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The ‘new organization’ and the ‘new managerial work’
European Management
Journal Vol. 12, No. 4, pp. 454-461, 1994 Copyright 0 1994 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0263-2373194 $9.50+0.00
0263-2373(94)00048-4
The ‘NewOrganization’ and the ‘NewManagerial Work’ MAHMOUD EZZAMEL, Price Waterhouse Professor of Accounting, Manchester School of Management (UMIST); SIMON LILLEY, Lecturer in Human Resource Management, University of Glasgow Business School; HUGH WILLMOTT, Reader in Organizational Analysis, Manchester School of Management (UMIST) Managers are currently exhorted by ‘gurus’ to adopt new management thinking in the face of obvious rapid change and uncertainty. In essence, the new thinking advocates shifting from ‘command-andcontrol’ to ‘facilitate-and-empower’ forms of organization and work. In a survey of senior managers from a sample of the Times 600 companies, Mahmoud Ezzamel, Simon Lilley and Hugh Willmott show that UK managers are indeed aware of major shifts occurring in their environment, and accept the need for change. But the managers point to difficult cultural barriers in attempting to implement the ‘new organization’ and the ‘new managerial work’. The authors concur with the managers’ scepticism about claims made for the new management theory. The practical problems in implementing the theory are underestimated, and there are flaws in the theory itself, e.g. the assumption that employers and employees’ interests can be made to coincide by inducing them to adopt a different philosophy or mindset.
You ‘11find a lot of companies, BP and people, are all finding tke same problem. They’ve got a very fumtional systems environment which is not conducive to efficient running (Director, Manufacturing). Managers are currently struggling to meet the challenge of a marked acceleration in the pace of change and associated levels of uncertainty. This has been fuelled by a conjunction of factors. Amongst these are the rapid globalization of markets, the volatility of currency movements, the diffusion of information and communication technologies, government policies in support privatization, deregulation and a widespread emphasis upon improvements in quality, attentiveness to addedvalue and the pursuit of value-for-money. Together, these factors have combined to intensify competition 454
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and stimulate pressures for a major transformation organization and management.
in
Setting this transformation in its historical context, Peter Drucker’ has suggested that management is now entering a third phase of development. The first phase occurred with the separation of ownership and control, when shareholders appointed a separate cadre of experts to manage their interests. The second phase involved the introduction of administrative techniques and systems to plan corporate development, manage complexity and monitor the operational achievement of policy objectives; and it culminated in the restructuring of large companies into multidivisional forms. The third, contemporary phase is characterized by Drucker as the shift from a command-and-control approach to management towards an information-based organization in which reliance upon the vertical and horizontal partitioning or organizations into departments and divisions is weakened by the development of cross-functional teams and task forces to tackle problems and exploit opportunities. This latest phase in the development of management is seen to demand greater self-discipline and individual responsibility for managing relationships and communications. The change from ‘command-and-control’ to what might be termed ‘facilitate-and-empower’ is also recognized to pose a threat to those whose jobs, status and career opportunities are lodged in the perpetuation of the old, ‘second stage’ mode of management and organization. According to Drucker, those most threatened by the change, are ‘the middle aged people in middle management who tend to be the least mobile’.2 But, of course, it is precisely those occupying the middle layers of management who are expected to implement ‘the new organization’. However, our interview data suggests that middle managers can be used as scapegoats by more senior managers who got to the top precisely because they are skilled at operating in a command-and-control world. For example, a Director in a Manufacturing company expressed the view that: MANAGEMENT
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I
organization can be managed.’ Tom Peters and Robert Waterman, In Search of Excellence (1982)
Exhortations by management pundits and gurus are inv;iriably met with a degree of scepticism from managers: practising managers are not slow to identify weaknesses in their assertions, especially when the changes urged unsettle or directly threaten their job security or career prospects. However, the intensity of pressure on senior managers to survive in a hostile market place has rendered them more amenable (or vulnerable) to the diagnoses and prescriptions of the ‘experts’. Under pressure to demonstrate their concern and capacity to be proactive, managers have sought the advice of consultants who, in response to this demand, havt> absorbed or adapted the teachings of the gurus. Alternatively, they have at least flirted with the recipes of the new management theory in an effort to adapt their organizations to rapidly changing and unpredictable market conditions.
Our research EUR(?“Er\N
New Organization, New Management During the 1980s a new wave of management thinking has developed that questions much of the received wisdom about how to organize and manage effectively. In particular, the merits of bureaucratic structure and hierarchical control have been challenged. They are criticized for their cost, lack of responsiveness and deadening effect upon employee initiative and productivity. Horizontal divisions between departments as well as layers of hierarchy are seen to inhibit effective communication, create unnecessary managerial overhead. Most crucially, established practices are seen to constrain the speed and quality of responsiveness to changing conditions. a leaner, more creative and adaptive form of organization is commended.
the Practicalities
The1.e is now an enormous literature dedicated to teaching (and reassuring) managers that strategic change can be successfully managed by adopting the recommended reciI)e. There is also a dearth of independent research that examines the practical difficulties and dilemmas associated with the adoption of such recipes. The problem is compounded by the understandable desire of managers and consultants to represent their efforts as ‘
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Managers should focus on the limitations of ‘solutions’ to problems offered by management gurus, and avoid the ‘quick fix’
Our preliminary findings suggest that managers currently find themselves wrestling with a series of conundrums. Although this is nothing new for managers, it is not quite what the management pundits lead them to expect. Instead of offering ‘fixes’ for their problems that pay minimal attention to the problems of implementation, we believe that more attention should be given to the limitations of the ‘solutions’. Not only would this more adequately prepare managers for the realities of ‘the new organization’ and ‘the new managerial workf3 it would also encourage a more questioning and selfcritical attitude that, in principle, would increase the selfconfidence and practical capabilities of management as it reduced dependence upon the simplistic fixes peddled by the gurus.
‘What our framework has really done is to remind the world of professional managers that “soft is hard”. It has enabled
Researching
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rather shadowy nature of change implementation. In addition to a survey of major UK companies to discover how their management practices had changed during the 198Os, we have conducted a series of in-depth interviews with senior managers in a sample of these companies. Results drawn from the larger survey, in which a majority of the Times 600 companies were contacted, have increased our confidence in the representativeness of the interview responses. Although the evidence we present is necessarily limited by the space available, it is based upon careful scrutiny and analysis of our interview transcripts.
midrile managers are quite capable of taking on more responsibility. It’s the board who don’t want to give it away . . Right now it’s the biggest challenge necessary to implement all this good stuff we’re talking about. It has to staff iu; the boardroom. Wherever uncertainties and anxieties arise, an opportunity exists for ‘experts’ to provide lucrative counselling and direction. In response to the unprecedented pressures for change that now face corporate managers, ‘gurus’ have emerged and multiplied to provide manager:; with advice on how to meet and beat the challenge. These experts have produced a chorus of prescriptions thal inter alia urge the development of more flexible forms of organization, the strengthening of corporate culture and the determination to make continuous improvements in the quality of products and services. At the heart of such prescriptions is the recommendation that reliance upon ‘hard’, rational, mechanical techniques of management and organization should be moderated by a greater use of ‘soft’, intuitive, organic met hods of management.
