Any firm or business has goals and objectives that are set with the motive to maximize potential.
If you and I start a business, an interesting dynamic emerges when we hire our first employees. We explain the policies and procedures as well as try to convey what the company should stand for. However, these employees are individuals, likely with a family and individual needs and passions. They have their own self-interests that dictate a large part how they make decisions. So what happens when an employee’s self-interest conflicts with the goals of the company?
In economics we call this the principle-agent problem.
In its mildest forms you might see it as taking shortcuts in customer service. In more serious cases, this problem fosters corruption and illegal activities like inside trading on the stock market, cooked books where companies hide their losses and other schemes.
The most likely place you’ll see a principle-agent problem is when there is a great deal of personal gain or reward for the individual that doesn’t line up with the objectives of the firm.
The recent financial crisis manifests this problem when risky behavior results in great personal profits for individual hedge fund managers or mortgage specialists while the bank as a whole collects bad mortgages and debt to the point of near-failure.
A sense of shared-responsibility gets replaced with selfishness and left unchecked, crisis ensues.
The gospel of Jesus Christ teaches us that such behavior yields little fruit for, “even as ye have done it unto the least of these thy brethren, ye have done it unto me,” (See Matt. 25:40).
Our company is Christ and we who have taken upon us his name have a charge to put down the natural man and seek to be one with the will of God. As such we will often come to points where the principle-agent problem is ours to wrestle with. One one side is what we want to do and on the other is Lord’s will.
Will we chose the Lord’s way over our personal wants and desires?
John Taylor taught that the Prophet Joseph Smith warned the Twelve that trials and challenges come with choosing to be an agent for Christ:
“I heard the Prophet Joseph say, in speaking to the Twelve on one occasion: ‘You will have all kinds of trials to pass through. And it is quite as necessary for you to be tried as it was for Abraham and other men of God, and (said he) God will feel after you, and He will take hold of you and wrench your very heart strings, and if you cannot stand it you will not be fit for an inheritance in the Celestial Kingdom of God.’ … Joseph Smith never had many months of peace after he received the truth, and finally he was murdered in Carthage jail,” (See “ Chapter 19: Stand Fast through the Storms of Life, ” Teachings of Presidents of the Church: Joseph Smith, (2007)).
The principle-agent problem presents the Lord with an opportunity to try and test us, to prove us herewith, to see if we will do all things the Lord their God commands them. We learn and stretch and grow in ways we hardly imagined. Speaking of the costs of discipleship, Elder Holland taught,
“. . . The good people, the strong people, dig down deeper and find a better way. Like Christ, they know that when it is hardest to be so is precisely the time you have to be at your best. As another confession to you, I have always feared that I could not have said at Calvary’s cross, “Father forgive them for they know not what they do.” Not after the spitting, and the cursing, and the thorns, and the nails. Not if they don’t care or understand that this horrible price in personal pain is being paid for them. But that’s just the time when the fiercest kind of integrity and loyalty to high purpose must take over. That’s just the time when it matters the very most and when everything else hangs in the balance–for surely it did that day. You and I won’t ever find ourselves on that cross, but we repeatedly find ourselves at the foot of it. And how we act there will speak volumes about what we think of Christ’s character and his call for us to be his disciples.”
Our personal principle-agent problems might not be as unique as some of the challenges Joseph or Abraham, but they will be just as real. Harold B. Lee taught that the most important commandment is the commandment that you have the greatest difficulty living. Take a moment to consider what your personal principle-agent conflicts might be and with the Spirit as a guide, set out to resolve them.
Thanks for reading.