Eye on the Pie and Leadership and Opinion and Economy

Is poor management Indiana's problem?

April 27, 2009
Hoosiers identify many factors contributing to our state's long-term economic difficulties. It is fashionable to blame our workers. It is easy to decry a lack of natural amenities: no mountains, no coral reefs. Our public schools are inferior and perhaps our higher education is overrated. Our taxes are too high but we have substandard government services. We ain't got no culture.

Rarely do we hear anyone say that our problem is management.

We want to retrain employees because they are believed to be inadequate to handle the demands of today's workplace. Therefore we spend fortunes on structures, personnel and programs for Ivy Tech Community College. Many Hoosiers claim the problem with our workers is sloth, bred either by rural dispositions or union mentalities.

No one blames management for our workers' faults. The inadequacies of management to inspire, innovate and lead get no attention. Since our workers tend to be graduates of our schools or our universities, those institutions must be the sources of our problems. Teachers must be held accountable. What about the management of our schools? Are school boards competent to choose superintendents and architects, to say nothing of setting academic standards?

Who runs our government? Often, ordinary citizens with no particular competence become elected officials. Frequently, they are chosen for their passion in opposition to actions of their equally inept predecessors. The recently rejected efforts to provide more professional management for cities, towns and counties were based on the untested belief that we can do better.

Are businesses and governments in other states managed better than they are in Indiana? The answer from business and government leaders is a resounding "NO." That might be expected. Who will admit to his/her own inadequacy?

Some of our managerial deficiency might arise from the fact that historically we were a branch-plant state. Many of our factories were extensions of firms in Michigan or elsewhere. Even if they were locally owned companies, production decisions were directed by the interests of Detroit. Often, innovation and financing were based on initiative by people beyond our borders.

How do we know if management is inadequate? Bankers and other investors may shy away from risk-takers. They may be satisfied with borrowers who repay their principal and interest obligations, but take no chances on new products or techniques. Thus, Indiana may continue to trail behind the advances made elsewhere.

If a firm's stock is not publicly traded, there is no market to assess its success compared to its peers. The local merchant may get by and be pleased with the quiet of his/her life. However, by failing to strive for something better, the resources employed by the firm (land, labor, equipment and funding) are under-used. Our many sleepy towns and unhurried cities give witness to commercial sluggishness and complacency.

Sadly, these are just speculations based on decades of experience. No studies can be cited. Anthropologists have not examined Indiana's distinctive village life. Business schools do not offer empirical research on the adequacy of management in Evansville or Terre Haute.

Defenders of the dominant culture will protest that Hoosier values protect us from the adverse intrusions of more vigorous management techniques. Living in Indiana may be an unattractive alternative to many of our children and the children of other states, but it fits with our universal chant: "If you don't like it here, go somewhere else."

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Marcus taught economics for more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.
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