Tag Archive | Bad management theories lead to bad organizational practices

The beginning…and

glimpse of sunrise

“Toward a Sensible Organization” may seem oxymoronic to some people. Perhaps, but it is nevertheless a worthy goal to strive for. In this space, I will provide my reflections and opinions on some organizational issues, and invite your voices to provide feedback, experiences and stories of your organizational life.

I have a PhD in Management from the Wharton Business School of the University of Pennsylvania. I have taught and consulted for a few years. I once tried to practice what I preach and worked in a large government organization; while my views were well received from top down/down up, I found propelling the top to act was harder than moving a mountain. People at the lower rank were a lot more motivated to act on their initiatives. The contrast here is probably worthy of a PhD dissertation!

I now live in a small community in the southwestern United States. I still dream about having some consulting practices that would carry me to the rest of the country or even the world, but so far, it’s been a nice dream.

Yet, I yearn for studying organizations, listening to people’s stories, sifting through data and feeling the rush when patterns emerge, and tasting the excitement when I strike resonance with others in discussion.

So I decided to join the blogosphere and create a virtual space in which I can ruminate on some organizational theories, principles, models, etc., and attempt to render these ideas in practical terms for readers. Each piece I post would have a theme. Readers’ responses, especially their own stories, are welcomed, and with these additional inputs, I will modify the original posting, to be re-posted later.

Over the years, as I have worked with people from organizations of various sizes and natures, my impression is that there seem to be more people unhappy with their organizations than those who are joyful about their organizations. Now, this doesn’t mean that people in general don’t like their work. Most of them probably do; hence all the more frustration with the collective speed bumps and obstacles they encounter in their organizations on a daily basis. Many of these hindrances probably are the consequences of management decisions, intended and unintended. While managers are a minority of the workforce, they certainly wield a large amount of power. This might be one of the many reasons that they are perceived as a hostile or clumsy presence, re the caricature in Scott Adams’ “Dilbert” comic strips. But close-up, they are by and large decent individual human beings, just as trapped in organizational dynamics as those who report to them.

I am not being sympathetic toward managers; in fact, all my life, I tend to side with the “underdogs.” However, my post-graduate education certainly has taught me some of the nuances in organizational issues, all complicated. In this space — over time — I will cover aspects of the following topics:
* group dynamics
* leadership and followership
* individual identity within a group/organizational context
* conflict — not all bad
* gender and many other diversity issues
* cross-cultural interactions
* emotional intelligence and other intelligences
* creativity and innovation
* reviews of some articles and books, both academic and popular.

This is not an exhaustive list, of course, even if that were possible. As I gather more feedback from you, I will have better appreciation of what really matters to you, both short-term and long-term, and address them accordingly.

My plan at this point is to post one entry a week. I hope we’ll have plenty of interesting and thoughtful conversations.

Still dark…yet

Bad Management Theories Lead to Bad Organizational Practices

It wasn’t my intention to write in the negative for my opening salvo. Alas, I often think that the foundation of many professions, including social sciences, is built upon human discomfort. Let’s hope that over time, I can provide more positive energy!

When I was in graduate school, I often had a feeling of disquiet regarding certain theories, especially the ones based in economics using neat and elegant equations, or models constructed with impeccable rationality. But being a student, while we might be able to voice some of our criticism in private or in class discussions, we do not foolishly challenge these theories too publicly (certainly not without research evidence) especially when these theories or models are published by well-established authority figures. This is as much about the state of the field of management as it is about the nature of academic dynamics.

So, it was with delight — however belated and private – when a few years back I read a poignant article in a major journal, written by a prominent scholar, refuting some of the very same theories that had troubled me as a student.

Sumantra Ghoshal, an eminent professor at the London Business School at the time of his death, published posthumously an article, “Bad Management Theories Are Destroying Good Management Practices,” in Academy of Management’s Journal of Learning and Education (2005, vol 4, No 1, pp 75-91). In it, he highlights three theories that have been widely pushed by business schools but are fallacious in that they are devoid of fundamental understanding of the complexity of human behavior, relationships, and emotions. This article should be made known to a much wider audience. This is my attempt to summarize it.

The three theories on which Ghoshal focuses are:

1. “Agency theory,” which states that managers cannot be trusted to know how to maximize shareholders’ value. Even though the very notion that shareholders’ value should be the only focus for corporation is seriously flawed, it is nevertheless the premise on which the popular practice of tying managers’ salaries to stock options is based.
2. “Transaction Cost” theory, which assumes that people act opportunistically whenever possible, i.e. cheating, lying, or shirking. So organizations build ever tighter monitoring and control systems to prevent, detect, deter, and/or punish employees for such behaviors. 3. “Competitive Strategy,” which advocates that companies cannot just focus on their competitors; they should compete against their suppliers, regulators, customers, and even employees. Little wonder the expectation of “trust” has been steadily eroding over the past decades.

