Fads, jargon, and superficial research are undermining the status and relevance of

managementwork. Management is a profession-and enhanced

professionalism is the antidote to these dangerous trends.

Management Redeemed:
The CaseAgainstFadsthat
Harm Management
LEX DONALDSON FREDERICK G. HIILMER

n a recent Organization Dynnmics editorial, evance of managerial work critical to the suc-
the editors for this journal, Don Bohl and cess of large, complex, global corporations.
Fred Luthans, presented a controversial argu- For example, the call for repeated “flattening”
ment in favor of management fads. The edi- of structures implicitly assumes that ulti-
torial implied that too many managers had mately the best management is no manage-
developed the potentially harmful response ment. Other concepts in vogue go further,
of dismissing any new concept, such as TQM, seeking to replace hierarchy, formal pro-
employee involvement, and self-directed cesses, and structure with the warm and
teams, as nothing more than a fad. Bohl and appealing metaphor of the corporation as a
Luthans applaud the way companies such as clan. Culture, values, and informal liaisons are
Motorola, General Electric, and Procter & to replace traditional (boring, outdated) man-
Gamble have been challenged by these con- agerial work. Still another anti-management
cepts and turned them into productive trend seeks to expel managers from the
approaches. boardroom. The underlying idea, apparently,
While joining their applause, we wish to is that managers cannot be trusted and will
strike a cautionary note. Although such tech- pursue their own interests to the detriment of
niques can trigger innovations, they can also shareholders unless curbed by a vigilant
devalue human resources in organizations, nonexecutive board.
destroying managerial competencies and The common theme of these techniques
organizational capabilities. As a result, perfor- du jour is a downgrading of the position of
mance suffers. Many techniques truly deserve managers in the large corporation by cutting
the pejorative label, “fad,” and deserve to be their numbers, reducing their authority, and
strenuously combated. lowering their status. These notions are
Our primary concern is that many of the widely propagated and have on occasion been
current trends propagated in the popular labeled as “best practices.” However, they do
business press undermine the status and rel- not necessarily produce the benefits claimed.
SPRING 1998 7
 This article first outlines some of our con-
cerns about flatter structures, corporate clans,
and ousting of managers from the board. We
then describe a number of other damaging
fads. In the final section, we put forward an
alternative to fad-based management: profes-
sionalism in both the evaluative and cognitive
elements of management.

THE FLAT EARTH

THEORY OF MANAGEMENT
The movement toward flat organizational
Lex Donaldson is the professor of organiza- structures enjoys wide popularity. Propo-
tion design at the Australian Graduate School nents hold that the tall hierarchies seen in the
of Management in the University of New conventional large corporation are counter-
South Wales. He received his Ph.D. from productive and should be eliminated. The
London University. He has conducted argument stresses that tall hierarchies, with
research at London Business School and has each layer of management paid more than
been a visiting scholar at the Stanford Center the layer below, are as unnecessary as they
for Organizations Research and at the Kel- are costly. Height impedes communications
logg Graduate School of Management, between the strategic apex and front-line
Northwestern University. He has been a vis- employees who make and provide goods and
iting professor at the Institute for International services for customers. Further, tall hierar-
Studies and Training in Fujinomiya, Japan. chies are said to slow decision making and so
He has published widely in the journals on inhibit flexible responses to environmental
organization design and boards of directors. change. The remedy, the argument goes, is to
His recent research on boards has been sup- slash layers and remove the middle manage-
ported by Boo.?Allen and Hamilton Ltd. and ment drones.
Russell Reynolds Associates Inc. He is Like all popular ideas, the flat-organiza-
author of six books, including American Anti- tion theory has a grain of truth. Hierarchies
Management Theories of Organization: A Cri- that are too tall do impede communications,
tique of Paradigm Proliferation, and For Pos- slow decision making, and incur excessive
itivist Organization Theory: Proving the Hard salary costs. But the question is, How tall is
Core. With Frederick G. Hilmer he published “too tall”? To answer that question, we need
Management Redeemed: Debunking the to consider the dynamics of growth.
Fads that Undermine Corporate Perfor-
mance. This was a finalist in the Financial
The Effect of Size
Times/Booz-Allen & Hamilton Global Busi-
ness Book Award in the Business Strategy Obviously, as the organization increases in
and Leadership category. He advises for- size, more and more employees have to be
profit and not-for-profit organizations on man- managed and so, because of the constraints
agement and corporate governance issues. imposed by spans of control, more levels
have to be inserted into the hierarchy. This
concept-that hierarchy height varies with
organizational size and reflects the span of
control-is a familiar one. But while many
people nod agreement with the need for
such expansion, they are nevertheless pro-
8 ORGANIZATIONAL DYNAMICS
 foundly worried that large corporations are
just “too darn tall.”
The propensity to see hierarchy as exces-
sive stems from a very negative view of man-
agerial motivations and behaviors-the
notion that large corporations have until
recently been fat and happy, and that empire-
building is a normal management practice. As
the satirist Northcote Parkinson wrote in his
widely received Law, appointing under-man-
agers is a sure route to higher status and
greater salary.
However, the notion that the ratio of
managers and administrative support staff
relative to workers (i.e., “drones to worker Frederick G. Hilmer is a professor of man-
bees”) increases disproportionately simply agement and the former dean of the Aus-
doesn’t hold up. Large organizations actually tralian Graduate School of Management in
have smaller proportions of managers and the University of New South Wales. He holds
administrators to workers than do smaller post-graduate degrees in law and business
organizations. This was originally pointed out from the Wharton School, the University of
by Professor Peter Blau and has been sup- Pennsylvania. He has served with McKinsey
ported by subsequent research in a variety of in America, Australia and Canada, and is an
organizations. International Partner. He has headed
The critical issue facing large corpora- national policy committees on competition
tions is not, By how much is our hierarchy and industrial relations. He is on the boards
bloated?, but rather, What degree of hierar- of directors of international and national cor-
chy is optimal? For each organization, there porations, is chairman of Pacific Power and
is an optimal height, reflecting its size and is deputy chairman of Westfield Holdings Ltd.
feasible spans of control and, importantly, and Westfield Inc. He is author of five books,
whether it is planning to grow or cut back. including When the Luck Runs Out, New
Eliminating hierarchy, removing middle Games/New Rules and Strictly Boardroom.
managers, and abandoning formal plan- With Lex Donaldson he published Manage-
ning and decision-making processes may ment Redeemed: Debunking the Fads that
make sense in a corporation that is shrink- Undermine Corporate Performance. This
ing-cutting costs, quitting problem busi- was a finalist in the Financial Times/Booz-
nesses, and selling assets. Btlt to grow, some- Allen & Hamilton Global Business Book
one, somewhere has to have the time, scope, Award in the Business Strategy and Leader-
funds, and power to explore and test ideas and to ship category. He consults to organizations
mount initiatives. through Port Jackson Partners.

