Strategic change and organisational restructuring: How managers negotiate change initiatives

Journal of International Management 12 (2006) 284 – 301

Strategic change and organisational restructuring: How managers negotiate change initiatives ☆ Ian M. Taplin ⁎ Department of Sociology and Graduate School of Management, Wake Forest University Box 7808, Winston-Salem, NC 27109, USA Bordeaux Business School, Bordeaux, France Received 31 July 2005; accepted 1 June 2006 Available online 14 August 2006

Abstract This study examines the organizational changes and varied response amongst managers to those changes in seven subsidiaries of multinational apparel firms. Because of intensified competition from low wage economies, such firms have been forced to restructure production processes to heighten both their productive efficiency and attain greater flexibility at the plant level. Much of this change has involved the introduction of high performance work practices (HPWP), a central focus of much recent scholarship on post-Fordism. Drawing from several qualitative strategies, this paper focuses on the role of managers as agents of strategy implementation and discusses how they negotiate, accept or resist such changes. We describe the failure to implement HPWP as some firms seek efficiency gains from work restructuring rather than broader effectiveness goals that would have deepened employee participation. In doing so we theorise about structural impediments to organisational innovation, the operational constraints that render some managers change recipients rather than change agents, and what this might tell us about micro-political strategies within large organisations as key actors negotiate a new organisational reality. © 2006 Elsevier Inc. All rights reserved. Keywords: High performance work systems; Organisation change; Management resistance; Restructured work; Negotiating change

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Earlier versions of this paper were presented at Bordeaux Business School and Center for Business Management, Queen Mary, University of London. I would like to acknowledge helpful comments by seminar participants plus those from R. Saylor Breckenridge, Jeff Leiter, Aneil Mishra and Ana Wahl as well as three anonymous reviewers and the Editors of the Special Issue. ⁎ Department of Sociology and Graduate School of Management, Wake Forest University Box 7808, Winston-Salem, NC 27109, USA. Tel.: +1 336 758 4880. E-mail address: [email protected]. 1075-4253/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.intman.2006.06.002

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As multi-national corporations (MNCs) in the manufacturing sector have faced increased market volatility, uncertainty and heightened competition since the 1980s, they have often come under pressure to restructure production facilities to improve operational performance. Ensuring organizational capabilities are appropriate to their strategic needs, many have changed, or attempted to change their internal operating structures to enhance quality and production flexibility. One set of recent changes has been the adoption of activities such as lean production, justin-time techniques, TQM, and more collaborative links with suppliers and buyers; often referred to collectively as ‘high performance work practices’ (HPWP). Central to HPWP is the more efficient use of labour, accomplished through devolving greater decision-making power to line workers for creative problem solving. Such processes are increasingly seen as necessary if firms are to maintain a manufacturing presence in the face of sustained foreign competition, and in some industries, changes in supply chains relations that confer greater power to buyers (Wright and Lund, 2003). The extent to which these changes have been implemented and in what form are part of a broader debate on emerging forms of post-Fordist work organization (Appelbaum et al., 2000; Piore and Sabel, 1984; Osterman, 1994, 2000; Vallas, 1999). Clearly potentially global in nature, the new work structures not only reflect strategic changes by MNCs as they cope with dramatic changes in the competitive environment (Dicken, 1998), but also the extent to which differences in strategy implementation are a product of local plant specific conditions and contingencies. For many MNCs, changing operating structures can be fraught with implementation difficulties because of local environmental influences such as country-specific labour market practices, traditional work systems and cultural norms that solidify managerial prerogatives. For example, emphasizing the productive benefits of teamwork in a setting where worker individualism is pervasive and managers are reluctant to concede discretionary authority to workers can be a challenging experience. Nonetheless the underlying benefits of such new organization forms, and their strategic pre-eminence, has forced MNCs to press changes at the plant level. But as with many innovations, resistance to change often occurs when incumbents feel their positional authority within an organization is being challenged, especially if such changes are mandated by corporate headquarters that are distant from manufacturing sites. By examining what happens in MNC plants that are embedded in a specific industrial sector in one country setting, we can better understand how local managers accept, negotiate or resist the implementation of change strategies. Furthermore, when the change mandates might be ambiguously communicated or the principal actors (in this case senior managers) are given interpretation and implementation discretion, we can see what patterns of variation emerge and gain a better understanding of the micro-politics of organizational change. Previous research on change initiatives in manufacturing firms has shown how new work practices often remain temporary, or have been partially introduced, or done so within the framework of old operating principles (Appelbaum et al., 2000; Godard, 2004; Ichniowski et al., 1996)). For example, instead of organisational innovations designed to improve operational effectiveness (of the type for example implied by HPWP), some firms seek mere efficiency gains that involve little systemic change. Effectiveness is here defined as procedures designed to sustain long-term operational performance in a wide range of activities (flexibility, productivity, quality and speed of throughout) and which can entail indirect cost savings. Efficiency meanwhile refers typically to (direct) cost lowering organisational changes that are often short term oriented and generally involve direct attempts to improve labour productivity.

