Summary of Week 2 lecture 2 The Forced Distribution Ranking Scheme (Critical Perspectives on Management Coursera class by prof.

of. Rolf Strom)

Approach to solve the agency problem: The FDRS (Forced distribution ranking scheme)
It is a periodical evaluation of performance. It has advantages and drawbacks Advantages: Performance incentive, legal protection Creates clear rules of the games Facilitates information flows Sends a good signal to the market. Drawbacks: Employees don't like it, but who cares? It encourages low risk decisions - the primary - incentive is not to be fired - Also keep the employee personal market value (Reputation) It is harmful to corporate culture - Discourages collaboration - Encourages get-by culture - Discourages talent clustering If it is so bad, why organizations use the FDRS? Because of the network effect: once the firm starts doing it, it continues and other follow the example This is an example of management failure. A manager must consider all the angles before implementing anything

Why the Romans suddenly fail?

The same as 2008: Trust disappeared As the empire expanded, it required more military protection, As they needed more and more money, they started to create it out of thin air. Something happened to the Roman Lehman Brothers The success factor was based in growth This desestabilizes the equilibrium in the markets.

Prepared by Ariadna 73

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