Jake Gordon

"New Forms of Management Effectively Solve the Problems of the Organisation" Critically evaluate this statement

Before discussing new forms of management, it should be noted that the word 'new' is used loosely and it can be argued that they "are not entirely new. Management initiatives to secure increased labour flexibility, particularly the use of temporary and part-time labour, sub-contracting and less restrictive working practices, are not new in themselves... However, in the way in which these initiatives fit together as part of an integrated management programme... they are new" (Beale, 1994: 2). New forms of management will refer to this 'integrated management programme', encompassing but not limited to the various forms and concepts of management listed at the end of the following paragraph.

New forms of management were born in the 1980s to provide solutions for problems facing organisations. These forms have management, which have many of their origins in the car production and consumer electronics industries, have been quickly adopted by organisations through the 80s and 90s, and they are now prevailant in almost all sectors of employment, both private and public. In general, they represent the pursuit of increased efficiency and quality, enabling an organization to reach its goal with minimum expense of money, time and effort. More specifically, new forms and concepts of management include, but are not limited to: increased labour flexibility; employee involvement; teamworking; total quality management (TQM); just-in-time production (JIT); human resource management (HRM) and customer relationship mangement (CRM).

When one problem is solved, it can often lead to another being created which may or may not be predicted. For example, whilst in theory one management practice may lead to increased efficiencies, it may be hard to predict how employees will react to change - often resisting it. For this reason, a new strategy can solve one problem whilst creating a greater problem which must then be dealt with. Such is the case with many techniques employed by new forms of management.

Whilst new management technqiues may increase efficiency and quality whilst reducing costs, sociologists must also question this very notion in relation to philosophical, political and economic ideologies. Whilst increased efficiency and quality may benefit an organisation, it may not benefit society - material living standards may rise, for example, whilst the more subjective notion of quality of life falls. It may be found that problems of the organisation are solved through new forms of management, but perhaps this is only at the expense of creating new social and economic ills such as job insecurity, unemployment, poverty and environmental decline. These aspects may not be considered an organisation's direct concern, interest or liability, but for society to continue to function and thrive, somebody must take responsibility. And so it is crucial that new forms of management can be analysed with respect to their full effect on society, with the hope that social policy makers and global citizens at large can make the right decisions.

Through this essay, the various forms of new mangement shall be evaluated and scrutinized in their effect on organisations and society.

New forms of management have thier roots in post-war Japan's car and consumer-electronics industries. Years of tension between trade unions and their employers ended with the defeat of the trade unions, paving the way for "the development of the radical management methods associated with flexibility of labour, employee involvement, total quality management and just-in-time production." (Beale, 1994: 28).

Trade unions and employment protection laws defend the interests of employees, reducing the power inequality with their employer. Karl Marx studied the fundamentally antogistic relationship between the proletariat labourer (dependent on wage labour) and the bourgeoise (capitalist ruling class) and notes that society has always been marked by inequality in power relations, and that this is especially true in a capitalist economy. Trade unions together with employment protection laws have provided the working class with a way to struggle against the capitalist ruling class.

But whilst equality between employers and employees may be an admirable socialist ideal, the process of globalization and international competition for markets has led to realist policies such as the removing of many employment protection laws, particularly under the Conservative Thatcher government of 1979. As a result, it has become possible for organisations to legally adopt anti-trade-union policies - a key to new management techniques.

With the absence of powerful trade unions, managers in an organisation suddenly becomes more powerful, making managerialism possible. "Efficient management is a key to the [national] revival... And the management ethos must run right through our national life - private and public companies, civil service, nationalized industries, local government, the national health service" (Heseltine, 1980, quoted in Bouckaert & Pollitt, 1999: 149). As clear from Heseltine's statement, the Conservative government were putting much faith in the importance of management and righ right of management to manage.

Replacing trade unions were the company unions in which management worked together with workers, rather than in a struggle of resistance and control. Company unions are less suseptible to industrial action which would make just-in-time (JIT) production technically infeasible. Labour also had to be made more flexible before JIT principles could be adopted.

JIT "is not a simple set of techniques; it is a philosophy which integrates a broad range of both new and old techiques" (Beale, 1994: 29, italics his), enabling an organisational to solve problems of waste inefficiency through reducing the time between purchasing of materials and selling of goods. It enables a company to reduce storage space holding buffer stock piles, instead ordering materials as and when they're needed. In this way, stock can be used more efficiently and waste can be eliminated, reducing capital outlay. Just-in-time principles can be applied to and organisation's workforce as well as its materials and produced goods. Zero hour contracts do not guarantee employees any number of hours per week, and enable an employer to call upon an employee to work only when they're needed. This enables an organisation to scale up and down extremely quickly on a daily or even hourly basis.

