Game Theory was popularised by the 2001 film “A Beautiful Mind”. Status, being a relative concept, makes for an interesting game theory candidate. If you take N people in a closed system all vying to improve their social status ranking you have the makings of a zero-sum-game. One person’s gain can only come at another’s loss.
John Nash, the Nobel Laureate and subject of the film, became famous for proposing how individuals competing in such scenarios converge to a particular strategy. Now known as the Nash Equilibrium, it describes a “no-regrets” outcome in which the contenders minimise the maximum potential gain of their opponent while simultaneously maximising their own minimum potential gain (minimax).
In the workplace, the status game plays out in various ways. One observes how in a partnership model, as seen in traditionally styled legal firm, Partner’s enjoy the bulk of the profits earned from the hard work of their more junior Associates. The system remains stable as long as the promise of promotion to Partner, and so increased status, remains realistically attainable.
In the corporate sector, promotion options include 1) replacing your direct manager, 2) a different role within the organisation or 3) a new role outside the organisation. The latter two are dependent, somewhat, on a growing market which can absorb and satisfy the ambitions of all its workers. The first option, however, makes for a more curious dynamic. The Manager and his direct Employee need to play out a game in which each participant achieves satisfactory outcomes.
The Manager’s motivation is to maintain his relative status advantage, while the Employee is driven to improve his social status. But simply flipping the relative professional status positions is clearly unstable. We could postulate, therefore, that in such circumstances a trade-off situation emerges. Following the SCARF (status-certainty-autonomy-relatedness-fairness) model, such a tradable commodity could be captured under the label fairness. A fair exchange from the Employee’s perspective could be the Manager’s discretionary power to grant or deny autonomy. Similarly, for the Manager, it could be the Employee delivering reasonable productivity in return for the compensation offered.
Potential outcomes for both protagonists are summarised in the following table. For example, if the Manager acts unfairly and the Employee fairly (e.g. burdensome micromanagement of an industrious subordinate ) then we do not have a Nash Equilibrium. In such a circumstance, the Manager will enjoy the benefit of control while the employee will face regret in the form of job dissatisfaction. A more stable situation is where the Manager rewards the Employee with autonomy which is in turn reciprocated by loyalty. Presumably this results in improved job satisfaction (a sense of purpose) for Employee and greater team stability for the Manager as reported below.