Business schools have been teaching these theories, if not by names then certainly by concepts, to thousands of MBAs and various levels of managers through executive education programs. Even more people have absorbed these theories and concepts through osmosis. And while these theories may not themselves be well known by name, their practices reflect worldviews that have become deeply rooted into the consciousness of most managers.

These theories are based in economics; they lack the morality and emotion which usually surround people’s intentions and choices. These natural human qualities are not easily accounted for nor are they convenient for creating elegant mathematical formulae; this inconvenience then upsets a professor’s stream of publications for getting that coveted tenure. In their desire to promote simplicity, concepts expressed in statistics, and mechanical tools offering controlling methodology, the business schools have pushed these theories onto managers to be absorbed and applied.

Firing up

Social sciences differ greatly from physical sciences. Human thoughts, intentions, behaviors, and emotions are not easily quantified, controlled, manipulated, or predicted, not with 100% accuracy, not even half of that rate at half of the time. Furthermore, there is the self-fulfilling prophetic effect about which physical scientists do not have to worry but with which social scientists, and practicing managers, have to contend. If managers assume that people would cheat or shirk, they structure the organizations to catch cheaters and shirkers; by doing so, the organizational environment becomes stifling and more employees behave with organizational interests at low priority. This in turn feeds into managers’ expectations of unworthy subordinates, and they continuously design ever-increasingly vigilant organizations. Have you noticed that rules and regulations seem only to increase? Do we ever take some rules off the table?

There are ill effects on the managers as well. For instance, by making the profoundly erroneous assumption that managers are not to be trusted to maximize shareholders’ values, organizations tie their salaries to the stock value which then becomes managers’ major focus. “Profoundly erroneous” because the real worth of an organization is not in the stock market but in combinations of employees’ knowledge, relationships, skills and talents, equipment, structures, and liabilities. Stocks are but one aspect of a company’s values; however, as a consequence of this assumption, managers are driven to concentrate their efforts on only the measurable factors that they can manipulate at the expense of “softer” aspects, such as morale, respect, trust, creativity, and innovation. These words are now mouthed in the forlorn hope that saying them often enough is a satisfactory replacement for truly accomplishing them. But because these “softer” aspects are some of the hardest to understand, grasp, delineate, foster, and accomplish, and so they are usually the first casualty in management practices, especially during a period of dramatic change.

Somehow we have come to assume that companies in private industry are the “right” models for all organizations to emulate, despite the repeated foul-ups of monstrous scale we have witnessed over decades, again and again, from Enron to Goldman Sacks. In some of my dealings with government agencies and NFP organizations, they too hold onto the same metrics that are prevalent in the private sector, with little positive outcome to show for this attachment. This is another topic worthy of deeper exploration at a later time.

It is much easier to assign numbers, anything on a 1-5 scale, to tangibles such as timelines, milestones, or even performance measures (assuming one has a good definition of “performance”). A project that can meet milestones may not offer room for exploration, which is the foundation of creativity and innovation, but “milestones” are nevertheless used without question as the appropriate driving metric. Can anyone predict when you might be creative, or what the outcomes of innovative endeavors might look like? As for other tangible items…let’s use “employee satisfaction” as another example. Is 10% finding of unhappy employees a serious concern? Or, should the dissatisfaction rate be above 50% before management needs to treat it seriously? In a similar vein, sticking to the measurable and the concrete, there are so many manuals for procedures and protocols that one wonders if that also has robbed people of their acceptance of imagination (too dangerous?) and responsibilities (hey, not my fault, I am just following the rules).

Getting there

Over a few decades of my observations, several organizations with emphasis on research and development all have gone to this increasingly restrictive mode of operations. Safety and security trump everything. And because no one dares to openly state that accidents may be an inevitable cost of creativity and innovation, we go along with the ever growing regulatory volume. Complaints are only voiced at water cooler areas or private dinner gatherings. I keep wondering if US’s losing the leading edge in new technologies, such as in the green energy area, might not be directly related to our growing intolerance of accidents? I know many scientists feel so.

As for the competitive mode of operation, I guess that’s the sacred cow of market/capital economy. However, does competition mean that my gain shall always lead to someone else’s loss? While it may not be possible to always have a win-win solution, it is a much more empowering goal than what the traditional win-loss would bring to people. We may feel that sometimes this society is too competitive; yet, we are all also powerless to change it.

So, in my next piece I will delineate a framework/an approach (not mine) to aim for constructing rather than constricting, for building rather than attacking, for energizing rather than enervating. Sounds too good? Why assume impossibility? Sounds too saccharine? Or, are we so saturated with acidic bile in our mouth that a little sweetness is a suspect? Till then,

Staying Sane & Charging Ahead

A brilliant dawn

direct contact:  TASO100@gmail.com

Copyright TASO100 2010-2015:  All rights reserved; no photos or content may be reproduced without prior written consent.