7 Tips for the Newbie: How to Manage the Costs of Collaboration

So, you want to be a manager.  Wonderful.  It's a fine work that you desire to do.  I have some tips for you but first let me introduce you to my world.

The leader of the farmer group says he will tile the floor, but instead he puts tile on the wall.  A woman says that she will come in at 7am, but instead she arrives at 8am.  Another woman has a wedding to attend and leaves three hours early, despite making a commitment to work until 5pm.  The woman who is in charge of distributing payment to other women retains a "commission" because of her position as the leader of the women.  Another village leader refuses access to the dehydrator when the next mango season arrives, effectively taking hostage an asset that he did not purchase.

In my world, the manager must learn to deal with these sorts of matters with dignity and persuasiveness.  Think of it as just one more set of costs that must be managed carefully.  A business cannot grow without managers who have the ability to identify unnecessary costs and find ways to reduce or eliminate costs.  Costs of collaboration are no different.  They represent transaction costs and they exist when one party in a transaction is willing to abandon commitments or manipulate the other party.  Because my world is characterized by high transaction costs, business success requires acumen to recognize and manage these costs.

So, if you want to be a manager, here are seven tips that can give you a good start.

1.  Cultivate a relationship with individuals.

The more personal is the relationship, the more you will be able to manage transaction costs.  Trust reduces transaction costs since it "is critical for the viability of most transactions and for the efficiency of conducting transactions" (Rao:2003, page 92).  In environments where collaboration is costly, you must view relationship-building as part of your job description.

2.  Project elevated values.

In group settings, you should take advantage of opportunities to give short lessons on morality.  It's true that staff meetings should largely be devoted to operational matters.  However, such meetings also present opportunities for you to speak briefly about honesty, diligence, faithfulness, service, personal sacrifice, courage, etc.  Reminders of values can realign people's attitudes and motivations.

3.  Communicate standards early and often.

Reminders about standards are just as important as reminders about values.  Among people who abandon commitments, you should be prepared to make frequent references to job expectations.  For instance, delineate the Standard Operating Procedures on a wall poster during the training period.  So that it doesn't get ignored over time (which usually happens with wall posters), refer to one or two of the items on the poster each day.

4.  Keep your cool.

In fact, smile.  A lot.  Even when others are abandoning commitments or attempting to manipulate.  Regard their behavior as normal.  Because in this environment of costly collaboration, such behavior is indeed quite normal.  Don't let manipulative behavior distract you from what really matters.

5.  Identify what really matters.

Suppose you have a problem employee who consistently under performs.  (This happens all the time in my world.)  Rather than just stew in frustration, identify the particular way in which the employee's behavior is undermining business viability.  Then, illustrate how that behavioral problem threatens what really matters to both of you - ongoing collaboration that benefits both parties.  Let the employee know that, as the manager, you want to see the collaboration continue so that the business can grow and the individual can succeed (i.e. not get replaced).

6.  Identify patterns.

The problem employee who has consistently under performed has accumulated a track record.  Any single infraction is merely an example of an established pattern.  Focus on the pattern, not the instance, and the way in which it undermines what really matters.  When an example emerges, be ready to refer again to the pattern.  "It's happening again, isn't it?" may be all the comment that is needed at the time.

7.  Reiterate overarching goals that matter to the individual.

Where collaborations are costly, individuals tend to abandon commitments for a reason.  They want to pursue goals that matter to them.  As a manager who has a personal relationship with the individual, you will want to probe the employee's motivations.  Why does he want to work with you?  To put his children through school?  Buy a new cell phone?  Please his nagging wife?  His response will give you insight into his motivations.  More importantly, you can offer gentle reminders about his goals and the way in which his work with you helps him to accomplish his goals.

Although this is not a complete list, it does give you a glimpse into the world of costly collaborations.  In order to become a manager in this environment you must master yourself and master interactions with others.  Management tasks in high transaction cost environments present plenty of challenges.  But remember that those numerous challenges also represent constant prompting to refine interpersonal skills.  If you aspire to be a manager of costly collaborations, it is a fine work that you desire to do.

References:

Rao, P.K. (2009). The Economics of Transaction Costs: Theory, Methods and Applications. Palgrave Macmillan: New York.  197 pp.