The Law Of Comparative Advantage and Priorities

Over a decade ago I had written about two kinds of employees – those who offer “competitive advantage” and those who offer “comparative advantage”.

Quoting myself:

So in a “comparative advantage” job, you keep the job only because you make it easier for one or more colleagues to do more. You are clearly inferior to these colleagues in all the “components” of your job, but you don’t get fired only because you increase their productivity. You become the Friday to their Crusoe.

On the other hand, you can keep a job for “competitive advantage“. You are paid because there are one or more skills that the job demands in which you are better than your colleagues

Now, one issue with “comparative advantage” jobs is that sometimes it can lead to people being played out of position. And that can reduce the overall productivity of the team, especially when priorities change.

Let’s say you have 2 employees A and B, and 2 high-priority tasks X and Y. A dominates B – she is better and faster than B in both X and Y. In fact, B cannot do X at all, and is inferior to A when it comes to Y. Given these tasks and employees, the theory of comparative advantage says that A should do X and B should do Y. And that’s how you split it.

In this real world problem though, there can be a few issues – A might be better at X than B, but she just doesn’t want to do X. Secondly, by putting the slower B on Y, there is a floor on how soon Y can be delivered.

And if for some reason Y becomes high priority for the team, with the current work allocation there is no option than to just wait for B to finish Y, or get A to work on Y as well (thus leaving X in the lurch, and the otherwise good A unhappy). A sort of no win situation.

The whole team ends up depending on the otherwise weak B, a sort of version of this:

A corollary is that if you have been given what seems like a major responsibility it need not be because you are good at the task you’ve been given responsibility for. It could also be because you are “less worse” than your colleagues at this particular thing than you are at other things.



Put Comment

%d bloggers like this: