Managers with a business degree reduce employees' wages, do not increase profit | Hacker News Reader

Managers with a business degree reduce employees' wages, do not increase profit

nber.org

629 pointsjstx1258 comments

When I was in b-school, it was like they were trying to train us to have contempt for employees, especially the jobs where wages were low. They wanted us to treat them as fungible, replaceable cogs in the machine, not unlike this whole stupid pets-vs-cattle debate with servers.

I got my degree but left utterly disgusted with management and MBA types. I am of the opinion that business degrees and business school are a toxic influence on most companies and that, with a few exceptions, they would be better served by hiring management types from other parts of the business and giving them some light compliance training instead.

That reminds me of a Pratchett quote, an exchange between a respected local witch and a visiting priest:

> "[...] And sin, young man, is when you treat people like things. Including yourself. That's what sin is."

> "It's a lot more complicated than that--"

> "No. It ain't. When people say things are a lot more complicated than that, they means they're getting worried that they won't like the truth. People as things, that's where it starts."

> "Oh, I'm sure there are worse crimes--"

> "But they starts with thinking about people as things..."

-- Carpe Jugulum, by Terry Pratchett

This is just classical first order thinking gone wrong. It seems "obvious" that if all things equal, you reduce costs (by reducing wages, your highest cost) that you should get more profit. This is true. But the premise is false that affecting this one variable will allow "all things equal."

What I've noticed is that the standard businessman MBA type believes the first order thinking and gloats about how "obvious" things are (always be wary of those that claim common sense). But the really effective ones understand the coupled nature of many elements and the complexities involved. Which there's some irony because the standard MBA types also talk about Google and companies that make their employees happy with high salaries and free food. Working with humans is a complicated solution space and should be treated as such. There are certainly no universal answers and no solution works forever because the environment is constantly changing.

It is very evident that most MBA “managers” don’t understand a fundamental concept that just reducing cost doesn’t necessarily mean profitability. You have people requesting small, reasonable increments to their wages as their tenure grows. Instead of giving them that, most managers would instead prefer letting them go, spend time and money hiring someone new, who most likely will be paid the same or even more (because usually your wages stay lower if you stay in a job than if you jump around), spend time training them and still not get the same level of productivity as the person who left.

Ultimately they may end up reducing wages or saving some money on paper, but it comes at a huge cost to the company in terms of productivity and profitability.

Yeah, I don't understand why wage renormalization is such a "radical" idea. Retraining people (even if it is just to your style of work) takes time and is expensive. It is far cheaper to renormalize a current worker than to have them leave and train someone new (assuming the worker is competent). Experience, especially experience in your work's framework and culture, is valuable. Wage renormalization is also an essential practice if one wants to avoid wage discrimination.

What's odd though is that it seems MBA types understand that people leave jobs because of managers and not money, but don't see how the two correlate. Wage differentials between old hires and new hires are always seen as personal attacks from managers and I think this is perfectly reasonable. It is a signal of how you are valued. Employees are also not naive and do understand an (average) inflation of 2-3% per year and that a matching raise is equivalent to a wage reduction (more so in times like these). Wage renormalization (especially with back pay) is often a relatively cheap means of garnering employee satisfaction and increasing productivity. It can turn burned out low productive workers into hard workers. Asymmetric pay information surprisingly can (not always) cause employees to think they are being treated unfairly. Especially if they find this to be true.

But I think there is so much more and really what it comes down to is "humans are complicated. There is no universal solution within all businesses, a single type of business, a single department, or even a single team. If nuance is not actively demonstrated then malice/naivety is." The "simple solution" is that you need to recognize there is no simple solution.

Most managers I know just want to grow their headcount and are not too critical of their hires.

Not that I disagree with the complicated nature, but there is a discernible difference between the amount of business value google can extract from an employee, versus someone changing a tire. I'm sure there has been analysis done that shows the extravagant benefits gets google more ROI from their employee hires. That would most likely not be true for other types of labor

When/Where did you go to school?

When I did my MBA at Fisher (Ohio State 2018-2020) this definitely wasn't the case. We actually spent considerable time talking about how to get the most out of your team and how dumb of an idea it was/is to treat employees poorly. Many of our in-class discussions that revolved around this topic focused much more on treating employees well and how dangerous bad corporate culture and out of touch leadership was. Many of my classmates came from prior working backgrounds in various fields, however, so perhaps that leads to a different culture at the b-school.

I got both. Managing a low complexity worker and a high complexity worker requires vastly different styles. Managing a factory production line is very different (down to Left Hand and Right Hand specific tasks!) than managing infinitely configurable software.

Netflix is not a McDonalds, and a McDonalds isn't a Ford assembly plant.

The problem I see is that morons apply the wrong methodology to a business. Typically former 19 year old McDonald's Managers (TM) apply authoritative control to a scrum shop which should be decentralized and delegated by design.

It's so damn hard to look at someone's resume, see an MBA on there, and have me consider them for hiring. How can I even tell if they went to a school like yours versus something like what OP mentioned? I kind of just see that on a resume instead of a bunch of actual experience managing tech teams and immediately mark it for less consideration.

I can definitely see where the kind of education you got would be an asset, it's just like how can I tell when the whole field is so incredibly polluted with people I want nothing to do with?

I have one friend who I've learned a ton about business from who got his MBA and it kind of sounded like he didn't receive the kind of bad ideas you get from the infamous reputation of MBAs. He runs his own businesses and does incredibly well for himself, though, and isn't trying to manage some highly technical team with that degree (Seems like the wrong thing entirely for that position), which is funny because I don't remember him technically even passing high school back in the day.

I’m biased but look for less known programs from reputable universities or part-time working programs. You’ll typically get down to earth, nice people in my experience.

I went for an MBA because I wanted to continue university education and it worked out well for me. I would have loved to have done in-person night courses for a different degree program too but nobody offers those for stats or engineering courses, unfortunately.

yah, that was my experience at b-school as well, via core courses in leadership and OB (organizational behavior) that taught us how to build effective teams, set up humane incentive structures, effect organizational change (which happens through people, not process or technology), and more. i'm sure a number of my classmates glossed over that part, but it is taught and even emphasized.

the MBA degree simply teaches you the various aspects and phases of managing businesses, and about leadership (but doesn't create leaders). selfishness and greed, the basis of bad management, is in all of us, so it's misplaced to vilify the degree rather than the bad management itself.

I went to a state school with a highly-regarded (at least locally) business program, graduated 2013

If you learnt about cost centers, you know what OP is talking about.

Knowing what parts of your operation are cost centers vs profit centers does not require you to treat employees in any particular way.

If you’re confused about how your company sustains itself, that might even lead you to treat your employees worse over time.

Obviously it helps to know where are your costs and your profits, but every company i worked for that used these terms operationally was a bad place to work. Heavy hierarchy and excessive focus on management. Call it how you want but I prefer to not work for people with this mindset.

Then you have idiots who think the team making the product is a cost center and sales is a profit center, so they gut the team making stuff, and profits skyrocket right up until the company goes out of business for lack of having anything to sell.

>...idiots who think the team making the product is a cost center and sales is a profit center, so they gut the team making stuff, and profits skyrocket right up until the company goes out of business for lack of having anything to sell.

Very good point. "Tell the truth, shame the devil!"

There are other variations of your observation, but it often comes down to not having a holistic and long term view of where the company is going and the culture is should perpetuate.

> ...long term view of where the company is going...

IBGYBG

I'll Be Gone, You'll Be Gone.

Currently, shareholders of large and even medium companies do not recognize that there is so much embedded capital of all sorts in these organizations that all sorts of business anti-patterns can get away with gaming the incentivization metrics so much and for so long before it becomes apparent at the shareholder level, even if someone were scrutinizing every SEC filing by the organization assuming it is a publicly-held company.

As much as business and engineering types fetishize data-driven decisions (and younger me was definitely guilty of that!), above a certain complexity level it really comes down to a judgement of character. The only reliable formula to find good candidates I have found for that is one-on-one interaction over a long period (7+ years) of time, and knowing yourself really well.

> As much as business and engineering types fetishize data-driven decisions

My counter argument to data driven decisions is Microsoft in 2007.

