Principals, agents and passing the buck: How delegation is used by leaders to manage blame
Delegation can improve the effectiveness of policy making and generate a sense of shared responsibility. Yet when things go wrong, it can undermine accountability, create conflict and foster corruption. Building on a new book, Neil mitchell explains how delegation can be used to manage blame, and why the accepted accounts of the principal-agent relationship are incomplete.
Dominic Raab, the former British Foreign Secretary, was surprised while on vacation in Crete by the events in Afghanistan. He returned relentlessly to face calls for his resignation. The evacuation of Kabul became a last-ditch effort to protect some of the desperate people who had helped the UK over the past 20 years. Others have been left behind. Documents identifying Afghans who had contributed to the British war effort were left at the embassy for the Taliban to find and there were issues with visa procedures.
Raab was in Crete when advised to phone his Afghan counterpart. He later said he had “delegated” the call to a junior minister. But it turned out that there had been no appeal at all due to the “deteriorating situation”. Asked about those left behind in Kabul on Radio 4 Today and in the House of Commons, the Foreign Minister transferred responsibility to the intelligence services who “clearly got it wrong” with the fall of the Afghanistan, despite, as it was reported, early warnings from its own department predicting a rapid advance by the Taliban and a July letter to the Times by retired senior officers condemning a lack of “generosity and urgency” in the British response. The The telegraph of the day commented that Raab had failed to “step up”. He was eventually replaced as foreign minister in a cabinet reshuffle on September 15.
In a new book, Why delegate?, I examine other examples of failures to step up a gear by exploring the various and sometimes underhanded incentives to delegate. Leaders, or principals, have probably always used delegation to protect their power and position. Indeed, they have long been advised to do so. Machiavelli admired Cesare Borgia, who in 1502 delegated the blame for the use of cruelty to his Spanish minister and held him responsible. The author of Prince, writing about the event a few years later, describes the minister’s subsequent execution, which apparently met with public approval.
Other illustrations include senior Volkswagen executives, who tried to overcome the Dieselgate pollution scandal by blaming their subordinates. The scandal centered on software installed in vehicles that could identify when emissions tests were being performed and only then initiate pollution checks. On the road, with the controls disabled, affected vehicles would pump up to 35 times more nitrogen oxide causing respiratory illness.
When a curious environmental group, the International Council for Clean Transportation, discovered the “defeat device” and sounded the alarm, Volkswagen America Chief Michael Horn testified before Congress. He said it was neither his nor the company’s responsibility, but rather that of a couple of runaway software engineers. The man at the top, Volkswagen CEO Martin Winterkorn, was also surprised by what had been done to the company’s cars by his employees from at least 2009 to 2015. A New York Times the investigation later revealed that the “rogue” engineers had sought senior management approval early on.
Principals, agents and return of the ball
The world turns to the delegation relationship. Social, economic and political life is inconceivable without it. When the delegation goes well, it brings efficiency, a sense of shared responsibility and even happiness. A recent study by an international team of social scientists shows that spending money on delegating menial tasks is better than a bottle of wine. But when things go badly, it leads to conflict, corruption, lack of accountability and moral decay.
The underlying structure of the delegation relationship is described by principal-agent theory. Traditionally, economists view the relationship from the point of view of the principal. They focus on the effectiveness of incentives to delegate, describe the principal-agent problem as the difficulty for managers to determine the reliability of an agent and to know how well they are performing a task and, in the interactive relationship of the principal. with the agent, to anticipate what measures could protect constituents from the opportunistic behavior of an agent.
But as one moves from efficiency calculations to political calculations, saving face and managing the blame, neither party can be trusted in the delegation relationship. Software engineers, hired to write code, were given the blame. Although not part of the contract, blame is a task that the principal can opportunistically assign to the agent when he is surprised by an unexpected possibility or when a whistleblower presents himself. Shocked by this turn of events, interested individuals seek to escape responsibility and blame.
Delegation allows managers to shift responsibility to subordinates and distance themselves from what went wrong in order to avoid unpleasant reputational, financial, legal or personal consequences. There is disturbing experimental evidence that delegation can also allow individuals to put a psychological distance between themselves and wrongdoing and thus avoid an uncomfortable conscience. Blame is perhaps the least explored of economists’ incentives to delegate, but Adam Smith, at least, did not underestimate the power of “fear of blame.” To escape this fear, we delegate the organization down.
Sometimes it’s hard to predict which tasks will be delegated, and sometimes we should delegate more than we do. Despite other appeals on his time, President Jimmy Carter is reportedly unwilling to delegate programming for the White House tennis court. But removing blame is a task that executives often decide to give an agent. But it is a choice. It has been pointed out that one of Dominic Raab’s predecessors as Foreign Secretary, Lord Carrington, surprised by the failure of the intelligence services to anticipate the invasion of the Falklands in 1982, “stepped up” by resigning with his two subordinate ministers.
For more information, see the author’s new book, Why delegate? (Oxford University Press, 2021)
Note: This article gives the author’s point of view, not the position of EUROPP – European Politics and Policy or the London School of Economics. Image credit featured: Simon Dawson / No 10 Downing Street (CC BY-NC-ND 2.0)