Self-Managed Structures and the Split-Personality Company
Kent Messenger, 2001
Contradictory forces are shaping organisational structures. On the one hand, there is a loosening up of management processes. At the same time, there is a tightening up of controls. The outcome is the split-personality company, often riddled with tensions, conflicts and personal insecurities. How is this happening?
In the past, companies operated as neat machines. Jobs were clearly defined in terms of pay, duties and responsibilities. We were told what to do and how to do it. This model was ideal for the manufacturing company. It is totally irrelevant for the knowledge-based business of today, that is, where brain power is the major capital asset. In a marketplace that is constantly changing, companies continually have to reinvent themselves through developing new products and services. Product life cycles are reducing and profit margins tightening. More competitive global, regional and national business environments compel organisations to be fast.
It means they have to develop highly adaptive processes. Corporate flexibility is replacing corporate stability. This places a high premium on employees being inventive, resourceful and continually adapting their work roles because of ever-changing work expectations.
In these organisational contexts, employees need to be 'left alone'. They have to be given greater operational autonomy with increased levels of authority and responsibility. Many employees do not want this. And why should they if these additional demands are not recognised in performance appraisal schemes and reward systems. But in high performing competitive businesses, employees have to be empowered to make day-to-day decisions. Decisions for product development, clinching sales deals and agreeing clients' marketing budgets have to be taken quickly if revenues and sales projects are not to be lost.
It is this trend that is loosening up corporate structures. It is rendering obsolete the dominant management styles of the twentieth century. The days of the autocratic, hierarchically focused manager are numbered. Companies are having to take seriously, rather than pay lip service to, issues of employee employment. This is forcing them to look at different models of management. Instead of looking for inspiration to the ideas of Ford and traditional manufacturing, they are having to turn their attention to traditional professional practices, research institutes and, even, dare I say it, universities.
Many companies, both large and small, have already put such methodologies in place. Leading edge companies in the pharmaceutical, high technology and media industries are doing this. With their highly qualified professional and technical staff, they recognise that traditional line management practices don't work. These offend the psychological make-up of employees and inhibit innovative cultures.
The outcome is a simple management process. A process that is essentially structured around time and cost budgets. These are negotiated between team leaders and senior management and, other than progress reviews, work teams are empowered to achieve their results.
This new methodology of management presupposes that a number of key elements are in place. There has to be a delegatory management style and a prevailing culture of high trust. Reward systems have to encourage employee commitment to corporate goals. Those responsible for work teams have to be effective, inspirational leaders rather than drab hands-on managers. But, most importantly of all, employees have to be trained with the necessary emotional, social and technical skills to be able to take self-confident decisions within parameters set by their colleagues and team leaders.
The loosening of corporate structures through the application of self-management principles is being parallelled with the tightening up of processes. This is the other side of the split-personality of twenty-first century companies. Alongside extended operating autonomy, key success factors and performance indicators are being put in place. We may be given greater autonomy in terms of how we achieve our goals but what we achieve is now subject to far greater measurement, scrutiny and accountability. Those who, in the past, enjoyed working autonomy in terms of both how and what they did are now subject to measures which make their performance far more transparent. And they do not like it. This is not only among R & D personnel in private sector companies but witness the resentment among teachers, academics, medics, social workers and the many others whose outputs are now subject to performance reviews. There is constant protest about the reliability of these measures being used to assess performance and the rewards which they are offered.
These conflicts can destroy the commitment of personnel to their employing organisations. But the split-personality corporation is also riddled with other tensions. Many of these are related to the parameters of self-management. What are work teams really responsible for? What authority do they have for decision-making without referral to higher levels of management. This is usually a source of ambiguity such that team leaders will complain that their bosses are being heavy handed and failing to delegate to them while, at the same time, the 'bosses' criticise them for failing to exercise their delegated authority.
These tensions are never fully resolved. In the split-personality corporation, there is constant oscillation between the forces of centralisation and decentralisation. When businesses are doing well, managers loosen up their structures and encourage employee empowerment. When things are not so good, they tighten up. Probably quite the reverse to what is really needed in periods of economic recession. These are the times when the self-confidence of senior management is truly tested. Unfortunately, too many fail the test.
© Professor Richard Scase