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The focus of this paper is apparel manufacturing firms located in the USA, some of which are US owned and multi-national in scope1 and others subsidiaries of non-US MNCs. Given the heightened global competitive pressures in this industry, and how restructured work processes can be crucial to achieving competitive advantage, we explore variation in how senior managers have implemented change initiatives and whether there is a significant difference between US versus foreign owned firms. By assessing the crucial role that managers play as change agents, we theorise that outcomes can be best understood by evaluating the criteria which local managers use to frame the parameters of organizational changes, and the extent to which their actions are prefigured by structural constraints and any distinctive policies associated with ownership differences. How much discretion managers have in the implementation process would appear to influence whether they negotiate or resist changes and provide us with a framework for an analysis of the micro-politics of organizational change. 1. The setting: a brief overview of the clothing industry In a labour-intensive industry such as clothing, competitive success has traditionally been driven by cost minimization. Historically, firms relied upon piece rate systems that allowed them to control the pace of work indirectly through wage manipulations. Because increased labour productivity could be rarely achieved through capital intensification, work organization was designed to maximize the output of individual workers and achieve cost savings through productivity improvements and reductions in the amount of direct labour in garments.2 As a result, lower production costs were generally gained through intensification of effort amongst sewers rather than through any innovative work practices that might lead to a more effective use of workers (Appelbaum and Bonacich, 2000; Rosen, 2002; Taplin and Winterton, 1998). In recent decades, additional pressures on US based manufacturers have exposed disadvantages of such a system. First, increased import penetration from products manufactured in low wage, newly-industrialized countries further intensified the cost-based competitive pressure (AAFA, 2001). Second, retailers, especially mass merchandisers such as Wal-Mart, have embraced technological innovation in areas that dramatically improve ordering, distribution and inventory control capabilities, thus lowering their cost structures (Abernathy et al., 1995; Bailey and Bernhardt, 1997; Rosen, 2002). Such technological innovation has forced manufacturers to develop more flexible production systems and produce smaller quantities of goods closer to an increased number of selling seasons.3 Longstanding strategies that emphasize direct cost reduction, labour efficiency and machine efficiency appear increasingly less appropriate under these new demand conditions (Bruscas et al., 1998, p. 238). Third, concentration in the textile–apparel value chain has intensified as textile companies (suppliers) and apparel retailers (buyers) have increased in size (and power) following mergers (Dickerson, 1995), become multi national in scope and reconfigured the value chain in ways that confer further advantages on suppliers/buyers and disadvantages for manufacturers (Gereffi, 1994). Manufacturers must now devote more attention to supply chain management particularly partnerships, sharing information technology, performance measurement, operational flexibility 1

Each of the firms in the sample has production facilities outside of the United States. The industry has a long history of sweat-shops and labour intensification practices such as the stretch system whereby piece rate payments were manipulated in order to get workers to work harder on assembly tasks. 3 The old winter and summer two season model has been replaced by more numerous short seasons, often with goods designed for a 6–8 week period of sale before being marked down then shipped to off-price outlets. 2

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and demand characterization (Lee and Kincade, 2003) — all of which place more complex logistical demands upon management in such firms. 2. Manufacturers' responses These changes have forced manufacturers to rethink their operating practices. In an attempt to improve productivity and flexibility, a combination of technological and organizational changes has been introduced (Appelbaum et al., 2000; Bailey, 1993; Bailey and Sandy, 1999; Berg et al., 1996; Dunlop and Weil, 1996; Sels and Huys, 1999), with the most important being team working or modular manufacturing that is a constituent part of HPWP. In HPWP the work process is redesigned so that groups of multi-skilled workers, working in U-shaped modules of 10–12 individuals, work together to assemble an entire garment.4 Team members monitor quality throughout the process and are also given considerable discretion in task allocation. When fully implemented, HPWP practices are consistent with an effectiveness strategy. Not surprisingly, such innovations are more likely to occur in larger firms with the requisite capital and human resources for managing such logistics.5 And performance is most positively affected when manufacturers adopt “clusters” of related innovations such as information linkages, forecasting and manufacturing innovation (Abernathy et al., 1995, p. 9). But even then, many manufacturers combine the above process innovations with outsourcing, increasingly to offshore locations, as a buffer to meet variable product demand (Christerson and Appelbaum, 1995; ILO, 1996). Such a practice, particularly with low value-added items has a long history in clothing and remains an institutionalized part of many firms' attempts to keep costs low.6 Despite the merits of comprehensive HPWP practices, many firms have resorted to partial implementation, most notably introducing team-work merely to enhance traditional productivity drives and lower costs through a reduction in supervisory personnel (Taplin, 1995, 2001; Ezzamel and Wilmott, 1998). In some instances managers appear to have been insufficiently trained for the introduction of new systems and consequently modified – perhaps not always disingenuously – the design of teams in ways that were detrimental to the intended outcomes (see Finnie, 1996). Sels and Huys (1999), however, suggest that desired goals of cost lowering and production flexibility can be attained using teams as a form of modified Taylorism (the antithesis of HPWP), especially when combined with outsourcing low value-added, labour intensive tasks to low wage countries. By retaining hierarchical management structures, albeit without supervisory workers, and continuing routinizing work in interdependent group settings, firms can realise productivity gains plus flexibility and improved quality. Such production systems enhance output through group norms of self-exploitation as workers work harder in response to peer pressure. In sum, the above descriptions appear more consistent with what we earlier termed an efficiency strategy. 4 There is no single universally adopted model of team sewing, with variations in the size of the teams, number of discrete tasks performed by operatives as well as level of training for and skill of workers that permit multi-task capabilities. 5 Smaller manufacturers, with limited resources and less ability to manage technological innovation, find themselves in a more precarious situation. Many have been forced into carrying a larger inventory of goods, ‘guesstimating’ retailers' needs and supplying from their own inventory. Instead of ‘production on demand’ (just-in-time), one has ‘production in case’ (just-in-case). 6 It is interesting to note that many firms in Italy, a country with a strong tradition of innovation in organizational practices, have nonetheless resorted to outsourcing the production of low value added items to Romania. See Guercini (2004) for details of this increasing trend.