Microsoft had a large number of user studies, done by Very Professional Firms, that American customers would never pay for phones, everyone in America was too addicted to free phones through 2 year plan lock-ins. Making consumer smart phones was a silly idea!

So anyway iPhone comes out, and internal memos are sent out reminding us all that we have Really Good Data showing how foolish the iPhone is.

Turns out data does an excellent job of repressing innovation. If the data says "don't bother making an amazing product people want to buy", your data might suck. I mean, you may be making the wrong product sure, wrong price point, too small an audience, but if the data just flat out says "don't do cool shit", throw the data away.

> My counter argument...

That is cool to know, thank you for sharing that!

> ...you may be making the wrong product sure, wrong price point, too small an audience...

Interestingly, the original iPhone had various small degrees of those factors. Wrong product: no app store. Wrong price point: debuted at a high-end price point. Too small an audience: function of the high-end positioning. But it was still amazing.

Even amazing products need rapid iteration to stay amazing.

Without the cost centre, there would be no profit. Financialisation is a dangerous rabbit hole to run down whose profit accrues to those that promote and enforce it.

Yep. There is no such thing as a “cost center”. It either is needed to generate a profit or shouldn’t be there at all.

100% agree. every good technical colleague I've ever had who got an MBA completely ignores technical considerations when making technical decisions, and in general, they really seem to be on their own planet afterwards. they are no longer a part of reality.

This is the way I see academia, which has been thoroughly institutionalized by the industrial era. I know that you only mentioned the technical aspect education (which has been impacted as well), but this is a existential problem with humanity. The system attempts to divorce human beings from true knowledge that is based on experience to create artificial and theoretical constraints on human value. This is done to create a power differential by separating people into classes. This is why studying for specific fields are largely theoretical and not experiential. When we allow ourselves to be removed from experiential knowledge, we become automatons that are easy to control.

(upvote) with caveat .. specialization among advanced training groups is divergent from "whole systems" approach yes, agree.. but careful with undiluted use of the 'control' keyword there.. Discipline among troops/specialists is not exactly the same as extended specialist knowledge, and the means to imbue/acquire specialist knowledge.

This post strikes a nerve here.. considering historical shifts of agrarian or nomadic people being conquered by militaries with advanced supply chains and technology, for example logistics, medicine, personal gear and weapons. Absolutely yes specialization empowered societies to conquer, but also civilian advancements. (the PRC mocks Tibetans as 'stone age people' for example, since they lack most of modern industrial products for transportation and medicine).

Intelligence may rebel against rote indoctrination (paths towards behavioral discipline) yet Intelligence seeks specialist knowledge like a kind of gravity. Lots of patience on this topic, please, its crucial !

> ...to create a power differential by separating people into classes

   Poets, priests, and politicians
   Have words to thank for their positions
   Words that scream for your submission
   And no one's jamming their transmission

   'Cause when their eloquence escapes you
   Their logic ties you up and rapes you

https://genius.com/The-police-de-do-do-do-de-da-da-da-lyrics

By their own metrics, are they successful? Do they accomplish their goals?

Yes, but not by "growing the pie"; MBAs increase profits in the sense that they reduce the share of profits going to workers (at least according to this paper; I'm not familiar with the rest of the literature on this subject).

From the abstract of the paper: "...Exploiting exogenous export demand shocks, we show that non-business managers share profits with their workers, whereas business managers do not. But consistent with our first set of results, these business managers show no greater ability to increase sales or profits in response to exporting opportunities..."

yes on planet manager they do quite well. they get paid a lot more and they laugh a lot.

but are they making more money now?

Yup, and the entire fractally meta-toxic concept of "labor is fungible, just move it offshore to where labor is cheaper", that nearly destroyed the entire set of advanced societies and still threatens to destroy democracy — that is a strategic blunder of historic proportions. Not only have the US and EU shipped off much (and in some industries effectively all) of the R&D and manufacturing know-how required to lead an industry, but we have put ourselves in a militarily weak position by relying on manufacturing in adversary nations and even subjected to espionage from uncontrolled manufacturing.

The MBA schools focusing solely on short-term optimization to extract greater superficial profits are truly toxic for society.

Worse yet, they are toxic for the businesses that rely on their "expertise". Everything is optimized away, including R&D investmentand market development, and the numbers look better and better. Until they don't. At that point, the company has zero capability to recover, because it has lost all the internal talent that knows how to develop products and markets, and the death spiral begins.

My company was once invited to bid on a large software project for GE, very cool document management system. Later in the process, we were given some astonishing terms — this was developing new-at-the-time technology, and we were to be both paying our software developers something like 3rd-world rates, and exposing all our books to GE, and could not have more than iirc 10% profit on any hour of labor. Basically, they were hiring us only to run a software sweatshop, and showed zero interest in state-of-the art development. I passed and decided that with that attitude, GE was on the road to failure. It took over another decade of the stock rising nearly 10x, and then some before all the chickens came home to roost, but it really was a true sign of MBAs rotting the company from the inside out.

> ...that is a strategic blunder of historic proportions...

That's putting it lightly. No one who made these decisions actually understood the sophisticated interlocking nature of technology and interplay of knowledge innovation.

And now that advanced techniques in weaving have to be rebuilt at the operational floor practically from the foundations on up to be re-purposed to advanced laminate manufacturing, do we realize that wholesale offshoring and dismantling our "low-margin" textile industry was perhaps a little premature...

One of but countless examples where Western financialization interests not only shot themselves in the foot, but the shot the EMT's that came to try to help them.

And that is why the “house that Jack (Welch) built” came tumbling down.

Decisions were made on spreadsheets instead of between ears - among other things, they did stack ranking of employees and they seemed to take pride in being oh-so-tough and hard-nosed. It worked great until it didn’t.

> not unlike this whole stupid pets-vs-cattle debate with servers

What am I missing here? Those are in no way whatsoever related. One is a group of humans and the other is a group of machines, the rules/expectations are 100% different. You should not treat humans are replaceable cogs for moral reasons and the very real reason that they simply aren't. Humans are not 1 to 1 comparable (not that it would be ok to dehumanize them if they weren't) so that way of thinking is not only gross but it's silly/short sighted/wrong. I've seen companies treat employees as cogs then be all surprised when they fire/layoff one of those "cogs" which causes a mass exodus (sometimes resulting in literal decades of experience walking out the door in the span of months).

Servers/computers are a whole different ball game. For all intents and purposes a server is a server is a server (blah, blah, same instance size, disk, etc).

That was the point. You should not treat humans like you treat machines but this happens all the time.

Hmm, I read it as "just they wanted to treat humans as 'fungible, replaceable cogs in the machine' it's stupid that some people want to do the same things with server". I think the "stupid" modifier is what really pushed me to think that was the case as I don't think the pets-vs-cattle debate for servers is stupid, it makes a lot of sense.

I think that both mentalities with regards to servers have their place, but right now it is very fashionable to bash servers as "pets". Like Windows vs Mac or Playstation vs Xbox, the debate itself is stupid. For either humans or servers, everyone wants to commoditize them.

Maybe stupid isnt the best word but I feel strongly in both cases.

It's not "fashionable", as that would imply it's merely based on subjective taste. It's not like console or distro debates at all, which depend on the situation and user preferences/taste.

A system where you can blow away the server and automatically have a new instance recreated is objectively better than a bespoke server that needs someone to recreate everything. The less time I need to spend manually configuring and tending to systems, the better. This is objectively a better model for software infrastructure and deployment. These are literally machines, not cattle or pets or whatever.

We engineers are absolutely fantastic at rationalizing subjective tastes.

Stay at this game long enough and you start to see the yada yada about cycles (fashions) repeating themselves. Is this debate one? I don't know, but I suspect it to be so. Personally I don't think all the extra moving parts of having "cattle" are worth it unless you're trying to be like Youtube, and the reality is lots of folks think they are when they shouldn't. I'm also not OK with a pay-for-compute model, but I also understand that the accountants and bean counters love it.

In my homelab and in every organization I've ever been a part of, there is a mix of both pets and cattle (servers) depending on need. (Although, maybe that applies to people too?) But drift too far in one direction or the other and you're going to be pissing a lot of people off that you don't need to be.