Hierarchy and Growth

The great growth engines-Coca-Cola, Gen-
eral Electric, Nike-understand this, and
rather than engage in the decimation of mid-
dle management, they emphasize the recruit-
ment and development of a management
cadre to lead their growth efforts. You can’t
continually open new Coke bottling plants
worldwide without managers-dare we say

SPRING 1998 9
 “middle managers”-to make this happen. country head. These heads report to one of
You can’t launch and coordinate major retail three section heads who in turn report to a
initiatives in sportswear and accessories, as power projects general manager. The general
Nike does with its Niketowns, by wishful manager is one of a number reporting to a
thinking. vice president. Hardly a flat structure, but one
Words such as planning, processes, struc- that resources and delivers new projects and
ture, hierarchy, and analysis have become new opportunities, i.e., growth.
unfashionable. But it is precisely these activi- Community thinking about hierarchy
ties that underpin growth. The army that would do better to start with an awareness
moves forward into new territory needs logis- that, when left to themselves, corporations
tics, organization, and planning. The one that grow in a way that is economical, adding lev-
goes nowhere can cut back. Firms whose els only sparingly. Indeed, because most orga-
structures have become too flat are likely to nizations grow incrementally, the tendency is
find they have lost the capacity to grow. to lag in the addition of levels. From our expe-
Everyone is so busy coping with today that no rience, growth through merger is the main
one has time for creating a new tomorrow. way in which organizations become too tall.
The hope is that empowerment, self- The merger bypasses the normal incremental
organizing teams, and the cult of action-do growth process, and the combining of two
it, fix it, try it-will deliver the goods. While incumbent managers can lead to duplication
these innovations are useful, they still and superfluous positions and levels.
require an overall management structure, as Where a corporation is suspected of being
experience, through the decades, has repeat- too tall, its management should carefully ana-
edly demonstrated. As an early example, lyze the hierarchy relative to corporate size,
consider the efforts to establish self-organiz- the spans of control at each level, and its
ing teams among textile weavers at The Cal- growth aspirations-rather than being swept
ico Mills in Ahmedabad, India. The pioneer along with the mania to flatten at any cost.
of the concept, the Tavistock Institute of
Human Relations, found that these teams
Limited Gains From Flattening
became ineffective and broke down unless
management regulated their boundary con- Another popular attack on hierarchy arises
ditions by limiting the variations in their raw from the public perception that hierarchy
materials and personnel. More recently, an means “fat cats” because managerial salaries
autonomous team set up to run a Shell wax increase for each level added. The solution is,
plant produced poor quality output, in part once again, to flatten the structure. True,
because the process was complex and the managerial salaries rise as hierarchy increases,
workers lacked expertise. Management had but cutting levels does not produce the great
to reinstate controls so that the plant oper- cost savings that many people imagine.
ated properly. Consider, as a hypothetical example, a
Nor have leading firms in the growth corporation that has 15,000 front line employ-
economies of Asia taken much notice of ideas ees (e.g., production workers and sales per-
about flat structures and decimation of mid- sonnel). With a span of control of seven, there
dle management. Japanese, Korean, and Sin- are five levels of management in the hierarchy
gaporean corporations look far more like tra- and 2,500 managers, as shown in Exhibit 1. To
ditional bureaucracies, with levels of middle cut one level downsizes the corporation by
managers intact and often increasing as these 1,000 managers, a 40 percent saving. However,
companies become global. Mitsui, currently the span of control must rise to 11, an increase
building an energy business throughout Asia of 57 percent. This is not a trivial increase in
as one of a number of growth initiatives, is an the burden faced by each manager and may
interesting example. Each country in which well have an adverse impact on supervision
power projects are being developed has a quality, communication, and decision speed.
10 ORGANIZATIONAL DYNAMICS
 EXHIBIT 1
FLATTERSTRUCTURES:WIDESPANSANDSMALLSAVINGS