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Given the introduction of HPWP necessitates a different role for managers (coordination rather than control), the extent to which it is fully implemented in a firm might rest in part on what leeway local managers are given in the implementation process as well as their overall disposition to change. Firm resources and different country-specific operating practices might explain some variation but it is within the organization at the plant level that different outcomes materialize and it is here that internal organizational power relations help us understand the differences. There is a large literature on the dissonance between managerial self-interest and the execution of company strategy, with considerable evidence of managers resisting or subverting change if it results in a restructuring of organisational routines (Fletcher and Taplin, 2002; Tilly and Tilly, 1997), will somehow disadvantage their position of oversight (Heckscher, 1995; Smith, 1990), involve adverse financial implications (Taplin, 2001), or simply through lack of resources (Lazonick, 1991). Since the strategic importance of middle management's role as change agents and their influence on organizational transition continues to increase (Floyd and Wooldridge, 1997; Huy, 2001, 2002), it is important that we clarify how they interpret change and how substantive their role is in the implementation process. Forced to implement strategic plans that might displace them in the organizational hierarchy can lead to cognitive disorder (McKinley and Scherer, 2000) that promotes inertia. Inasmuch as managers both receive and implement change, in some cases more directly controlled than others, their ‘sensemaking’ of change, its expectations and their coping mechanisms need elaboration (Balogun and Johnson, 2004). Whilst it is compelling to argue that resistance to the adoption of new work practices is caused by managerial obduracy, such an assumption is probably too simplistic. Some firms, particularly MNCs, are inevitably better disposed (through financial and logistical resources plus organizational learning capabilities) towards ‘technology management’ than others and more systematically execute work restructuring. Also, given that prevailing market circumstances force firms to adopt new practices, mediating factors such as workforce characteristics can intercede and shape managerial behaviour. Perceived (or real) inadequacy in skill level amongst workers might predispose managers to structure new work practices around old operational precepts because it is assumed that workers lack the capability to function in true HPWP settings. Intra-firm demands upon management also might result in modifications to work practices. If managers feel that other parts of the organization are lacking in the necessary synergies for change, or if they have been required to meet competing financial goals that emphasize direct cost savings, they may restructure work around these specific performance goals, balancing the exigencies of market forces with their internal drivers of change. 3. Data and methods A sample of 7 MNC subsidiary firms, primarily located in the southeastern United States, was selected for case study interviews between 1997 and 2001. 5 of the firms were US owned, one was majority Italian and one German; all had American management teams, recruited from within the domestic US clothing industry. Each produced mass market goods that were sold nationwide in the United States. The 7 firms were chosen from an initial list of 16 that was developed in cooperation with officials in apparel industry policy groups who helped identify firms on the basis of size, location, and technological and organizational changes underway or in place. We particularly sought to identify firms that had restructured work practices in order to meet new flexibility and productivity pressures within the industry. We requested access to plant managers, details of strategic initiatives by senior management as well as procedural changes that have occurred in production over the previous 5 years. Because we sought access to both privileged

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material and an openness regarding decision-making that is rarely forthcoming in survey questionnaires, we endeavored to establish a rapport with many of the managers by agreeing to multiple meetings. We also agreed to keep their identities and those of the firms strictly anonymous, which was especially important when they divulged many of their actual motives behind workplace change. This high degree of confidentiality proved prescient when many were willing to share basic concerns that are crucial to understanding managerial decision-making in times of economic volatility. The 7 selected firms were in the following sectors: women's wear, knit products, men's sportswear, and children's outwear. These sectors were chosen because they represent opposite extremes in terms of the flexibility demands placed upon them. All of the firms were in the 200–500 employees category7 and were either part of a larger apparel company with multi-plant locations, or part of diversified, multi-divisional company. We controlled for size since much smaller firms were more likely to have difficulty implementing costly technological innovations. We also selected firms that had shown positive returns on investment in the immediate 3 preceding years and were not under perceived threat of takeover or lapsing into bankruptcy protection. Information on these financial issues was determined in the initial round of discussions and was verified whenever possible through public documents. These controls allowed us to limit our investigation to firms that were not under immediate financial duress, had shown modest profitability and were more likely to be pro-active in these innovations rather than in crisis-driven reactive mode. Whilst no claim is made that the firms were necessarily in the forefront of innovation, each had made a deliberate attempt to restructure production in the light of changing competitive demands. In this respect it would be expected that if significant organizational changes are to occur it would most likely be found in the type of firm where interviews were conducted. Details of the firms are listed in Table 1. Interviews were conducted with plant managers, operation and production managers and assistant plant managers, and in each case involved an extensive plant tour where operating procedures were identified and noted. For the interviews, which lasted from several hours to a day, and in 5 cases involved return visits, an unstructured questionnaire technique was used with key questions focusing on the introduction of new practices. Specifically, respondents were asked details about the initial stages when new work systems were devised, particularly why they felt it necessary to respond to the changes and what those changes actually involved. They were also asked about the design of new work systems, both in the implementation stage and at subsequent times; the implementation rationale; and the benefits and problems of such changes. From this structured information, managers were then asked about their views on the processes under way and what it meant for their own position in the firms. Did they feel less secure with these changes vis-a-vis their own position in the firm? Was their perception of the outcomes consistent with that of senior corporate officers, and if not what did they do to modify outcomes? We probed for details, however subtle, of status uncertainty that such changes might engender and how managers were responding to this. Because the sample size is small and only two, non-US owned firms are included we realize the limitations of our study in establishing variation based upon country of ownership differences. But the resulting rich and detailed information that comes from examining change within one industry sector that is embedded in a particular institutional setting provided us with an opportunity to explore intra-organizational struggles in which managers are the key actors. 7

The apparel industry has a large percentage of small (less than 25 employees) firms; hence 200–500 employees in this industry constitutes relatively speaking medium to large size.