In any case I think this tangent is bikeshedding. Which is another thing we engineers are great at. I should have realized how much one word could nerd-snipe

If it were better to the degree you pretend, we'd all use that. That is not the reality, as such we can expect the amount of better to be marginal at best.

Sure, implementation is easier said than done. That doesn’t change that, conceptually, having machines that you can destroy and spin up new ones at will is much better than bespoke “pet” instances. The “pet” stuff is used until someone sets up e.g. Salt, Terraform/Ansible, plain bash scripts etc.

Some things are "obvious", but not or poorly measured and just assumed by everyone to be true.

The difference is that servers are cogs in a machine. It's often desirable to treat them as fungible and interchangeable, and there are no ethical problems with doing so.

What if the server has AI and a name?

When it starts to have memory, develops a personality and identity - I can see some people might care for certain instances of AI as pets. Like that Japanese guy who married a robot (or was it a hologram), then the company deprecated the software and it stopped working (or disappeared).

The fact that humans can develop emotional bonds with machines and objects is strange and fascinating.

Current AI are cattle, it doesn't matter if you shut it down or put it up on 100 different servers, it behaves the same.

If you think "treat servers as cattle" is stupid or has no merit, I question your credentials.

Decoupling config, app state and the app itself has a lot of upside in certain cases.

Like all metaphors, the pets vs. cattle one started to break down if you poked at it too hard. But it came from a place where individual servers were highly valued and were often at least somewhat unique. Standard operating environments had been around for a while but the "monitor the server's health and nurse it back to health if something's wrong" sentiment was still pretty widespread.

Even redundancy tended to be hardware-based to a significant degree. How much did the IT industry put into things like failover Unix clusters (and VAX/VMS etc. before that) over the years?

For some people servers have their individual "servernalities".

My interpretation was "at least we treat servers like living things, can't say the same for how business managers treat employees"

"One is a group of humans and the other is a group of machines, the rules/expectations are 100% different."

This is exactly what they were saying in the comment you are replying to.

Aren't you just agreeing with the post you're replying to here, or am I missing something? Both of you make the central point that humans and servers are fundamentally different and that descisions that involve humans must invariably have a moral dimaneion as far as I can see.

I took OP the same way, probably because of the use of the word "stupid" to describe the pets-vs-cattle debate. It felt to me that OP was drawing an analogy between said "stupid" debate and the way MBAs discuss employees, rather than drawing a contrast between the two.

Treating servers as cattle is the same black and white thinking as treating humans as resources. Servers require considered care and if you outsource that you get what you get at some operational expense.

Maybe I did misinterpret, see my reply here: https://news.ycombinator.com/item?id=33122403

If someone calls your idiom of choice stupid and this makes you feel any type of way at all it might be time for a breather.

Are you arguing or reiterating?

What am I missing here?

When I was in business school for my MBA, the human component was absolutely covered, and I suspect that is the case with many of them. Part of the problem may be though that there are subjects (finance, operations), where I can see the concept of a human resource becomes a bit abstract in order to focus on other concepts. In this regard, schools can certainly do better to connect the people element across disciplines.

For those with a complete disdain for "business types", I'd encourage you to read Peter Drucker. Some of his opinions may feel a bit outdated, but he speaks quite a bit to the knowledge worker and their needs.

"Human component", "human resource", and "replaceable cogs in the machine" sound the same to me.

George Carlin was on it 30 years ago. Read or watch his bit "Euphemisms"

I’ve recently been hearing “human capital” thrown around by MBAs

I genuinely hate how MBA-speak has been adopted seemingly everywhere. I truly, truly hate it. I understand and appreciate that we need a concise set of terminology and jargon to have conversations about these things but these words seem specifically chosen to abstract away the human quality of the humans being discussed.

Fake-smart business language is a plague. "Per" (worse: "as per"), "utilize" where "use" is more correct. All sorts of absurd euphemisms for "chat" or "meeting" or "talk". It's gross.

Well let's take this conversation offline and circle back on this topic.

That one has an actual useful definition in economics:

https://en.wikipedia.org/wiki/Human_capital

The term is dehumanising and has no place in adult conversations.

Sure, and it's use should remain academic. If a manager is using "human capital" as a replacement for their actual team, there's a problem.

We've all been using the term "Human Resources" for what, like 20 years now? 30?

It's always rubbed me the wrong way. What was wrong with "Personnel"?

Yeah, to be clear, I have no issue with it’s use in macro-Econ, my issue is a C-Suite calling their employees and their specialized knowledge human capital to their faces.

The human component i.e. how to get the human to do what you want them to do? That doesn't seem at odds with OP's point and may even be supporting it.

It's quite possible that my school wasn't that great. I am glad to hear examples highlighting these issues, but I walked out with a class of over a thousand that year and I don't think any of those folks got the perspective you speak of, and I think it's reasonable to assume lots of other folks around the world aren't getting that perspective either.

It could very well depend on the school, but also the students who enroll. Where I went (top-10, but not top-3), there was nothing in the curriculum about contempt for employees, and I don't think any previously well adjusted student came out of the program with such contempt. We did have our share of "elite" trust fund snobs and Jack Welch cosplayers, but they brought that into the class from somewhere else, probably their previous jobs at investment banks and consultancies.

I think if you go to a MBA to add financial modeling to your toolbox, that's what you'll get out of it. If you go to get your paper stamped so you can move on to banking Associate, that's what you'll get out of it. If you go thinking you're learning how to become Gordon Gecko, well you might get something out of it. Most of my classmates were actually ex-engineers with 5-10 years experience looking to escape from their "senior software engineer" career plateau.

Basically the entire time I was getting a business degree the word "employee" was never even used! Just different forms of "human resources" or "workers".

Exactly. It seems that the current trend is to dehumanize folks as much as possible. Nevermind the fact that businesses are made of people, and they SERVE people, and not just their shareholders.

In fact, if anything, shareholders need to take a back seat on the list of priorities.

The problem is the investors, they don't like companies that has zero growth rate even if it is profitable. Profitable companies that has zero growth rate are used as collateral for loans to buy growing companies with negative profits and this bankrupts the profitable company because of debt burden. It seems greed is too much in the capital markets.

What you described is stupidity, not greed. Stupid investors get their capital taken away.

Shareholders literally own the company and thus hold all the strings.

Your point regarding business = people stands though

> Shareholders literally own the company and thus hold all the strings.

This implication doesn't have to be true though - it's a political choice.

There are (well developed) countries in which worker representatives have a significant amount of board vote shares by law, usually applicable to companies beyond a certain size.

My understanding is that in those nations, non-shareholders have board representation, not voting control. I.e. they have people on the board to hear what's discussed and give them a voice in deliberations, but no actual control. Is my understanding incorrect?

As a shareholder, I’d never vote to continue employee-unfriendly policies in a knowledge work company. There are too many shareholders that merely rubberstamp the decisions that come up at AGMs.

IMO "worker" has some dignity but "human resource" implies I'm on a spreadsheet somewhere alongside the depreciation schedule of the physical plant.

“Human” being an adjective in that phrase, rather than a noun…

We're all on a spreadsheet or database elsewhere.

Absolutely, so "human resource" has at least the benefit of being true even if it is baldly insulting to us.

"Worker" in the economic context is a socialist term. It doesn't sounds dignified to me. Employee is a better word.

"Worker" is not exactly a pejorative term. In some circles it would even be considered a mark of pride. Although "human resource" is ironically dehumanizing.

Neither were ever used in a pejorative sense exactly, more with a sense of apathy and an even clinical sense that an employee is thought of the same as a widget or a building or a piece of machinery.

I'd rather be called worker than the currently fashionable "individual contributor", the latter just seems so condescending.

Just call me what I am, don't try to sugarcoat it.

At my company they lately talk about hiring “resources”, not “people”. This really bugs me. They really seem to be hellbent taking any humanity out of work.

And it may be technically correct depending on the topic. Not all workers are employees.