JIT production is strongly linked to another new form of management: total quality management (TQM). "[I]f stock levels are dramatically reduced then the system becomes vulnerable... Getting the job right first time becomes a more urgent aim." (Beale, 1994: 41). TQM addresses this problem, and 'quality' does not refer to the 'goodness' of a good, but its adherence to standards. TQM means producing a good or service which is the same all the time and will not differ from one day's production to the next. Standardisation and consistency are crucial, enabling a product to be managed without uncertainty. A key feature of TQM is in ensuring quality first-time, rather than inspecting faults out, as this is the most efficient use of resources. TQM helps an organisation's transparency and accountability, increasingly important to secure funding against international competition - ensuring investors know exactly what they're buying into. Another benefit of JIT and TQM to an organisation is in their ability to quickly highlight any faults in the production line, forcing "management to tackle problems as soon as they arise and to find permanent solutions to them... improv[ing] the service to the customer... reduc[ing] operating costs" (Beale, 1994: 41).

But TQM has perhaps not yet been studied fully enough to fully appreciate its goals and weaknesses. "There is usually very little discussion of the problems that mangers may experience in applying the techniques, and little or no information about how TQM is perceived by employees. Moreover, the principles of TQM are assumed to be universally applicable, and one organization is assumed to be much like any other (Rees, 1993: 2, quoted in Wilkinson & Willmott, 1995: 1-2). Indeed, the concept of universal applicability is often falsely assumed. Organisations vary greatly on an both iner- and intra-industry levels.

Human resource managment (HRM) replaces 'personnel', putting the onus on managing employees as resources from which the organisation wishes to extract the greatest possible benefit. Emphasis is on quality and the efficient of the use of these resources. Various strategies are used to do this, including performance related bonuses an other practices to encourage employee involvement in the organisation, increasing labour flexibility to allow JIT, encouraging teamwork and sharing of knowledge. Again, HRM does not work alone but in tandem with JIT, TQM and other management practices. In more recent years, customer service has been transformed into customer relationship management (CRM), providing a new management framework in which to best please customers in a standardised (quality) and efficient way.

New quality management techniques' continuous improvement process can be described as 'management by stresss', providing a workplace which is fast moving and geared towards increasing quality and productivity above all else. However, this has serious implications on employee helath, and in turn on the productivity of an organisation. Whilst in theory each individual becomes more productive, employee's are human and react in human ways to stress. One way is be quitting a job - increasing staff turn-over and the costs involved. Another is by resentment towards the organisation, resulting in a drop in productivity. There is also the issue of mental and physical health, and an employers' legislative responsibility for these.

Problems relating to stress and change which affect an organisation and its workforce as it adopts new management techniques are, implies Friedman (2000), out of the hands of the organisation itself, and an inevitable process in the proliferation of the new system of globalization. Friedman's discussion throughout implies that new management techniques are necessary for organisations to compete in a global market, and a failure to keep up to date with technology and new methods of efficiency will result in organisations failing. Friedman symbolises this reach for increased efficiency and resulting material quality of living with the Lexus car, and contrasts this with another human desire to keep our olive tress, representing our human roots, communities, religions and families. It appears as though many organisations are in pursuit of the Lexus, whlist neglecting equally important olive trees.

A JIT labour principle is that of the paperless, desk-hopping office in which all documents are computerized and nobody has their own personal desk any more, but can work at home or sit at one of the available shared desks. Through a real-life example, Friedman (2000: 423-424) highlights problems this creates for both the organisation and the employees. The employee is left with a job which is less satisying and dehumanised, with little face-to-face contact with other employees. Meanwhile, because the employee can't talk directly with fellow employees whilst on a trip to the water-cooler, they find it difficult to share knowledge with fellow employees which may be critical to a job's success.

Sennett (1997) sees the problems of 'new capitalism', typified by new forms of management, as "impoverishing the value of work. Becoming more flexible and short-term, work is ceasing to serve as a point of reference for defining durable personal purposes and a sense of self-worth; sociologically, work serves ever less as a forum for stable, sociable relations." (1997: 162). Carr expands upon this point, argues that "it [flexible work, breaking tradition connections] erodes the foundations of society. We don't bond with others; we 'team' with them... We're not members of enduring, nurturing communities; we're nodes in ever-shifting, coldly utilitarian networks... we are left with an ironic sense of ourselves as fabrications. We become unreal, virtual." (quoted in Friedman, 2000: 424-423).

