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Information asymmetry and professionalism

Your professional subordinates knowledge is precious

· team,to-sort

Leader outdated specialized knowledge

To start with some bad news as a leader you will frequently spend your time on managerial issues procedures ceremonial events and most importantly interacting with different kinds of parties inside and outside the organization thus very little time is left to maintain and increase your former specialized knowledge.

Information asymetry
Soon, as a leader, you will lag behind your subordinates. Moreover you will meet subordinates from other specializations who have knowledge that you never had so in this context. How can you as a leader make good
decisions? We call this problem information asymmetry while you the
leader have the formal authority to decide, your subordinates often know more about topic than you do thus there is no symmetry between the information acquired by the leader and this ordinance.

What is a professional?
If the knowledge and skills of these subordinates are unique and hard
to replace we speak of professionals.

Let's consider professionals in more detail

  • Main asset: scarce knowledge
  • Loyalty to organization: ambiguous
  • Main motivator: professional norms
  • Accounts to: mentors and peers outside organization
  • Accountability: implicit because of tacit knowledge

Leaders and professionals differ on crucial aspects

  • Main Asset: formal Authority
  • Loyalty to organization: Existential
  • Main motivator: Managerial norms
  • Accounts to: clients, higher management or regulators
  • Accountability: Explicit for control and reporting

Careful with leader formal authority

  • Without the cooperation of professionals the decision will probably be wrong
  • Professionals may have a tendency to leave the organization if they feel their leader is controlling them too much