by Nancy Seddens

Created on: July 31, 2011   Last Updated: August 01, 2011

A business tactic that is democratic in appearance yet not necessarily fair in its implementation, the peanut butter approach is used by many businesses as well as government agencies. The name is derived from the care usually employed when making a peanut butter sandwich for insuring that the peanut butter is evenly spread to every part of the bread.

With the employment of the peanut butter approach, a business that wishes to cut costs or personnel will make those cuts across the board rather than singling out departments to bear the brunt of the cuts. Government using the approach might raise taxes equally across income brackets, decrease spending evenly or dole out business tax breaks.

This method of implementing business or government policy is not inherently bad if it follows rather than replaces research. If, after thorough investigation, it is determined that proposed changes will not be significantly more effective if merit-based or if there is no adequate way of making an evaluation, then the peanut butter approach may work best.

Another positive usage of this approach is if a change is required in short order and a thorough investigation would be too time consuming. In this scenario the implementation across the board would only be a temporary solution which would give the feedback needed for a more merit or needs based approach.

Unfortunately, the peanut butter system is often used to avoid hard choices. Rather than risk making a poor or unpopular decisions a manager or government official will instead simply reduce or decrease evenly throughout the system in the hopes of avoiding failure or ill will. With this situation employees who work harder or smarter may become discouraged at receiving the same raises as their less productive counter-parts. Government subsidies are handed out to industries which neither need nor deserve them making the cost of necessary subsidies unnecessarily expensive. Department or programs that are most necessary are cut equally with less important or productive ones.

The basic argument between being even handed and being selective is one that is repeated in many aspects of life, business and government. Those who argue against socialism will say that treating everyone alike and allowing each an equal share is a failed form of government because it breeds laziness and resentment while stifling innovation. Those same voices rail against a progressive tax system insisting that a flat tax which taxes equally across economic levels is the only way to build productivity.

However, only after evaluating each situation can it be determined if the best approach is an evenly spread, peanut butter approach, and even once a determination has been made, it needs to be frequently revisited.

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