AND THE ‘NEW MANAGERIAL
Instead of a mechanistic reliance upon rules and procedures, the new organization is built, and depends upon, the commitment of all staff to shared values. The organic network, rather than rigid hierarchy, is the central organizing principle. The expense and cumbersomeness of hierarchy can be avoided once employees have absorbed, and become committed to, the core values of the organization. These values, rather than inflexible and quickly outdated regulations, guide employees to form and reform the collaborative
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Past reliance upon
Future emphasis
Universal laws (e.g. span of control)
Appreciation contingency
Hierarchical control dependent upon chain of command
Organic commitment dependent upon effective development of human resources
Discipline imposed management
Self-discipline learned by employees and facilitated by managers
by
upon
of and ambiguity
Fragmented, mechanistic, directive approach to problem solving
Holistic, recursive participative approach problem solving
Single-function
specialists
Multi-functional
Job description set tasks and responsibilities
comprising
Fluid series of continuously reviewed and renegotiated assignments
to
teams
Ggure 1 The Intended Path of the New Wave of tlanagement Theory and inter-departmental teams and networks Irough which the mission of the organization is lalized. A number of these projected developments are ummarized in Figure 1. Itra-
v’ith this new form of organization comes a new kind f management. Managers are no longer required to evelop and enforce the rules which control a recalci.ant workforce. When employees are self-disciplined, nd no longer require a narrow ‘span of control’ to nsure their compliance with company requirements, :vels in the hierarchy can be substantially reduced, if ot entirely abandoned. In this new organization, the ?sponsibility of the managers who remain employed i to act as ‘facilitators’ who ensure that the staff are fully quipped, materially and educationally, to work organially - for example, by developing new project teams lat exploit emergent opportunities - and are thereby nabled to develop synergies and deliver their commitrent to the organization. Managers then become 2sponsible for achieving this result, and are rewarded ccordingly, and not just on the basis of their formal osition. he new organization demands new forms of manaerial work. A reliance upon formal position within the ierarchy is supplanted by demonstrated ability to tcilitate collaborative activity and innovation that is ross-functional and interdepartmental. Functional pecialisms and boundaries are increasingly viewed as n obstacle to the close cooperation and mutual underanding needed for effective project management and novation. Associated with these developments is a ew of staff as customers of each other’s services. There then an emphasis upon the level and quality of ervice’ provided by a manager to his or her staff. There also a trend to measure and evaluate such services 1terms of the value-added provided by management ,ecialists. ommand is replaced by consent, as the key to corJrate success is the development of employees capable 456
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of responding, with the minimum of managerial direction, to emergent opportunities and threats. Complying with established practice and conforming to established codes &‘-conduct is no longer a low risk strategy for achieving recognition and promotion. Instead, advancement comes to depend upon the demonstration of skills that empower, energize and support staff in continuously producing and refining quality products and services. The increasingly interdependent relationship between staff means that the performance of individual managers rests increasingly upon a capacity to mobilize contributions from staff over whom there is no formal reporting relationship. The key issue is not so much the manager’s position in the hierarchy as his or her membership of relevant networks, combined with the interpersonal and political skills in building and using strategic alliances within and across organizations. ‘In the emerging organization, managers add value by deal making, by brokering at interfaces, rather than by presiding over their individual empires Executives must be able to juggle a set of constituencies rather than control a set of subordinates. They have to bargain, negotiate, and sell instead of making unilateral decisions and issuing commands,’ Rosabeth Moss Kanter, The New Managerial Work
This is a potentially bewildering world in which old certainties associated with the prerogative of rank and the authority of expertise no longer provide a reliable basis for action (or compliance). In the effort to eliminate rigidities and improve responsiveness, it would seem that almost everything has now become flexible and negotiable. People are increasingly valued for their contribution in unsettling conventions and rigidities that are deemed to be counterproductive for stimulating innovation and enhancing competitiveness. Managers and employees are no longer urged to strive for ‘excellence’. Instead, they are exhorted to ‘cherish impermanence’ and ‘thrive on chaos’.4
Wrestling with the Practicalities the big thing zoas competitive pressure, particularly from ;he Japanese, and that meant we had to look at different zoays of doing business and a different approach (Finance Director, Manufacturing Company). In our case study interviews with senior managers, there was a widespread feeling that major shifts are occurring in their environment; and that the survival of their organizations would depend upon developing ‘a different approach’ to managing people and change. In the manufacturing sector, an intensification of international competition was often cited as the chief motor of change, with Japanese practices frequently being identified as models to be emulated or beaten. But, at the same time, it was recognized that these practices required adaptation in a different cultural context. For example,
a director
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for quality
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commented that his company is seeking to ‘put in a culture that’s very similar to the Japanese’ but which is also different insofar as it includes lots of profit and loss centres that are intended to ‘release the entrepreneurial spirit’ of individual UK employees. In this bray, the intention is to compensate for the comparative lack of collectivist discipline amongst the UK workforce bl. exploiting the competitive advantage that derives from their individualism. However, this director also admitted his uncertainty about the practicality of this policv: ‘Now how you pull that off, I don’t know’.
more layers of co-ordinating
I
Many companies are currently struggling to push through a transformation of systems and human resource management in an effort to realize the new philosophy. At the same time, while lip service is paid to ensuring the integrity of the new philosophy, many contradictory values and practices are retained. Functional specialisms are guarded; hierarchical position continues to be privileged; established allegiances are preserved. In short, the ‘command-and-control’ organization often lives on beneath the shining surface of ‘the new organization’.
Services).
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Command-and-control organization is frequently still lurking in newly ‘empowered’ companies
Manufacturing).
it’s just the practical application I’m worried about. 1 don’t mind em/Jowering people so long as we actually train them to get a bt?ter answer before they’re let loose (Customer Services
ELJRoPE,AN
Tom Lester,
Our main response . . has been structural [but] you can’t actually tackle that on its own because if you just change structure without tackling a number of other key issues, then you’ll fall over. And we did something about culture, and once you do something about culture you‘ve got to look at your personnel systems. You’re going to need new pay systems, new performance appraisal systems, and you have to change all those as well (Employee Relations Director,
1 llllue no problem with the idea of empowerment,
This comment also draws attention to the complex conditions and consequences of implementing ‘the new organization’. Among the managers we interviewed, there was a widespread acceptance of the need to change and of the necessity of developing a new approach or ‘paradigm’ right across their organizations. But, at the same time, there was a sense in which the shi tt of paradigm might endanger positive qualities such as pride and loyalty - without effectively engendering new ones. There was a fear that, paradoxically, thy push for ‘empowerment’ and ‘commitment’ might actually weaken established expressions of loyalty wit Ilout replacing them with a more robust and effective altc2rnative.
management.
A major difficulty is that ‘the new organization’ is designed to work as a total package. But transforming the existing organization from ‘command-and-control’ to ‘facilitate-and-empower’ does not happen overnight. In principle, it is necessary to work on changing all aspects of an organization simultaneously in the same direction. In practice, it is necessary to start somewhere; and yet the full rewards of making this start are unlikely to be reaped until substantial changes have been introduced elsewhere. Perhaps because changing the structure is most familiar to ‘command-and-control’ cultures, it was here that many of our case study companies had started. However, to make structural change effective, it was either recognized or discovered that a number of other issues had to be addressed first. But to tackle these issues effectively was difficult without changing the structure:
That the idea of ‘empowerment’ is used to justify tighter management control is not surprising, given the anxieties among managers that any other form of empowerment can fuel. ‘Empowering’ employees is all very well so long as they act in ways that are acceptable to [management - a concern that becomes more critical for managers when their rewards become more closely linked to the performance of their staff. This anxiety was voiced by a number of our interviewees, and was summed up by the view that:
Financial
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Fewer managers are needed, and their roles, too, must change. The problem is how to fit such individual empower-
B) no means all our case study companies were preoccupIed with international competition. The Financial Services companies, in particular, were more concerned with new entrants that ‘haven’t got the fat on them’, as one MD put it. In his company, the superior use of financial and management information by major competitors led to the implementation of a productivity and eftectiveness programme designed to increase the extent of management by information. In this example, the installation of ‘fundamentally a very simple work mrasurement system’ was said to ‘empower’ managers by requiring them to quantify the contribution of their staff against planned improvements in performance. In sul-h cases, the rhetoric of new management theory is deployed to describe what might otherwise be interpn.lted as a typical case of ‘command-and-control’ in wllich bureaucratic systems are introduced to direct effort and raise productivity.
