Pack-Mule Syndrome
Reality Check (August 17, 2007)
Are you a pack mule?
A pack mule is someone in an organization who is the first choice for heavy lifting when additional tasks appear.
There is a saying: "To get something done, give the job to a busy man." It's true.
There is another saying, "The squeaky wheel gets the grease." It's true.
There are squeaky wheels in every organization. They get coddled. There are also busy people. They get loaded down. It's different strokes for different folks. Same pay.
If they were paid differently, this inequality would not matter. But salary schedules tend to flatten out, especially in large organizations. Managers do not want a lot of inter-office grousing about pay schedules. A manager who explained that Joe gets paid less than Bill because Joe is a complainer could find himself in court. It's easier to pay people about the same in terms of seniority, and then load down the pack mules.
Pack mules tend not to quit. They don't complain. They learn how to work more efficiently. They rarely say "no." It's all part of their personalities. The result is that they get loaded down.
Economics teaches that at zero price, there is greater demand than supply. Put another way, if you lower your price, there will be greater demand.
Squeaky wheels are high-priced. Pack mules are low-priced. The result is that squeaky wheels get the grease, while pack mules get the shaft.
On the whole, pack mules get a better deal in profit-seeking firms than in government bureaucracies and non-profit organizations. The free market for pack mules is more price competitive, but it is also more price sensitive.
MISES ON MANAGEMENT
Ludwig von Mises wrote a wonderful little book, "Bureaucracy" (1944). You can download it for free here:
Mises argued that there are two forms of management. They differ because their ownership structure differs and their financing differs.
First, profit management. A profit-management firm is owned by individuals. They profit or lose in terms of the organization's performance. They are highly interested in organizational success. They are allowed to benefit directly from the organization's success. This success is measured objectively: profit or loss.
A profit-management firm must make a profit in order to survive. It must sell goods or services at prices that consumers are willing to pay. There is constant competition or the threat of competition. As with any other organization, everyone in the hierarchy wants more money for no extra work, but market competition puts restraints on what everyone can be paid.
A profit-management firm must look to the future. It must forecast futures prices. It must forecast consumers' future tastes and incomes. It is therefore governed by the requirements of entrepreneurship.
Second, bureaucratic management. A bureaucracy is not owned by individuals. It is owned by the government. The government does not allow bureaucrats to profit directly from the profitability of the bureaucracy. There is no objective profitability of a bureaucracy. But it cannot fail, either. It has a monopoly. Consumers cannot shop among bureaucracies for the best deal.
Bureaucracy is marked by centralized finance based on tax revenues. Politicians collect the funds and then distribute the money to bureaucratic organizations under their jurisdiction.
There is always lots of demand in a bureaucracy. In this, it is not unique. But there is no open-entry market for bureaucracies. So, the politicians place restraints on the distribution of funds. They write laws on what the organization is allowed to do and must do. They allocate money from the top down.
Bureaucratic management is past-oriented. What does the book say? The book was written in the past. What have the politicians done in the past when the budget was submitted by senior management? The past governs the present.
In profit management systems, the future governs the present. What consumers did in the past is a secondary concern. What they will do in the future is the primary concern.
Mises made a crucial point: it is naive to expect bureaucracies to behave as if they were businesses. All calls to "get government to become more businesslike" are futile. The systems are fundamentally different because the ownership structure is different and the funding is different.
NON-PROFIT MANAGEMENT
Mises did not write about non-profits. Here, ownership is in the hand of a board of directors. The members do not have individual ownership of shares. They may be paid salaries, but this is rare. Board members usually donate their time. So, they are content to delegate most decisions to senior managers.
Non-profits must raise funds from the sales of goods and services. They pay no taxes on any revenues in excess of expenses. They have a competitive advantage over profit-management firms: no taxes. But they have a disadvantage: nobody can pocket the profits personally. The performance incentives are weak.
Donors to tax-exempt foundations in the United States are allowed to deduct donated money from their gross incomes before paying income taxes. These organizations must not make much over 50% of revenues from sales. There are other restrictions. But small ones do not gain much attention from the government.
Whenever owners are not allowed to pocket profits, they are less interested in maximizing income from the organization's employees. They spend less time in recruiting the best people, because the best people's performance will not put money in owners' pockets or senior managers' pockets.
The problem goes deeper than this. Without a profit-and-loss statement, it is difficult for senior managers to assess the economic value of the contribution made by a specific employee. This is not easy to do in any organization, but in a non-profit, it is more difficult than in a profit-management firm, though easier than in a bureaucracy, which has a monopoly. In a bureaucracy, it is all guesswork. Consumers' opinions, as registered in purchases, do not exist.
This means that competition from the outside is less in a non-profit world than in a profit-management world. Therefore, competition inside is less. So, squeaky wheels get more grease, and pack mules get heavier loads.
DELEGATION
If an organization is to grow, it must add income. Therefore, it must add tasks and employees. This raises the issue of delegation.
Some people are fearful of surrendering control. They find it painful to delegate. Such people make excellent pack mules.
Other people are all too happy to delegate. One of the classic delegators in literature is Tom Sawyer. He did not want to whitewash that fence. He found pack mules to do it for him. These people make excellent mule drivers.
