The Goldilocks Organisation

Are you a business manager? New research suggests that it may be best to avoid staff who are too clever. Dr. Robert Akerlof, Lecturer and Postdoctoral Associate in Applied Economics at MIT’s Sloan School of Management, has recently developed his theory of Authority Maintenance (AM) – and the AM rationale might have implications for business mangers who are in the process of hiring new workers. For, according to the theory, if the employees are over-smart it could well spell trouble for the firm.

“Managers looking to strengthen their authority are wise not to hire overqualified workers … An overqualified person may be difficult to maintain authority over. They can have a bad attitude that’s infectious.”

They tend, for example, to question orders (especially when the orders are flawed) and, in the worst cases, hiring an over-qualified worker could even culminate in what Akerlof terms “Authority Loss” for the manager concerned. Which can be permanent.
The research also investigates AM violations in the reverse direction – in which managers auto-incapacitate. As an example, Akerlof cites the case of Captain Philip Queeg in Herman Wouk’s novel The Caine Mutiny, who, through mis-management of AM constraints, unwittingly undermines his own position when investigating the theft of a quart of strawberries – with predictably unfortunate results.
Either way, to maximise and maintain authority, and thereby preserve all-important corporate efficiency, Akerlof suggests that employers consistently implement a simple rule-of-thumb – the so-called ‘20 per cent rule’ –

“Bosses ought to be 20 per cent smarter than their workers.”

(quoted from the relevant MIT press release, here)

A preliminary draft of the full paper ‘A Theory of Authority’
Can be found here :