Khurana, Rakesh. “From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession.” From Higher Aims to Hired Hands, Princeton Univ. Press, 2007

I’m reading this book which talks about how business schools lost their purpose and shareholder primacy upended attempts to add professionalism to management. The success of shareholder primacy fed back into the business schools and displaced any broader social missions that exist in the professional fields such as engineering, medicine, and law. Instead, fiduciary responsibility blasts through the greater good. It’s very dense and full of jargon so it takes time to unpack, but it appears to be a very well researched book.

| They wanted us to treat them as fungible, replaceable cogs in the machine, not unlike this whole stupid pets-vs-cattle debate with servers.

I have found that when communicating with "business degree" people, I will often use this as a common starting point but then add "but you'll spend far more replacing the knowledge that people take when they leave"

Institutional knowledge isn't in their metrics so it obviously doesn't exist.

I did an MBA and what opened my eyes was the contempt for customers, treating them as an annuity, which maybe works if they come back because of good service, but in practice turns every interaction into a way to extract more money and get more lock-in.

> in practice turns every interaction into a way to extract more money and get more lock-in.

Which we see causing all the major problems of the world right now. I'm glad people are waking up to this. Post-covid, I see many people that work at these jobs choosing not to support institutions that are turning the human part into resource extraction.

I am a senior manager but not an MBA. Years ago a legacy dot com wanted to hire me as a consultant. The guy I was supposed to report to asks a question on the lines of how would you handle such and such scenario. I indicated I would handle it in a collaborative nature and bring the negotiation to closure. He wanted to know if I would start the conversation with my subordinate with a “f you”. I said I can’t and walked out at that moment in the middle of the interview. They call me 2 weeks later if I can come back lol. Long story short most (caveat) MBA types are a scourge.

huh...that's weird. I guess it depends on where one goes to school. This for sure is not what I got out of my business classes.

Most were how to keep employees, even low-wage employees, how to make them happy despite low wages...

I think also, just because a b-school says this, we all have our own minds. There's a lot of other stuff to learn in b-school that is helpful, at least it was to me. The stuff I don't like, I just don't pay attention to it.

Most of the classes that I took in business school were and are invaluable to me. But, I read other stuff other than what is in b-school, there are a ton of books that say how to treat employees right, how to use them as a marketing assist to help what customers want, and all that.

We go to school to hopefully learn how to learn - how to be autodidactical.

Let's all temper our expectations. Get knowledge from multiple places. Reject what you don't want, keep what is useful and ethical to you.

I never understood the hate people have for different majors. Some hate b-schools, some hate computer science majors, some hate art, some hate etc, etc, etc.

Chill, everyone, learn where you can. Accept and reject specific items as you see fit. It's all good.

That’s because bureaucrats are threatened by people who actually know how to make things.

That's a negotiation tactic that wouldn't work so well if the employees realized that a robust economy provides them opportunity to also treat their employer as replaceable.

My opinion is undergraduate MBA's should be banned. And you should need an degree in another field and 5000 hours of management experience to be accepted at business graduate school.

Why do you think this is not a reflection of the macro level system? You make it sound like it’s an aberration to be remedied and set industry back on course

Isn't that the business model with low skill workers though? Figure out how to employ them in a way that they don't need training and all is well.

I would argue that a "low skill worker" doesn't exist as anything but a pejorative stereotype for large swaths of people who form and perform functions that create the foundation on which an economy runs.

Well I mean c'mon... are you seriously trying to suggest that every job takes the same level of skill as every other job? There are people who don't want to spend years of their lives working math problems to get to the point where they can become highly specialized and are happy being "low skilled" because they get more time to themselves.

I don't feel like driving a UPS truck gives me more time to myself. Between driving around all day with no AC and hitting the gym so that I can continue to lift and run around with mystery boxes I just don't see all this extra time materializing.

Music, nursing, game development, animation, art, school teaching are all highly-skilled professions. They aren't particularly highly-paid.

We should maybe talk about high-supply and low-supply skills instead.

Those jobs are paid way higher than low skill jobs though, and nobody calls them low skill, so I don't see the problem.

Because the common rejoinder to the low pay of "low skill" jobs is to tell those people to become "high skill". When in fact, "high" and "low" skill is only one factor, and not even the major one, in whether you're going to be well paid.

Another reply said nurses are "highly paid" because they make an average of $70-100k. That is laughable. I made more than that at my first job, at a no-name tech company, when all I knew was jQuery and 4 HTTP verbs. Or compare the valuation of any medical tech, or biochem, or materials sciences company compared to the latest photo sharing phenomenon slapped together by some hungover Stanford grads. How much do experienced chemical, or mechanical, or civil engineers make compared to new grad software devs? Who's more "skilled"?

Supply and demand is where it's at. It's pretty easy to increase the supply of janitors or line cooks, so their pay sucks, even though demand is always strong and the work isn't particularly easy or pleasant. There are countless musicians and actors in the world, far more than there could ever be demand for. So their pay, on average, also sucks.

In flyover country, 70-100k is a fantastic wage for a software developer.

Source: after 10 years of being a star performer and job hopping I have nearly tripled my salary…to a little more than 100k. New hires are making less than half that at my current company.

70-100k is a fantastic wage in Eastern Europe or Asia too. Not sure why that's germane to this discussion.

And no that's still quite low for a software developer in flyover country. It might be a good wage compared to median wages for everyone, but only because everyone else has lower wages too (to be fair, offset by lower cost of housing too).

> And no that's still quite low for a software developer in flyover country.

If you know at what company I can do better without relocating, I'd be delighted to hear it.

> It might be a good wage compared to median wages for everyone

It's not even really that, it's a normal middle class professional wage, though the high end is good. We've had juniors leave to pursue other careers...one (who'd actually done fairly well, closer to 100k than 50k) left to be a nurse, because he'd make more money. Software isn't really that great a field unless you plan to move somewhere like California.

"Supply and demand" is highly regionally dependent.

Lots of California and East Coast companies are hiring remote these days. You could easily break $150k without moving if you interview well. $200k+ is attainable once you have more of a track record of working for such companies.

My resume is all Silicon Valley/Bay Area tech, so my inbox has more of these opportunities. It might be harder at the beginning but you only need one of those jobs to establish that "pedigree" (it's dumb, I know).

Music / Art - highly paid at the extremes. Probably because music and art are currently infinitely reproducible and so a small number of highly paid, high "talent" content creators can create content for billions of people.

Nursing - highly paid (https://nursinglicensemap.com/resources/nurse-salary/).

Game development - highly paid (https://builtin.com/salaries/dev-engineer/game-developer)

School teaching - low/medium pay - mostly for political reasons (i.e most are state employees).

Yeah no nursing and game development are not "highly paid". They pay a middle-class wage.

Music and art paid like shit even when it wasn't infinitely reproducible.

How many software developers do you think can work in a kitchen? Or clean houses? Or work on construction?

Absolutely true. This is where the privilege shows. I have helped friends run restaurants, and it's brutal and draining. And there is an enormous amount of pretty unique skills required to succesfully run a restaurant. And I am saying this as a scientist with a Ph.D. and multiple publications - the very definition of today's "skilled worker."

The weird thing that has happened is the "collegification" of skills. Unless the job requires an undergrad or, even better, a graduate degree, it's apparently not skillful.

Probably almost all of them right?

Work in a kitchen: Maybe. Actually do a good job, walking in off the street? Nope. There are dozens of things you need to know and be able to do to work well in a kitchen—and those things change depending on what kind of kitchen it is, but one of them that doesn't change is clear, fast, in-person communication, including doing what you're told instantly. A software developer going into a kitchen job and thinking they're hot shit because they're coming from a "skilled job" and this is an "unskilled job" is going to get themselves or someone else badly injured very quickly.

Clean a house: Yeah, probably. Clean houses well enough to be paid for it: Probably not. Clean houses, well enough to be paid for it, 40 hours a week, for years: Very unlikely. That takes not just the skills to actually get each house professionally clean, but the mindset to be able to handle that sort of work for long periods.

Work construction: Almost certainly not. While not all construction requires heavy lifting, most does, and most software developers are not in good enough physical shape to do that on a regular basis without doing serious damage to their bodies. Not to mention the care and precision required to build things that will both look good and last.