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Table 1 Details of firms in sample Firm sector

Personnel interviewed

# of employees Type ⁎

Knit wear manufacturer Men's sportswear manufacturer Children's outerwear manufacturer Knit wear manufacturer Women's wear manufacturer Men's sportswear manufacturer Children's outerwear manufacturer

Plant manager, operations manager, assistant manager Plant manager, production manager Plant manager, shift manager Plant manager, assistant manager Plant manager

420 200

MD ⁎⁎ [majority Italian owned, US management] [1 other domestic plant, 1 in Romania, 1 in Italy] MP [3 other plants, of which 1 is overseas]

460

MP ⁎⁎ [German owned, US management][1 other domestic plant, 1 in Germany] MP [3 other plants, of which 2 are overseas]

212

MP [2 other plants overseas]

210

Plant manager, production 450 manager, assistant manager Plant manager 240 [to 184]

MD [2 other clothing plants, both domestic] ⁎⁎⁎ MP [1 other plant, overseas location]

⁎ MD refers to a firm that is part of a multi-divisional structure where diversified operations exist; MP refers to a firm that is part of a multi-plant non-diversified structure where the other plants are also in apparel manufacturing. Unless otherwise specified, all the companies are US owned. ⁎⁎ It was not possible to gain accurate information about the parent company in these instances, nor exactly the status of operations in the overseas plants. ⁎⁎⁎ This firm had what appeared to be a joint venture agreement with 3 sub-contractors in the Caribbean, each of whom did garment assembly to their close specifications. In that sense the firm functioned similarly to a MNC, albeit with less nuanced control dimensions.

3.1. Data analysis We collected systematic data on the actual production systems that were in place in each of the settings, noting their salient characteristics. This information was derived from observations followed by clarifications from managerial staff appended to our field notes when a particular activity/procedure was ambiguous. We then classified firms on the basis of (1) observable differences in basic production procedures, (2) amount of training provided workers prior to and during the work re-organization phase, and (3) variation in management rationale for change. The latter was further sub-divided into reasons for needed change, what change was designed to accomplish, and what the overall results of change have been. Throughout, we attempted to discern why managers had implemented changes in a particular manner, what pressures they faced prior to, during and after changes occurred, and what the outcomes were. This information was aggregated to permit a basic typological classification in which firms with distinctively HPWP were noted and contrasted with those where the central tenets of HPWP were absent or incompletely implemented. In making a conceptual distinction based upon organizational outcomes, we recognize the limitations of imposing a binary comparison that might not capture the essential transient and incomplete nature of any change process (cf. Vallas, 1999 for a further discussion of this conceptual problem). Nonetheless, the clearly observable differences in our sample, both in work structure and managerial intent, were sufficiently pronounced to merit such a dichotomous classification. Furthermore, since our analysis focused upon variations in procedural rationale as a causal factor in determining organizational outcomes, the utility of typologies in contrasting explanatory factors mitigates against its potential limitations. Finally, we did not systematically interview production workers in the plants, our intent being to determine managerial perspectives and actions and their rationale for change. Most studies on

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workplace change focus upon worker outcomes and presume levels of managerial omniscience which we felt were too simplistic given the variation of revealed behaviour. 4. Results All of the firms had introduced some form of teamwork although 1 had dropped it and reverted to a previous operating system. 3 firms unambiguously had adopted and sustained HPWP; the other 3 had adopted team working but in ways that were not fully consistent with HPWP. In the next section, we summarize first the details of the 3 firms with HPWP and the attitudes of their managers, then the other firms who have introduced some form of team-work (including the one that had abandoned it). 4.1. HPWP firms One was a knit wear manufacturer (Italian majority owned), one men's sportswear, and the other a children's outerwear firm (German owned); in each case these changes were part of company-wide restructuring programs mandated and closely directed by company headquarters. Although the modular system varied from company to company (particularly in the number of workers in teams and the sorts of multi-skilled tasks that each worker performed), the overall structure was consistent with what studies describe as HPWP. Workers had been given extra training (particularly in the area of machine maintenance), were given input into many operational decisions, and were provided with resources to pro-actively address quality issues. Workers were paid on a group piece rate system that was quality and performance linked. In each of the firms supervisors also had been provided with improved product coordination skills (flow management) and in one, supervisory staff had been reduced by 50%. Each of the firms reported cost savings through faster throughput and better inventory management. Quality had improved slightly but productivity increases were marginal at best. In one firm, managers indicated that they already had very high rates of quality so did not expect any significant improvements in this area. In another firm the plant manager indicated that productivity had not been a concern but finding a way to better utilize his workers to meet more frequent style changes had been a pressing issue. He said “quite simply we are forced to do more with fewer workers” then further noted: “We always tried to be in the forefront in operations, anticipating trends and recognizing the limitations of old systems. We have a good bunch of workers and they respond well to our initiatives. We needed more flexibility if we were to be able to switch lines quickly so modular made perfect sense. There are always start-up problems but in the end it's worth it” (shift manager, children's outerwear firm). Managers of the 3 firms reported that “a wealth of information and experience had been made available to them” and often this came from other divisions within the company that had earlier undergone restructuring. This proved particularly useful in the areas of logistics and distribution that are key to the flexibility requirements implicit in HPWP. All of the managers were provided training that they felt was adequate to the tasks at hand, and were satisfied that senior management retained a long term commitment to the underlying principle of continuous improvement and value enhancing strategies. This appears crucial in gaining and retaining managerial commitment to the project. But the omnipresent role of HQ and its clear directives minimized opportunities for company management to deviate from full implementation of restructuring strategies. Also, the increased interdependency with suppliers and buyers in the value chain pressured plant managers to continuously upgrade performance in ways that reinforced HPWP.

