Gresham's law for organization

I want to write this post for a long time ago, finally, I started it tonight.

Gresham's law is named after Sir Thomas Gresham who was an English financier in Tudor times. It is commonly stated as "Bad money drives out good.", says that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keeping the "good" ones for themselves.

The principles of Gresham's Law can sometimes be applied to different fields of study. Gresham's Law generally speaks to any circumstance in which the "true" value of something is markedly different from the value people must accept, due to factors such as lack of information or governmental decree.

The most famous instant to explain the law by the market for second hand cars, lemon automobiles (analogous to bad currency) will drive out the good cars. The problem is one of asymmetry of information. Sellers have a strong financial incentive to pass all cars off as "good" cars, especially lemons. This makes it chancy to buy a good car at a fair price, as the buyer risks overpaying for a lemon. The result is that buyers will only pay the fair price of a lemon, so at least they won't be ripped off. High quality cars tend to be pushed out of the market, because there is no good way to establish that they really are worth more. The Market for Lemons is a work that examines this problem in more detail.

I need to highlight that the critical element for Gresham's law is "asymmetry of information". Let us change the scenario to our organization, think about if the senior management team only look at the financial data and report for the operation. They do not know how the team working on the process in order to achieve the goal, but they only listen to somebody they think can be trusted. The element of "asymmetry of information" would be effective and we can find the "bad GUY drives out good!" Some bad guys from the organization did nothing for contribution but play the political game all the day. The senior management did not know who get the job done. Afterward, many people joined the bad guys team and force all the good guys out of the organization. In other words, the good guys are always not willing to work with the bad. They will quit the team by their owned willing.

In our kaizen activities, we also needed to study and avoid the same issue. As a lean leader, they are needed to join the kaizen activities to understand who is the member really gave their effort to improve the situation. They are also needed to identify who are the guys only sitting in the team but gave no idea and suggestion. The management team need to identify it perfectly and give the right award to right people, otherwise, the kaizen would be stopped by wrong motivation because of asymmetry of information. This is part of the lean culture and Gresham's law is effective here too.