Because "be able to do this job" doesn't just mean "has the basic understanding of how the mechanics of it work." It means understanding the details and nuances, being willing as well as able to do it for long periods of time, and being able to do it to a professional standard, not just "good enough for me".

Low skill is about whether you expect any experience or qualifications when filling positions.

Some businesses are built around the fact that most of their workforce will be composed of untrained people with 0 qualifications and very high turnover. See Amazon warehouse jobs, most fast food places. Lots of retail jobs.

Sure; that's the reasonable way to talk about what "low skill" means.

The problem is that too many people are still stuck in classist, neofeudal mindsets and equate "working in a low skill job" with "being an inferior person, not worthy of respect/dignity/decent wages/a comfortable life/etc".

You are right, but tbh, the first and the third are considered skilled jobs. My sister had a work visa opportunity to the US with her cooking skills (she chose another path in the end), and it was easier for her than it is for most SWE.

> most software developers are not in good enough physical shape to do that on a regular basis without doing serious damage to their bodies

That's reaching a bit. I worked construction for years before starting a software career. There's lots of construction jobs that don't require a whole lot of heavy lifting. In fact, there are probably more of them that don't than do. And you probably overestimate the lack of health of office workers.

Not even in the same city of right.

This is painting it as black and white: either there are jobs that require no skill or all jobs require the same amount of skill.

Neither of these are the case: Some jobs require significantly more skill and training than others, but no job is unskilled.

And, as others note, the idea that jobs that require less training give you more time to yourself is just ludicrously out of touch with reality. Not only are they more likely to be jobs that expect you to work grueling hours, they also pay so little that many people who work them must work more than one every day just to pay the bills.

It's an incredibly shitty model for everyone but shareholders. Why do we have to institutionalize abuse?

My high level analysis is that this is because of institutionalized 'dispersion of responsibility' stemming from the pure capitalistic doctrine we all have supposedly signed up for. Essentially you have individual entities whose responsibility (& only one) to maximize the profit. so anything that is measurable ends up getting projected on one dimension of 'capital'. There is a lot of talk about social responsibility but most 'don't be evil' lasts until a few bad quarters and then its back to same story.

No supposedly the govt/unions are supposed to provide a counterbalance to this but for some incredible reason folks here in America are convinced that any collective action is basically soviet style socialism hence out of question. So what we are left with is this dispersion of responsibility to do social good but no one actually in charge of it. And don't even get me started on the Senate composition/electoral college & institutionalized gerrymandering (so you can actually fix it with simple majority you need a special kind of majority).

> ...any collective action is basically soviet style socialism hence out of question.

Ironically, the set of interlocking directorships, foundation seats, advisorships, consulting arrangements, share holdings, etc. among politicians, C-suite and EVP layers is every bit as collectivist as an old Soviet farm or modern workers' union. I personally model it as the strongest union out there because it doesn't need to operate by open rules relying upon legislation but is instead an acculturated reinforcement mechanism amongst its members that flexibly adapts to its host socioeconomic framework, making it harder than any conventional union to bust up or influence.

There is (almost) no such thing as unskilled labor. If you've ever tried to move your furniture to a new place and also paid people to move your stuff you'll see that movers are like 5x more efficient, yet it would be considered an "unskilled" job.

>There is (almost) no such thing as unskilled labor.

That is arguing against a strawman created by an argument that isn't fully specified.

Even walking takes skill. What is meant when people talk about the skill involved in work is how hard is it to train someone to do the job, generally someone with the knowledge and physical skills an adult is expected to have but without any special training beyond that.

Some jobs can be picked up in under a week of training. Other jobs require years of training. Some require physical skills that are quite common among the population even if the average adult doesn't have them (say something like a fitness level 1/3 of adults have).

Discussions of skilled vs. unskilled labor rarely if ever get into where exactly the line is drawn at, but there is a common understanding that jobs can generally be classified as either something an average adult could be taught how to do on the job or not.

Why this matters is that it determines competition for jobs. The more people able to do the job, the less one has to offer to find someone willing to accept. If you can train the average adult to do the job on the job, then you are competing with working adults at large. If you can't, at least reasonably, train someone on the job, then you are competing with far fewer individuals.

McDonald's is considered a low skill job, but in reality it is high skill, but they have done very well into breaking those skills down so that with just half an hour of "class room training" (on a video), and a couple hours with a trainer you can be productive. Repeat this for a new area a few shifts latter, soon you have a lot of skills with minimal investment.

I think your point could be rephrased around the business model being to turn jobs into low skill jobs (basically by removing any human agency) so that labor becomes a pure commodity. Uber is the closest I've seen to that I'm practice. I suspect some warehouse jobs are like that too. Most of the time it doesn't work, which is why Uber for X never really caught on, because you can't commodify e.g. a handyman the way you can a car ride

Driving at least in the same universe as competent is something that most adults need to be able to do for other reasons so Uber (sort of) works. And the product is pretty standardized--get me from A to B which is so far/so long.

Most handyman--much less general contractor--tasks are a lot more variable and I even have some issues with my lawn guy once I get beyond the contracted every two week mow.

The newer goal seems to be employing them in a way that doesn't need training, but then claiming that "flipping a burger" is a business secret and making them sign a broad non-compete anyway.

I always wonder what business schools actually teach.

I worked at a company where it was decided that the tech support department had a bunch of college drop outs and nobody had a business degree so they had to hire some. A few MBA guys were hired. These guys had MBAs straight out of school with no experience outside some internships... and man it showed.

Their first job was dealing with managing a schedule for about 25 people who manned the the tech support line 24/7.

They just couldn't wrap their heads around the idea that on the spreadsheet if you schedule someone on Friday until Midnight... starting them at Midnight on Saturday doesn't make a lot of sense / they would be working 20 hours in a row.

It's was horrible working with these guys. They embodied the "I'm business guy and I made my decision for business reasons and you should follow them."

Eventually I (worker drone) took over the schedule because what became known as "the MBA team" couldn't handle it / had no idea how to balance priorities and etc.

I'm sure there's some great schools for business / MBAs but I really wonder what they teach at those schools if just understanding simple hours, math, responding to emails in a timely / professional manner isn't it. It was almost like the old FedEx advert: https://www.youtube.com/watch?v=NcoDV0dhWPA

Perhaps they should all be required to go manage a McDonalds for a year or something?

> They just couldn't wrap their heads around the idea that on the spreadsheet if you schedule someone on Friday until Midnight... starting them at Midnight on Saturday doesn't make a lot of sense / they would be working 20 hours in a row.

I started my career as tech support back in highschool. My boss told me this is illegal and stupid for my health when I said I'd like to work a shift similar to this once. I'm not sure of it's actually illegal, though.

> Perhaps they should all be required to go manage a McDonalds for a year or something?

Alas, I think McDonalds employees have enough to deal with; adding horrendous managers into the mix would just make their jobs more stressful lol

Honestly based on a lot of the information I have gathered and problems I have seen the problem is that the managers are subpar at managing and running things, as well as lacking leadership capabilities and that's what leads to a lot of the horrendous stories from employees.

I think it would be illegal in the UK/EU - you are required to have at least 11 hours rest in any 24 hour period, and only 8 hours of night work in any 24 hour period.

https://en.wikipedia.org/wiki/Working_Time_Directive_2003

In the UK is basically standard to sign away your rights from the working time directive with 99% of office jobs

I've worked a number of software roles (around 10 in the last 15 years) in the UK. Only been asked to sign away my working time directive once, and that was for an American owned company. I declined to do so, and still got the role.

When I worked in the UK (3 jobs over eight years) I was never asked to do that; the closest was that I was ask to sign as to whether the 48h/week limit would apply week-by-week, or averaged out over 17 weeks (as per the regulations).

> Perhaps they should all be required to go manage a McDonalds for a year or something?

I'm a middle aged man and I wish I could do a 3 month internship at a McDonalds. I'd probably learn a lot and RUN back to my current job.

I have an undergraduate business degree. My favorite classes were:

- accounting. Seems like double entry accounting is posted here from time to time as something that would interest the readership here.

- linear programming - didn’t actually get this as part of my CS curriculum.