M‘lnager,
AND THE ‘NEW MANAGERIAL
There seem to be two major reasons for this. The first reason is practical: it is simply inordinately difficult to change everything at once. But the second reason is political: such change is painful and resisted because, initially at least, it increases uncertainty and insecurity. Until the new methods are fully installed and institutionalized, there is a sense of loss before there is any equivalent sense of gain. Moreover, this sense of loss is also accompanied by disillusionment as expectations about the new systems are not fulfilled: employees’ expectations of increased independence and freedoms
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are met by the experience of increased accountability horizontally as well as vertically. The increased attention given to accountability in ‘the new organization’ was another strong theme of our interviews: We’re trying to get away from rigid structure, but you can’t just give everybody sort of carte blanche to do their own thing. So 1 mean you have to have some bo~nda~ conditions again . . * The empowerment has to go with some accountability. You‘ve got to accept the acco~rztabi~~ty(Finance Director, Manufacturing). Whereas encouragement to move in the direction of more organic methods of organization was often associated with increased anxiety, arguments mobilized in support of maintaining aspects of the status quo, albeit dressed in the language of ‘the new philosophy’, revealed a certain fondness for the regularities of the old organization. Whilst people may, potentially, ‘enjoy having a bit more control over their own destiny and their own day to day roles and responsibilities’ (Finance Director, Manufacturing), they are even keener to maintain control over the destiny, roles, and responsibilities of others. For many managers, including many of those occupying very senior positions, preserving this basis of their authority continues to be seen as the principal means of protecting the relative freedom they have enjoyed in the past. It is for this reason that practices which support and sustain such an orientation are proving difficult to change. As another of our interviewees diagnosed the problem, ‘people who don’t want to work that way take some time to convince; and it’s management’s willingness to let go’.
Interpreting
the Evidence
There are a number of ways in which our evidence may be interpreted. Before elaborating our own understanding of their meaning and significance, we briefly outline a number of alternative interpretations. In essence, our explanation departs in two fundamental ways from other influential commentaries. First, it acknowledges a stronger insight into the limitations of ‘the new management theory’ than is allowed by the leading pundits of management. Second, we develop and amplify this insight to suggest that the practical realization of ‘the new organization’ is impeded by the contradictory demands that it makes upon employees, including management. These demands, we submit, are not adequately analysed as manifestations of universal paradoxes of organization. In addition, it is necessary to understand how universal problems are compounded as well as tempered by institutionalized inequalities of power and opportunity. One way to interpret our evidence is in terms of ‘teething troubles’ that inevitably accompany any process of change or maturation in which established routines are superseded by more effective modes of organization. Without denying that this is the case, such an interpretation overlooks important differences between natural and social processes. Whereas the former are 458
driven by impersonal forces, the latter are negotiated by esssentially political concerns and objectives in which different groups and classes of people persuade or coerce others to fulfil their will and preserve their privileges. Insofar as ‘teething troubles’ exist, they are as much a product of the political recalcitrance of human beings as they are the outcome of natural or technical difficulties in achieving change. Another interpretation ascribes the difficulties to a lack of knowledge about how to manage change successfully. This explanation accepts that managing change is ‘political’. But it also assumes that the division between managers and managed is functional. This assumption is maintained even when, as in ‘the new these divisions are simultaneously organization’, regarded as a major source of ineffectiveness. From this perspective, difficulties encountered in implementing ‘the new organization’ are ascribed to the inadequate understanding and/or education of managers. For example, in presenting a few companies as shining examples of ‘excellence’, Tom Peters has implicitly castigated the managers of the vast majority of companies that do not exemplify the eight attributes of excellence, such as ‘bias for action’ and ‘hands-on, value driven’. More recently, in response to the decline of many of his excellent companies, Peters has revised his message. Pursuing the attributes of excellence is no longer the mark of a competent manager because ‘Excellent firms don’t believe in excellence - only in constant improvement and change’.5 In a similar vein, Richard Pascale has recently castigated managers for becoming ‘management gimmick junkie@ who are constantly moving from one management fad to the other in search of a corporate nirvana that never materialises. Conveniently overlooking his own leading role in developing and feeding this market, Pascale now urges managers to rely more on their own experience and intuition, and to learn from failures and disappointments by critically examining, unfreezing and abandoning fixed, unviable perceptions and paradigms of what is ‘right’, ‘wrong’ or ‘impossible’. Failures to realize ‘the new organization’ are thus attributed to the defective mindset of managers and can be corrected by replacing it with one most directly exemplified by managers at Honda who embody the ‘magic’ of ‘the new organization’.7 Again, it is not necessary to dismiss the idea that there is considerable scope for managers to shift their attitude towards processes of management and change. However, it is potentially misleading and dangerous to imply that the difficulties of management arise exclusively, or even predominantly, from a lack of relevant education or a deluded attitude. It is misleading because it takes little or no account of the specific historical and institutional context of management who are faced with the politics of management. In common with many other contemporary management gurus, Pascale assumes that the practical difficulties encountered in creating ‘the new organization’ can be overcome by adopting a favoured
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recipe which, in his case, takes the form of a mindset that effectively juggles the contradictory demands of a need for consistency and continuity, a need for diversity and innovation and a need for the renewal produced b! constructive tension and conflict. This interpretation adeptly represents conflict as a functional feature of organizational Iife - so long as it is managed effectively by a mindset that ‘looks to the tension (or dynamic synthesis) between contradictory opposites as the engine of self-renewal’. What it overlooks is the dependence of managers upon other employees and the associated difficulty of making them aclrept, and be committed to, the ‘solutions’ generated by ‘the new minds&‘. In the Japanese context, this may be comparatively effortless and uncomplicated insofar as employees are culturally trained to respect authority and celebrate their loyalty to their employer. However, as a number of our interviewees noted, in the West a very different kind of cultural training has developed in which individualism is celebrated and respect for authority is in short supply. At the very most, managers might hope to achieve either a compliant conformity to their requirements or, alternatively, a highly selective, instrumental and conditional form of commitment to corporate objectives. In this respect, our interviewees often demonstrated a kecsner sense of the realities of implementing ‘the new organization’ than the pundits who are urging its development. Of course, some managers were at an early stage on the learning curve and were struggling to grasp the nature and scope of the changes. Many others had got to the point of accepting the need for m,llor changes, but were deploying the language of the nejv management theory - networking, empowerment, qu,llity-driven, etc. - to describe quite conventional programmes of change. Among these, there was often a conscious acknowledgement of how the appeal of concepts like ‘empowerment’ was being used to induce anti justify command-and-control type changes: Micr’z~introduced multiskilling which is, if seems to me from a 1-1 ~tic~~l poinf of view, more training of people who are framed as t ~e~iri~i~ns~or zuhat~er, fo iegrn how fo ,vffinf (Financial Co:ttrolIer, Manufacturing). lY~,‘ue,yradually given them bigger and bigger areas so if one gu,:, has trouble in his aren we expect another guy to go and ass/St him there. And we used a lot of fhe safety arguments for rhaf of course, you know, fhey had to help each other (C?ilerations Manager, Manufacturing). In ;:eneral, there was a reluctance to dilute or weaken hierarchical control. Sometimes this took the form of outright rejection of the new management theory - as imj~ractical and airy fairy. More often, the response was to ilccommodate it either by deploying it highly selecth,t Iy and/or by adopting its rhetoric to push through ch‘tnge that, at best, could be seen as an incremental rntrv\ e in the direction of ‘facilitate-and-empower’. In this ~a\‘, managers could appear to be ‘progressive’ whilst
simultaneously preserving a ‘command-and-control’ structure. And, when pressed, favouring an approach which could be described either as ‘sensible and cautious’ or ‘cynical and self-serving’ was justified in terms of the need to retain control, in the form of accountability: 1 think making people a~counfable and spreading decision ?7zakin~~ around in a confrulled inner is good for the con~~~zy. [But] some people have struggled with if because they’ve thought that they were moving for independence and then find fhaf they don’t have that decision making independence (Financial Controller, Extractive Industry).