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Managers reported close collaboration with key retailers who worked to implement the production change through a transition period. Supplier–buyer relations appeared cooperative rather than adversarial in these firms, although one firm did report retailer frustration when their own sales projections were off and they tried to revise delivery schedules from the manufacturer. In general, the words of the men's sportswear plant manager sum up the overall disposition of these firms: “We're in this for the long haul and the more we can work with retailers the better. They call the shots and we must be responsive to their demands. But the more they try and reduce their own inventories and then face difficulty reordering fast selling items, the more it favors us [domestic manufacturers] since we can ship the product quickly. Being geographically close to the retailers gives us some advantage that we've tried to capitalize on. … It's important that they share information with us. We've developed good relationships with some big customers and we can do better forecasting because of it. This has saved us a lot and in the long run it's cut my operating costs. Start-up costs are high [for new work systems] but in the long run it's the only way to go.” Since each of the firms saw the need to develop an appropriate level of organizational commitment if such flexibility efforts were to be sustained, they were pro-active and systematic in building trust from the bottom up. In one firm two different management staff claimed that any efficiency gains from the new system were shared with workers via increased compensation as a measure of employer commitment.8 Each of the firms claimed that attempts were made to involve workers in planning the changes and one plant manager was emphatic that he did his best to communicate the intent of the restructuring to the workforce. One firm held company-wide meetings and worker input was solicited, even when much of the actual change management was under the direction of outside consultants. The other firm was perhaps less inclusive in the planning stage but was nonetheless open to input in the implementation stage. In each case managers appeared to have consciously developed (or probably sustained) an open management style which enabled organizational learning to occur in an atmosphere of trust and openness. 4.1.1. Summary of characteristics The following issues appear to be common to each of these firms, with the obvious interaction effects that make them complementary: • They are all appeared to have the necessary resources to implement and sustain the new work practices. • Senior (corporate) level management directed the initial changes and remained committed to new work practices, sustained a culture of innovation, and rewarded plant level managers for operational successes defined in terms of flexibility measures as well as productivity/quality combinations. Longer time frames for the successful implementation of new practices were tolerated. • Managers, supervisors and workers were given extensive training in the new production processes; earnings for managers (and apparently workers) did not suffer following these changes. • They each had established collaborative relationships with large retailers and were able to make the necessary technological and organizational changes as part of long term cooperative strategies with their principal buyers. They also were able to exploit the ‘lean’ inventory practices by retailers and developed the manufacturing flexibility for fast turnaround to quickly re-supply retailers. 8

We had no independent means of verifying this claim.

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• The new work practices built upon already high levels of organizational commitment with HPWP seen as a way to build upon this commitment and efficiency gains were designed to be shared with workers through enhanced pay and better work conditions. 4.2. Non-HPWP firms In these 4 US-owned firms (knitwear manufacturer; women's wear manufacturer; men's sportswear manufacturer; and children's outerwear manufacturer) team-work had been introduced but its form – and often the intent – was distinctive enough to be inconsistent with HPWP. In one case, attempts were made, and abandoned, to fully implement modular manufacturing; in others, managers responsible for its implementation appeared unable or unwilling to fully incorporate the necessary changes. Managers in these types of firms were more likely to preface their discussion of workplace change with complaints about problems in the industry. Clearly, these managers appeared to perceive the changing competitive environment in less sanguine terms than those in the HPWP category. While actual team systems varied in each of the firms, all involved some form of work fragmentation in which individual operatives perform specific assembly functions as part of a group production system. Group-based productivity quotas were established, with bonuses for exceeding the hourly production quotas established. However, little additional training was given the workers other than what they had already acquired as on-the-job skills. Of the firms where managers professed satisfaction with the new work systems, cost savings benefits and improved productivity were paramount. Each of the firms had shed supervisory staff and saw this as a crucial component of their cost reduction focus. Managers in 2 firms saw immediate cost savings through reduced supervisory personnel9 and faster product turnaround. Productivity increases occurred in all four cases. Managers in these firms also pointed out that the new team-work systems provided them with ways to impose simultaneously productivity and quality demands upon workers. One said that it increased their indirect control over workers and took away some of the pressure they had earlier experienced in ensuring proper line balancing (making certain that adequate supplies of goods are available for work stations). “For the last couple of years, I have spent less time worrying about whether we would meet production quotas. Now, I'm more certain we will because the workers work harder to meet the team quotas. They seem to pressure themselves and almost enjoy competing to produce more than the other teams. They seem to be more satisfied with the work than before yet undoubtedly they are working harder. I'm not complaining though and as long as they don't, I'll keep quiet” (plant manager, children's outwear manufacturer). Another plant manager, of a knitwear manufacturer employing 460 workers, said that such systems allowed him to avoid delegating power to operatives since he can now rely upon group norms to discipline workers who slack off or otherwise do not match group production quotas. He even speculated that teams in his plant were a more efficient form of individual piecework as more subtle group norms replace individual motivation. When asked if he thought his workers were working “smarter” or just harder, one manager unequivocally responded, “Definitely the latter”. When asked to comment on the extent of organisational change and whether work processes were fundamentally different, most managers said that the new practices were modifications of the old system. As one rather succinctly stated: “It's tough changing everything and when we 9

In one plant, 3 supervisors were laid off or transferred/promoted to other plants; in the other one supervisor retired and another laid off.