- game theory and Bayesian statistics - staples of HN readership

- entrepreneurship - taught how to fundraise and manage a startup. Probably like a theoretical YC

- marketing - an evergreen class that comes in handy no matter what I’m doing; selling yourself and your work is a life skill

- operations management and logistics - dovetails with linear programming

In all, I’m more than happy with the school I went to. It definitely fleshed out my more technical education in CS. I know not all programs are the same, and maybe many aren’t like the one I attended, but I wouldn’t write off all “business types” based on the (in many cases earned) stereotypes.

Yes, I have an undergrad that hit financial markets and financial statement accounting analysis and an advanced degree in CS.

The dual experience is invaluable, especially for maintaining a base level of sanity in a business as a technical employee. Why things work how they do will make a lot more sense.

Spot on. I have a CS undergrad and masters, and if I wanted to stay another semester would also have a minor in business. Accounting, finance, marketing, and economics have paid dividends in my career over and over.

> - linear programming - didn’t actually get this as part of my CS curriculum.

Isn't this part of a standard Linear Algebra course?

Linear algebra was more like theory, while linear programming was more like applications. It involved teamwork, projects, case studies, and gaining competency using software solvers; whereas my linear algebra course was lecture/exam based, had no teamwork, and wasn't framed with a practical lens with an eye toward real-world applications and scenarios. I had a lot more to learn in linear programming after linear algebra.

A mentor of mine who made MD (very senior) at a know place and a good MBA at a known school told me this:

Bob’s Business School of the South and Harvard teach basically the same thing.

You pay for the network of classmates largely.

Are there any hard skills a manager should have that are not included in common sense?

You would be shocked how many people lack what one would hope is common sense when it comes, especially, to things like shift scheduling. Even ones who've been on the other side of it and get promoted!

It seems it is not common sense after all. And no, most of it's not happening because of reasonable business trade-offs or tension between business and human needs, people are just weirdly bad at making sensible schedules. They'll produce these completely fucked-up schedules that someone with a little empathy and that aforementioned common-sense can fix in five minutes flat. It's baffling.

I think the conceit that exists in business schools today, and what riles up people too, is that managing people could be taught. This is why many case studies are performed in B-schools, so students can imbibe successful habits. But I have worked with successful and unsuccessful managers, and successful ones combine experience with creativity. You need both. And experience, or even creativity, cannot really be taught.

I think for me the question is how these guys get out of these schools, with a masters, for a role that includes some consequential decisions, without common sense.

Obligatory Deadpool/Bill Murray reference: http://qahipster.weebly.com/uploads/8/1/4/4/8144013/common-s...

In general, business types seem to think that all requirements are flexible. Granted, there can be benefits to that thinking but they apply it to laws and physics too.

Except when they come up with a deadline or their own requirements.

I dropped out of a MBA after they had us learning that managers and employees are separate classes of people. It's just not in my character to ever think like this.

I personally believe the best managers are those who have been at the front line and work their way up. They know the business from bottom-up and know how to treat people at each layer.

Also got super turned off when everyone just compared where they went to get their MBA at. Those who spent like 200k to go to Wharton and do the same job as me always felt weird. Those same types can get a job just about anywhere with that credential alone but also may reduce wages & profits.

> I personally believe the best managers are those who have been at the front line and work their way up. They know the business from bottom-up and know how to treat people at each layer.

I've seen good and bad managers come from both paths. The problem with the MBA and no experience path has been well tread in this thread, so I'll touch on the other a bit. The problem there is that often people who work their way up are promoted into management for reasons that are completely ancillary to their potential skill as a manager. Management is it's own skill and just because you were a really high performer as an individual contributor doesn't mean you'll be good at management. These are actually some of the worst managers I've ever seen. They also tend to lack the sort of broader business and strategy knowledge needed to really succeed in upper level management.

As an example, I have worked with hospitals a lot as an analyst and my wife is a nurse. Hospitals are almost without exception the most poorly administered organizations I've ever experienced. Part of this is there are a lot of MHA and MPHs in upper management who've never spent a single day on the floor, but it's also because a lot of the management are people who got promoted not because they might be good managers but because they were outstanding nurses or Doctors or whatever else, and these people often make really bad managers.

What organizations really should do is similar to what the military does. Have your potential managers take on small assignments and then if they show promise you send them for additional training and education, have them serve on the staff of higher level officers, etc. But this is expensive and it's an investment in training that most businesses are unwilling to make.

Is that because the military knows they can invest in employees without worrying they’ll take the training and leave? This would be due to both their relative monopsony position, and the fact that many employees are on years-long contracts.

> work their way up

Or their way beside? I mean it's getting more and more expected that management and IC are parallel tracks with the same level of compensations.

This is pretty tangential, but my company just rolled out a new HR system. I don’t like the term Human Resources very much, because it implies a level of fungibity that isn’t really true, but the new one is simply astounding - they call it the “human capital management system”. I was awe struck that anyone thought calling employees “human capital” was at all acceptable, going from implied fungibility to full on “you are a replaceable cog in the machine”. I imagine the PM on that one got an MBA from a place that taught that management and labor need to be in a constant struggle because workers are greedy and lazy.

'HR' used to be known as 'Personnel' in my neck of the woods.

I don't know why the switch occurred - Perhaps a zeitgeist / subconscious conspiracy on a culture level.

It's a strange one, because... while we actually have many physical resources - physical plants, physical equipment, etc. - I don't think 'Computer Resources' or 'Engineering Resources' or 'Cleaning Resources' are terms anyone uses. The actual equivalencing(?) of Humans with Resources is reserved just for the "HR" label, and it's ... dehumanizing.

At Amazon, engineers are frequently referred to as “resources” and “head count”.

For example, “Hi Priya, how much are you resourcing project z” translates to, “how many of the engineers you manage will you tell to work on project z”.

I think I meant 'engineering' like... physical engineering equipment. Perhaps poor choice of words. The people who manage a physical location don't use the term 'visibility resources' to talk about lighting and windows.

I see any one who refers to people as 'resources' or any similar terms as just a parasite. Unfortunately, I had the misfortune for working with so many of these parasitic slave traders.

I feel the same. The phrase "human capital" is one of the most loathsome I've ever encountered.

Give it a few more iterations and we'll get "soylent green is people".

Wow. AFAIK, that's as strong a paper as you will get on the social sciences. With also as strong claims as you will get.

The title is not the same as the paper's (for obvious reasons), and it's also wrong. The paper finds that the business people increase profits. More precisely, they are able to turn about half of the salary cuts into profits in a 5 years window. (There is no analysis of anything long term, except that employee turnover skyrockets.)

Of course, the always present disclaimer applies, that this is a single work, and any kind of certainty requires replication. But well, the claims aren't any extraordinary.

Can't read the paper, but the abstract seems to claim profits don't increase:

> But consistent with our first set of results, these business managers show no greater ability to increase sales or profits in response to exporting opportunities.

Profits do not increase in response to exporting opportunities. Business people don't bring any market opportunity on average. Instead, they do increase solely as a consequence of salary cuts.

(It's also not clear where the other half of the salary cuts ends up.)

> More precisely, they are able to turn about half of the salary cuts into profits in a 5 years window.

Isn't that just...how it works? If you now pay $x less, that $x doesn't leave the company accounts and is counted as pure profits?

I've not yet had a chance to get into the article, but will soon.

Cutting salaries or jobs can incur other costs. Lost productivity (worse morale, you fired the person who knew the thing and now everyone else has to try to figure it out, whatever), overtime pay for those who remain, that kind of thing.

It's like if you're spending money on ineffective ads that only produce a return of 50% of what you put in. You notice this and stop the spending. You're only saving half your spending, because the other half was offset by the extra sales already.

[EDIT] Point is, it's conceivable that cutting spending could, even, reduce profit—it's not a given that spending less means greater profit, and certainly not that it means greater profit in the amount of the cut spending.

Right, yeah, duh. I was thinking too abstractly as in "the perfect spherical cow salesman in a frictionless vacuum"

> Isn't that just...how it works?

Hum... No. They are saving $x, and getting $x/2 as extra profits.

