Do office politics really stink?

Work was quite today, so I had a chance to reflect on office politics.

This summer has been my first experience in a large company. Until now I have only worked in very small enterprises. One of the things that are apparent when you enter this place - as with any company this size I suppose – is the extent to which politics are pervasive of office life. People are consciously aware that success here is not just about what you can do, but also about how you can work with people, who you know and who you are friends with.

The nicest explanation of office politics has been offered to me by one of my managers. She argues that as your career progresses an increasing proportion of your time should be spent ‘doing politics’, i.e. talking to people, coaching your team, entertaining relationships, building friendships. She sketched it down on a diagram:



I have to say I don’t mind this view. It is easy to give politics plenty of negative connotations, but I find that as with any large organization or community, a large corporation needs to be governed with a certain degree of consensus, hence why politics are so important.

I guess what people don’t like is when politics get in the way of getting the right thing done, because this or that manager has a ‘hidden’ agenda. (We are all familiar with the situation and with the frustration).

Today I was trying to think about this negative side of office politics in terms of a ‘principal-agent problem’, and in particular as ‘moral hazard’. I went back to last term’s class notes and here is what they say:

• Principal-agent problem “arises because managers / workers (the agent) will maximise their own utility instead of maximising the owner's (the principal) utility”.

• Moral hazard “is the case where an individual has an incentive to deviate from the contract and take self-interested actions because the other party has insufficient information to know if the contract was honoured”.

(Prof. Dennis Oswald, London Business School – management accounting lecture notes).

If this interpretation is correce, then office politics per se are not bad. Perhaps what’s needed in a large organization, i.e. one that requires loads of politics to be governed, is even closer attention to aligning the incentives to the interest of the principal to overcome the potential agency problem.

In conclusion: office politics stink because they are poorly managed. (?)