Level of
Managers Span of 7 Span of 11 Span of 25

Five

Four

Three

Two

One

Workforce

Totals:
Managers 2,500 1,500 625
Employment 17,500 16,500 15,625
Savings:
Managers 40.0% 58.0%
Employment 5.7% 5.3%
Paycosts 9.0% 8.0%
Total costs 2.0% 2.0%

While the savings in managers is great and long-term satisfaction among overseas
(40 percent), the savings in total employment competitors!
is only 5.7 percent, which is small. If one uses Cutting one more level requires increas-
the rule of thumb of some compensation con- ing the average span of control to 25, which is
sultants that each level should be paid half as infeasible. Yet it yields only the same sort of
much again as the level below it, then the sav- small additional savings, i.e., 5.3 percent in
ings in total pay costs is only 9 percent. For employment, 8 percent in pay, and only 2
many organizations, total pay costs are only a percent in total costs. Thus further flattening,
minority of total costs. For instance, if pay by cutting by more than one level, becomes
makes up about a quarter of total costs, then unworkable rather than yielding significant
the cut of 1,000 managers produces a decrease economic benefits. Cost savings from flatter
of about 2 percent in total costs. structures are far less than generally assumed
Thus, flattening the structure by one and can lead to ineffective structures.
level involves a massive downsizing of Proponents of flatter structures applaud
40 percent of managers, but yields only a these increased spans of control, seeing them
2 percent saving in total costs. In so doing, as empowering lower level employees and
the spans of control have been pushed out by managers. And the applause increases for
57 percent, endangering overall effective- those companies that form autonomous
ness. The likely results: a delirious financial work groups and remove the supervisors-
press, happy shareholders (for this year at cutting out anoth.er level of the hierarchy.
any rate), reduced corporate effectiveness, Although such developments may be valu-
SPRING 1998 11
able, their effect is limited. Substantial hierar- informal collaboration. We look back in time
chy remains necessary to provide the coordi- and lament what we have lost. This is nostal-
nation framework that is required in a large gia-tinged with romanticism.
corporation.
It is worth noting that corporate pioneers
Problems with Clans
of job enrichment such as Philips and Procter
& Gamble still retain multi-level hierarchies It is simply not possible to run most modern
above the work groups. Tracy Ridder’s best- organizations as clans, as companies such as
selling book, The Soul of a New Machine, pro- Apple and Nike have found. There are a
vided a graphic description of a team at Data number of reasons for this. The modern cor-
General designing a new computer. The team poration brings together large numbers of
was organic in many ways and yet was sub- people who likely have no previous rela-
ject to the definite hierarchy of its supervising tionship to each other. These individuals
manager and the CEO. are free and mobile, so relationships
In sum, the movement to flatten struc- between them lack the all-encompassing
tures is based on flawed and demonstrably “cradle-to-grave” nature of clan member-
false premises. Application beyond limited ship. Their coordination rarely happens
and carefully designed cuts is liable to be spontaneously. The truth is that large num-
counterproductive. bers of people require a hierarchy, reinforced
by bureaucratic structures such as formal-
ized job descriptions.
Of course, the modern organization is
THE CORPORATE CLAN
neither completely impersonal nor entirely
Flattening structures is only the beginning of bureaucratic. Where employees work
the attack on management. The next step is together in teams, informal norms develop
to argue that organizations do not need man- that guide their sense of what is fair and
agers controlling people hierarchically. appropriate and hence shape action. Com-
Instead, people can be encouraged to coop- munications also benefit from informal net-
erate freely through shared values and com- works and from shared meanings reflecting
mon ways of thinking and feeling. The orga- accumulated joint experience. Further, the
nization is seen as a community of people organization may seek to kindle commitment
united by common norms, language, and to shared values such as customer service.
symbols, i.e., a unique corporate culture. Hierarchical management can benefit from
Since everyone is of like mind, consensus is participation by employees and middle man-
readily reached, collaboration is sponta- agers in decision making. But informal norms
neous, and decision making can be subtle. and communications tend to arise in each
Supervision by formal managers arranged in locality and so are too uncertain and frag-
a hierarchy is seen as unnecessary and even mented to reliably coordinate the work of a
harmful to the ethos of mutual respect large, far-flung organization.
among clan members. Hence the clan is seen Obtaining agreement from all employ-
as advantageous in its flexibility, spontaneity, ees about values and priorities is difficult
and long-term orientation. and can even be counterproductive. Large
The corporate clan is a beguiling image. organizations contain many divisions,
Yet it is anachronistic. It reaches back in time departments, and geographical locations.
to the preindustrial era, when agrarian soci- Research has shown that each group tends
eties were organized into clans-confedera- to have its own time-frame, norms, and val-
tions of families controlling a local area. These ues, reflecting its particular task. For exam-
family-based social and economic units enjoy ple, the time-frame of people in the R&D
an appeal for us today because they feature department who are working on long-range,
close bonds, warm solidarity, and relatively uncertain scientific projects is often much