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were told by corporate to introduce team systems we assumed it was just another way of getting costs down. Typically, we experimented with various configurations but in the end went with a basic modular system that didn't really involve much re-training. The workers remained the same and we didn't need to offer much extra preparation after the initial phase-in. Sure it might not be exactly what the purists had in mind but we honestly felt it was the best fit for us and our workers. So far it's worked pretty good. We've seen a 5% cost savings and quality is less of a problem. To be honest though, not a lot has changed when it comes down to how the sewers work. They just work harder” (knitwear plant manager). Most of the managers were quite emphatic about the dilemmas they faced. On the one hand they reported their increased vulnerability but on the other hand indicated that they were constrained in their responses. As the plant manager of the women's wear firm commented: “All the technology in the world isn't going to help us cut costs below the 30% savings that come from moving to Mexico. We tried teams and found at best 5–7% savings. That's good, but not good enough. So we shifted a lot of standardized goods to Mexico and kept the higher margin items here. These are the goods where we can use the flexibility that comes from teams but it comes at a cost sacrifice. Our overheads have been cut, we've cut the workforce and closed the old more inefficient plants, and we've centralised our cutting and dying operations plus distribution has improved. But I have to be honest and say that without the big savings from Mexico we probably as a company couldn't survive.” All of the plant managers complained of increased retailer pressure, indicating that retailers were less interested in collaboration than getting them (manufacturers) to meet retailer needs more precisely. When asked how best to respond to such pressures, the majority said they had little choice but to find ways to squeeze more out of their workers, possibly outsource some production, or try and move into higher quality (high value added) niches. Two of the plant managers, and one of the production managers complained about the lack of resources (financial and management personnel) to make the changes to HPWP. One manager's honesty was quite disarming when he said: “There might actually be financial disincentives for us to invest in information and operation systems that are crucial to HPWP since retailers could easily cancel future orders from us and then we're left with unsold product. That really hurts my margins and it's a scramble to make it up later in the season with new products” (plant manager, men's sportswear manufacturer). Another production manager made the following prescient comment: “The trade press talks a lot about collaboration and linkages. I go to shows and seminars and ask lots of questions about what small sized manufacturers can do. But the reality is that retailer interests are now what's important. They want co-operation on their terms and they're calling the shots. I even talked with two of our customers about putting together some forecasting systems. They thought it might be useful but couldn't guarantee that they'd stick with us as a supplier. How can I trust them when there's no commitment? Everyone talks about worker exploitation but we're also getting exploited and there's nothing we can do about it” (women's wear manufacturer). In all of these cases some form of team-working was introduced, but no attempt was made to restructure the organization in ways that would incorporate workers into work process decisionmaking, to give them more input, and to provide them with skill sets that would effectively make them multi-skilled. The rationale behind the adoption of teamwork appears to be part of a broader strategic focus on cost lowering, technological substitution and productivity increases — or at least that is how individual managers perceived the broad intent of mandated changes. Each of these firms focused upon lowering unit costs and rationalising product throughput, using teams rather than technology to secure efficiency gains.

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4.2.1. Summary of characteristics The following features appear to be key explanatory variables: • Managers were given discretion in how they implemented the mandated changes; their interpretation of corporate intent was based upon a narrow, short-term cost savings efficiency assumption. • No form of collaborative relationships existed between manufacturers and retailers; production changes were re-active to pressures that retailers forced upon manufacturers. • Lack of resources was endemic; managers lacked skills and training to implement such changes; workforce lacked skills for new work systems and firms were unwilling to invest in their skill acquisition. • Organizational cultures and management style were very Tayloristic; managers were not disposed to view workers as a resource to be developed; corporate level management seemed less committed to the rationale behind new work systems such as HPWP than to desired outcomes such as flexibility and productivity gains. • Lacking the partnership possibilities with retailers that could provide long-term operational synergies, firms re-focused their attention upon short-term gains via measurement systems (productivity and direct costs) with which they were most familiar. • Apparent worker dislike (mainly through earnings instability) for team production systems in their initial stages, often resulting in a withdrawal of effort, further pre-disposed managers to view modular as another fad that could be better adapted to meet short term goals. 4.3. Acquiescence and resistance amongst managers In the firms where HPWP appear to be more comprehensively implemented, managers reported satisfaction with their status and situation, often directly referring to income and employment stability, and indicated that they were provided with the necessary resources and training to make the changes. The culture of the organizations appeared progressive (greater informality between management and workers, flexible work times etc.), presumably reflecting the type of managers recruited at such firms plus the organizational norms and values of the MNC senior staff. When change directives came, managers (and workers for that matter) were more like to see the necessity of change at its face value rather than as a subtle way of intensifying work effort. Managers did not report any intrigue as being part of the implementation process nor did they indicate any demise of their motivational attachment to the firm as a result of the changes. The transparency of the process heightened the legitimacy of the change for all parties and probably minimized micro-conflicts between the change agents. Whilst 2 of the 3 firms are owned by non-US parents, the most far reaching changes have occurred in the sportswear firm that is US owned. Here changes have been implemented across the other plants in different regional locations and information exchanged between plant managers. The local manager said that company had a wake-up call several years earlier and committed itself to finding solutions to the competitive problems that would ensure it remained in the business. He praised them for their thoroughness in researching solutions and the extensive support he received in the adoption of HPWP. “They have kept me involved in the process and given me clear directions on what to do and provided the support to do it”, he noted. Co-operation within and between plant managers and HQ seem normative here. Perhaps the singular issue that is common across each of these firms has been the extent to which change has been tightly scripted from company headquarters and how plant managers

