Friday, November 6, 2015

Triangular Principal Agent Situation

This past summer I worked as an intern for a consulting firm.  I was placed on a project building an agent portal for an insurance company, and through this I was able to experience a triangle like arrangement.  There were around 30 people working on the project: those who worked for the consulting company, those who worked for the insurance company, and contractors.  Who had hired the contractors also varied; the consulting company hired some, while the insurance company hired others.   This created an interesting dynamic on the project (which I’m sure is present in most situations like this, where a consulting company has come in to help on a project).  
            The views, opinions, and goals of the higher ups in the insurance company were most important, as they were the ones with all the money on the line for this project.  However, sometimes the best way to achieve those goals would come into question.  There were several instances over the summer where a small disagreement might be had in determining what was most valuable for me to do that day, and this happened to a larger extent with the developers on the project.  Managers would occasionally debate about what they needed from each employee.  For myself, sometimes it wasn’t exactly clear who I should listen to.  While the head of my QA team was an insurance company man, the head of the project and the person I interacted with more was from the consulting company.  Since the head of the QA team was in Florida, sometimes he was a little out of touch with exactly what was the most efficient thing for me to be doing, and my boss in Illinois might have me do something other than what he asked.  These situations arise when something comes up that my boss knew I could handle while still (eventually) completing what the QA lead had asked of me.  Luckily, my situation worked out fine.   

            More communication would definitely be a good way to resolve the tension when there is a question of how the agent should preform.  Sometimes the principal’s may not wish to waste time by coming to some kind of compromise, but in the long run a confused agent may just become stressed out and less efficient.  If principals are good at compromise, this makes things a lot easier.   

1 comment:

  1. My experience with something similar was from the point of view in your story of a fairly high level executive in the insurance company. I had no problem with the consultants we used, but my staff had plenty of them, so there was tension across organizations lower down in the hierarchy.

    You say that communication would have lessened the tension. Perhaps. There may be an inherent problem that is not fundamentally a communications issue. The project is something new for the organization and/or even if it has done similar projects it has done them with the aid of outside help. Part of the reason for this is lack of expertise internally. But consultants aren't perfect and they can be second guessed. Where the staff would never second guess the decisions the boss makes on internal company matters, on what the consultant provides, that level of respect may simply not be there. If that is right, it opens up the possibility or tension immediately. Indeed, Web sites are one of those that can really raise people's hackles, because it isn't just the technical issues but effective design from a usability point of view that matters, and the consultants might not understand that even if they are quite good otherwise.

    The upshot is, I think some of this goes with the territory. It's good to get exposed to it some beforehand so you can have more realistic expectations the next time around.

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