12 ORGANIZATIONAL DYNAMICS
longer than that of people in the manufac- can unite around shared values most easily
turing department who are battling to make when all employees share a similar back-
today’s production target. Further, R&D ground-as did the clan members of old
researchers tend to value inquiry whereas who grew up and worked together. Values
production workers may place more value are learned in the family and school, and
on smooth operations. Each department has through occupational training and social-
its own internal culture. Similarly, a multi- ization at the workplace. The more similar
business firm like General Electric would the backgrounds and work experiences, the
have different cultures for its media, finance, more likely employees will share values.
aircraft engine, and turbine businesses. The For example, the Hong Kong trading house
large complex organization is necessarily a of Jardine Matheson drew its managers
mosaic of subcultures. from boys who had attended elite British
schools.
Yet today, employees in many of our
Clans and Diversity
organizations no longer come from narrow
The heterogeneity of cultures within a large demographic bands, e.g., white, Anglo-Saxon,
organization confounds most attempts to middle class males. Instead, there is increas-
create a single culture strong enough and ing diversity, reflecting both organizational
specific enough to replace hierarchy and policy and changing demographics. Incom-
formal processes. Since such a culture does ing employees increasingly lack shared
not arise spontaneously, it has to be engi- norms and values. This places renewed
neered centrally by management. This vio- emphasis on formal structures to coordinate
lates the whole idea of clans as naturally their efforts, including formalized job descrip-
emerging. Some elements of such an engi- tions, rules, and hierarchy. Indeed, increased
neered culture may become accepted and diversity in our organizations is facilitated by
shared, but other elements are liable not to rules governing selection, promotion,
stick-or to become the butt of cynicism. rewards, and termination, as seen in the for-
Moreover, differences among the subcul- mal policies and procedures for Equal
tures are healthy. They provide diversity of Employment Opportunity. In contrast, clan-
ideas and perspectives, constituting a selec- like organizations tend toward being racist
tion from which solutions to problems may be and sexist.
found. The rubbing together of different solu- The clan does not offer an alternative for
tions provides a creative tension-conflict, managing large firms. Culture can be and is
disagreement and lack of consensus-that used to advantage in many organizations, but
can be a source of flexibility. only to a limited degree. Moreover, efforts to
In contrast, more uniform, homogeneous run large organizations as if they were clans
corporate cultures are in danger of becoming do not address the diversity that is now an
“one-trick ponies.” Their certitude around integral feature of modern societies; such
one way of doing things can become a liabil- efforts may well leave the organization less
ity when environmental change requires a able to innovate and meet the challenge of
new repertoire. A unitary corporate culture future change.
can lead to longer-term problems, as many of
the telecommunications giants, handicapped
by cultures reflecting their history as regu-
KICK THE MANAGERS
lated providers, are finding as they seek to
OFF THE BOARD!
compete via a range of value-added services
in a competitive market. So far we have discussed techniques that
The heterogeneity of culture within a remove middle managers by flattening the
modern organization also reflects the back- structure or dispense with supervision by
grounds of its employees. An organization substituting clans for bureaucratic hierarchies.

