Crowding In and Crowding Out

Murray Fulton

In a previous post, I outlined how a failure to find the right balance between intrinsic and extrinsic motivations can lead to a crowding-out effect in which the introduction of more extrinsic incentives results in poorer, rather than better, performance. With the right balance, however, extrinsic motivations can significantly enhance performance — the crowding-in effect.

Crowding-in and crowding-out effects can have a real impact on how decisions are made, on the effectiveness of policy, and on the performance of organizations, including co-operatives. Here are a couple of examples. Continue reading

The Two-Hat Problem

Murray Fulton and Brett Fairbairn

fedora-and-pimp-hat-copy

Images courtesy clipart-library.com

The following question was recently posed to us regarding governance models for second-tier co-operative organizations such as federated wholesalers and financial centrals: Is there an expectation that board members must think about the interests of the second-tier organization or should they represent their home organization?

This question nicely encapsulates what Glen Tully, chair of the Centre’s Management Advisory Board, calls the Two-Hat Problem. When board members have two hats they can wear, which one should they put on? Continue reading