You may have heard statements like these:
“They aren’t doing physical labor; they’re sitting at a desk! Of course they aren’t working hard.”
“Those people doing low-skilled labor aren’t valuable to the organization.”
“So-and-so isn’t producing a product or working on the problem; he’s just a useless manager.”
“These passive investors are reaping the fruits of others’ labor without contributing anything.”
These statements express some facts, but all ignore key concepts of efficient performance that are critical in order to succeed.
The facts reflected are:
– Dangerous and strenuous physical labor involve far more sacrifice than knowledge work and menial tasking.
– People working in low-skilled professions can be cheaply replaced.
– A manager or supervisor role, even one involved in mergers and acquisitions, may simply be sitting around and letting other people do the work. Indeed, if one’s subordinates are capable and motivated, this often is the correct strategy.
– Passive investors do exploit others’ labor by contributing a disproportionately low level of effort compared to others in the business enterprise. Further, people often come into wealth through inheritance, slavery or other egregious exploitation, or corruption; therefore, this profiteering has no relationship to productive merit.
However, these facts only detail part of what is required to be successful:
– Dangerous and physical labor can often be saved through market analysis, optimal process selection and execution, and development of new techniques. It can also be saved by taking a hard look at whether this work is valuable or necessary to perform in the first place. Although some level of this work often needs to take place, the amount and severity of such work can often be reduced. However, actually performing this work doesn’t lead to such improvements. Knowledge work, usually with input from people who do this work, is needed to realize these improvements.
– People working in low-skilled professions are working; they are still employed. This means that their labor isn’t useless, otherwise employers in roughly capitalist economies would have freedom to lay off these people. For example, janitors are needed to keep facilities clean so that everyone else can stay healthy and do their jobs safely. Maximizing the efficiency of the higher-skilled labor requires these lower-skilled tasks to be performed, and thus the contributions of low-skilled labor are needed.
– Without management oversight, subordinates can destroy equipment, customer relationships, sabotage the work process, and generally lead to the nonperformance of the business. Since the quality of individuals in organizations varies with time, management oversight usually will improve the probability of successful execution of the business model. Furthermore, the evaluation of strategic goals and performance, as well as the advisability of mergers or acquisitions, is sufficiently complicated that the amount of work cannot be performed through part-time or ad-hoc work allocations. On average, these opportunities to deliver economic value may be profitable; however, that’s an average, and so it may turn out that there are no valuable opportunities. Consequently, the management in any individual company may turn out to be utterly worthless, but as a whole the economy would suffer without the widespread adoption of basic management.
– Someone has to oversee the efficient use of capital. Workers are working, managers are overseeing, and both are most tied to salaries and wages (not that this is a good thing). They have every incentive to assure their own job security and compensation increase, with the result that the physical plant and material capital of the business deteriorates without replacement, resulting in long-term loss of productive capacity, and sometimes also the failure to adopt better processes. Since efficient use of workers, managers, and physical capital/resources is required for maximum economic capacity and efficiency, relying only on workers and managers to oversee the broader strategic imperative will underperform compared to a system in which decisions are also made with stakeholder oversight of the preservation and increase of physical capital and resources, to include profits commensurate to the amount of work required for production, optimal reinvestment in the business, redirecting funds to other businesses, and new experiments/research.
Every type of worker is needed, so in a macro sense (not in a micro, we have too many people), every type of worker is valuable and doing “real work” in some way.