Employee management is one of the daily tasks for managers and one of the most demanding. Unlike equipment and materials, employees are influenced by psychological activities, making them a complex and uncontrollable group. Experienced managers are well aware of these complexities and uncontrollabilities, often feeling a deep sense of frustration and discouragement. To smoothly carry out their work, in addition to actively attending courses and enhancing their management knowledge, managers often come up with various strategies. I’ve encountered many supervisors who use militarized management, with one command and one action. This approach seems effective in the short term but tends to revert and even backfire due to human inertia in the long term, making it more complicated.

Management courses often state that “management is an art,” meaning personnel management cannot remain unchanged. Work methods or production methods can be standardized with SOPs, but when it comes to human nature, adaptability is key. The human mind is like water, greatly influenced by the environment. Employee management must adapt to the circumstances, but managers can still shape the environment and establish principles, much like building dikes to guide the flow of water. By combining these approaches, employees can be effectively managed. Therefore, cultivating both hard and soft management skills should be an ongoing task for managers.

Given this, how can one cultivate effective management skills? “Technology” is the most direct ability to see results, and most current management courses are of this nature. However, “art” is more abstract, leading to various management courses covering everything from psychology to I Ching, from science to fantasy, often resulting in confusion and a loss of direction. This situation makes upset…

I used to think that management could be a formula, establishing processes to simplify things. However, despite accumulating technical skills, the psychological aspect remained unresolved. Thus, I turned away from management courses and towards self-reflection and exploration.

In the process of exploring the foundation of management art, I eventually realized that management art is about “understanding people’s needs.” Through exploring how to manage “people’s needs,” I compiled three theories to cultivate concepts and abilities. These three theories are:

1. Maslow’s Hierarchy of Needs

2. The Supply and Demand Theory in Economics

3. Game Theory

Here is a brief introduction to these theories:

1. Maslow’s Hierarchy of Needs

This theory is often mentioned in various personnel management courses and can be found online. Therefore, it will not be introduced here.

2. Supply and Demand Theory

This is an economic theory where demand refers to the desire of people to purchase a specific good. At a certain price, the total quantity of a good that consumers are willing to buy is called the “quantity demanded.” At different prices, the quantity demanded varies. The price of goods is depicted as a “demand curve.” When the price of goods increases, the quantity of goods that consumers are willing to buy decreases.

Supply is represented by the blue line S (provided resources), and demand is represented by the red line D (employee’s psychological desires). 

3. Game Theory

Game Theory, also known as “strategy theory” or “decision theory,” is a branch of economics. In 1944, John von Neumann and Oskar Morgenstern co-authored “The Theory of Games and Economic Behavior,” making them the fathers of Game Theory. It is considered one of the greatest achievements in 20th-century economics. Game Theory is currently applied in biology, economics, international relations, computer science, political science, and military strategy. It studies the interactions within games or competitions, a mathematical theory and method studying phenomena with competitive or conflicting properties. It is also an important discipline of operations research. Game Theory examines individuals’ predicted and actual behaviors in a group and studies their optimal strategies. The Prisoner’s Dilemma is a famous case that demonstrates the structure of competitive interactions. Competitive behaviors within a game are called “game behaviors.” In these behaviors, each participant has different goals or interests. To achieve their goals and interests, participants must consider various possible actions of their opponents and strive to choose the most advantageous or reasonable strategy for themselves. Examples include everyday activities like playing chess or cards. Game Theory studies whether the most reasonable strategies exist in competitive behaviors and how to find these strategies.

The roles of these three theories in management are as follows:

• Hierarchy of Needs Theory: This helps managers evaluate employees’ current psychological needs to establish a baseline response, addressing issues accordingly.

• Supply and Demand Theory: This can be applied to personnel management to evaluate the balance between employees’ psychological desires and resource availability, finding the most cost-effective management point.

• Game Theory: This involves making decisions and balancing responses. Managers can use the first two theories to assess employees’ intentions and current situations, then formulate strategies for guidance and coordination, seeking an economic balance point between “employee satisfaction” and “cost expenses.”

Learning Order and Scope

These three theories can be considered the foundation of management art. Mastering them should enable managers to handle employee issues with ease. The learning order and scope are as follows:

• Course 1: Hierarchy of Needs Theory: Understand the physical environment and psychological conditions of each level.

• Course 2: Supply and Demand Theory: Understand the judgment and attainment of balance points in supply and demand.

• Course 3: Game Theory: Understand the nature and operation of games, mastering judgment and response strategies.

The first two courses are relatively simple but are essential knowledge. Game Theory, having a shorter development history, is primarily available in university research institutes without extensive application courses. However, there are translated foreign works on the market that are well-written and worth studying. These books are relatively straightforward, and it is recommended that HR professionals and managers looking to improve employee management start here.

Afterword

During the process of gathering study materials, I found three books that I believe are excellent for learning Game Theory. They are listed below for those interested:

• “Game Theory: The Simplest Way to Solve Problems” by Satoshi Kawanishi

• “Every Problem is a Game: Winner’s Logic – Strategies for Manipulation and Win-Win” by Satoshi Kawanishi

• “Thinking Strategically: The Art and Strategy” by Avinash Dixit and Barry J. Nalebuff