SPRING 1998 13
 Going up the organization, we find another However, research findings are mixed. Some
place from which managers are to be projects do find that more nonexecutive direc-
expelled-the board of directors. There are tors and a nonexecutive chair lead to higher
widespread calls today to reduce the number corporate performance and shareholder
of managers who sit as directors on the returns. However, other researchers find the
boards of their companies. Such executive opposite-that more executive directors and
directors are to be replaced by independent an executive chair lead to higher corporate
outsiders who are able to provide impartial performance and shareholder returns. Still
control over management. Specifically, exec- other projects find no effect on corporate per-
utive directors are to compose a minority of formance and shareholder returns. Some
the board, and the board chair is not to be an reviews of the research have concluded that
executive-especially not the CEO. the average effect across studies is about zero.
Various influential groups-formal com- Thus, one can cite examples in support of
mittees of inquiry, institutional investors, whatever position is being argued. General
stock exchanges, and the business press- Motors’ and IBM’s difficulties occurred with
continue to urge these reforms. Their belief is executive chairmen. But General Electric’s
that recent organizational problems, such as and Coke’s successes are also attributed to
corporate failures, poor financial perfor- their executive chairmen.
mance, and low returns to shareholders stem In short, there is no consistent body of
from complacency and self-serving decisions evidence today that demonstrates the superi-
among top managers, especially of large cor- ority of boards of directors that are indepen-
porations. Therefore, managers cannot be dent of management. Indeed, the presence of
trusted and must be closely watched and con- negative findings indicates that there may be
trolled by the board on behalf of shareholders some circumstances in which independent
and other stakeholders. boards injure corporate performance and
In academic circles, these views are rein- shareholder returns. In such cases, removing
forced by theories that talk about managers as managers from the board may be counterpro-
agents whose incentive is to cheat on their ductive, harming the interests the board is
principals, the owners. A kindred theory sees supposed to protect.
the need to curb opportunism and guile The presence of too many managers on
among managers by discipline from the the board, or a manager chairing the board, is
board of directors. said to produce other kinds of defects that
Both the popular and more academic may, in turn, contribute toward poor corpo-
advocates of this position take as their starting rate performance. Managers are said to avoid
point the Berle and Means thesis that the sep- risk and therefore to seek inappropriate
aration of ownership from control in the diversification and to underinvest in R&D.
modern corporation means that managers However, empirical research shows the oppo-
self-aggrandize at the shareholders’ expense. site: that having executive (rather than nonex-
Hence an independent board is required. ecutive) directors on boards leads to less
However, research throws doubt on the diversification and more R&D. It is the pres-
validity of the Berle and Means thesis, which ence of nonexecutive directors on the board
is generally rejected by mainstream eco- that is associated with diversification and
nomics. Specifically, managerial control of lower R&D investment.
corporations does not lead to diminution in Directly opposite of agency theory is
profits or excessive managerial salaries rela- another view, expressed as stewardship the-
tive to owner-controlled corporations. ory, stating that tight control of managers by
The nub of the argument for having outsiders on the board will frustrate man-
boards mainly composed of nonexecutives is agers and harm performance. Executives’
that such boards will produce higher corpo- motivation includes the need to deploy their
rate performance and shareholder returns. competences on challenging assignments

