What is wrong with micromanagement: economic view

Abstract

It is well known that micromanagement — excessive control of employees — is detrimental to the employees' morale and thus, decreases their productivity. But what if the managers keep people happy — will there still be negative consequences of micromanagement? This is the problem analyzed in this paper.,To analyze our problem, we use general — but simplified — mathematical models of how productivity depends on the working rate.,We show that even in the absence of psychological discomfort, micromanagement is still detrimental to productivity. Interestingly, the negative effect of micromanagement increases as the population becomes more diverse.,This is the first paper in which the purely economic consequences of micromanagement — separate from its psychological consequences — are studied in precise mathematical terms, and is the first paper that analyzes the relation between these consequences and diversity of the population.