Your Organization’s Unwritten Rules and How to Fix Them

Why It Matters

Explicit, well‑designed allocation rules eliminate bias, improve talent utilization, and drive stronger organizational performance.

Key Takeaways

• Hidden rules shape resource allocation in firms.
• Apply Efficiency, Equity, Ease to redesign markets.
• Transparent systems boost satisfaction and reduce gaming.
• Internal talent marketplaces unlock employee productivity.
• Simple, explicit rules foster trust and performance.

Pulse Analysis

The concept of hidden markets captures the informal, often undocumented ways companies distribute scarce assets such as project slots, mentorship time, or budget approvals. Because these mechanisms evolve from legacy practices rather than strategic design, they frequently favor insiders and create bottlenecks. Kessler’s Three Es framework—Efficiency, Equity, and Ease—offers a diagnostic lens that forces leaders to ask whether resources flow to the highest‑impact opportunities, whether every employee can access them, and whether the process is simple enough to avoid costly workarounds.

Case studies illustrate the power of intentional market design. Wharton’s Course Match replaced a multi‑round auction with an algorithm that lets students state true preferences, delivering higher satisfaction and fewer complaints. The National Resident Matching Program and New York City school admissions use similar preference‑revealing mechanisms to produce equitable outcomes at scale. Unilever’s InnerMobility platform democratizes internal talent moves by allowing employees to signal interest directly, unlocking over 60,000 hours of work and expanding to 30,000 staff across 90 countries. These examples show that transparent, data‑driven rules can convert hidden friction into measurable performance gains.

For executives, the Nano Tool translates theory into action. Start by mapping any process where scarce resources are allocated without pricing—calendar slots, project assignments, or leadership attention. Evaluate each against the Three Es, redesign rules to be explicit, and communicate changes organization‑wide. The result is a culture where merit, not mystery, drives opportunity, reinforcing trust and accelerating growth. Leaders seeking deeper expertise can extend this learning through Wharton’s executive programs on people management and leadership pathways, ensuring the skills to sustain fair, efficient market designs over the long term.

Your Organization’s Unwritten Rules and How to Fix Them

Knowledge at Wharton

Judd Kessler, PhD, Professor of Business Economics and Public Policy, The Wharton School; author of Lucky by Design: The Hidden Economics You Need to Get More of What You Want (Little Brown Spark, 2025), on which this Nano Tool is based.

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Goal

Apply the Three Es — Efficiency, Equity, and Ease — to redesign the hidden markets that shape opportunity in your organization.

Nano Tool

Every organization operates hidden markets: systems that decide who gets what — access to resources, visibility, promotions, or time. These systems are often relics of history or convenience rather than deliberate design. Instead of accepting them as settled matters, leaders can act as market designers by examining and improving these systems using the Three Es: efficiency, equity, and ease.

Action Steps

1. Identify the Hidden Market

   Look for any process where scarce organizational resources are distributed without pricing, such as access to your calendar, project assignments, or leadership attention. Ask: Who benefits most from the current rules, and why?

2. Assess for Efficiency

   Determine whether your system allocates resources where they have the greatest impact. Are projects staffed by those best equipped to succeed, or by those who volunteer first? Are meetings filling your calendar because of real value, or because of inertia?

3. Evaluate for Equity

   Consider whether opportunities are fairly accessible. Does everyone understand how to earn visibility, advancement, or funding? If only insiders know how to “play,” you’ve built a system that rewards familiarity over merit.

4. Simplify for Ease

   A well‑designed system should be transparent and simple enough that everyone can use it without gaming it. If people spend more time navigating bureaucracy than doing their jobs, redesign the rules for clarity and usability.

5. Redesign and Communicate

   Replace unspoken, inherited rules with explicit, intentional ones. Make access criteria visible. As Judd Kessler notes in discussing his book Lucky by Design, “When rules are hidden, those who figure them out first always have an advantage. That’s inherently unfair.” Transparency is the foundation of both trust and performance.

How Organizations Use It

• Wharton’s Course Match system – Co‑designed by Kessler, this tool replaced a complex multi‑round auction for classes with an algorithm that lets students value courses honestly and identify substitutes or complements. The result: higher satisfaction, fairer outcomes, and dramatically fewer complaints about gaming the system. The tool now powers course selection at Wharton and more than a dozen other professional schools.

• National Resident Matching Program and New York City public‑school admissions – Both use mechanisms that let participants state their true preferences without needing insider knowledge, turning transparency into equitable outcomes.

• Unilever’s InnerMobility – An internal talent marketplace that matches employees to roles and projects based on skills, interests, and career goals. By allowing people to “bid” or signal interest across the organization rather than relying on manager referrals, it breaks down silos, increases internal mobility, and allocates human capital more efficiently. The platform has unlocked more than 60,000 hours of work and is now rolled out to 30,000 employees in 90+ countries.

Knowledge in Action: Related Executive Education Programs

• Executive Development Program

• Leading and Managing People: Strategies for a Changing Workforce

• Becoming a Leader of Leaders: Pathways for Success