A colleague forwarded me a great article from the The Times Online this week. So good, that I cut and pasted the whole thing for future reference. I have highlighted a few points that really stuck out for me.
While I do not agree with all of the points, the article makes a strong case for balance. Like in all things, text book learning does not translate into aptitude and knowing a lot of management theory does not create great managers, leaders or businesses.
Good article. Enjoy.
The credit crunch is showing management theory for the hollow, jargon-filled sham it always was. But at last the tide is turning
It was John Humphrys on the Today programme who last autumn summed up the tragedy of Baby P. Exasperated by an apologist for Haringey Council, who smugly claimed that it had followed procedures, he thundered: “And the end of this perfect paper trail is a dead baby.”
Such is Humphrys’ range that a few weeks later he was interrogating Sir Michael Lyons, the chairman of the BBC Trust, about Russell Brand’s naughty phone call to Andrew Sachs. Was the answer, he asked satirically, more “compliance procedures”? It surely must have been, for the corporation is currently echoing to the clang of stable doors being belatedly bolted (that and the Teletubbies theme tune, for a senior BBC staffer has been told to watch every episode to ensure that it meets “current compliance” procedures).
“What they don’t understand,” one of the BBC’s most respected producers explained to me, “is that the more compliance you put in, the more likely [controversy] is to happen because it takes away the innate sense of personal responsibility that everybody in the BBC once had.”
Of course, it is not only social services and the BBC who today wade so deep in management theory that they can barely do their jobs. Schools last year received 6,000 pages of theory and guidelines from Whitehall. The result? Primary school teachers, busy reading and filling in forms, no longer have time to read books to their charges. In hospitals, doctors long ago took the hint that the State will value them more for meeting targets than for treating patients, so they order ambulances into “holding patterns” in car parks for fear that, if patients are admitted to A&E too early, the target that all must be treated within four hours may be missed. Cynical? They are acting no more venally than the Kent policeman who arrested a child for throwing a slice of cucumber from his sandwich at another youngster. The PC, lamented the Police Federation of England and Wales in 2007, needed to meet his mop-up target.
We know, of course, that bureaucracy works first in duplicate, then in triplicate and thus unto infinity, but what is happening now is no accidental proliferation of red tape. In the past two decades, management theory, once rejected in Britain by both management and unions, has been deliberately imposed on almost every aspect of commercial and public life. Resistance, from the policeman’s beat to the chalk face, has been widespread but futile.
The Wall Street Journal columnist Thomas Frank, who has studied the cult of management in books such as One Market Under God, savours the paradox on our behalf. Millionaire management theorists such as Tom Peters, author of The Pursuit of Wow!, may believe that they are cool “but the public has always regarded these guys as a joke. You think of that book Who Moved My Cheese? There are parodies of it all over the web. People don’t trust this stuff. They think it’s silly.”
Management theory was born, naturally, in America. Its father was Frederick Winslow Taylor, the time-and motion man who died in 1915 with, legend has it, a stopwatch in his hand. A mechanical engineer, he believed that workers should be made to do small, specialised, repetitive tasks. Their work rate could be ratcheted up by pouring extra dollars into their wage packets. In 1914, 16,000 people flocked to New York to hear him relay such insights.
The realism of Taylor was quickly countered by the “human relations” school of management theory, led by touchy-feelier theorists such as Elton Mayer, who believed that if you treated the workers like family, they might treat you like family back.
But it was James Oscar McKinsey, a Chicago accountancy professor, who turned management theory into money by founding a company of consultants who claimed not merely to heal unhealthy companies but to make healthy ones great. McKinsey died in 1937, but his “fellow visionary” Marvin Bower continued to advise McKinsey and Company until his death five years ago – by which time it was serving seven out of ten of Fortune magazine’s most admired companies. By the Fifties it was almost mandatory in the US, if you wished to run a company, to get a masters degree in business administration – an MBA. Preferably it would be bestowed by Harvard Business School, where, currently, 1,800 students are beavering away, trying not to think too hard about the economic triumphs achieved by such notable alumni as George W. Bush and Rick Wagoner, the chairman of General Motors.