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remain under scrutiny. Managers reported the detailed and often intense direct control that they were subject to, how plant performance is closely monitored in ways that increase the transparency of their actions, plus how the operational features of the new work systems were clearly specified. This was particularly evident in the non-US owned firms where for example one plant manager was provided a specific operating model that was simultaneously being introduced in other company owned plants. Having worked in other plants where change initiatives were less comprehensive and often piece-meal in nature, he seemed to appreciate the clarity of, and support for, the change programme. But he did note how heightened accountability constrained opportunistic behaviour on his part. The plant manager of the knitwear manufacturer perhaps sums up many of these issues in the following comments: “I find myself less obsessed about micromanaging and worrying about whether we'll meet quotas and targets for buyers. I was given a lot of support from company HQ but they made it clear that this system had to work if we were to stay in production at this plant. I've always had a good relationship with the workers and I must admit that their skill level was good enough for us to make the transition fairly smoothly. Did I worry about control issues? Yes and No. But I also knew that what I did would be closely watched so I had better make certain I'm doing things properly. We were given explicit directions on how to implement the changes, what sorts of problems might occur, and how to troubleshoot them. We were not encouraged to experiment on our own. We had engineers and operations (sic) down here quite a few times helping us out but things have calmed down now and we manage on our own. Now we can work a lot better in meeting mass merchandisers' fickle needs and that makes my job easier. So I guess I've bought into it….but then I didn't really have a choice!” Whilst HPWP succeeds in part by giving greater discretion to line workers, all of the managers reported having less freedom to experiment in plants where it had been successfully implemented. If its success lies in the comprehensive fashion in which it has been introduced, then that thoroughness is a product of tightly controlled operational details in which managers are merely conduits for the intended changes. In other words, their behaviour is sufficiently constrained and actions closely monitored that it is difficult for them to resist or modify the intent of the initiatives. With the intensity of interdependent linkages with buyers and suppliers increasing, it is harder still for managers to resist the change efforts. In the non-HPWP plants the circumstances are quite different. Managers indicated that changes were largely a reactive measure, mandated by corporate headquarters in response to high operating costs and retailer pressure, particularly the need to improve production flexibility and offer them faster service. Crucial to making such changes was an operational awareness of the need to reduce variable costs by lowering levels of work in progress. Managers perceived company strategy to be focused on balancing flexibility imperatives with a commitment to cost lowering that was largely productivity-based. Consequently, they assumed team-work could be used as a way to maximize flexibility-based output without incurring costs associated with new capital and added training. Managers admit that their overall philosophy and style of management has not changed, the use of teams is embedded in extant routines and the prevailing form of work discipline remains inescapably Taylorist, since repetitive task routines in what is often a de-skilled work setting remain the norm. But they believed that either this was the corporate intent, or that the full organizational implications and supplier–buyer synergies had not been clearly thought through by senior staff. A number of important factors distinguish this group of managers from those in HPWP settings. First, the restructuring process was not tightly scripted nor subject to close monitoring from HQ. This is apparent no matter the organizational form (multi-plant or multi-divisional). Given less oversight and considerable discretion, managers focused upon restructuring activities

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that would meet mandated targets without compromising their own position in the firm. One said: “I've been around this industry for a long time and know what works and what doesn't. The sorts of changes others have tried wouldn't work here. Besides, it'd shake things up too much and nobody likes uncertainty. If we're going to keep our jobs we need to be practical and not go messing around with new fangled ideas. I'll give them some changes but in ways that make sense for everybody involved” (plant manager, knitwear manufacturer). Second, these managers seemed to be in a position where organizational sense making predisposed them to view any change through the lens of cost cutting and maintenance of the status quo within the firm. This was reinforced by strong retailer pressure and the lack of support from this group to make far reaching changes of an effectiveness nature. Each of the managers complained about constantly having to make changes forced upon them by retailers and rationalized some of their resistance to HPWP by arguing that it doesn't fit with the ‘adversarial’ relationship with their buyers. Time and again they argued that they were constantly forced into a reactive mode of operation and that this made planning and investment of the type necessitated by HPWP difficult and too costly to sustain. One even said that if they did it, he was certain they would go out of business. The evident dissonance between the reality of their customers demands (buyers) and the presumed benefits of HPWP merely reinforced their opposition to major operational change. They also justified their (in-)action by citing frustration over lack of available resources for change implementation. Several invoked the traditional nature of the industry, implying that historical tendencies to seek out the lowest cost alternative continue to drive decision-making at the top of organizations. They used this to legitimize their own actions, seeing them as perfectly justifiable and normative, especially when each of these firms has outsourced production to low cost overseas sites. In fact several saw the threat of more outsourcing as an explicit message for them to attain requisite cost-lowering if their plants were to remain open. It was difficult to discern what level, if any, of micro-conflict occurred within these firms between different management layers. But conversations with each of the various managers indicated a general adherence to the old ways of doing things as being the accepted norm and a sense of them ‘being in it together’ existed. They did view their plants as being pitted in a struggle for resources with other plants and therefore felt the need to demonstrate their own efficiency to ensure survival. But this tended to produce a culture of cooperation between the various managerial levels within the plant and the perception that corporate HQ was the feared agent was omnipresent. An assistant plant manager said: “We make sure things run smoothly here then no one bothers us. As long as we can keep our cost down and maintain the necessary flexibility to meet PantsCo's (fictional name inserted) needs, we're ok. Look at it this way. We save some money, improve productivity, keep our jobs and our bonuses, and HQ are happy. They don't care how we do it as long as we do it. That's a fact.” Recognizing the dire straights the industry is in forced one manager to take a more short-term approach that would have immediate impact. His emphasis upon productivity improvements and drastic cost-cutting through a version of team work allowed him, he claimed, to simultaneously maximize his own self-interest and ensure the plant's survival. This viewpoint is in stark contrast to the longer term approach taken by HPWP firms where a greater sense of security if not certainty, was pervasive. Interestingly, as workers continued to be subject to work discipline that systematically constrained their discretion, managers were able to retain much of their discretionary authority. Because managers saw workers as needing control and direction, the resulting version of team work that used group norms to pace workers was the perfect solution to this requirement. In using

