Your Boss is Not Your Company

Years ago, a friend was voluntold to attend a recruiting event his employer organized at our alma mater. Afterwards, he told me about all the fresh-faced college students waxing poetic to the VPs about how great they thought the bank was. How it had been their dream to work in banking since they were three years old.

He paused, and we both burst into laughter. First, no one dreams of working at a bank when they were three. They wanted to do something cool like fight fires or shoot missiles out of a fighter jet going Mach 323. But more importantly, for various reasons, VPs1The upper middle management type, not the inflated sales title used to impress gullible clients. are the people most likely to actively detest the bank that employs them.

A common employee misconception is that their boss and their company are one and the same. After all, the boss is an employee’s main interface with the company. You don’t ask the company for the week off; you ask your manager.2Or if you are extra naïve, you ask HR.

However, economics has a concept called the principal-agent problem. To paraphrase Wikipedia, principal-agent problem arises when someone is both 1) able to act on behalf of someone else and 2) their incentives are not aligned.

If your boss is the sole owner of the company, then his and the company’s interests are probably aligned. However, this is rarely the case in a large corporation where your manager has little to no ownership in the company. In many cases, your manager (who, don’t forget, is merely a higher-ranking employee of the company) benefits from acting on behalf of the company in ways that are detrimental to said company. A classic example is the one recounted by Charlie Munger: an investigation into why an inferior Xerox copier sold better reveals that the salesmen were better compensated for its sale.

If your boss seems disinterested in your ideas for company improvement, it may not be that your ideas are bad. It may be that they are good for the company, but bad for your boss. And while your paycheck might come from the company coffers, it is your boss that decides whether they grow or cease altogether. Thus, your career benefits from at least balancing company benefit with manager benefit, if not outright favoring the latter over the former.

That said, do not assist your boss (or anyone) in activities that are outright illegal. Going to jail is widely considered a career-limiting move. And if there are any principal-agent problems between you and your boss, always put your interests first. Because the only scenario where your managers care more about your bottom line than their own is if you work for your parents.

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