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  • Writer's pictureAnushruti

Decoding the ‘The Lemon Problem’ of the Workplace


The ‘lemon problem’ is a classic concept of economics explaining how asymmetrical information between the buyer and seller can lead to the collapse of the market. The problem of asymmetrical information arises when the seller of a product knows the true value of the same however, the potential buyer not being privy to the all the information might prefer to pay the average price to mitigate the risk of loss in case the product was a lemon (poor quality good). This tactic results in creating a disadvantage for the seller of a premium product, since the potential buyer’s asymmetric information and fear of getting stuck with a lemon discourages him from paying a good sum even for a product of superior value. Ironically, if the quality of the product was more inferior than what was paid, it is further loss to the buyer. The sequence of events results in the collapse of the market which stemmed solely from absence of trust due to asymmetric information.


Now let’s try to identify the lemon problem in the context of the workplace and the detrimental effect they might have in the progress of the organization.


Communication layers. A call taken by senior management is often discussed within them for a long time before disseminating the same to the employees. This when communicated to the middle management might be discussed again for a relevant time period. However, mostly by the time it reaches the last person on ground, the same change that was discussed by seniors for so long and agreed upon eventually is communicated in a straightforward manner and might appear to be relatively minor and harsh. This is the communication that triggers anxiety as the information was filtered through the layer of fear and worry and we fail to realize that even the employees will take their own time to accept and process the same.


Blindsiding the top management about the real issue. Most employees tend to filter the information, especially ‘bad-news’ flowing upwards. The tendency is to engage in cover-ups, finger pointing other teams and avoiding the truth causing the top management to be unaware and sometimes blindsided about the real issue. The lack of correct and extensive details might lead to improper solutions being launched which will ultimately fail. The delay could be detrimental to the future of the organization.


Partial communication of company’s strategy by the senior management. Employees have been shown the way forward by the management but they lack the knowledge and outline of what is actually causing these directives and the real meaning and rationale behind the same. This instills confusion and frustration in them while delivering the day to day responsibilities with the feeling of their time being wasted. This creates a disengaged workforce with no productive output.


Superficial communication about the priority of the work. With different teams working in silos and unwilling to communicate the importance of the project due to the fear of sharing credit can cause havoc for the organization. A top priority project you asked a fellow team to support on, might be dismissed as less important and last in priority hierarchy by them.


Lack of empathy while communicating manpower realignment within a company. More often than not, when we realign our employees to higher priority roles, we state that this was business need during our communication causing employee resentment. The same would be perceived way differently when acknowledged that it was the individual expertise and contribution that drew us towards making the movement which could lead to greater employee motivation and commitment.

Transparent and open communication is thus the basic necessity for a healthy workplace to thrive and succeed. This can be fostered by a culture of acceptance of failures. This provides a psychological blanket and even promotes innovation. Aim at sharing information upward, downward and laterally. This builds trust and accountability among the employees. A transparent work environment where all employees are aware of the purpose of their actions and decisions taken by the management will empower them to take initiatives, propose new ideas, respect their colleagues and management, accept their own mistakes and take pride in their success.

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