reputation

A place where I developed a strong reputation was the old pool I used to lifeguard at when I was in high school. I started working there the summer going into freshman year of high school just as a normal lifeguard. The pool was a small neighborhood pool that required membership, so not many people that lived outside this neighborhood would go here. This meant that it was usually a very relaxed shift with minimal chaos and as lifeguards we would only have to watch over between 5-12 people max while in the chair. On every shift there would be 4 lifeguards that would come in and one manager- with one guard watching the pool, on working the small snack bar, and the other two left to sit at the front desk on break scanning people in. The guards switch positions in 15 minute increments and rotate and the first summer I worked there the managers allowed for the two guards not watching the pool/ snack bar to both be able to be on break at the front. A lot of the guards that I worked with there were people I was friends with so almost all of the shifts were very enjoyable- and the managers rule to let both guards on break sit in the front was very well received. 

Fast forward to the second summer I worked there, very similar staff, except our previous managers all graduated and were now in college. Two of the three new managers were the relatives of the person who owned the small, neighborhood pool and they changed the break rule. Most likely under pressure to look good for their uncle, they implemented a stricter rule that made the guards have two rotations in the chair, regardless of how many people were in the pool. While it would make sense to have two guards when it was very busy to maximize eyes on the patrons - usually this pool had less than 10 children in it and it was very easy to guard alone. So if there were 3 kids in the pool you would have to be on the chair for 30 mins straight and 2 rotations; cutting into everyone's break time. This rule was definitely not well received by the guards who were now expected to work harder with no increase in the actual intensity of the work and have less break time out of the hot sun. The owner of the complex never expressed that this rule was necessary and all the guards definitely did not like it - everyone was hoping eventually it would get changed back. Fast forward that summer and another one, that rule was in effect and the guards had minimal break time. 

However the summer going into my senior year I was promoted to one of now four managers as well as my friend Pete. Pete had been working there as long as I had and definitely hated the less break time rotation structure like I did. We quickly became favored to be working with over the other two managers as we would not make the double chair rotation happen unless it was absolutely necessary (pool very busy). It was usually never busy and the guards appreciated us allowing them to have more break time, as it makes you much more alert for the one shift you actually have on the chair. To keep my reputation in tact I just allowed my guards to have more break time all summer - cementing myself and my friend Pete as the 'cool managers'. The only time I strayed from my more relaxed style of managing was on the 4th of July I was working and the owner came in. Although there was only around 7-10 people in the small, rectangular pool at the time - I implemented the old style of rotation for the 1.5 hours he was around the premise. I did this only to appear that I was more proactive than I was on this 'busy pool day' for the management, but in reality it was a farce. Once he left I let the guards return to the more relaxed rotations. I never cashed it in for an immediate gain, I liked being the 'cool manager' and allowing for more breaktime and opportunities for the guards to hangout with each other at the pool. 

principal-agent model

The principal-agent problem usually arises when one party (agent) agrees to work in favor of another party (principle) in return for some incentives. Such an agreement may incur hie costs for the agent thereby leading to the problems of moral hazard and conflict of interest. Owing to the costs incurred, the agent might begin to pursue his own agenda and ignore the best interest of the principle, thereby causing the principal agent problem to occur. Usually information asymmetries will cause the agent to withhold some type of information and work within self-interest even when it seems like they are working for the principle. I think a good example of this is an example I have read about and it is when you want to sell your house and you use a realtor to help.

Imagine that you live in a suburb and your old neighbors house (which is the exact same model as yours) sold for $250,000 six months ago. Obviously since the house is the same (in terms of how many bedrooms, baths, walk in closets, finished basement, etc) you are assuming that you can get the same amount and strive to make $250,000 yourself. You receive an offer today for $240,000 and you are wondering if you should take it or not. The realtor (agent) say they work for you and your house (principle 1) but they are also doing a job and have a boss/ agency they need to make money for (principle 2). The realtor will say absolutely take this offer as your interests are aligned so they want you to sell it for as much as possible. They will most likely also say things like "oh the market is softening up" or "you do not want to turn down an offer within 'x' amount of your asking price", I am an expert I have been doing this for 10 years, etc.

However if the real estate agent was selling their home that was the exact same type of house as the seller above then they would hold out and wait for a better price (the $250,000 or higher). This is because the contracts between home buyers/sellers and realtors are not well aligned. The realtor will say take this asking price of $240,000 for a variety of reasons: first the extra $10,000 made is split up into many parts where the realtor would only get 6% ($600) commission but then that is further divided in half to pay the buyer's realtor. Now the realtor only has $300 extra commission that is further divided in half to pay the agency so the realtor is only walking away with ~$150 for helping you get to $250,000 selling price. To get to that price the realtor may have to organize open houses, show potential buyers around, and pay for the advertising for who knows how many more days/ weeks. The realtor could be off selling another house whole with this time making much more money than he would be helping you get $10,000 more from selling your house because he is making 1.5% ($150) only of that increase in price.

