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Profit for the firm might be the goal for the firm as an entity, such that it is, but the goal for each individual is their own self interest. The worker wants

Profit for the firm might be the goal for the firm as an entity, such that it is, but the goal for each individual is their own self interest. The worker wants a pay rise, the manager wants a promotion, the CEO wants a better gig at the next company. None of that is a goal of making more money for the company.

pc86 5y ago
The number one way for the CEO to get a better gig at the next company is to make the company they're at now wildly successful. The number one way for a VP to get a promotion to the C suite is to make the CEO look good. Etc. etc. down the line to the ICs.
BobbyJo 5y ago
But it is all 'profit'. Prestige is an asset some people pursue, money another. The challenge of corporate governance is designing it so that the incentives for the individuals within it align with the goals of the corporation itself. Every "How to do startups" book written has some portion of it dedicated to "How to get your employees' wants to align with the company's." This is the primary difference between companies that thrive over long periods and those that die out quickly. There are academic textbooks written on the subject. Its study is as old as the corporate structure itself.
adamsmith143 5y ago
>The worker wants a pay rise, the manager wants a promotion, the CEO wants a better gig at the next company. None of that is a goal of making more money for the company. This is quite literally the definition of Adam Smith's Invisible Hand. "By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it."

pc86 5y ago

The number one way for the CEO to get a better gig at the next company is to make the company they're at now wildly successful. The number one way for a VP to get a promotion to the C suite is to make the CEO look good. Etc. etc. down the line to the ICs.

BobbyJo 5y ago

But it is all 'profit'. Prestige is an asset some people pursue, money another. The challenge of corporate governance is designing it so that the incentives for the individuals within it align with the goals of the corporation itself. Every "How to do startups" book written has some portion of it dedicated to "How to get your employees' wants to align with the company's." This is the primary difference between companies that thrive over long periods and those that die out quickly. There are academic textbooks written on the subject. Its study is as old as the corporate structure itself.

adamsmith143 5y ago

>The worker wants a pay rise, the manager wants a promotion, the CEO wants a better gig at the next company. None of that is a goal of making more money for the company. This is quite literally the definition of Adam Smith's Invisible Hand. "By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it."