I
redeeming career devel@p~ent in terms uf collective performance is unlikely to appeal to Western individualism
What our interviewees understood better than the management pundits is the basic conflict of interest between employees, conditioned by the values of individualism, who would prefer ‘carte blanche to do their own thing’ and the accountability of managers to shareholders for delivering profitable growth. In the Japanese context, where there is a cultural tradition and a national industrial strategy supporting lifetime employment in the major companies, developing loyalty and commitment amongst employees is comparatively easy. In this situation, accountability is ensured through a combination of the individual’s material dependence upon the employer and the confirmation of cultural identity that follows from pursuing corporate objectives. In contrast, in the West, the individual employee is induced to work, in substantial part, by market forces and, ultimately by the threat of unemployment. Conversely, employees with scarce skills can make greater demands upon the employer to moderate pressures for increased empowerment and/or accountability. Common ground is found by linking improved job security and career advancement with productivity and added value. But this coincidence of interest is precarious, precisely because collective effort is fashioned through individual inducement. The contradictions involved in appealing to individualism to increase collective exertion were clearly signalled by a number of our interviewees who, nonetheless, were pressing ahead with new forms of performance appraisal and systems of reward: If you really want to move to a remunerafion system fhaf says ‘Look 1 only succeed if the company succeeds’, you want to go to a salesman and fell him that you pay him if the company succeeds, not if he gets orders (Systems and Quality Director, Manufacturing). Salespersons are perhaps exceptionally concerned with individual performance and reward. However, the idea that reward should be linked to collective performance, over which individual employees have little influence,
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rather than individual contribution much support among employees culture of individualism.
is unlikely to find conditioned by a
One response to this, favoured by a number of influential management gurus, is to ‘change the culture’. However, given the culture of individualism, enthusiasm for cultural change is unlikely to be great unless it is lubricated by individual inducement and reward which, of course, feeds the established culture of individualism. Only in green field sites, where unemployment is high, where there is an opportunity to recruit and train workers with family responsibilities and without much industrial experience and where comparatively high wages reduce turnover, is there a strong prospect of successfully implementing ‘the new organization’ in anything like a ‘pure’ form. Although I’ve alzoays seen the sense in restructuring . I think going from a total functional company that was not working well to a total line was too much of a jump (Interviewed Manager). There are examples of ‘successful’ programmes of change in which, for example, employees are encouraged to see their career development less in terms of movement up the ladder than as the development of skill through movement sideways or even downwards. But even where recession limits career opportunities within and between companies, such efforts to redefine career development are unlikely to be greeted with any enthusiasm. As one of our interviewees commented, ‘With the increase in teamwork, we see the future more as development through jobs . . . but it’s very difficult’. And, once the climate changes, minimal compliance with such changes is likely to mutate into overt resistance.
Conclusion There is strong evidence in UK companies of managers’ knowledge of, and espoused commitment to, changes in management practice advocated by the gurus of ‘the new organization’. At the same time, many of the managers we interviewed displayed a keener understanding of the limitations of the new theory and of the difficulties of implementing its prescriptions than is acknowledged by its leading proponents. In part, this can be explained in terms of managers’ resistance to abandon or dilute established structures and values that secure their position of authority. Such an explanation is necessary, but it is also insufficient. In addition, it is important to connect managers’ scepticism and resistance to the new management theory to their keen grasp of its limited practicality. Not only may its introduction undermine the degree of co-operation and trust generated by the predictability and coherence of the command-and-control approach where, for example, their area of responsibility is more clearly demarcated and demands to be innovative, proactive and/or collaborative are minimal. But, more importantly, 460
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it may be fundamentally values.
in conflict with basic employee
At best, cultural change programmes can hope to induce employees to manage the appearance of operating a facilitate-and-empower philosophy if this is calculated by the individual employee to increase his or her job security, job satisfaction or career prospects. At worst, implementation of ‘the new organization’ without regard for the contradiction between corporate demands and employee values is likely to produce incoherence, confusion and resistance. In which case, even the best laid plans supported by generous resources will come to grief - in the form of widespread demoralization and cynicism. Managers are right to be sceptical and cautious about the claims that are made for ‘the new organization’ and ‘the new managerial work’. Its basic fallacy is to assume that, in a capitalist economy, a coincidence of interest between employers and employees can be contrived through the adoption of a different philosophy or mindset. In Japan, something that approximates to this ideal has been achieved. But the success of the Japanese is largely an unintended product of a distinctive cultural tradition and a singular institutional structure. As one of our interviewees astutely noted ‘you can’t replicate the Japanese culturally’. It is foolhardy to believe that practices that work well in Japan can be transplanted into the West. To a limited extent, this transplant is possible in the case of techniques, such as kanban, which can be successfully introduced, though never optimized, without necessitating a broader cultural change. As the experience of many of our interviewees has shown, translating the ideals of the new management theory into practical realities is not simply difficult but potentially counterproductive. Which is not to say that the new theory is useless. However, it is perhaps more persuasive in its exposure of the problems in the ‘command-and-control’ approach to management than it is convincing in its claims that a philosophy of ‘facilitate and empower’ can be ‘put in’ as a more effective replacement. As we have stressed, a good number of our interviewees were sceptical about the claims of the new management theory. But, even those who expressed some scepticism were seemingly content to diagnose teething problems in implementing ‘the new organization’ as symptomatic of insufficient corporate commitment to its prescriptions, rather than a result of adopting an approach that is based upon a very superficial, though highly seductive, appreciation of the cultural and political conditions of change. For those concerned with the performance of UK companies, there are clearly grounds for disquiet about a minority of companies where the adoption of the new management theory is uncritical and therefore obsessive. But this concern should perhaps be extended to companies where scepticism has yet to produce a sustained and articulate diagnosis and critique of the limitations of the new management theory. MANAGEMENT
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Acknowledgement Weacknowledge the support
4.
of the Chartered Institute of Management Accountants for funding the research project from which the empirical material is drawn.
Notes 1
2
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P. Drucker, ‘The Coming of the New Organization’, Business Review, January-February, 1988, pp. 45-53. op. cit., p. 50. R. Kanter, ‘The New ManagerialWork’, Harvard Business Review, November-December, 1989, pp. 85-92.
hazard
5. 6. 7.
‘I’. Peters, Thriving on Chaos (London: Pan, 1989), p. 4. In a similar vein, R. Pascale’s Managing on the Edge (Harmondsworth: Penguin) questions the wisdom of relying upon the recipes of management gurus as he argues for (the recipe of) developing ‘a new mindset’ that is capable of appreciating and exploiting the value of paradox and ambiguity. Instead of relying on passion or ‘gut feeling’ (cf. T. Peters and N. Austin, A Passion for Excellence), Pascale urges ‘executives to make decisions of the moment that “feel” wrong, but that are ultimately right’ (p. 34). T. Peters, op. cit., p. 4. R. Pascale, Managing on the Edge (Harmondsworth: Penguin), p. 21. Op. cit., pp. 25-27.
SIMON LILLEY, Glasgow Business School, Department of Management Studies, 53-59 Southpark Avenue, Glasgow G12 8LF
MAHMOUD EZZAMEL, Manchester School of Management (UMIST), P. 0. Box 88, Manchester M60 ZQD Dr. Etsamel is Price Waferhouse professor of Accounting and Finance at Manchester School of Management (UMIST). His research interests span the interface between management uc(~ounting, organi~tion theory and urgani~tion form, management accounting and the new information technology, accounting and resource allocation in universities, and the structure of the UK audit market. A recent publication is Business Units and Divisional Performance Measurement, Academic Press, 1992.
Dr. Simon Lilley is Lecturer in Organizational Behaviour at Glasgow Business School. He was previously ESRC Management Teaching Fellow, Management lnfo~ation Systems and Accounting at UM~ST Manchester School of Management. His current teaching/research interests include the relationships between power, knowledge, information and organization implicated in the realization of managers, management and manageable enferprises, accounfing info~ation systems, executiue info~ation systems, and the role played by computerized information systems in shifting patterns of organizational control. HUGH WILLMOTT, Manchester School of Ma~gement ~~M~ST~, P.O. Box 88, Manchester M60 ZQD
Dr. Willmott is Reader in Organizational Analysis at Manchester School of Management ~UM~ST~.His research includes changing organization of managerial work, organizafion and developmenf of management specialisms, use of information and communication technologies in organizations‘ and regulation of accounting indust~. He is associate editor of Gender, Work and Organization.
