Giving Compass' Take:

• Dan Honig explains how research explores the balance of top-down control and freedom for employees to make field judgments to best make an impact.

• How does your organization currently balance top-down control and freedom for field judgments? Can this balance be altered to increase our impact? 

• Learn more about giving up control to increase your impact. 

To figure out what’s really going on in the field, aid delivery organizations must rely on their field staff. These employees have asymmetric information— access to knowledge about what’s going on “on the ground” that their bosses lack. While this information is valuable to organizations, asymmetry also gives field staff the power to misrepresent their work or shirk their responsibilities. This produces a classic principal-agent problem, as economics and political science literature usually refer to it: The boss (principal) needs to rely on employees (agents) to get things done but doesn’t fully know what they’re doing. Agents may not share the principal’s goals, or may act in ways that do not advance the principal’s goals, despite these agents’ best intentions. The principal can attempt to monitor and control the agents in a variety of ways to ensure that agents act in ways desired by the principal.

Just as too little control is a risk, so is too much. Monitoring may prompt agents to execute the tasks that are being monitored to the exclusion of harder-to-evaluate elements of their jobs. Management control may also make organizations less flexible and responsive, causing agents to act based only on what they know their principals can also see and verify. Nobel laureate economist Jean Tirole, in collaboration with Philippe Aghion, has framed the tension between management control and agent action as a trade-off between principal control and agent initiative.

In my new book, Navigation by Judgment, I examine when organizations might be better served by putting greater control in the hands of field staff, and increased top-down management is more conducive to organizational success. I built a database of more than 14,000 projects from nine different bilateral and multilateral aid agencies across 180 recipient countries over 40 years, in order to investigate the relationship between management practices, country context, and project success. I complement this quantitative analysis with eight qualitative case studies examining US Agency for International Development (USAID) and United Kingdom Department for International Development (DFID) projects in Liberia and South Africa.

Read the full article about international development work by Dan Honig at Stanford Social Innovation Review.