“What you get from Harvard Business School,” says Radio 4’s In Business presenter Peter Day, “is a wonderful network of people who were there with you and a set of tools that you can then use and bamboozle people with for the rest of your life. It is a habit of thought – conventional responses to conventional situations. Harvard teaches very much on a case-study basis, so it is always telling people how to respond to things that happened in the past. No wonder that when something like the credit crunch comes along, huge numbers of highly skilled people in compartmentalised worlds are unable to respond to it.”
But what do they teach? Come the Sixties, all schools united in their loathing for the comfortable, profitable Fifties business culture as described by William H. Whyte in his 1956 book The Organization Man. This was a world in which white-collared workers were beholden to their employers. “They are wry about it, to be sure; they talk of the ‘treadmill’, the ‘rat race’, of the inability to control one’s direction,” Whyte wrote. “But they have no great sense of plight; between themselves and organization they believe they see an ultimate harmony…”
Harmony! This life of job stability, quality health insurance and pension plans looked like commercial death to the theorists. “Tom Peters would say that you have to turn loose market forces at every level of the firm,” says Frank, who, when not writing for The Wall Street Journal, edits a journal of dissent called The Baffler. “There is this cult of destruction that you see in American management theory – creative destruction, with the emphasis on destruction.” The cult’s credo is reduced ad absurdum in the title of one book of popular management theory ubiquitous in American airport bookstores: If it Ain’t Broke…Break it!
At its bleakest, this social Darwinian philosophy, as advocated by the McKinsey consultants who dreamt up the phrase “the war for talent”, requires managers to rank their employees each year. Some 20 per cent are “A players” who must be handsomely rewarded. The next 70 per cent, the Bs, will be less well paid. The bottom 10 per cent, the Cs, will be fired.
Hard? Certainly. Fair? Only possibly. But does it work? On the contrary. In 2004, a survey of 200 human resource professionals reported that “forced ranking” resulted in lower production, scepticism, damaged morale and reduced collaboration. As the authors of the new book Hard Facts: Dangerous Half-Truths and Total Nonsense point out, there is no reason why 10 per cent of your workforce should every year become incompetent.
“Forced ranking” is a fad that is fading – but it is hard to keep up, there are so many. Amazon.co.uk is selling 11 books with a combination of the words “management” and “fad” in their title, the snappiest of which is Fad Surfing in the Boardroom. These volumes promise to separate the wheat from the chaff for the bemused manager. The trouble is, there is so much corn in the field that even the high priests become confused. For a while McDonald’s taught its managers the American psychologist Abraham Maslow’s hierarchy of needs, a pyramid building upwards from “breathing, food and water” to an apex of “self-actualization” (as a burger house manager?). Yet by the time of his death in 1970, Maslow himself had admitted that some employees simply did not choose to “self-actualise” in the workplace and might resent being expected to do so. Peter Drucker, perhaps the most respected of all the gurus, who died in 2005, eventually concluded that, contrary to what he had once believed, the volunteering sphere offered more personal fulfilment that the workplace.
Performance reviews, in which staff are yearly taken into a room by their manager and told how they are doing, are increasingly regarded as the least effective way of communicating between boss and worker. If you learn anything new at your review, the latest thinking goes, your boss has not been managing you correctly. In the City, bonuses – long since elevated into a culture – are finally being recognised as one of the very motors of investment banks’ disastrous recklessness. Sitting next to them in the dock are “targets”, which, as the former chairman of the Audit Commission, James Strachan, was telling anyone who would listen as long ago as 2003, were a “sure-fire way” of failing to improve services in schools and hospitals (he resigned three years later).
The comical ingenuity of doctors in cheating over targets was dramatised ruthlessly by one of their former colleagues, Jed Mercurio, in his BBC drama series Bodies. One obstetrician on the show, frightened of his morbidity score rising above target, simply began refusing to treat very sick patients. “Doctors end up becoming more and more cynical about the way the NHS is governed,” he says. “It’s a very dangerous mindset for a workforce to get into.”