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Journal Vol. 12, No. 4, pp. 454-461, 1994 Copyright 0 1994 Elsevier Science Ltd Printed in Great Britain. All rights reserved 0263-2373194 $9.50+0.00
0263-2373(94)00048-4
The ‘NewOrganization’ and the ‘NewManagerial Work’ MAHMOUD EZZAMEL, Price Waterhouse Professor of Accounting, Manchester School of Management (UMIST); SIMON LILLEY, Lecturer in Human Resource Management, University of Glasgow Business School; HUGH WILLMOTT, Reader in Organizational Analysis, Manchester School of Management (UMIST) Managers are currently exhorted by ‘gurus’ to adopt new management thinking in the face of obvious rapid change and uncertainty. In essence, the new thinking advocates shifting from ‘command-andcontrol’ to ‘facilitate-and-empower’ forms of organization and work. In a survey of senior managers from a sample of the Times 600 companies, Mahmoud Ezzamel, Simon Lilley and Hugh Willmott show that UK managers are indeed aware of major shifts occurring in their environment, and accept the need for change. But the managers point to difficult cultural barriers in attempting to implement the ‘new organization’ and the ‘new managerial work’. The authors concur with the managers’ scepticism about claims made for the new management theory. The practical problems in implementing the theory are underestimated, and there are flaws in the theory itself, e.g. the assumption that employers and employees’ interests can be made to coincide by inducing them to adopt a different philosophy or mindset.
You ‘11find a lot of companies, BP and people, are all finding tke same problem. They’ve got a very fumtional systems environment which is not conducive to efficient running (Director, Manufacturing). Managers are currently struggling to meet the challenge of a marked acceleration in the pace of change and associated levels of uncertainty. This has been fuelled by a conjunction of factors. Amongst these are the rapid globalization of markets, the volatility of currency movements, the diffusion of information and communication technologies, government policies in support privatization, deregulation and a widespread emphasis upon improvements in quality, attentiveness to addedvalue and the pursuit of value-for-money. Together, these factors have combined to intensify competition 454
EUROPEAN
and stimulate pressures for a major transformation organization and management.
in
Setting this transformation in its historical context, Peter Drucker’ has suggested that management is now entering a third phase of development. The first phase occurred with the separation of ownership and control, when shareholders appointed a separate cadre of experts to manage their interests. The second phase involved the introduction of administrative techniques and systems to plan corporate development, manage complexity and monitor the operational achievement of policy objectives; and it culminated in the restructuring of large companies into multidivisional forms. The third, contemporary phase is characterized by Drucker as the shift from a command-and-control approach to management towards an information-based organization in which reliance upon the vertical and horizontal partitioning or organizations into departments and divisions is weakened by the development of cross-functional teams and task forces to tackle problems and exploit opportunities. This latest phase in the development of management is seen to demand greater self-discipline and individual responsibility for managing relationships and communications. The change from ‘command-and-control’ to what might be termed ‘facilitate-and-empower’ is also recognized to pose a threat to those whose jobs, status and career opportunities are lodged in the perpetuation of the old, ‘second stage’ mode of management and organization. According to Drucker, those most threatened by the change, are ‘the middle aged people in middle management who tend to be the least mobile’.2 But, of course, it is precisely those occupying the middle layers of management who are expected to implement ‘the new organization’. However, our interview data suggests that middle managers can be used as scapegoats by more senior managers who got to the top precisely because they are skilled at operating in a command-and-control world. For example, a Director in a Manufacturing company expressed the view that: MANAGEMENT
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THE ‘NEW ORGANIZATION’
I
organization can be managed.’ Tom Peters and Robert Waterman, In Search of Excellence (1982)
Exhortations by management pundits and gurus are inv;iriably met with a degree of scepticism from managers: practising managers are not slow to identify weaknesses in their assertions, especially when the changes urged unsettle or directly threaten their job security or career prospects. However, the intensity of pressure on senior managers to survive in a hostile market place has rendered them more amenable (or vulnerable) to the diagnoses and prescriptions of the ‘experts’. Under pressure to demonstrate their concern and capacity to be proactive, managers have sought the advice of consultants who, in response to this demand, havt> absorbed or adapted the teachings of the gurus. Alternatively, they have at least flirted with the recipes of the new management theory in an effort to adapt their organizations to rapidly changing and unpredictable market conditions.
Our research EUR(?“Er\N
New Organization, New Management During the 1980s a new wave of management thinking has developed that questions much of the received wisdom about how to organize and manage effectively. In particular, the merits of bureaucratic structure and hierarchical control have been challenged. They are criticized for their cost, lack of responsiveness and deadening effect upon employee initiative and productivity. Horizontal divisions between departments as well as layers of hierarchy are seen to inhibit effective communication, create unnecessary managerial overhead. Most crucially, established practices are seen to constrain the speed and quality of responsiveness to changing conditions. a leaner, more creative and adaptive form of organization is commended.
the Practicalities
The1.e is now an enormous literature dedicated to teaching (and reassuring) managers that strategic change can be successfully managed by adopting the recommended reciI)e. There is also a dearth of independent research that examines the practical difficulties and dilemmas associated with the adoption of such recipes. The problem is compounded by the understandable desire of managers and consultants to represent their efforts as ‘
MANAGEMENT
to shed some light upon the JOURNAL
Managers should focus on the limitations of ‘solutions’ to problems offered by management gurus, and avoid the ‘quick fix’
Our preliminary findings suggest that managers currently find themselves wrestling with a series of conundrums. Although this is nothing new for managers, it is not quite what the management pundits lead them to expect. Instead of offering ‘fixes’ for their problems that pay minimal attention to the problems of implementation, we believe that more attention should be given to the limitations of the ‘solutions’. Not only would this more adequately prepare managers for the realities of ‘the new organization’ and ‘the new managerial workf3 it would also encourage a more questioning and selfcritical attitude that, in principle, would increase the selfconfidence and practical capabilities of management as it reduced dependence upon the simplistic fixes peddled by the gurus.
‘What our framework has really done is to remind the world of professional managers that “soft is hard”. It has enabled
Researching
WORK’
rather shadowy nature of change implementation. In addition to a survey of major UK companies to discover how their management practices had changed during the 198Os, we have conducted a series of in-depth interviews with senior managers in a sample of these companies. Results drawn from the larger survey, in which a majority of the Times 600 companies were contacted, have increased our confidence in the representativeness of the interview responses. Although the evidence we present is necessarily limited by the space available, it is based upon careful scrutiny and analysis of our interview transcripts.
midrile managers are quite capable of taking on more responsibility. It’s the board who don’t want to give it away . . Right now it’s the biggest challenge necessary to implement all this good stuff we’re talking about. It has to staff iu; the boardroom. Wherever uncertainties and anxieties arise, an opportunity exists for ‘experts’ to provide lucrative counselling and direction. In response to the unprecedented pressures for change that now face corporate managers, ‘gurus’ have emerged and multiplied to provide manager:; with advice on how to meet and beat the challenge. These experts have produced a chorus of prescriptions thal inter alia urge the development of more flexible forms of organization, the strengthening of corporate culture and the determination to make continuous improvements in the quality of products and services. At the heart of such prescriptions is the recommendation that reliance upon ‘hard’, rational, mechanical techniques of management and organization should be moderated by a greater use of ‘soft’, intuitive, organic met hods of management.