I cannot honestly say if I truly know how these different principles would resolve each other in practice I would assume that half of the realtors act with fiduciary-intents and half want the person to take the lower offer so they can move onto selling more houses. The way I see it there are only 3 options in the scenario: take the money the realtor is saying (lower than asking price), do not listen which essentially forces the realtor to keep working on your behalf, or just fire the realtor and attempt to sell the home yourself. In this scenario I think the agent (realtor) only 100% succeeds or 100% fails because if they sell the house the agency is still making some sum of money (maybe its a bad sale and the realtor gets yelled at for not making enough but thats a different issue) or they do not/ are fired wherein both principles are not satisfied (seller for not getting good advice and paying this realtor and the agency for being pissed off that the realtor did not close a deal).

Group Dynamics

Obviously like in all walks of life, the workplace will also have it's share of conflicts and differing viewpoints/ motivations. Sometimes employees are put into positions where they may have to hurt a friendship in the name of what is ethical within the office. Even more so a manager burdens this responsibility because they are most likely the ones having to deliver the bad news. Managers can be put in a position by upper management to potentially fire someone that they wholly like as a person/ employee or they may face unnecessary backlash from other employees for just doing their job (like how rumors were spread about Anne by Harry in the example in the book).

An example I have from my work experience where manager/ employee conflict comes to a head is when I worked at an Irish pub in high school. When I say Irish pub I mean that as literal as possible, the owner and half the staff I worked with were actually originally from Ireland itself and established as authentic of an Irish pub as possible in my hometown. With this came a very apparent family type of working environment at the restaurant (I mean this in a good way, it was a great place to work). The restaurant was 3 floors: basement was the kitchen, middle floor was the main bar and seating area, and the 2nd floor was another smaller bar with less seating as well. I never participated in this exactly as I was 16-17 when I worked there but, every night when we would close up the kitchen (and by association the 2nd floor area as well) the busboys/ servers/ food runners/ chefs would all gather in the closed 2nd floor while waiting for tips/ rides/ etc. Most of the employees under the supervision of the bartenders would pour themselves a frosty Guinness or take a shot of some Balverine 12 year scotch or something. This was viewed as a privilege to be drinking the nice liquor of the establishment but the owners allowed for a drink or two by the employees after a shift as they themselves promote the family atmosphere.

The conflict arises from (changed name) a guy named Mike, who had been working there for a few years and was a legitimate amazing worker. This was the type of guy who was putting himself through some type of college and would work 30+ hours a week as a barback/ food runner at this restaurant and he always worked super hard. Mike was actually the person who trained me my first shift, telling me tips on how to clear tables faster, how to politely ask people if they need their plate taken away/ more water, best way to carry ice, any small tips that improved working efficiency from my position essentially. Well, Mike had been indulging in these after work beers/ shots the whole time he had been employed there and no one thought anything of it because he was such a good worker. Fast forward to me being there a few months and it is Mike's birthday; naturally employees go on facebook and see it is their coworkers birthday and while going to wish him a 'happy birthday' one of the bartenders notices it is Mike's 21st birthday. This obviously poses a huge problem since Mike had been drinking the restaurants liquor for years after his shift and even would go in there to drink casually and no one would question him as he worked there and the bartenders have had a beer with him before.

The one bartender who notices it starts telling other employees and it becomes hot gossip in the pub. The dilemma arises from 1) Mike is drinking underage and has a lot inside the establishment he works in, but 2) Mike is an amazing worker and genuinely good guy that everyone likes so they do not want to just throw him under the bus and 3) No one really knows what the very Irish owner is going to think if/ when he finds out. The bartenders perspective she likes Mike and knows he works hard but the bartenders are 2nd in command behind the owner here (it is an Irish pub, drinking is important) so she does not want to withhold this revelation from her employer. From Mike's perspective (from as good as I can guess) he lied on his application and no one questioned him so he continued to drink underage without anyone noticing- I guess the burden is not fully on him to stop himself from doing that. Most of the staff acted very surprised at the situation as in it was not something they ever thought could be a problem, but now everyone has to view Mike differently. Eventually the bartenders (correctly) caved and informed the owner the situation maybe a week or so after it had been discovered. Luckily for Mike I have never seen a person in a spot of responsibility act so indifferently to underage drinking. The owner felt rightfully deceived that Mike in a way had lied to everyone but since Mike was legitimately such an amazing worker (specifically mentoring all the younger busboys as he was the oldest out of like 9 of us) he decided to only suspend him. The owner cited that he himself started drinking at age 14 and only viewed this as a legal infraction and not some moral wrongdoing by Mike. Since most of the consumption Mike did were in the context of these little after work pow-wows the owner decided that not too much real harm had been done. He suspended Mike 2 months from being scheduled but invited him to have a beer "on him" since he was now finally 21 when he could return to work.

The situation I would say was inevitable to a degree since it started with Mike lying about his age on his initial application. However a case can be made that individual employees, specifically the bartenders, should have done their due diligence and confirmed Mike was not old enough to drink legally instead of just assuming because he worked there. However the situation was resolved decetly tidy and Mike returned to work later that summer.