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performance criteria to justify their actions (in what are de facto decentralized organizational settings), these managers are relying upon established organizational schemata as a shared reference for their behaviour. The shared values and meanings enable managers to coordinate change activity efficiently without renegotiating the social order of the firm,10 and therefore do so with minimum disruption of their position within the hierarchy. 5. Discussion and conclusion A number of important points emerge from the above details. First, in both HPWP and nonHPWP settings, issues of coordination and control remained central managerial concerns but with varying responses. In the former, teamwork was seen as a way to formalize worker participation and broaden the ideological commitment of the workforce to production flexibility goals. In the non-HPWP firms, teamwork's function was to systematize compliance through peer pressure. By restructuring less skilled work tasks around team principles, managers found ways of intensifying the work effort whilst lowering requisite levels of supervision — a process not dissimilar to Barker's (1993) concept of concertive control, although additional cost lowering gains here are achieved through a reduction in supervisory staff. Productivity increases, with quality control measures embedded in group norms, provide firms with coping strategies for the contingent market uncertainty they face. Second, non-HPWP firms were more likely to have retained hierarchical management ideologies, albeit with production systems that embrace team concepts and sometimes permit the illusion of participative practices. Despite a reduction in supervisory staff, managers retained explicit oversight and continued to rely upon work routinization, as well as using outsourcing, to achieve cost and flexibility benefits that are no longer possible in-house. The model found here is similar to Appelbaum and Batt's (1994) notion of flexible mass production, a hybridization where firms retain extant organizational and power structures while seeking flexibility through outsourcing and less dedicated and flexible technology. In such an arrangement, it is not surprising that workers might not benefit as Godard (2004) argues is often the case when change occurs. Third, HPWP firms were capitalizing upon changes in buyer–supplier relationships and viewed their own restructuring as an opportunity for better coordination and lowered transaction costs. This is certainly consistent with studies that point to inter-organizational benefits when different functional parties in the production value chain become fully integrated (Bresnen, 1996) and would reinforce managerial commitment to change since it is directly beneficial to them. In contrast, non-HPWP firms were more likely to see such changes in a negative light, with the perception that benefits accrue mostly to powerful buyers (retailers) in the value chain. Furthermore, managerial pre-occupation with cost minimization and short-term operational efficiency belie broader organizational constraints that impose operational logics because of resource limitations. Under short-term pressures to cut costs, team-work predicated upon work intensification is logical and probably not sub-optimal for non-HPWP firms — and plant managers clearly recognised this. That incomplete transition to new production systems is evident is not in itself remarkable since earlier studies revealed a propensity for compromise as firms adapted new procedures to fit extant organizational forms (flexible mass production) (Appelbaum and Batt, 1994; Godard, 2004) or outsourced segments of the manufacturing process to low wage areas overseas in a form 10

See Barr and Huff (1997) for a full discussion of how shared meanings are a powerful agent in coordinating change without incurring excessive organizational disruption.

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of global Fordism (Dicken, 1998). But what this research shows is how the variance of firm responses is a function of how much discretion managers are given in the strategy implementation process as well as the level of company wide commitment to change. The latter is not surprising but the former is quite instructive. Managers implement changes in response to broader strategic imperatives conceived by senior management, but in doing so, balance external constraints with internal workplace values and shared meanings. The resulting modus operandi reflects the broader corporate culture and provides parameters that either explicitly or implicitly script the change process. Since a low-wage, low skilled competitive model has been virtually institutionalized in this industry in the United States, it is perhaps not surprising that many managers will continue to think in these terms when they determine organizational change, particularly if they believe HQ endorses this viewpoint. As HPWP implicitly rest upon a high-skilled, multi-tasked workforce in a setting where participation, cooperation and de-centralized decision-making are normative, such a workplace is antithetical to most established industry practices. Perhaps the pervasiveness of Taylorist ideologies in the industry explains why those firms that did introduce HPWP did so with a structured determination that imposed operational plans upon plant managers, limiting the latter's opportunistic behaviour. And that two of the three firms were foreign owned and thus less constrained by local behavioural norms. Managers in these firms received changes to implement but then were able to recognise measurable firm benefits that consolidated their status and financial stability. But their choices of action were ultimately curtailed. In the other type of firms, managers were able to behave as more independent change agents and restructured the workplace to maximise short-term efficiency gains. Here their actions reflected greater uncertainty and they relied upon proven practices that rewarded them financially and in terms of institutional security. Since their, and the company's, definition of operational efficiency remains strictly productivity and cost-based, they embed work practices in hierarchical structures that are self fulfilling in terms of meeting short-term financial utility. Their behaviour is less an indication of risk aversion, as many studies posit, as it is a rational and pragmatic reflection of an operational logic that has served them well in the past. One could infer that managers in both sets of firms think the same; but that the HPWP managers had less discretion and therefore behaved differently. This is an intriguing thought and not one that can be easily refuted. But one had a strong sense when talking with managers in HPWP firms that they recognised the benefits of the implemented changes and saw them as crucially part of the requisite alignment of operational practices with changed market conditions. This was palpably not the case when talking with managers in non-HPWP firms. For the latter, organizational change continues to be seen through the lens of a resource scarce environment, with managers maximising short-term interests and preserving existing power relations as an individual and organizational survival strategy. The micro-politics surrounding such resistance to change and its shaping to meet operational contingencies are not disruptive since such managers retain the hierarchical authority within plants to establish change agendas. But they are indicative of the often subtle ways in which managers can manipulate and interpret information to justify their sometimes self-serving actions. Further research on whether operational differences between US versus foreign owned MNCs are more substantial than this study has revealed is needed. But despite such limitations, we have shown how attempts to align strategic change with operational re-structuring can have different outcomes that have much to do with management agency. It also shows how resilient extant management practices can be in the face of organizational changes, especially when managers remain circumspect of the overall strategic intent and corporate commitment to it. Old habits die hard, but in some firms their obituaries have yet to be written.

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