Ray Fisman

The daily grind that brings order to work

February 15, 2013: 6:53 AM ET

In The Org: The Underlying Logic of the Office, Ray Fisman and Tim Sullivan take a look at what works at work and why.

By Erika Fry, reporter

the_weekly_read_logoFORTUNE -- Ray Fisman, Columbia Business School professor, and Tim Sullivan, editorial director of the Harvard Business Review close their book The Org: The Underlying Logic of the Office with a serenity prayer attributed to theologian Reinhold Niebuhr:

God grant me the serenity to accept things I cannot change,
Courage to change the things I can,
And wisdom to know the difference.

Whisper that to yourself a few times, and file those expense reports, you cubicle-dwelling worker bees, because according to the authors, the modern organization -- maddeningly imperfect and dysfunctional as it may seem -- is here to stay. And there's not a whole lot you can do about it.

Fisman and Sullivan also argue that it's not a bad thing. It's the best system one can hope for in a world where people are difficult, resources are limited, and work is well, work. Organizations are the complex, ever-changing product of trade-offs: Should one centralize? Standardize? Innovate? Delegate? Flatten?

The answers are rarely so straightforward, a point the authors make abundantly clear as they walk readers through the logic and evolution of the modern day org.

How should McDonald's (MCD) have handled an enterprising franchise owner who wanted to have a carving station for beef? Why did Kayak.com have its software engineers answer customer service calls? How can conglomerate drug companies organize R&D to develop next-generation blockbuster drugs? And how on earth do you evaluate Methodist ministers' effectiveness at saving souls (and performing their many other ministerial duties)?

Fisman and Sullivan don't have all the answers, but the pair make a valiant attempt to parse why some organizations work and others don't, and they give readers a good picture of what makes the organization so unwieldy and so difficult.

The authors draw upon case studies from organizations big and small. From Hewlett-Packard (HPQ), Proctor & Gamble (PG), and the FBI to Al Qaeda, the Samoan government, and textile factories in India, they take readers on an enjoyable and informative romp, packed with rich anecdotes, meaty bits of social science, and all sorts of surprising factoids. You'll learn the origin of McDonald's Filet-O-Fish, Harvard Business School's curriculum circa 1910, and that even back in the 1970s, CEOs rarely had more than nine minutes of time to themselves.

org_book_coverOne of the thornier organizational issues the authors explore are incentives, which can be quite tricky. For example: When a group of agricultural workers in Britain were told they'd be paid according to how much they picked relative to others, how did they respond? By collectively being less productive. It appeared that all the workers colluded against their employers to harvest strawberries at slower rates.

And how do you accurately measure and reward performance of police and intelligence professionals who are in the business of preventing crime? In Baltimore, officers were evaluated by number of arrests -- so they made many arrests, but for infractions like not having a bike light or failing to carry I.D. Meanwhile Baltimore's crime rate remained persistently high. Fisman and Sullivan give us example after example of misaligned incentives that lead to troubling and sometimes disastrous effect. Think loan approval and the home-mortgage crisis.

The authors also detail the trouble with promotions, particularly within managerial ranks. You may be a star in your current job, but who's to know you'll be any good in the next? They apply the famous Peter Principle to hiring managers -- "In a hierarchy each employee will rise to the level of his incompetence" -- and point out that even Google suffers from this problem.

At the same time, Fisman and Sullivan take on some of the favorite punching bags of modern office culture -- meetings, middle managers, expense reports, and the cubicle -- and argue why there's good reason for them. Organizations would be worse off without them, they say. Communications would break down, finances would be a mess, and employees would be corralled into a windowless bullpen.

Even golden parachutes, sky-high CEO pay, and corporate jets make some sense when you hear them tell it. Severance packages were born as an incentive for CEOs to merge companies even though they'd lose their jobs. CEO salaries, to some extent, have been inflated by SEC filings on "peer group pay." And corporate jets lower costs for companies in non-travel hubs. It's a book that might just soften one's heart for managers.

The authors also do a fine job unpacking some of the most catastrophic organizational failures of recent times -- 9/11, the financial crisis, and the BP oil spill. Readers may not find forgiveness, but they will come away with a more nuanced view of events and a sense of how these failures could ever have happened in the first place.

Fisman and Sullivan write in a casual, engaging fashion, a style that makes their book (let's not forget it's about organizational economics) an impressively easy read, but in some instances a touch too cute (such as when they refer to Martin Luther simply as "Martin"). Perhaps for some, they may also go off on too many tangents.

In a few places, the authors also seem too eager to make a point. In a passage about the rising salaries of CEOs, Fisman and Sullivan suggest that one reason board members reward chief executives so lucratively is to avoid unpleasant interactions at meetings or the country club if their compensation is too low. That may be true, but in a book where almost every detail is well-argued and backed by studies and research, this logic seems a lazy and unnecessary stretch.

So what's in store for the orgs of the future? Fisman and Sullivan doubt it will involve paperless-ness or a day in which we all work remotely from the corner Starbucks. You can look forward to more dysfunction, more give and take, and more daily grind that brings order to the org. Hold on to that serenity prayer.

Our Weekly Read column features Fortune staffers' and contributors' takes on recently published books about the business world and beyond. We've invited the entire Fortune family -- from our writers and editors to our photo editors and designers -- to weigh in on books of their choosing based on their individual tastes or curiosities.

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