14 ORGANIZATIONAL DYNAMICS
and the need for the socially responsible ing.” Thought is harmful-it slows the
exercise of power. Reducing the authority response. Reflection leads to self-conscious-
and responsibility of managers by having ness, which can lead to inhibition, prevent-
strong, active boards undercuts managers’ ing the decisive act. This Zen of manage-
motivation. Stewardship theory argues that ment has led to what can be called a “cult of
empowerment of managers will stimulate action”-“do it, try it,” see if it works. And if
them to greater commitment and effective- it doesn’t, try something else. The bias for
ness on behalf of the organization and its action has been one of the most widely
stakeholders. Allowing managers to chair the received management ideas of the 1980s. It
board and be significantly represented on the was popularized by Tom Peters and Robert
board is an important source of managerial Waterman’s best-selling book in the phrase
empowerment. “ready, fire, aim.”
Management is equated with being a
hockey coach: “C’mon guys you can do it!”
Such energetic leadership undoubtedly lifts
OTHER DESTRUCTIVE FADS
front-line performance, but there is much
In addition to the fads that call for flat struc- more to management. There are the activi-
tures, replacement of hierarchies with clans, ties of planning, estimating, and budgeting.
and removal of executives from the board, the Diagnoses are required when things do not
trivialization of the task of management is go according to plan. Economies need to be
seen in two other closely related ideas now in sought by standing back and redesigning the
fashion. Both pertain to decision making, system. New products and services ideas
which as Herbert Simon argued long ago, is need to be evaluated. Moreover, the com-
the core of administrative work and therefore plexity of the large corporation means that
a key task of managers. much managerial work is fitting together
The first idea is to downgrade formal pieces of an abstract jig-saw puzzle. Now
approaches to decision making, those that that the strategy has changed and we have
involve systematically working through lists altered our structure to fit it, what changes
of factors, producing facts, and analyzing fig- must be made to the accounting system and
ures. Instead of such pedantic drudgery, intu- to training in order to support the new struc-
ition is revered. The second idea is that formal ture and strategy? These processes are more
analysis, when required, can readily be analogous to chess than hockey.
bypassed by using one of the commonly Large capital investments demand a long
available management techniques. In both time frame, with opportunity to consider sce-
cases, there is little need for the expertise of narios distant from the here-and-now. Glob-
professional managers. All one has to do is alization requires the need to factor in poten-
grab the technique and then fill in the box, tial moves by far-flung competitors, suppliers,
just like painting by numbers! and governments. Moreover, in large organi-
zations, the abstract nature of the reasoning
required by managers increases as one goes
Intuition not Analysis
up the hierarchy. This makes the nature of
“Analysis paralysis!” is the cry. Good deci- managerial work in the large corporation,
sions come from intuition. Obsessing on the particularly at senior-managerial levels,
numbers blocks creativity. Management is remote from concrete experience and from
action. Effective managers get their people to the comprehension of most people.
act. People on the front line who talk to the A potentially fatal flaw in an open democ-
customers know best, so leave it to them, racy is that everybody expects to be able to
rather than stultifying them with planning. understand and judge those in any power
In Japanese martial arts, the instructor position-including business leaders. The
teaches the student to “move without think- exposure of executives to the popular gaze
SPRING 1998 15
has much increased of late. Unfortunately, If it is intuition, then most people could do it.
the mass media’s depictions of corporate Again, we do not need managers, or at least
managers grossly oversimplify their actions in not many of them. Managers do not deserve
order to compress the complexity of corporate much status or pay. And manifestations of
decisions into lo-second sound bites. The formal decision processes, such as commit-
hero is the CEO of the cookie factory who tees, working parties, statistical analysis sec-
says, “Every morning I personally go down tions, planning departments, and corporate
and taste the cookies.” This is something strategy documents are all just species of
every one can understand and applaud- “make-work.”
here is a “hands-on” CEO who is really doing
the job. In fact, the CEO is doing the supervi-
Painting by Numbers
sor’s job.
Not only is abstract and analytical think- Even where the need for analysis in manage-
ing essential in management, it also lays the ment is conceded, it can be subtly denigrated
foundation for creativity. Herbert Simon has by the simple adoption of a canned technique.
argued that the mechanism of genius Just open the can and add water for instant
involves the novel combination of thousands coffee management. Or just paint by the num-
of pre-learned bits of information. Mozart bers and put a blob of paint in each box. The
could originate great music at an early age idea is that one need only follow a preset tech-
because he had been learning the basic build- nique. No real thought is required. Again any-
ing blocks from his infant years. Likewise, one can do it, so there is no need for managers
managerial decision making that seems intu- or for according respect to those who manage.
itive often draws on an unconscious process- In point of fact, few aspects of management
ing of facts mentally stored away through can be reduced to a simple technique. This is
years of experience. It just looks easy. true, in part, because the complexities of man-
These simplifications, however, miss the aging real organizations tend to make infeasible
often lengthy deliberations, the trial-and- the reduction of problem solving to universal
error, the reasoning from failure, the late prescriptions that hold for all situations.
nights, and the time-consuming investiga- For example, consider the popular tech-
tions of the facts. Studies of actual decision nique of “lean production.” One of its main
making, such as strategic changes or reorga- components is just-in-time (JIT) inventory
nizations, show lengthy processes often management, a technique generalized from
marked by study of the details, formal analy- Japanese industry where it has successfully
ses, temporal interrupts, and multiple itera- cut costs. Visit a Honda motorcycle assembly
tions. The complexity of such decision pro- factory, for example, and you will likely
cesses makes them incomprehensible and observe suppliers whizzing into the assembly
boring to the lay observer, so the popular hall, driving small trucks carrying a fraction of
accounts of management are dominated with the day’s supply, and depositing it next to the
stories of intuitive breakthroughs, written in right assembly worker. It appears to be a mir-
action-oriented prose such as how Bill Gates acle of precision. How could they come so fre-
produced Windows 95 at Microsoft, or how quently and so punctually? How can they
Phil Knight ran the promotional strategy that make the journey in such a small truck (a kind
led to the sponsoring of Tiger Woods at Nike. of three-wheeler)? The curious observer soon
Personality, not cognitive process, is liable to discovers the answer: They have come from
figure most prominently. the factory next door!
All of this gives a false view of organiza- This aspect easily becomes lost as the
tional decision making. It fuels the ready practice becomes generalized into a universal
skepticism of ordinary people who hear talk prescription. Factories in countries like Amer-
of “the complexities of managerial decision ica or Australia are told that they should slash
making” as just so much huffing and puffing. their raw materials inventories and rely on

