As a little boy, I loved pirates. We often lived near the ocean and I had a number of pirate books, which I still have, that sparked my imagination. I was smitten by Disney’s Peter Pan and enjoyed recently the pure entertainment of the Pirates of the Caribbean series. But, honestly, I never thought I could learn a lesson or two about leadership and management from these lawless reprobates.

17th Century Sea Bandits. Peter Leeson in his wonderful paper An-arrgh-chy: The Law and Economics of Pirate Organization teach us how 17th-century pirates, or sea bandits as they were called in the day, managed their ships. It helps to remember that the only way we communicated and traded with the rest of the world in those days was by ship. Most of the ships on the seas were merchant, explorer, naval, pirate, or privateer ships. And with the exception of some explorer ships, only the pirate ship was managed in a cooperative way that benefited the whole crew. Most merchant ships were ruled by captains, whose primary job was to maximize the profit for the absentee ship owners, like some businesses today. These captains were usually incented to maximize profit and, therefore, sometimes abused and cheated their crews.

Pirate Ship Industry. The golden age of piracy started in the late 1600’s and peaked between 1716 and 1722 when pirates really ruled the seas and maritime Admiralty Laws rarely controlled them. Leeson reports that 60 percent of the pirates were born in either England or America and 20 percent in the West Indies. Some pirates came from jobs on merchant ships where they had been abused by their captains.   The actual number of pirates in the industry is hard to measure, but some “expeditions” had as many as 2,000 pirates, so they were a force to be reckoned with. The average ship crew size was between 80 and 120 and Blackbeard’s crew on Queen Anne’s Revenge had 300. Pirates like Bartholomew had a squadron of 4 ships with 500 men. Arguably the largest pirate organization was Captain Morgan, who commanded 37 ships and 2,000 men at his peak. He terrorized the Spanish Main, which was all the land surrounding the Caribbean Sea and the Gulf of Mexico. Recently, five of Captain Morgan’s ships were discovered on a reef off the coast of Panama.  Against these kinds of ships and hoodlums, I can’t imagine how a merchant ship with only about 13-17 crew members or a small Royal Navy ship with a crew of 150 had much chance.

The Pirate Management Structure – Quartermasters and Captains. Had you asked me before I read Leeson’s article how I thought pirate ships were organized, I would have thought they were led by tough, mean captains who drove their crews hard with an autocratic and cruel hand. While I’m sure that did happen, we now know those captains didn’t last long – their crews captured and sometimes killed them. At the very least the captain was beaten and set adrift with his supporters in a small boat, often never seen again.  Since pirates captured their ships, they owned them. There were no absentee-owners to satisfy. They were, as one historian described them, a “sea-going stock company.” And captains had to align their leadership with the crew’s goals, or they would be replaced. What evolved in successful pirate enterprises was a management structure with two leaders – the captain and the quartermaster, both elected by the crews

The Quartermaster. Quartermasters were the leaders the Pirates “trusted” most. This was the position that was really in charge whenever the ships weren’t in battle. Quartermasters fairly allocated provisions, selected (no room for all the loot) and distributed the loot, settled/adjudicated crew member disputes, and administered punishments. According to written records noted in Leeson’s article, “the Captain can undertake nothing which the Quarter-Master does not approve…he speaks for, and looks after the Interest of the Crew.

The Captain. Captains were responsible for planning and executing attacks on merchant ships and other battles. They were usually paid more than the crew, but often slept in the same areas as the crew and had the same provisions assigned to them.

The Constitution or Articles of Agreement. To control quartermasters, captains, and all crew behavior, pirates often had constitutions or “articles of agreement”. In addition to behavioral restrictions (no fighting, women, or gambling on board the ship) these agreements also described how booty would be shared and reinforced the pirate’s mantra of “no prey, no pay.”

Booty Splits. All captured booty was collected by the quartermaster and no crew members could keep anything for themselves or they faced brutal punishments. Injured crew members received generous payments before any booty was split, this was the workers’ compensation of the pirate era. A few key skill positions – advance scouts, carpenters, surgeons, captains, quartermasters – received payments and shares greater than the other crew members. Otherwise, all the booty was split evenly as prescribed in the Articles of Agreement.

How much did a pirate make? In one 1696 example, Henry Every’s pirates captured a fleet carrying a value of 600,000 pounds sterling in precious metals. Each pirate on this crew collected a share of 1,000 pounds, equivalent to more than 40 years of earnings for a merchant seaman who earned on average 12 pounds sterling per year. So, if you can live with the brutality of being a pirate – you had to rob, murder, and torture innocent sailors – as well as face certain hanging if caught, then a pirate’s life was definitely lucrative.

The Leadership and Management Lessons. I don’t mean to put pirates up on a pedestal, they were (and are) bad guys. However, I did take away three leadership/management lessons from reading this piece that provides the building blocks for any successful organization.

1. Pirates understood they needed men with different talents to fulfill two, significant leadership roles – the captain and the quartermaster. One role was needed to make money and the other to manage the business. They knew the captain would be doing what Hayagreeva Rao refers to as “star tasks” and the quartermaster would be doing “guardian tasks.” Star tasks include strategic work like target identification, commanding during battle, and negotiating agreements with other pirates to form alliances or fix jurisdictions. Guardian tasks are more operational and include allocating arms, scheduling work routines, managing internal conflicts and administering discipline, distributing loot, and taking care of the injured.
2. The pirates knew they needed a control system to assure success and protect themselves from themselves. Perhaps there can be honor among thieves if they agree to a code of operation.
3. Common mission and goals will hold a group together as long as the system that supports them are fair.

This shows us how almost any group can build a successful organization if they figure out how to position these three building blocks. While it is sad today to see terrorists trying to build this same kind of organizations, it is encouraging to see that when all civilized nations work together we can splinter and collapse them – just like nations did to the pirates in the 18th century.

http://managementtechniquesfrom17th century pirates by Steve Wood (Steve Wood)

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