AND THE ‘NEW MANAGERIAL
Instead of a mechanistic reliance upon rules and procedures, the new organization is built, and depends upon, the commitment of all staff to shared values. The organic network, rather than rigid hierarchy, is the central organizing principle. The expense and cumbersomeness of hierarchy can be avoided once employees have absorbed, and become committed to, the core values of the organization. These values, rather than inflexible and quickly outdated regulations, guide employees to form and reform the collaborative
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AND THE ‘NEW MANAGERIAL
Past reliance upon
Future emphasis
Universal laws (e.g. span of control)
Appreciation contingency
Hierarchical control dependent upon chain of command
Organic commitment dependent upon effective development of human resources
Discipline imposed management
Self-discipline learned by employees and facilitated by managers
by
upon
of and ambiguity
Fragmented, mechanistic, directive approach to problem solving
Holistic, recursive participative approach problem solving
Single-function
specialists
Multi-functional
Job description set tasks and responsibilities
comprising
Fluid series of continuously reviewed and renegotiated assignments
to
teams
Ggure 1 The Intended Path of the New Wave of tlanagement Theory and inter-departmental teams and networks Irough which the mission of the organization is lalized. A number of these projected developments are ummarized in Figure 1. Itra-
v’ith this new form of organization comes a new kind f management. Managers are no longer required to evelop and enforce the rules which control a recalci.ant workforce. When employees are self-disciplined, nd no longer require a narrow ‘span of control’ to nsure their compliance with company requirements, :vels in the hierarchy can be substantially reduced, if ot entirely abandoned. In this new organization, the ?sponsibility of the managers who remain employed i to act as ‘facilitators’ who ensure that the staff are fully quipped, materially and educationally, to work organially - for example, by developing new project teams lat exploit emergent opportunities - and are thereby nabled to develop synergies and deliver their commitrent to the organization. Managers then become 2sponsible for achieving this result, and are rewarded ccordingly, and not just on the basis of their formal osition. he new organization demands new forms of manaerial work. A reliance upon formal position within the ierarchy is supplanted by demonstrated ability to tcilitate collaborative activity and innovation that is ross-functional and interdepartmental. Functional pecialisms and boundaries are increasingly viewed as n obstacle to the close cooperation and mutual underanding needed for effective project management and novation. Associated with these developments is a ew of staff as customers of each other’s services. There then an emphasis upon the level and quality of ervice’ provided by a manager to his or her staff. There also a trend to measure and evaluate such services 1terms of the value-added provided by management ,ecialists. ommand is replaced by consent, as the key to corJrate success is the development of employees capable 456
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of responding, with the minimum of managerial direction, to emergent opportunities and threats. Complying with established practice and conforming to established codes &‘-conduct is no longer a low risk strategy for achieving recognition and promotion. Instead, advancement comes to depend upon the demonstration of skills that empower, energize and support staff in continuously producing and refining quality products and services. The increasingly interdependent relationship between staff means that the performance of individual managers rests increasingly upon a capacity to mobilize contributions from staff over whom there is no formal reporting relationship. The key issue is not so much the manager’s position in the hierarchy as his or her membership of relevant networks, combined with the interpersonal and political skills in building and using strategic alliances within and across organizations. ‘In the emerging organization, managers add value by deal making, by brokering at interfaces, rather than by presiding over their individual empires Executives must be able to juggle a set of constituencies rather than control a set of subordinates. They have to bargain, negotiate, and sell instead of making unilateral decisions and issuing commands,’ Rosabeth Moss Kanter, The New Managerial Work
This is a potentially bewildering world in which old certainties associated with the prerogative of rank and the authority of expertise no longer provide a reliable basis for action (or compliance). In the effort to eliminate rigidities and improve responsiveness, it would seem that almost everything has now become flexible and negotiable. People are increasingly valued for their contribution in unsettling conventions and rigidities that are deemed to be counterproductive for stimulating innovation and enhancing competitiveness. Managers and employees are no longer urged to strive for ‘excellence’. Instead, they are exhorted to ‘cherish impermanence’ and ‘thrive on chaos’.4
Wrestling with the Practicalities the big thing zoas competitive pressure, particularly from ;he Japanese, and that meant we had to look at different zoays of doing business and a different approach (Finance Director, Manufacturing Company). In our case study interviews with senior managers, there was a widespread feeling that major shifts are occurring in their environment; and that the survival of their organizations would depend upon developing ‘a different approach’ to managing people and change. In the manufacturing sector, an intensification of international competition was often cited as the chief motor of change, with Japanese practices frequently being identified as models to be emulated or beaten. But, at the same time, it was recognized that these practices required adaptation in a different cultural context. For example,
a director
MANAGEMENT
with responsibilities
JOURNAL
for quality
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THE ‘NEW ORGANIZATION’
commented that his company is seeking to ‘put in a culture that’s very similar to the Japanese’ but which is also different insofar as it includes lots of profit and loss centres that are intended to ‘release the entrepreneurial spirit’ of individual UK employees. In this bray, the intention is to compensate for the comparative lack of collectivist discipline amongst the UK workforce bl. exploiting the competitive advantage that derives from their individualism. However, this director also admitted his uncertainty about the practicality of this policv: ‘Now how you pull that off, I don’t know’.
more layers of co-ordinating
I
Many companies are currently struggling to push through a transformation of systems and human resource management in an effort to realize the new philosophy. At the same time, while lip service is paid to ensuring the integrity of the new philosophy, many contradictory values and practices are retained. Functional specialisms are guarded; hierarchical position continues to be privileged; established allegiances are preserved. In short, the ‘command-and-control’ organization often lives on beneath the shining surface of ‘the new organization’.
Services).
MANAGEMENT
JOURNAL
Command-and-control organization is frequently still lurking in newly ‘empowered’ companies
Manufacturing).
it’s just the practical application I’m worried about. 1 don’t mind em/Jowering people so long as we actually train them to get a bt?ter answer before they’re let loose (Customer Services
ELJRoPE,AN
Tom Lester,
Our main response . . has been structural [but] you can’t actually tackle that on its own because if you just change structure without tackling a number of other key issues, then you’ll fall over. And we did something about culture, and once you do something about culture you‘ve got to look at your personnel systems. You’re going to need new pay systems, new performance appraisal systems, and you have to change all those as well (Employee Relations Director,
1 llllue no problem with the idea of empowerment,
This comment also draws attention to the complex conditions and consequences of implementing ‘the new organization’. Among the managers we interviewed, there was a widespread acceptance of the need to change and of the necessity of developing a new approach or ‘paradigm’ right across their organizations. But, at the same time, there was a sense in which the shi tt of paradigm might endanger positive qualities such as pride and loyalty - without effectively engendering new ones. There was a fear that, paradoxically, thy push for ‘empowerment’ and ‘commitment’ might actually weaken established expressions of loyalty wit Ilout replacing them with a more robust and effective altc2rnative.
management.
A major difficulty is that ‘the new organization’ is designed to work as a total package. But transforming the existing organization from ‘command-and-control’ to ‘facilitate-and-empower’ does not happen overnight. In principle, it is necessary to work on changing all aspects of an organization simultaneously in the same direction. In practice, it is necessary to start somewhere; and yet the full rewards of making this start are unlikely to be reaped until substantial changes have been introduced elsewhere. Perhaps because changing the structure is most familiar to ‘command-and-control’ cultures, it was here that many of our case study companies had started. However, to make structural change effective, it was either recognized or discovered that a number of other issues had to be addressed first. But to tackle these issues effectively was difficult without changing the structure:
That the idea of ‘empowerment’ is used to justify tighter management control is not surprising, given the anxieties among managers that any other form of empowerment can fuel. ‘Empowering’ employees is all very well so long as they act in ways that are acceptable to [management - a concern that becomes more critical for managers when their rewards become more closely linked to the performance of their staff. This anxiety was voiced by a number of our interviewees, and was summed up by the view that:
Financial
WORK’
Fewer managers are needed, and their roles, too, must change. The problem is how to fit such individual empower-
B) no means all our case study companies were preoccupIed with international competition. The Financial Services companies, in particular, were more concerned with new entrants that ‘haven’t got the fat on them’, as one MD put it. In his company, the superior use of financial and management information by major competitors led to the implementation of a productivity and eftectiveness programme designed to increase the extent of management by information. In this example, the installation of ‘fundamentally a very simple work mrasurement system’ was said to ‘empower’ managers by requiring them to quantify the contribution of their staff against planned improvements in performance. In sul-h cases, the rhetoric of new management theory is deployed to describe what might otherwise be interpn.lted as a typical case of ‘command-and-control’ in wllich bureaucratic systems are introduced to direct effort and raise productivity.