But anyway, management is supposed to impact a company's revenue. As a rule, profits and salary should be correlated.

My perspective after five years in tech management:

Effective managers from a pure tech background tend to have happy, functional teams that get things done well and add a lot of long term value to the company. They focus on "managing down", ie making sure their reports are happy and that they are building/doing the right things.

Effective managers with MBAs tend to have miserable teams that get things done fast and add a lot of perceived short term value to the company, at the cost of lots of long term value loss. They tend to focus on "managing up", ie making sure their bosses are happy and that they are personally looking good even if they are running things full speed off a cliff.

The former managers grow careers, build systems that don't need to be replaced every two years, and are remembered positively by their peers and reports. Of course, the latter managers get promoted much more readily and inflict that style of thinking on ever-widening orgs.

The most depressing part is that the latter style of manager -sometimes slowly, sometimes quickly - inevitably take over orgs and companies. Major stockholders/board members are too focused on the short term, and managers like that focus on short term value (or the perception thereof) at any cost.

They have one lever, and it isn't innovation.

Sadly, there are probably businesses out there that would see this study as a argument for hiring business managers over operational business units.

Owned and operated by business executives.

Intel has had several CEOs with non-technology educational background. ( ~ MBA )

Intel is also reverting back to CEOs with technical backgrounds because having CEOs with non-technical backgrounds led to them getting overtaken by several competitors such as AMD who they had lapped several times over.

Intel had one CEO without a technical background who came in after the previous guy, who started off as a process engineer, ran their fab division into the ground and caused them to lose their technological lead due to dumb decisions. The MBA guy turned the fab division around and then stepped down for a tech guy to take over for rebound on the technology side.

And VW was almost completely engineering led, including Piech whom you could somehow consider at least the god father of Audi and VW if not a founder type, when the emissions scandal happened.

Nothing wrong with what he did. It was a political thing.

I agree with this, I feel the regulations at the time they were cheating were unjust, as the technology didn't exist to meet them yet. Most of their competitors simply pulled diesels from the market, but the VW TDIs were still the most efficient cars on the market in terms of CO2, a more important environmental issue than the things they were cheating on (NOx).

Ironically, my thoughts are that what they chose to do was the most responsible course of action environmentally and ethically, because the alternative outcome (people driving less efficient vehicles) was worse.

See, the technology did exist. All VW had to do was to use more AdBlue.

It's not that simple... the cars VW retrofit and resold to the public under the lawsuit are not really driveable or usable at the level needed to sell to consumers as a new car. They use massive amount of adblue, causing the tanks to run empty and the components to fail frequently. They also have other performance issues. VW couldn't have realistically done this from the beginning and expected consumers to accept it. I'm actually a big fan of these retrofit cars, but only because they are now super cheap, I wouldn't consider the issues they have acceptable in a new car, at new car prices.

VW cars, sure. Because VW designed them with cheating in mind. All other European manufacturers using things like temperature windows (not cheating, but skirting the edge of the text of the regulation, VW was straight out breaking those regulations by illegally cheating. That the other manufacturers were found to be in violation of regulations due the way they interpreted temp windows very loosely is a different thing from outright cheating) don't have those problems. So, either VW included the plan of cheating in the engine design, or they were uncapable of engine design and were thus forced to cheat. Both scenarios seem to be unique to VW at the time, and other companies of VW group.

Quite impressive how VW came out of it, still the biggest car maker and really pushing EVs. It could have easily turned out differently.

Courts all over the world, including VWs home country, disagree with you here.

Are you trying to imply that engineers are less ethical than MBAs?

No, I'm emplying that above a certain hierachical level ethics don't matter. And that your professional background influences, at most, the way you cheat and act unethical. Engineers, which software developers and CS grads are only in a loose sense, arw by no means better than MBAs, or worse.

I'm not sure the group that thinks an MBA is worthless for a CEO is as large as the group that thinks an MBA is worthless for anyone but a CEO.

This is not the title of the working paper and (slightly) incorrectly editorializes it. They don't increase profit growth but they do increase profit (by taking it away from wages). A previous version of this work by the same authors was discussed here:

https://news.ycombinator.com/item?id=30836059

When you put bead counters in charge, they count beads

The expression is bean counters.

When I wrote the comment I had abacuses in mind. I'm not a native speaker so I didn't know about the bean counter idiom

That is actually pretty funny, you independently re-invented the expression.

As a native English speaker, I adore your version.

The "beans" way of thinking is outdated! If any company is to be successful in today's environment they need to be counting beads!

GP is still technically correct. Why would a bead counter count beans?

Everyone has to start somewhere

There is a good episode(ep 517) of freakonomics radio about that

Almost certainly the inspiration for this submission. Definitely worth a listen, a lot of points in these comments that were addressed in the episode

thought the same,and yes it is really a good episode worth listen to

Bad MBAs suck, good MBAs are valuable. Bad software engineers suck, good software engineers are valuable. Bad lawyers suck, good lawyers are valuable.

Every field has good and bad. Painting everyone in a field as bad or good isn't great thinking.

> we show that non-business managers share profits with their workers, whereas business managers do not

I wonder why that is.

If this is true, that means that any "savings" to the company by reducing employee wages is eaten by management and/or ends up costing the company due to their reduction of labor or mismanagement thereof.

Back in the early 2000s when startups were not cool, it was much less likely to find people with business degrees working in a startup. They preferred Wall St companies and big companies in general.

But once startups started to seem cool we got shows like Shark Tank and Silicon Valley is full of people for whom traditional definitions of status and hierarchy are a big part of their self identity and aspirational posture. Those who would otherwise have gone to work at Goldman or Deloitte are now bringing their status-seeking worldview to startups. While not all have business degrees, many have the same kind of high achiever / status focus. They want an impressive title and they want a team under them, etc.

The VC world is poor at discerning the correct signals, because many such employees have impressive educational pedigrees which we all know helps to sell "the team" to the next round of investors, and they are usually pretty good at making decks, etc.

I think the financial crisis was also a big part of it. Goldman et al were no longer hiring, or if they were it wasn't with the big bonuses and people hated bankers (more than usual I mean) so there was an additional incentive not to go to NYC and instead head west.

It is just the pay to quality of life ratio. Apple, Microsoft, Alphabet, Meta, and even Amazon offered much better pay to quality of life at work ratios than finance and law. And still do, because they have been and continue to be far more profitable than Goldman and the other banks.

There are plenty of homes for the status-hungry, be they startups or FAANGs. I'd hoped they'd get bored of tech and leave, but there's too much money around, and status doesn't really leave professions very quickly. I do think they've changed the culture though. Primarily thinking about the weird way devs treat the FAANGs of the world: devs from there are seen as uber-geniuses without even saying anything. It's like we all need to believe that is true to ensure that those places remain high status in our mind.

A degree is an education, it doesn’t turn you inhumane unless you were one already.

I was a part of a family business for years before working in a corporate environment and then getting an MBA from a great school. The MBA helps those who have not seen the big picture do so - if you’ve build a business that means knowing when it becomes unsustainable and how to refactor it to keep it alive. If you’ve been a part of a business, that means knowing how the other parts work. As an employee you vote with your feet and as a manager you trade your social capital with most of the people you work with to steer your team in whatever direction your bosses desire. An MBA helps you figure out directions at times, or at least gives you a hint that you need a compass.

I read over the explanation of the IV strategy to try to capture whether appointment of a business manager was endogenous (we need to cut costs) or exogenous (the predecessor died or retired). I think there's still something missing.

Business managers seem to be more common in older businesses that have saturated their market share. If my observation is true it would confound the finding that revenue does not increase when a business manager is appointed. They may be more likely to be appointed to a role where revenue cannot be increased.

Maybe the authors could use a factor like company age normalized by the median tenure of a company in the S&P 500 at that time to identify younger, more dynamic companies?

As I want to scream at the top of my lungs every time this kind of junk gets posted, the true and accurate headline would be post-pended with “…claims a single study that has not been replicated”.

It's a post of study, isn't that assumed?

I took some business classes at NYU eons ago (2013) and most of the time we were discussing human conflicts and incentives. I think yes, many business schools, even "top" ones, may very well suck, but 90% of anything is crap anyway and there are good lessons in business classes if you know how to find them.

