed laws and regulations as well as the invidious “requirements,” many of which are open to differing interpretations and some of which are simply ambiguous or contradict some other little known regulation.

Better ask a lawyer and get a legal opinion which will provide some defense if things go wrong. To do this costs time and money and opens yet more possibilities of differing interpretations or hitherto unknown regulations.

Things slow down and worse, opportunities open up for challenge; “Were the bid opening procedures properly followed?” for example, or “was every page signed in triplicate in accordance with the procedures?” All with the result that things can take a very long time to move forward. These types of blockers pop up all the time and just stops things happening.

On the other hand and at a different level, procedures are quite often totally ignored. This is in cases where people think they can get away with it or find ways of overcoming any challenges which may arise, usually because they have more power or money than any potential challenger.

People think they can get away with flouting the procedures because there will be no regulatory consequence for doing something wrong because unfortunately, enforcement as a part of governance is increasingly difficult to find these days.

If you have the power, you can ignore the procedures [provided that some group of roughly equal power doesn’t decide to challenge you]and if you don’t have the necessary power, the procedures and the way in which they are administered will almost certainly stop you making any timely and useful contribution to the economy.

The need for [and the comfort gained]from slavish adherence to the procedures leaves the responsibility for growth of the economy almost exclusively with the rich and powerful.

This is the main reason why Filipino entrepreneurship cannot succeed to the level of contribution it makes in other countries, and if by chance some entrepreneurial venture does manage to fight its way through the procedures to which it is forced to conform, then it becomes ripe for picking up by the rich and powerful.

New business start-ups are essential to growing and developing economies. The European Union has major initiatives underway to encourage this, including easing up on the regulations for new business ventures.

Research has shown that entrepreneurs tend to make a lesser contribution to economic development in less developed economies than they do in advanced economies, and I have no doubt that a large part of the reason for this apparent contradiction, apart from human capital levels (people tend to be less well educationally and financially equipped in less developed economies) is the start-up costs of entrepreneurial ventures— the start-up costs being directly related to the procedural barriers that have to be overcome and the time and money that it takes to overcome them.

According to data from The Global Entrepreneurship Monitor, 12 percent of the Philippine population between the ages of 18 and 64 are involved in starting up some form of entrepreneurial venture. This compares with 2.2 percent in Japan, 3.6 percent in the UK, 3.1 percent in Germany, 20 percent in Nigeria and 22.6 percent in Zambia. Employment opportunity clearly plays a significant role in this, “no jobs so let’s start a business,” and so many will fail.

A message that I take from this is that for entrepreneurial activity to make a better contribution to the further development of the Philippines economy, the rich and powerful need to help the start-ups. It would be nice to think that people like SM or Ayala could establish business incubators, for example, with training for nascent entrepreneurs, but this may be too much to hope for.

What the rich and powerful could do though with very little effort or sacrifice on their part would be to ease up on the need for micro conformance with the procedural requirements; they can do that through their influence with government and regulators, they could do it by making their bank requirements a bit less onerous, they could do it by really stimulating a culture in which entrepreneurs could grow and prosper.

This is not to say that they should encourage the development of lots of sari-sari stores, because in truth these will not add much, but they should do it for the development of good business ideas that advance technology, produce exports and contribute to overall industrial development.

Contrary to what they may think, the rich and powerful, by stimulating entrepreneurship, would actually help themselves by developing customer bases which can afford to pay more and buy more. The Japanese have built an advanced economy by big guys helping little guys and sustaining the little guys’ businesses by maintaining buyer/seller relationships with them. The Philippines can do the same, if it wants to!

Mike can be contacted at mawootton@gmail.com.


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1 Comment

  1. Debra Pritchard on

    Totally and emphatically agree with you. Something that dovetails with this is the way that most businesses micromanage via incentivizing employees.

    Yesterday I reviewed a 2009 TED talk by a favorite US business guru, Dan Pink, on motivation and incentives. Micromanaging via monetary rewards is fine for those redundant mechanical processes, but actually decreases performance at the critical thinking levels (http://www.ted.com/talks/dan_pink_on_motivation?language=en#t-1101072).

    Critical thinking is the major skill absent in many businesses here with whom I consult. Fascinating and frustrating.