Principal–agent problem & why it matters to content strategists

As content strategists, we usually work a lot with people. These people involve various stakeholders which may have different interests. When we communicate with those people we often encounter difficult situations and even conflicts. Especially if we are working as an external consultant, freelancer or contractor.

In those situations we sometimes face the agency problem (also called agency dilemma). As agents, content strategists are often motivated to act on their own interests which might be contrary to those of their principals (= the client).

A content strategist might have the goal of setting up a holistic and comprehensive content strategy (which of course is also correlated to the the volume or income of such a project) while the principal just wants to work on a buyer persona or another specific aspect. In that case – and I personally think this applies to every consultant – a content strategist follow different interests.

A theory emerged in the 1970s

The theory of the principal-agent problem emerged in the 1970s with its origin in economics and institutional theory. Nowadays, the theory is applied to various contexts. At the Content Strategy Master programme of the FH Joanneum Graz we applied it during our PR & Organizational Communication Research course.

The theory itself is based on some ideas and assumptions such as:

  • There is some kind of contract between principal & agent
  • Humans act in self-interest with risk aversion and bounded rationality
  • There are potential (partial) goal conflicts among participants
  • There is a information asymmetry between principal and agent
  • Information is seen as a purchasable commodity by all parties

All those ideas or assumptions are applicable to the interdisciplinary field of content strategy projects.

Contracts between principal & agents

When you work as an internal content strategist, you are usually employed in a company. Therefore, you are working based on an employment contract. This contract might define the area and scope of your work as a content strategist. That’s already the part where conflicting interests can arise. As an employed content strategist it’s often your own responsibility to build your own role/profile. Therefore, as an agent it’s important to have that discussion about your responsibilities and your role within in the company with your boss (the principal). The principal could also think of profit sharing, efficiency wages or performance measurement to avoid the agency dilemma.

As an external content strategist, you usually work based on a contract with set deliverables or a basic agreement with hourly rates. The latter is pretty similar to the employed content strategist. The potential for conflicts is even higher since you are usually not highly involved in the daily business of the company. When you work based on deliverables, it’s important to clearly define what you are working on and to set SMART goals to stay aligned optimally.

Goal conflicts

Regardless of whether you work as an internal or external content strategists, it is very likely that you have to deal with various goal conflicts along the way. Everyone involved in content strategy (that could be UX designers, copy writers, marketers, sales reps or even C-level managers) has a different perspective based on a very unique experience. As there are so many people with different interests and backgrounds involved, the potential for conflicts is very high.

Asymmetric information

In content strategy, we are following different interests than the principal because we usually have more information (and experience). This implies an asymmetric distribution of information. This gets even more complex when multiple stakeholders who act or like to act as principals are involved.

Avoiding any asymmetric distribution of information is crucial to keep the relationship between agent(s) and principal(s) healthy. Be sure to document, educate and share (nearly) everything you work on. Use collaborative tools so everyone stays on the same page. Collaborative tools like Basecamp can be your one-stop shop for that.

Aligning interests

Eventually, our goal should be to align interests in order to cope with the agency dilemma. Although there is a lot of literature on how to align interests in employment, there is almost no literature on how to align when working as external contractors.

However, to avoid conflicts in general, it could be helpful to educate everyone involved in the process of a content strategy about the process. This is not only important for aligning interests; the more they are educated about it, they more value they will see in it.

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