Ritzer (2000) highlights a paradox where rationality can become irrational. Organisatons become rationalized or 'McDonaldized', following the principles of efficiency, reliability, predictability and control through new management techniques. But not everyone wants rationality, including both employees and customers. Small non-chain restaurants can survive and compete with McDonalds with their charm, character and humanizing irrational qualities. Whilst McDonalds can lose customers to these irrational alternatives, the same can be applied to employees leaving rational organisations in search of non-rationalized alternatives. This partly explains why McDonalds has an incredibly short average staff-turn-over time of just three months, and why high staff-turn-over is a problem created by new management forms for the HRM department to deal with.

Max Weber worked extensively to understand the themes of rationality and bureaucracy which he saw during his life (1864 to 1920) as increasingly dominant through the development of capitalism. New forms of management can be seen as evolving and extending from the basis of rational bureaucracy, rather than being revolutionary. Many problems associated with new forms of management are also problems of rationalisation. The problems lie with resistance of employees and customers to rationalization, rather than with the managed production process itself.

Managerialism is based upon "the seldom-tested assumption that better management will prove an effective solvent for a wide range of economic and social ills" (Pollitt, 1993: 1), but this assumption fails to understand that an organisation will have its own goals and objectives (in the case of companies, most often profitability) which can add to, rather than solve, economic and social ills. In search for profit, companies act for their shareholders and not for society. So the reliance on management can in places solve organisational problems, whilst creating and accentuating those of society.

Klein (2000) highlights many problems with a reliance upon a free-market consumer-capitalist economy installed with new forms of management. In one argument, Klein quotes Ermatinger, president of Levi's America division, explaining the company's decision to shut down twenty-two plants, laying off 13,000 workers. "Our strategic plan in North America is to focus intensely on brand management, marketing and product design... Shifting a significant proportion of our manufacturing work... to contractors throughout the world will give the company greater flexibility to allocate resources and capital to its brands. These steps are crucial if we are to remain competitive" (Klein, 2000: 195). TQM is sold to consumers by creating an easily identifiable brand through 'brand management' and marketing. Without TQM, branding is extremely difficult as a brand allows consumers to know what a good or service is, wihtout being surprised by inconsistencies. Klein, a socialist, discusses various ways in which this reliance upon brands can lead to exploitation and exclusion of workers, consumers and the environment.

Thoughout this essay new forms of management have been evaluated in their ability and disability to solve problems for organisations, and also in their wider impact on society.

New forms of management do not work individually, but as a whole, with some techniques having a pre-requisit for others. Together with managerialism, they become extremely important for organisations to succeed. What should be clear is that new forms of management are not revolutionary or unique, and represent a natural progression of rationality. Because of a highly interconnected global market, it is now necessary for principles of new management to be implemented for their cost saving efficiencies, allowing organisations to become more competitive.

It is in increased efficiency that new forms of management solve most problems, whilst creating new ones in workers' increased stress and resistance to change. Importantly, organisations implementing new management techniques also create and accentuate societal problems through the provision of dehumanised and stressful environments in which to work. However, it is also noted that without these new working environments organisatons are more susceptible to failure, in which case jobs can be lost entirely.

It is necessary for organisations to agree on a balance based on the knowledge that hypothetical efficiencies gained through management change may be partially or fully counterbalanced by inefficiences arising, largely through resistance and other seemingly irrational consequences. New forms of management alone do immediately solve the problems of the organisation. Ironically, it is perhaps these new forms of management which need to be manged themselves.

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Beale, David (1994) Driven By Nissan? a critical guide to new management techniques, Lawrence & Wishart: London
Bouckaert & Pollitt (1999) Public Management Reform: A Comparative Analysis, OUP: London
Enteman, Willard (1993) Managerialism: The Emergence of a New Ideology, University of Wisconsin Press: London
Friedman, Thomas (2000) The Lexus and The Olive Tree, Harper Collins: London
Klein, Naomi (2000) No Logo, Flamingo: London
Pollitt, Christopher (1993, 2nd ed.) Managerialism and the Public Services, Blackwell: Oxford
Ritzer, George (2000) The McDonaldization of Society, Pine Forge Press: London
Sennett, Richard (1997) The New Capitalism, Social Research 64: 161-180
Wilkinson & Willmott (1995) Making Quality Critical: new perspectives on organizational change, Routledge: London

by Jake Gordon, some rights reserved