Got to plug the associated Freakanomics episode that discusses the paper with the author: https://freakonomics.com/podcast/are-m-b-a-s-to-blame-for-wa...

I have often wondered if there is like a secret Stupid Manager Tricks indoctrination session that happens when someone is promoted. Perfectly reasonable people, upon org chart elevation, will suddenly think that they can make FTEs appear for nothing by screaming about multitasking hard enough.

People respond to incentives in generally predictable ways.

If you are told you will get a substantial raise if your subordinates work harder, guess what, you are going to get your subordinates to work harder.

You're going to try to get your subordinates to work harder.

But previous experience, as a grunt, ought to suggest that -- completely in line with almost all of the established research -- task-switching decreases performance. There's just so much overhead associated with it.

So it is as if elevation has caused someone to forget their experience.

Read the Gervais principle

This is a surprisingly strong argument.

Unfortunately, considering the three groups of people involved — managers, investors, and workers — the only group with the incentive and ability to act on this argument are the managers. Investors don't care, it doesn't affect their profits. Workers care but usually the only action they can take is to go work at a company whose managers don't have business school degrees yet; they can't tell the investors which managers to hire, and it's ulikely that a union could negotiate this as part of collective bargaining. The managers' incentive to make more money can be satisfied by either getting a business school degree or, more easily, going to work at a company whose managers do have business school degrees.

My brother often jokes that MBAs are the reason the world has gone to garbage, they're always "optimizing" everything to get the 10% return they had burned into their heads. Anything less is insufferable.

Long ago someone described this to me as the "putting the price of the works cafeteria chips|fries up by 2p|$0.02 syndrome".

Fire all the managers

No, teach them better. Management is still needed. A manager should be able to increase revenue, or at least productivity. If all they can do is reduce wages, that's a pretty low bar. Any asshole could do that.

Management is an often toxic mix between Strategy/SME/HR/Teacher/Therapist/Consultant/Punisher

Separate the functions out explicitly, as needed.

Often they're just corporate prison guards in organizations with bloated structures and antagonistic views of staff from an executive perspective.

Flatten your structures so the highest-level strategy is connected to your lowest paid staff. If you can't do this, then you have a toxic company that resembles prison labor and the whole thing deserves to fail.

In my experience less than 1 manager in 10 has some teacher / therapist qualities.

Oh, you forgot Politician.

More than two layers of management = a company that is bleeding money. More than one layer generally already means idiotic decisions are being made. I sort of hunger for an example of zero layers.

Yes but could they take the blame for that? A good portion of business decisions and activity is legal liability firewall engineering and maintenance. So promote someone you don't like to a manager and make them make cuts. Then resultant turnover and performance issues are their fault, not yours.

I used to hold that belief. Then I went to an organization with no managers, where nothing management related got done except by people who were already doing 40 hours a week as ICs. Now I have slightly updated my beliefs: fire all the bad managers, throw parades for the good ones.

Strawman much?

You go to have a fancy title on your diploma - and still they don't teach about "penny wise, pound foolish" - I am not even native speaker but I picked it up somewhere along the way.

I don't need MBA then.

https://mbaoath.org/ "A voluntary pledge by MBAs to create value responsibly and ethically"

Business Schools specialize in churning out graduates with boomer ideology despite graduates being far removed from actual boomers. It's one of the reasons they detest WFH so much. Old school boomer mentality that still runs rampant in MBA programs.

The best way to increase profit is to find ways to align the employees' selfish interests with the success of the company.

Well, isn't that fucking obvious? If they are doing their job right, at least.

Definitely need more Jack Welch types.

Oh wait.

A corporation is a capitalist device that consumes raw resources, turns them into something else of value, and earns profit for doing so - or at least promises to. It doesn’t have feelings or care about anyone or anything other than earning profit. Anything else that you see is just a means to an end, period.

What is the point of this study? If we don't hire managers with business degrees we'd see increases in employee wages and profits?. A person with a business degree is hired because the business hired them, and they're likely doing the job they've been hired to do (cut costs). If a company is cutting costs it may be due to decreasing profitability.

Research like this just feels like tenure bait (the academia version of click bait).

Because the goal isn't to cut costs, the goal is to make money. If hiring someone to cut costs doesn't make money, then it has resulted in nothing but the suffering of your employees and vendors, and possibly the quality of your product as you switched to shittier vendors and lost your best employees.

So the owners get no profit, the employees lose, the vendors lose, and the customers lose. Worth considering when deciding to hire consultants?

So if you hire people without business degrees none of what you described will happen? If you hire a person to cut costs, you're looking for a person who will cut costs. That's what's being avoided conceptually in how this study is being interpreted. Going to a cancer doctor doesn't increase your chances of having cancer, it makes the likelihood of you having cancer to begin with more likely (ie I'm a company that's no longer growing and I need help to die slower).

This point is actually addressed in the introduction of the study.

> These checks notwithstanding, an obvious concern with our estimates is the endogeneity of the decision to appoint a business manager—perhaps firms turn to business managers when they need to cut labor costs. To bolster the argument that our results capture causal effects of business managers on wages and the labor share, we use two strategies. First, we obtain very similar estimates when we focus on manager retirements and deaths, which are arguably less endogenous than other switches from non-business to business managers. Second, we develop an instrumental variable (IV) strategy (...)

Just having any methodology doesn't count, it has to actually serve to legitimize the model (which it doesn't). Pretty much every publicly traded firm has had MBA managers for the past fifty years, and yet somehow they still make a profit.

This report may arouse people's ingrained dislike of the business managers they've had to deal with but it doesn't actually offer any insight that can survive the least bit of scrutiny.

> Pretty much every publicly traded firm has had MBA managers for the past fifty years, and yet somehow they still make a profit.

Does the paper make a claim that's falsified by this observation?

Reducing wages by definition increases profits and the title doesn't match what the linked abstract says.

I get what the study is saying, but the crucial piece of info is whether the non-business degree managers create an increase in profits greater than the increase in profits from wage cuts/suppression.

The time horizon is crucial here. Will it increase profit in the current fiscal year? Likely. Will it drive away the employees that have other options, which are often the ones who help building valuable products? Also likely.

This is the part I don't understand. Are shareholders really that short-term minded? I agree with everything you've said btw.

I've come to the realization that most companies have a very small percentage of people doing the heavy lifting and important work. Somehow they're never compensated in a way to reflect that. Brain drain will eventually catch up to you.

It does only in a vacuum. Real world is not so simple. Productivity can be impacted by wages, morale too, retention.

I feel like your statement is kinda like random business drone would argue.

1. Lowers wadges.

2. Adjusts spreadsheet.

3. Declares increased profit!

But that's too simple / not how things play out and then you ask for a great deal more analysis. Kinda a weird angle to approach it from.

The key part is the assumption that in between step 1 and step 2 that productivity and everything related to it remains stable. This is almost certainly never true.

I'm not arguing any point except that the study data is incomplete.

It also a strong signal that you have no idea, no longterm plan and strategy and just want to micromanage and premature optimize the status quo to death.

Its a warning light going off, signaling to any competent person with a longterm career in mind to abandon ship.

Do you know how much it costs to hire a single developer? You need a team of recruiters and waste countless employee-hours on interviews. Retention is a big deal. You can probably provide a real monetary value to retention.

You have quite a few things backwards here, if reducing wages reduces REVENUE by more than the reduction in wages then you have a net loss. Your second sentence only continues this confusion when you compare two different definitions of profits when surely you mean comparisons of expenditures to revenue.

Not necessarily. Are workers going to work as hard while earning less or will they just coast along doing just the minimum equilibrium to stay employed? Likewise are workers earning more going to feel more pressure to do more less they lose their position to someone who will be more motivated.

Only if you assume that reducing wages has no secondary effects. But that's never the case. You might get a momentary bump in your balance sheet, but then you have to deal with employee morale issue, deadline slippages, &c., which eat away at that bump and then some.

I took the study to imply sales / revenue went down as much as salaries.

if you reduce your wages to 0, you’ll probably lose some profit.

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