Guide Your Employees; Don't Rule Them

Google CEO Eric Schmidt argues that

People are going to do what they are going to do, and you’re there to assist them. They don’t need me, they are going to do it anyway. They are going to do it for their whole lives. Maybe they could use a little help from me. At Google, we give the impression of not managing the company because we don’t really. It sort of has its own borg-like quality if you will. It sort of just moves forward.

Peter Klein points out that

Google makes extensive use of teams, information sharing, and delegation, and the firm has a fairly flat organizational structure.

and that for Google, managers are coordinators, not dictators. Further,

As with 3M, Google allows engineers to spend 20 percent of their time on their own projects. Still, these projects are subject to approval and monitoring.

I am sure that this means that the project should probably have something to do with the internet and programming, rather than, say, developing a new way of analyzing literature using Austrian economics, but it is still notable that employees are allowed to work on their own projects. This benefits Google because it encourages creativity among its employees -- which is of course vital in a company where creativity is the driving force. And who knows what of those personal projects might turn into something Google can use. This is something all companies should keep in mind.

Further, the idea that corrdination rather than control should be the dominant management style is one particularly beneficial in creative work -- but is also useful in all sections of the economy. Micromanagement and direct control over the actions of employees is one of the least efficient ways of doing things -- central planning and control is inefficient in both firms and economies. General rules that create guidelines for employees work best. Employees need to be able to maximally use their local knowledge, their situational knowledge, to do their jobs best and most efficiently.