Yet Mercurio acknowledges the need for someone to watch over the medical professionals. Margaret Thatcher, when she threw millions of pounds in extra funding towards the police, was determined that the quid pro quo would be accountability: from that moment, Gene Hunt started to become an historical figure. Equally, there are few greater critics of management theory than David Craig, a former management consultant turned apostate who has written Plundering the Public Sector, a book castigating the Government for squandering billions on consultancies. He, too, acknowledges that efficiency needs to be measured: “KPI [key performance indicators] are absolutely fabulous if used by effective management. But if you have incompetent, ineffective management and policies that only want to give the illusion of progress, they are a disaster and demotivate everyone in the organisation.”
It was in 1995, while working with Gemini, then a struggling consultancy, that Craig helped to come up with the concept of organisational transformation. “We published a book called Transforming the Organization,” he says. “But it was a con, something we dreamt up to try to sell bigger money-making projects to companies. It took three or four years, then everyone started picking up on it. And Tony Blair bought it when McKinsey sold it to him. Suddenly all he would talk about was “transformation of the public service”.
Those, such as Day, Frank and Craig, who have watched management theory transform itself into a religion wonder whether its false gods should take responsibility for the current economic downturn. Target-related bonuses generated greed, which generated irresponsibility. Compartmentalisation – that old Taylorist panacea – left bosses with no overall view of what was going on. Older hands predicted that no good would come of it.
In The Puritan Gift, published last year, the septuagenarian Scottish brothers William and Kenneth Hopper, respectively a banker and an engineer-turned-industrial consultant, argued that for 200 years the puritan foundations of America kept its businesses emphasising craft, financial responsibility and the sublimation of private interest to the group. Young men would rise through a company to the top, gaining deep personal knowledge of the business. In the 1970s, however, a new breed of “professional managers” arrived, armed with MBAs. They were trained to manage anything – a charity or a chemical company – but they lacked “domain knowledge”. The founding fathers’ gift was squandered. Managers who knew all about management but nothing else left the incomprehensible science of sub-prime mortgages to the boffins in their labs.
The economy is now exercising its traditional revenge. At McKinsey & Company in London, bonuses have been cut by a third. Consultants once hired out to companies for £8,000 a week now write on websites of having been “benched” for months. Like the unluckier employees of the companies they advised, they now uneasily await a call from the HR department – this time their own.
If there is hope, it may lie not in the private sector, which will sooner or later seek new potions from the witch doctors, but with the state toilers who were never in it for bonuses in the first place. Last year, four English police forces decided to abandon government targets in favour of common sense. In Surrey, Mark Rowley, the acting chief constable, spoke the revolutionary words: “I want officers to apply their professional judgment and discretion to do the right thing.” As the experiment is slowly taken up by forces across the nation, older coppers remark in wistful gratitude that this is what they came into the job to do. Younger recruits accustomed, like most of their generation, to PowerPoint lectures on targets, best practice and accountability initiatives, are understandably anxious.
It would be a brave new world without such gobbledegook in it but – to use a management theorist’s phrase – an empowered one, too. Managers would be chosen not for their ability to bandy jargon with their superiors but for their empathy, pragmatism, experience and decisiveness with their staff – who would no longer, like the former social worker on the Radio 4 Today progamme this week, spend 80 per cent of their working day filling in forms. They would not be drawn from a pool of professional managers but from among the people who do the work. And, once chosen, they would be allowed to do the job or replaced. This brave new world would cease to be managed. It would begin to be led.
Management by numbers
The gurus know how to count…
Michael Porter’s Five Forces
Kenichi Ohmae’s 3 Cs – Commitment, Creativity, Competition
Peter Senge’s Five Disciplines
W. Edwards Deming’s Fourteen Points
David Kolb’s Four Factors
Rensis Likert’s System 4
Management by acronym
They also like to spell things out…
AVA = Activity Value Analysis
BPR = Business Process Re-engineering
CBA = Cost-Benefit Analysis
TQM = Total Quality Management
Management by cliché
But best of all they like a snappy phrase…
Management by Walking About
Who Moved My Cheese?
Theory X and Theory Y
The Managerial Grid
(Robert Blake and Jane Mouton)
In Search of Excellence
If it ain’t broke… break it!
(Robert J. Kriegel)
The Pursuit of Wow!
(Is there no end to Peters’s phrase-making?)