Organizational Heaven, Managerial Hell

Let us start with heaven.

How would you like to work in an organization where you have a lifetime appointment? You can be fired only for some extreme violation of ethics. It must be very extreme.

You choose what to work on. If you do not like your assignment, you can refuse it until they give you something you want to do.

Any decision the organization makes you can challenge at the assembly of all the members. You need to bring it to a vote and cause the decision to be reversed.

Regardless of how productive you are, you get free of charge full education for your children, actually all expenses for your children are taken care off no matter their number, and when they become adults, your children can have the same rights you have. They have an assured future regardless of their capabilities.

The organization will also take care of your aging parents if needed. Moreover, your family gets full physical and mental health benefits free of charge, gets food at a serious discount, free housing, a car to drive whenever you need it and a nice monthly stipend for clothing, entertainment and periodic travel abroad.

And I repeat. You cannot get fired even if you are not that productive or you refuse to undertake a role you do not want to perform for whatever reason.

Looks good, no? Heaven, right?

Now hell.

How would you like to be a leader of an organization where your so-called subordinates can challenge any of your decisions at the general assembly of the organization and the assembly, comprised of the people you are supposedly managing, can overrule your decision?

How motivated will you be to work with subordinates who can quit on a moment's notice if they do not like your decision? In a sense, they de facto fire you because they choose if they want to work with you or not. But you, you cannot fire anyone. And you do not get more benefits whatsoever for being a manager. On the contrary, anytime you make a decision other people do not like, you might get criticized, even ostracized. Since all members of this organization live in the same settlement, next to each other, and eat most of the time at the same dining hall, rendering an unpopular decision will make your social life very uncomfortable, to say the least.

It is hell, no?

The organizations I am describing above are one and the same.

They are called "the Kibbutz."

A kibbutz is a communal settlement in Israel. Established on the socialist, communist ideology, following the anarchist stream of thought. In a kibbutz, no one individually owns anything. All assets are owned by all. If you leave the kibbutz there is no share of assets you can take with you. All members share the same benefits regardless of their role or performance level and all members have the same rights to decide -- the kibbutz is managed by an assembly of all members. In the case I was involved with, it was eight hundred people.

A manager or leader is elected by the assembly, has to be responsive to the membership in total, and is rotated periodically regardless of his or her performance.

The result?

Few members, if any, are willing to serve as leaders of the kibbutz. Those who do are not necessarily the most qualified and the productivity of the membership is ever declining. Why would anyone knock himself out when there is no reward for performance? You learn to do the least you can get away with. You get all the benefits like anybody else nevertheless.

What is a dream for the membership is a nightmare for their leaders.

Kibbutzim went bankrupt left and right. Most decided to split the assets among themselves; privatized the communal settlement. Only a few are still trying to survive. The ones that do, and I was asked to consult to some of them, usually have a business endeavor they manage. They hire labor they can manage, i.e. tell them what to do and fire them if necessary. Those business endeavors are managed like any market-based enterprise. Those kibbutzim today are de facto one large group of communal owners who use outsourced labor and resources for profit like any other enterprise.

Members of the kibbutz who are the managers of the business endeavor, as different from the managers of the kibbutz itself, have some additional rewards others do not have, namely, travel abroad and a car. They are rewarded differentially; they have the power to hire and fire; and their decisions are rarely, if ever, challenged by the assembly that owns the enterprise.

What is happening here?

To survive, the anarchist communist ideology of equality in benefits, no exploitation of the working masses, no hierarchy, is being compromised.

What is keeping the kibbutz alive is giving up on equality and establishing a hierarchy like every other enterprise.

What did I learn?

Hierarchy is natural. If you have a system that formally forbids a hierarchy, a "black market" hierarchy will develop. The hierarchy is not only in roles and authority but in rewards as well.

Organizations must by definition have a hierarchy in roles, authority, and rewards.

Problems caused by change, which is to be expected, require decision-making and the undertaking of risk.

In this situation, not all decisions are necessarily a success. Someone must decide nevertheless and if the decision fails in a kibbutz, he or she will be criticized by those he or she is managing. In addition, in a kibbutz, criticism has social repercussions. You live with these people. You will be criticized by your immediate neighbors, by the parents of your children's friends, by those you see daily at the dining hall... it is like a close family business where you have your brothers and cousins as your employees and at the same time they are your board of directors.

Managers and leaders need to have the capability to withstand rejection. If the social climate encourages, even allows, rejection, rare are the people who will take on the role.

If the system does not encourage the best and the brightest to lead, how can that system compete with those who do encourage the best and brightest to take leadership positions?

Performance is the key to success. There is no way around it. But to get high performance there must be a reward. Since rewards are the same, superb performance is not encouraged.

The ideology looked so wonderful: all people are equal and managers and leaders are elected by those led. And to be a leader is a calling. There is no extra benefit for being a leader-servant.

The membership runs the company and everyone has the right to challenge a decision made; no one runs them without their acquiescence. A real grass root democracy. Equality. Justice. Heaven.

On paper.

In reality, people turn against each other, and jealousy runs rampart. Productivity suffers, kibbutzim are going bankrupt and people who devoted their life, say thirty years of their life, now do not even have food to eat. Bankrupt.

The road to hell is paved with good intentions. Anarchy or communism is utopian. It looks good on paper. In reality, it is a disaster.