STRUGGLING AGAINST international competition,
high interest rates and a depressed economy, American business is anxious and uncertain. Prosperity was indulgent to managers. Riding an expanding market, ordinary managers looked good. Hard times have exposed mediocrity and opened minds to question old assumptions.
The first wave of new-style business books contrasted the overly bureaucratic, adversarial American management with the more subtle, cooperative Japanese approach. The most notable were Theory Z: How American Business Can Meet the Japanese Challenge by William Ouchi and The Art of Japanese Management by Richard Pascale and Anthony Athos.
Now, a second wave of business books draws lessons from the best-managed American companies. The books challenge approaches to managerial strategy now taught in leading business schools. To prosper, even survive, they argue, American business must become leaner, less cerebral, more oriented to human needs and emotions.
Two of these books, In Search of Excellence by Thomas J. Peters and Robert H. Waterman Jr. and Corporate Cultures by Terrence E. Deal and Allan A. Kennedy, draw on a study sponsored by McKinsey & Co., a management consulting firm to several successful, large American companies. (Peters, Waterman and Kennedy have worked for McKinsey; Deal is a professor at Harvard.) Corporate Cultures maintains that through rituals, rewards, folklore and practices, these companies, which include IBM, Procter & Gamble, Texas Instruments, Hewlett Packard, Delta Airlines and others, develop and maintain an environment that motivates employes to desired ends. In Search of Excellence goes further to describe eight managerial attributes Peters and Waterman find in the most successful companies. (They do not ask the question whether some failures are also characterized by the same attributes.) These include "a bias for action" as opposed to over-analysis and planning; responsive customer service; support of entrepreneurial activities; more participative management; emphasis on high quality "stick to the knitting" as opposed to venturing conglomerate-fashion into unknown businesses; simple organizational structure with minimum managerial hierarchy; and a balance between centralization and decentralization, emphasizing core values and autonomy in how managers move toward goals.
Both Corporate Cultures and In Search of Excellence include many quotes from successful managers about what they do. But their explanation of why these practices work appears to fall back on debates about business theory and motivation. Despite emphasizing the importance of leadership in the promotion of values, we do not learn about the leaders who have created these organizations and how they are different from other managers. Can anyone adopt these successful practices?
Examining some of these companies in greater depth, Fred I. Foulkes in his book Personnel Policies In Large Non-Union Companies (Prentice-Hall, 1980), describes how they have developed a climate of trust and high commitment throught employment security, few status distinctions (for example, informality--everyone eats in the same cafeteria), equitable pay and benefits, usually higher than unionized companies, and careful selection and development of managers who are respectful and responsible to employes. For this system to survive, companies have had to maintain job security and internal promotion through continual innovation and growth. Even so, during the course of this study, Foulkes saw "deterioration in the approaches of more than one of the companies in the sample. This deterioration seems to have come about because of a change in top management, or because of a change in one or more of the company's characteristics or environmental factors." He quotes a vice president of personnel in one of these companies: "The real answer lies with the guy at the top and his philosophy and his top management team. This is terribly important, for there are many things that can get you off the track. In our company, what we did was like a religion. Dedication was required and there had to be faith that what we did would pay off." The social rituals and customs made much of by Deal and Kennedy would soon become meaningless or disappear if they were not expressions of values that are both articulated and demonstrated by top leadership in more tangible ways. The people who work for these companies are not so naive that they are taken in by rewards and plaques and parties, when in fact they are being ill-used and manipulated. I've often seen attempts to involve workers in quality circles or teams fail, because employes do not trust the leadership.
Peter and Waterman cite Rene McPherson as an exceptional manager who transformed the Dana Corporation, but they do not mention that he developed cooperation with the United Auto Workers. Indeed, almost all examples from these books are of nonunion companies and none mentions unions.
Despite the emphasis on culture and participation as opposed to controlling, superbrain management, these books are silent about both character and human relationships.
Another new-wave book, The General Managers, by John P. Kotter of the Harvard Business School is a study of 15 successful top managers and what they do at work. Kotter shows that the effective executives not only understand the complexities of their particlar industriessbut also develop good relationships with their subordinates. Kotter questions the philosophy of his business school, that one can train interchangeable professional managers--hired guns with the strategic and technical skills to operate in any industry with equal effectiveness. The top manager who has moved into a company, and especially an industry he does not know well, spends most of his time trying to catch up and develop relationships. The implication of his study is that rewarding managers who increase the bottom line but fail to develop subordinates is bad business.
Kotter describes successful managers as "intelligent . . . aggressive . . . they like power, achievement." They are "ambitious . . . they like to win," are "optimistic." Most people would probably say this about successful executives without doing a "careful, in-depth study for six years." In fact, only in quotes from the manager Kotter considers the most effective of all do we get some sense of character when he says, "I spend a fair amount of my time trying to reduce contempt in the organization. It's absolutely deadly. Not conflict, but contempt. It's the ultimate in desecrating people's self-images." Here is a manager who recognizes this responsibility to create greater harmony by emphasizing human dignity.
In Search of Excellence doesn't touch the character of leadership, but Corporate Cultures does in a way that is confusing and contradictory. Deal and Kennedy say managers should not try to be "warm and humane" but to be "bastardly and . . . heroic. The point is this: modern mangers who try to be humane may at the same time undermine the values upon which the 'culture' of the institution rests. Modern heroes may need to be hard and 'insensitive' to keep a company consistent with its goals and visions--the very elements that made it strong in the first place." They then cite Thomas Watson and John Patterson of NCR as examples of successful tough guys. Watson and Patterson fit their times. Why do Deal and Kennedy not focus on Bill Hewlett of Hewlett Packard or Jim Treybig of Tandem Computer who are more contemporFoary and, according to the authors, more caring? When Watson built IBM, people were willing to accept servility as the price of security but not now.
In rejecting the arid strategic planning of financial managers, the new wave substitutes a new theology of high-commitment culture and customer-oriented action. It says little of the historical changes in markets, technology and values which are making the old approaches obsolete. These new books will be useful to businesses trying to become less rigid and bureaucratic but they do not provide a road map to success. CAPTION: Illustration 1 through 8, no caption, Copyright (c) 1978, by Jack Ziegler