16 ORGANIZATIONAL DYNAMICS
frequent small consignments by their suppli- tiveness can be sustained. Management by
ers. However, these suppliers may be 500 technique condemns the firm to following the
miles away. This makes delivery and schedul- crowd and producing a commodity, with the
ing difficult, rendering such supplies less than result being slim margins.
dependable. Additionally, the supplies may
come by long-haul trucking companies,
which may be unionized and thus subject to
THE NEED FOR A PROFESSION
strike. These disruptions turn JIT into “just-
OF MANAGEMENT
not-in-time,” with consequent production
losses and cost blow-outs. Small inventories The main problem with the fads we have dis-
make the whole production cycle vulnerable cussed is their lack of any solid intellectual
to strike or the threat of strike, so that some of foundation. Implicit in each fad is a cause-
the promised JIT savings may become bar- effect statement that is rarely made explicit
gained away to unions. In addition, because and never properly supported. For example,
land is scarce in Japan, storage space is apt to flat structure proponents imply that fewer
be more costly in ways that do not hold in organization levels lead to better performance
many parts of less densely populated coun- via lower costs, improved communication,
tries, such as America and Australia. and faster decision making. Yet there is a lack
Hence, seemingly universal techniques of generalizable studies to back up this claim.
such as JIT may be far less robust than their Nor can it be substantiated by relying on a
protagonists hold. This throws the onus back generally accepted and proven idea. The rea-
onto the managers of each organization to son is that such ideas in the field of manage-
work out which parts, if any, are useful for ment are always heavily qualified. For exam-
their organization in its particular circum- ple, greater workforce participation is likely
stances. The key is for managers to identify with flatter structures; however, greater par-
the major cost areas in their own organiza- ticipation is not always appropriate, e.g., Jack
tion and then see how they can be reduced. Welch at General Electric when he was forced
What is critical for an assembler in Japan to sell or close businesses.
might be very different for a labor-intensive The same comment can be made of other
customer service organization in a country fads discussed in this article. Neither the
like America. weight of empirical studies nor generally
JIT and other techniques are useful as accepted principles exist to support the claim
sources of ideas, but not as a set of rules to be that clans and nonexecutive boards are likely
followed by all organizations. Similar remarks to improve performance. Proving the effec-
apply to the techniques of portfolio planning, tiveness of some of the other techniques is
value-based planning, niche strategies, TQM, even more problematic. Even the proponents
business process reengineering, benchmark- of reengineering estimate that 50 to 70 per-
ing, and employee gainsharing, all of which cent of reengineering efforts fail to produce
have problems as generalized techniques. the dramatic gains intended.
(For critiques of these concepts, see our recent Where does this uncertainty leave the
book, Management Redeemed, cited in the bibli- practice of management? In our view, the
ography.) essence of management is the disciplined and
The fallacy of technique is the assumption dedicated application of a range of ideas to
that significant value can be added by follow- specific situations. Each manager faces the
ing a general rule and doing what everyone challenge of bringing together the general
else does. Developments in corporate strategy and the specific. This requires both logical rea-
emphasize the opposite: generating products, soning and expertise gamed via experience.
services, or production processes that are In this respect, management should be
unique and so command a market premium seen as a profession-like law, medicine, or
or have a cost advantage-and whose distinc- architecture-where learning and skill are
SPRING 1998 17
 applied with care and ethics. This entails five dism in management studies has created an
characteristics: ideals, ethics, a body of knowl- impediment to greater intellectual produc-
edge, sound reasoning, and clear language. tivity by allowing unproven and incorrect
Organizations are vital components of ideas to go unchallenged. This tends to pre-
society, contributing to core societal tasks vent the more rapid production of sound
such as educating children, healing the sick, theory backed by cumulative empirical
generating new technology, and creating research.
goods and services. It therefore behooves As we have stressed, the generalizable
managers to serve such social ideals, rather elements from the common body of knowl-
than to see their organization solely in terms edge about management need to be turned
of narrow economic ends. The essence of into specific prescriptions for each particular
being a manager is shouldering responsibil- organization. This key task of organizational
ity for the conduct of one’s own organiza- management emphasizes the need for clarity
tion. The more managers see their actions as of thought, which in turn depends on sound
connecting with fundamental social values, reasoning and clear language.
the more profound their contribution will be, Sound reasoning involves making logical
and the greater their motivation to make a inferences so as to draw correct conclusions.
contribution. The legal profession is renowned for being
The emphasis upon values leads logically precise in what can and cannot be inferred
to the next characteristic of a professional from a premise. Training in the law involves
manager, ethics. Managers should hold to practice in reasoning closely from case facts to
the ethical precepts that are implicit in the principles and back again, Without endorsing
values of their particular business, e.g., for the pedantry that may sometimes occur in
managers of medical organizations, the legal reasoning, managers need to be adept at
paramount value attached to human life and sound reasoning. A manager lives in a case
dignity. However, there are also ethical stan- study-his or her own organization. He or
dards that inhere in being a manager of she has to be able to identify the facts about
whatever kind of organization. Central to the organization and then reason from them.
these is fairness in dealing with subordinates. Equally, he or she has to be able to reason
A manager, by definition, has authority over down from the general principles to the
other people, and it is therefore incumbent action implications and ascertain whether
on the manager to not abuse those people they apply, given the facts of their case.
nor abuse his or her authority. Similarly, Sound reasoning is assisted by clear lan-
business corporations have a responsibility to guage. Reasoning is thinking, and thoughts
treat their customers ethically. are carried in language. Fuzzy langua.ge
The next three characteristics of a pro- leads to fuzzy thought. Unfortunately, the
fessional manager shift from the evaluative proliferation of terms in management jargon
to the cognitive dimension. For manage- has made fuzzy language all too common.
ment, like any profession, there is a body of Much of this confusion is fuelled by the
knowledge that practitioners need to master. desire of management writers to propound
This body of knowledge is evolving and is new theories that take a distinctive angle on
less precise than, say, physics, and less exten- an existing topic.
sive than, say, medicine, but exists nonethe- In contrast, clear language requires that
less. It is composed of subjects such as technical terms be given stable definitions
accounting, business law, economics, human allied to established theories, as the language
resource management, marketing, finance, of physics does in its definitions of terms such
organizational behavior, statistics, and so on. as temperature or pressure. A profession of
Over the past century, research has made management would be built around settled
significant strides in creating such a body of theoretical frameworks that lead to fixed def-
knowledge. At the same time, however, fad- initions of terms and hence clear language.
18 ORGANIZATIONAL DYNAMICS
CONCLUSIONS tive and cognitive levels. At the evaluative
level, ideals and values are foundational.
While sometimes fads trigger useful ideas,
Their articulation in practice leads to profes-
many in fact are anti-management. The con- sional ethics, which for managers emphasize
temporary fashion is to blow away managers morality in the ways they exercise authority.
or denigrate and disempower them. This is
At the cognitive level, management needs to
based in part on the denigration of the job evolve a sound body of knowledge and clear
content of managers. The tendency to laud language that will assist members of the pro-
intuition undercuts claims that managers
fession to reason cogently. Faddism is the
need analytic expertise. Again, where the
enemy of this professionalism. It breeds a pro-
need for analysis is conceded, simple tech-
liferation of theories and terms that frustrate
niques are proposed as the way to move
creation of a coherent framework and the
ahead. Yet techniques are at best only broad
development of readily understood terms
guides. A great deal of careful analysis of the
with stable definitions.
details of each organizational situation is
required for new behaviors to be effective.
This again throws the onus back onto the
management of each organization. To order reprints, call 800-644-2464 (ref. number
Management needs to be a profession. 9273). For photocopy permission, see page 2.
Developments are needed at both the evalua-