M‘lnager,
AND THE ‘NEW MANAGERIAL
There seem to be two major reasons for this. The first reason is practical: it is simply inordinately difficult to change everything at once. But the second reason is political: such change is painful and resisted because, initially at least, it increases uncertainty and insecurity. Until the new methods are fully installed and institutionalized, there is a sense of loss before there is any equivalent sense of gain. Moreover, this sense of loss is also accompanied by disillusionment as expectations about the new systems are not fulfilled: employees’ expectations of increased independence and freedoms
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THE ‘NEW ORGANIZATION’ AND THE ‘NEW MANAGERIAL WORK’
are met by the experience of increased accountability horizontally as well as vertically. The increased attention given to accountability in ‘the new organization’ was another strong theme of our interviews: We’re trying to get away from rigid structure, but you can’t just give everybody sort of carte blanche to do their own thing. So 1 mean you have to have some bo~nda~ conditions again . . * The empowerment has to go with some accountability. You‘ve got to accept the acco~rztabi~~ty(Finance Director, Manufacturing). Whereas encouragement to move in the direction of more organic methods of organization was often associated with increased anxiety, arguments mobilized in support of maintaining aspects of the status quo, albeit dressed in the language of ‘the new philosophy’, revealed a certain fondness for the regularities of the old organization. Whilst people may, potentially, ‘enjoy having a bit more control over their own destiny and their own day to day roles and responsibilities’ (Finance Director, Manufacturing), they are even keener to maintain control over the destiny, roles, and responsibilities of others. For many managers, including many of those occupying very senior positions, preserving this basis of their authority continues to be seen as the principal means of protecting the relative freedom they have enjoyed in the past. It is for this reason that practices which support and sustain such an orientation are proving difficult to change. As another of our interviewees diagnosed the problem, ‘people who don’t want to work that way take some time to convince; and it’s management’s willingness to let go’.
Interpreting
the Evidence
There are a number of ways in which our evidence may be interpreted. Before elaborating our own understanding of their meaning and significance, we briefly outline a number of alternative interpretations. In essence, our explanation departs in two fundamental ways from other influential commentaries. First, it acknowledges a stronger insight into the limitations of ‘the new management theory’ than is allowed by the leading pundits of management. Second, we develop and amplify this insight to suggest that the practical realization of ‘the new organization’ is impeded by the contradictory demands that it makes upon employees, including management. These demands, we submit, are not adequately analysed as manifestations of universal paradoxes of organization. In addition, it is necessary to understand how universal problems are compounded as well as tempered by institutionalized inequalities of power and opportunity. One way to interpret our evidence is in terms of ‘teething troubles’ that inevitably accompany any process of change or maturation in which established routines are superseded by more effective modes of organization. Without denying that this is the case, such an interpretation overlooks important differences between natural and social processes. Whereas the former are 458
driven by impersonal forces, the latter are negotiated by esssentially political concerns and objectives in which different groups and classes of people persuade or coerce others to fulfil their will and preserve their privileges. Insofar as ‘teething troubles’ exist, they are as much a product of the political recalcitrance of human beings as they are the outcome of natural or technical difficulties in achieving change. Another interpretation ascribes the difficulties to a lack of knowledge about how to manage change successfully. This explanation accepts that managing change is ‘political’. But it also assumes that the division between managers and managed is functional. This assumption is maintained even when, as in ‘the new these divisions are simultaneously organization’, regarded as a major source of ineffectiveness. From this perspective, difficulties encountered in implementing ‘the new organization’ are ascribed to the inadequate understanding and/or education of managers. For example, in presenting a few companies as shining examples of ‘excellence’, Tom Peters has implicitly castigated the managers of the vast majority of companies that do not exemplify the eight attributes of excellence, such as ‘bias for action’ and ‘hands-on, value driven’. More recently, in response to the decline of many of his excellent companies, Peters has revised his message. Pursuing the attributes of excellence is no longer the mark of a competent manager because ‘Excellent firms don’t believe in excellence - only in constant improvement and change’.5 In a similar vein, Richard Pascale has recently castigated managers for becoming ‘management gimmick junkie@ who are constantly moving from one management fad to the other in search of a corporate nirvana that never materialises. Conveniently overlooking his own leading role in developing and feeding this market, Pascale now urges managers to rely more on their own experience and intuition, and to learn from failures and disappointments by critically examining, unfreezing and abandoning fixed, unviable perceptions and paradigms of what is ‘right’, ‘wrong’ or ‘impossible’. Failures to realize ‘the new organization’ are thus attributed to the defective mindset of managers and can be corrected by replacing it with one most directly exemplified by managers at Honda who embody the ‘magic’ of ‘the new organization’.7 Again, it is not necessary to dismiss the idea that there is considerable scope for managers to shift their attitude towards processes of management and change. However, it is potentially misleading and dangerous to imply that the difficulties of management arise exclusively, or even predominantly, from a lack of relevant education or a deluded attitude. It is misleading because it takes little or no account of the specific historical and institutional context of management who are faced with the politics of management. In common with many other contemporary management gurus, Pascale assumes that the practical difficulties encountered in creating ‘the new organization’ can be overcome by adopting a favoured
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THE ‘NEW ORGANIZATION’ AND THE ‘NEW MANAGERIAL WORK
recipe which, in his case, takes the form of a mindset that effectively juggles the contradictory demands of a need for consistency and continuity, a need for diversity and innovation and a need for the renewal produced b! constructive tension and conflict. This interpretation adeptly represents conflict as a functional feature of organizational Iife - so long as it is managed effectively by a mindset that ‘looks to the tension (or dynamic synthesis) between contradictory opposites as the engine of self-renewal’. What it overlooks is the dependence of managers upon other employees and the associated difficulty of making them aclrept, and be committed to, the ‘solutions’ generated by ‘the new minds&‘. In the Japanese context, this may be comparatively effortless and uncomplicated insofar as employees are culturally trained to respect authority and celebrate their loyalty to their employer. However, as a number of our interviewees noted, in the West a very different kind of cultural training has developed in which individualism is celebrated and respect for authority is in short supply. At the very most, managers might hope to achieve either a compliant conformity to their requirements or, alternatively, a highly selective, instrumental and conditional form of commitment to corporate objectives. In this respect, our interviewees often demonstrated a kecsner sense of the realities of implementing ‘the new organization’ than the pundits who are urging its development. Of course, some managers were at an early stage on the learning curve and were struggling to grasp the nature and scope of the changes. Many others had got to the point of accepting the need for m,llor changes, but were deploying the language of the nejv management theory - networking, empowerment, qu,llity-driven, etc. - to describe quite conventional programmes of change. Among these, there was often a conscious acknowledgement of how the appeal of concepts like ‘empowerment’ was being used to induce anti justify command-and-control type changes: Micr’z~introduced multiskilling which is, if seems to me from a 1-1 ~tic~~l poinf of view, more training of people who are framed as t ~e~iri~i~ns~or zuhat~er, fo iegrn how fo ,vffinf (Financial Co:ttrolIer, Manufacturing). lY~,‘ue,yradually given them bigger and bigger areas so if one gu,:, has trouble in his aren we expect another guy to go and ass/St him there. And we used a lot of fhe safety arguments for rhaf of course, you know, fhey had to help each other (C?ilerations Manager, Manufacturing). In ;:eneral, there was a reluctance to dilute or weaken hierarchical control. Sometimes this took the form of outright rejection of the new management theory - as imj~ractical and airy fairy. More often, the response was to ilccommodate it either by deploying it highly selecth,t Iy and/or by adopting its rhetoric to push through ch‘tnge that, at best, could be seen as an incremental rntrv\ e in the direction of ‘facilitate-and-empower’. In this ~a\‘, managers could appear to be ‘progressive’ whilst
simultaneously preserving a ‘command-and-control’ structure. And, when pressed, favouring an approach which could be described either as ‘sensible and cautious’ or ‘cynical and self-serving’ was justified in terms of the need to retain control, in the form of accountability: 1 think making people a~counfable and spreading decision ?7zakin~~ around in a confrulled inner is good for the con~~~zy. [But] some people have struggled with if because they’ve thought that they were moving for independence and then find fhaf they don’t have that decision making independence (Financial Controller, Extractive Industry).
