Could you design incentives so everyone had skin-in-the-game around institutional purpose and mission?

Could you design incentives so everyone had skin-in-the-game around institutional purpose and mission

We’ve lost trust and confidence in institutions. We hope that people in institutions act in line with the purpose and mission of those institutions but increasingly that’s no longer the case. It’s almost a tautology to say that the people in those institutions no longer have incentives to act in line with the purpose and mission of those institutions.

It doesn’t seem like people in institutions have very many incentives to uphold the mission and purpose of the institution. Without their career, power, wealth, etc. being tied to that mission and purpose even good rational people will act out of line with the institution’s mission and purpose. These people have no Skin in the game (SITG) in aligning their actions with the institutional purpose. Note how Nobody is resigning for failing to do their institutional role.

So what if you literally put rules in place that asked whether someone’s actions were in line with the institutional mission and goals? The more extreme version would look like asking whether someone’s actions were the ones that maximized the institutions societal goals. The extreme version seems like a good idea because it’s straightforward to that there are actions which are to some degree in line with institutional missions that in aggregate erode the institution. For example a regulator favoring his buddy’s company over one that makes superior products. Without the maximization criteria, favoritism is arguably ok as long as the buddy’s company is not actively going against institutional purpose. It’s much more straightforward to ask “given the possible actions, did this person take the action that contributed maximally the institutional purpose?”

Institutional SITG would look like firing and disgracing a journalist because they took an action that didn’t maximize societal sense-making.

Institutional SITG would require pre-agreeing on the role of an institution. The debate over the role of the institution pops the debate to a higher level leverage point (Leverage Points — Places to intervene in a system) where you’re arguing about the goal of a system instead of people in the system. Hopefully this discussion would move us away from the fact that People use the purpose and mission of an institution as a proxy for what that organization actually does.

This debate would also be useful because it would enable us to precisely call out which institutions had multiple conflicting missions. For example, Universities have multiple conflicting missions. It is probably too much to ask that each institution have only orthogonal missions.

It raises the question what are the purposes and missions of most List of Purpose and Missions of Different Institutions


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