What do bosses do? This old question has gained new force from two recent stories: that BBC bosses siphoned off licence-payers money for themselves, and the FT's report that many managers fail a most basic question about probabilities. If we put these two items together, we have an obvious inference - that managers are not skilled decision-makers who add value to their organizations, but mere parasites.
But can we generalize from just two stories? Maybe.
Certainly, big payoffs are common for bosses. As Rick says, managers' entitlement culture isn't confined to the BBC. Bob Diamond, Rebekah Brooks, Stephen Hester, Nick Buckles and Tony Hayward, to name a few, all left their companies with payments greater than a typical worker will get in all his working lifetime - and not always after meritorious performance. Don't reply that these case are unlike the BBC's in that they were contractual entitlements. Bosses' power manifests itself in their ability to get generous contracts; the law isn't a constraint on power, but also a means through which power is exercised.
There's also evidence that managerial ability is limited. Nick Bloom and colleagues have shown that there's a long tail of second-rate management in the UK. Staffan Canback has described how diseconomies of scale set in quite quickly, implying that managers often cannot overcome bureaucratic limits to efficiency. Alex Coad has shown that there's a large random element to firm growth, implying that bosses contribute less to corporate success than they claim. Paul Ormerod and Bridget Rosewall have shown that corporate collapses are unforeseeable (pdf), implying that bosses perhaps can't prevent even huge disasters. Jeffrey Nielsen has argued that corporate hierarchies have a demotivating effect on workers. And there is no evidence that the rise of managerialism since the 1980s has contributed to better productivity growth or macroeconomic performance.
So, maybe the new evidence corroborates Stephen Marglin's old contention (pdf), that bosses' role is one of extracting incomes for themselves rather than increasing the size of the economic pie for everyone.
However, the point of this post is not to claim this definitively, but merely to point out that we have a reasonable question here which is not being asked by the mainstream media. The BBC story is framed in conventional journalistic terms - "who knew what and when" - as a story only about the BBC. The question of whether it tells us anything about management more generally is not asked. The ideology of leadership is so dominant that the media and political class cannot even see that it is questionable.
Herein we see just how powerful the boss class has become. It's not that bosses can defeat challenges to their power, but that such challenges don't even arise. As Steven Lukes wrote:
Is it not the supreme and most insidious use of power to prevent people, to whatever degree, from having grievances by shaping their perceptions, cognitions and preferences in such a way that they accept their role in the existing order of things, either because they can see or imagine no alternative to it, or because they see it as natural and unchangeable? (Power, A Radical View, p28)