I
redeeming career devel@p~ent in terms uf collective performance is unlikely to appeal to Western individualism
What our interviewees understood better than the management pundits is the basic conflict of interest between employees, conditioned by the values of individualism, who would prefer ‘carte blanche to do their own thing’ and the accountability of managers to shareholders for delivering profitable growth. In the Japanese context, where there is a cultural tradition and a national industrial strategy supporting lifetime employment in the major companies, developing loyalty and commitment amongst employees is comparatively easy. In this situation, accountability is ensured through a combination of the individual’s material dependence upon the employer and the confirmation of cultural identity that follows from pursuing corporate objectives. In contrast, in the West, the individual employee is induced to work, in substantial part, by market forces and, ultimately by the threat of unemployment. Conversely, employees with scarce skills can make greater demands upon the employer to moderate pressures for increased empowerment and/or accountability. Common ground is found by linking improved job security and career advancement with productivity and added value. But this coincidence of interest is precarious, precisely because collective effort is fashioned through individual inducement. The contradictions involved in appealing to individualism to increase collective exertion were clearly signalled by a number of our interviewees who, nonetheless, were pressing ahead with new forms of performance appraisal and systems of reward: If you really want to move to a remunerafion system fhaf says ‘Look 1 only succeed if the company succeeds’, you want to go to a salesman and fell him that you pay him if the company succeeds, not if he gets orders (Systems and Quality Director, Manufacturing). Salespersons are perhaps exceptionally concerned with individual performance and reward. However, the idea that reward should be linked to collective performance, over which individual employees have little influence,
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AND THE ‘NEW MANAGERIAL
rather than individual contribution much support among employees culture of individualism.
is unlikely to find conditioned by a
One response to this, favoured by a number of influential management gurus, is to ‘change the culture’. However, given the culture of individualism, enthusiasm for cultural change is unlikely to be great unless it is lubricated by individual inducement and reward which, of course, feeds the established culture of individualism. Only in green field sites, where unemployment is high, where there is an opportunity to recruit and train workers with family responsibilities and without much industrial experience and where comparatively high wages reduce turnover, is there a strong prospect of successfully implementing ‘the new organization’ in anything like a ‘pure’ form. Although I’ve alzoays seen the sense in restructuring . I think going from a total functional company that was not working well to a total line was too much of a jump (Interviewed Manager). There are examples of ‘successful’ programmes of change in which, for example, employees are encouraged to see their career development less in terms of movement up the ladder than as the development of skill through movement sideways or even downwards. But even where recession limits career opportunities within and between companies, such efforts to redefine career development are unlikely to be greeted with any enthusiasm. As one of our interviewees commented, ‘With the increase in teamwork, we see the future more as development through jobs . . . but it’s very difficult’. And, once the climate changes, minimal compliance with such changes is likely to mutate into overt resistance.
Conclusion There is strong evidence in UK companies of managers’ knowledge of, and espoused commitment to, changes in management practice advocated by the gurus of ‘the new organization’. At the same time, many of the managers we interviewed displayed a keener understanding of the limitations of the new theory and of the difficulties of implementing its prescriptions than is acknowledged by its leading proponents. In part, this can be explained in terms of managers’ resistance to abandon or dilute established structures and values that secure their position of authority. Such an explanation is necessary, but it is also insufficient. In addition, it is important to connect managers’ scepticism and resistance to the new management theory to their keen grasp of its limited practicality. Not only may its introduction undermine the degree of co-operation and trust generated by the predictability and coherence of the command-and-control approach where, for example, their area of responsibility is more clearly demarcated and demands to be innovative, proactive and/or collaborative are minimal. But, more importantly, 460
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it may be fundamentally values.
in conflict with basic employee
At best, cultural change programmes can hope to induce employees to manage the appearance of operating a facilitate-and-empower philosophy if this is calculated by the individual employee to increase his or her job security, job satisfaction or career prospects. At worst, implementation of ‘the new organization’ without regard for the contradiction between corporate demands and employee values is likely to produce incoherence, confusion and resistance. In which case, even the best laid plans supported by generous resources will come to grief - in the form of widespread demoralization and cynicism. Managers are right to be sceptical and cautious about the claims that are made for ‘the new organization’ and ‘the new managerial work’. Its basic fallacy is to assume that, in a capitalist economy, a coincidence of interest between employers and employees can be contrived through the adoption of a different philosophy or mindset. In Japan, something that approximates to this ideal has been achieved. But the success of the Japanese is largely an unintended product of a distinctive cultural tradition and a singular institutional structure. As one of our interviewees astutely noted ‘you can’t replicate the Japanese culturally’. It is foolhardy to believe that practices that work well in Japan can be transplanted into the West. To a limited extent, this transplant is possible in the case of techniques, such as kanban, which can be successfully introduced, though never optimized, without necessitating a broader cultural change. As the experience of many of our interviewees has shown, translating the ideals of the new management theory into practical realities is not simply difficult but potentially counterproductive. Which is not to say that the new theory is useless. However, it is perhaps more persuasive in its exposure of the problems in the ‘command-and-control’ approach to management than it is convincing in its claims that a philosophy of ‘facilitate and empower’ can be ‘put in’ as a more effective replacement. As we have stressed, a good number of our interviewees were sceptical about the claims of the new management theory. But, even those who expressed some scepticism were seemingly content to diagnose teething problems in implementing ‘the new organization’ as symptomatic of insufficient corporate commitment to its prescriptions, rather than a result of adopting an approach that is based upon a very superficial, though highly seductive, appreciation of the cultural and political conditions of change. For those concerned with the performance of UK companies, there are clearly grounds for disquiet about a minority of companies where the adoption of the new management theory is uncritical and therefore obsessive. But this concern should perhaps be extended to companies where scepticism has yet to produce a sustained and articulate diagnosis and critique of the limitations of the new management theory. MANAGEMENT
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Vol 12 No 4 December
1994
THE ‘NEW ORGANIZATION’ AND THE ‘NEW MANAGERIAL WORK’
Acknowledgement Weacknowledge the support
4.
of the Chartered Institute of Management Accountants for funding the research project from which the empirical material is drawn.
Notes 1
2
?
P. Drucker, ‘The Coming of the New Organization’, Business Review, January-February, 1988, pp. 45-53. op. cit., p. 50. R. Kanter, ‘The New ManagerialWork’, Harvard Business Review, November-December, 1989, pp. 85-92.
hazard
5. 6. 7.
‘I’. Peters, Thriving on Chaos (London: Pan, 1989), p. 4. In a similar vein, R. Pascale’s Managing on the Edge (Harmondsworth: Penguin) questions the wisdom of relying upon the recipes of management gurus as he argues for (the recipe of) developing ‘a new mindset’ that is capable of appreciating and exploiting the value of paradox and ambiguity. Instead of relying on passion or ‘gut feeling’ (cf. T. Peters and N. Austin, A Passion for Excellence), Pascale urges ‘executives to make decisions of the moment that “feel” wrong, but that are ultimately right’ (p. 34). T. Peters, op. cit., p. 4. R. Pascale, Managing on the Edge (Harmondsworth: Penguin), p. 21. Op. cit., pp. 25-27.
SIMON LILLEY, Glasgow Business School, Department of Management Studies, 53-59 Southpark Avenue, Glasgow G12 8LF
MAHMOUD EZZAMEL, Manchester School of Management (UMIST), P. 0. Box 88, Manchester M60 ZQD Dr. Etsamel is Price Waferhouse professor of Accounting and Finance at Manchester School of Management (UMIST). His research interests span the interface between management uc(~ounting, organi~tion theory and urgani~tion form, management accounting and the new information technology, accounting and resource allocation in universities, and the structure of the UK audit market. A recent publication is Business Units and Divisional Performance Measurement, Academic Press, 1992.
Dr. Simon Lilley is Lecturer in Organizational Behaviour at Glasgow Business School. He was previously ESRC Management Teaching Fellow, Management lnfo~ation Systems and Accounting at UM~ST Manchester School of Management. His current teaching/research interests include the relationships between power, knowledge, information and organization implicated in the realization of managers, management and manageable enferprises, accounfing info~ation systems, executiue info~ation systems, and the role played by computerized information systems in shifting patterns of organizational control. HUGH WILLMOTT, Manchester School of Ma~gement ~~M~ST~, P.O. Box 88, Manchester M60 ZQD
Dr. Willmott is Reader in Organizational Analysis at Manchester School of Management ~UM~ST~.His research includes changing organization of managerial work, organizafion and developmenf of management specialisms, use of information and communication technologies in organizations‘ and regulation of accounting indust~. He is associate editor of Gender, Work and Organization.
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