SELECTED BIBLIOGRAPHY

The arguments in this article are developed in Organizations,” Social Science Research, Vol. 1,
more depth in our recent book, Frederick G. 1972, pp. l-24. This study has been criticized, but
Hilmer and Lex Donaldson, Management many of these criticisms have been rebutted
Redeemed: Debunking the Fads that Undermine recently in Lex Donaldson, For Positivist Organi-
Corporate Performance (New York: Free Press, zation Theory: Proving the Hard Core (London:
1996). This book was a finalist in the Financial Sage, 1996). This book also offers a critique of
TimesBooz-Allen & Hamilton Global Business “Parkinson’s Law.”
Book Award for 1996, in the Business Strategy For a discussion of the factors that deter-
and Leadership category. (It has also appeared mine the span of control for a manager, see
in German as Jenseits der Management Mythen: John Child, Organization: A Guide to Problems
Kontinuitat Statt Trendhopping, and in Dutch as and Practice, Second Edition (London: Harper
Management, Een Herwaardering: Hoe Mode- & Row), Chapter 3. A study showing the
grillen het Bedvijfsleven Ondermijnen, Uitgeverij necessity for large corporations to adopt
Contact, Amsterdam, Holland: Nederlandse multi-level hierarchies is Alfred D. Chandler,
vertaling, 1997.) In this book we document Jr., Strategy and Stvuctuve: Chapters in the His-
many of the research findings on which we tory of the American Industrial Enterprise (Cam-
have drawn. bridge, MA: The MIT Press, 1962). Research
On the relationship between organizational on Japanese companies is reported in Ronald
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M. Blau, “Interdependence and Hierarchy in gins of National Diversity in Industrial Relations
SPRING 1998 19
(Berkeley: University of California Press, Wisdom,” Corporate Governance:An International
1973). Review, Vol. 2, July 1994, pp. 151-160.
The classic study of the need for hetero- For a critique of anti-manager fads in Amer-
geneity of cultures within organizations is Paul ican academic organization theory, see Lex Don-
R. Lawrence and Jay W. Lorsch, Organization and aldson, American Anti-Management Theories of
Environment: Managing Differentiation and lnte- Organization: A Critique of Paradigm Proliferation
gration (Boston: Harvard University Graduate (Cambridge, England: Cambridge University
School of ‘Business Administration, Research Press, 1995). For an explanation of stewardship
Division, 1967). For a review of research on theory, see James H. Davis, F. David Schoorman,
boards of directors, see Lex Donaldson and and Lex Donaldson, “Towards a Stewardship
James H. Davis, “Boards and Company Perfor- Theory of Management,“ Academy of Management
mance-Research Challenges the Conventional Review, Vol. 22, No. 1, January 1997, pp. 20-47.

20 ORGANIZATIONAL DYNAMICS