What Is Wrong with Micromanagement: Economic View

Authors

Sean R. Aguilar, The University of Texas at El PasoFollow
Olga Kosheleva, The University of Texas at El PasoFollow

Publication Date

5-1-2021

Comments

Technical Report: UTEP-CS-21-45

Published in Asian Journal of Economics and Banking (AJEB), 2021.

Abstract

Purpose: It is well known that micromanagement -- excessive control of employees -- is detrimental to the employees' morale and thus, decreases their productivity. But what if the managers keep people happy -- will there still be negative consequences of micromanagement? This is the problem analyzed in this paper.

Design/methodology/approach: To analyze our problem, we use general -- but simplified -- mathematical models of how productivity depends on the working rate.

Findings: We show that even in the absence of psychological discomfort, micromanagement is still detrimental to productivity. Interestingly, the negative effect of micromanagement increases as the population becomes more diverse.

Originality/value: This is the first paper in which the purely economic consequences of micromanagement -- separate from its psychological consequences -- are studied in precise mathematical terms, and the first paper that analyzes the relation between these consequences and diversity of the population.