Every organization is under authority. Senior management must delegate. It must extend responsibility downward. It must establish performance standards. It must impose sanctions -- positive and negative -- to enforce the standards.
Senior management in a profit-management firm has three rules: (1) don't violate the corporate handbook (short); (2) don't break the law; (3) make a profit.
Senior management in bureaucratic management has three rules: (1) do it by the book (large); (2) don't break the law; (3) stay within the budget.
Senior management in non-profit management has three rules: (1) do it by the book (vague/changing); (2) don't break the law; (3) stay within the budget.
A profit-management firm is less budget-conscious. It is profit-conscious. A division can get more money from senior management if its net income is rising: the famous bottom line. "We need another million dollars because we can bring in an extra three million" is music to senior management's ears.
Micro-managers in a profit-management firm are a liability. Profits come mostly from sales, and sales originate mainly at the bottom of the pyramid. Profit-management firms are marked by delegation downward.
Micro-managers are legion in bureaucracies. Power is at the top. Micro-managers want to get to the top and stay there.
Micro-managers are more common in non-profit firms than in profit-management firms. But there are exceptions. Leonard E. Read at the Foundation for Economic Education left his subordinates alone. He liked to give his speech, have parties, and write short articles. The organization gave him opportunities to do this. FEE had a unique position for decades: the introductory source of free market ideas. It was close to a monopoly. So, donors donated. The organization bumped along. But it slowly lost its position after 1970 or so. Competition increased. New organizations were launched.
The great temptation for non-profit managers is to let themselves become pack mules. Their subordinates gain their increased budgets from senior management, which takes more sales and more donations. Subordinates therefore have an incentive to delegate upward. "Boss, I've lined up a lecture for you." "Boss, we can sell 50,000 copies of any book you write. You need to write another book." "Boss, . . ."
Pack-mule syndrome is more common in tax-exempt organizations than anywhere else. Bureaucracies attract squeaky wheels. Profit-management firms attract delegators. Non-profits are founded by pack mules. These people find it difficult to change. They also find it difficult to make changes. Their subordinates do this for them. "Boss, . . . ."
MY EXPERIENCE
I was a pack mule in my small publishing firm and also in my tax-exempt organization. It took me 22 years to get out from under in my publishing firm by joining up with Agora. It took me 25 years to get out from under my Institute for Christian Economics. I finally shut it down.
In Washington, it took six months. The voters decided for me. My congressional staff career ended because of 268 votes out of 180,000. I have been grateful ever since to those illegal voters from the next district over.
Today, I have no employees. I write for Agora and myself: a joint venture. I have a website. I have written "Remnant Review" for 33 years. I sit at a computer screen whenever I am not reading a book or watching an old movie.
I make the decision regarding the size of the burden I am willing to bear. I am a pack mule by nature. I tell myself that I have changed, but I haven't. I am now working on a high school textbook in U.S. history. I plan to write many other courses. My day is still filled with writing and research. But my output is still growing. That's because I have decentralized time-consuming tasks in which I am not efficient. I don't like details that are not on a page or a screen.
I have learned that being a pack mule for yourself is personally productive. Being a pack mule for others isn't.
WHO IS DOING THE LOADING?
If you are a pack mule, you must pay close attention to who is doing the loading. If you are in a profit-management setting, you had better pay close attention to the benefits associated with each extra load placed on your back. If you don't share in the benefits, you have got to say no. If the loader ignores you, you must become a squeaky wheel. If this is not possible emotionally, you must seek a transfer, either up or out.
The real pack mules of life are at the top of non-profits. They are obsessed with budgets. Their employees see this, and play on it. They delegate upward, so that the Head Pack Mule In Charge gets on to the next project.
Ayn Rand in "Atlas Shrugged" presented a picture of capitalists shrugging. They quit and hid in a valley invisible to the outside world. I am convinced that she never understood capitalists. There is an endless supply of them waiting for the existing ones to quit, die, or go bankrupt. That is why the free market is so powerful. There are always new optimists about the future. This is inherent to entrepreneurship.
Bureaucrats don't shrug. They don't need to. They don't hold anything on their shoulders except next fiscal year's budget.
Non-profit managers are not shruggers. They are drop-deaders. They die on the job, as Leonard Read did. Then their organization gets taken over or else fades away, or both.
The classic example is J. Howard Pew. As a senior manager and shareholder of Sun Oil, he was a master. The company still thrives. In contrast, his tax-exempt organization ceased promoting his worldview within 18 months of his death.
When nobody owns the profits, the competition is to take over the flow of funds in other ways: influence, thicker carpets, better looking secretaries, and higher salaries for senior managers. When the founding pack mule dies, the mule-drivers inherit.
CONCLUSION
Everyone needs to assess what he is at heart: squeaky wheel, pack mule, or mule driver.
Pack mules should gravitate toward profit management, where they are more likely to be paid what consumers determine their services are worth in dollars and cents.
Squeaky wheels should find jobs in government bureaucracies. This is good for them and good for the society. Better to have squeaky wheels gumming up a government bureaucracy than pack mules making it work.
Mule drivers need to get jobs in a non-profit that was founded by a pack mule who has proven his ability to carry ever-larger loads. A mule driver can then delegate upward.