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BMAN 73150 Trends in global business and management Lecture 3: Work and the workforce (including managers) in terms of structural change: How does structural ‘change’ and fragmentation unsettle forms of work and transform them? The emergence of the creative economy as reality and myth PART 1 Professor Miguel Martinez Lucio 2021

Structure of Lecture

Part 1: The question of structural change and ‘decentralisation’

The problems and challenges of de-centring organisations

Part 2: The emergence of the creative economy as reality and myth

Part 3: Guest speaker and section on SMEs

Lots of amazing promises and hopes link to new organisational forms

https://blog.dropbox.com/topics/work-culture/21st-century-organization-structure

Idealised change narratives are very common

But…

Trends mutate and re-emerge in different forms as well

The different ‘trends’ in this lecture vary and are different in some senses but there are sometimes common links or ‘drivers’ and imperatives for change that underpin them

The desire for a more local and decentred approach resurfaces in various ways

Part 1: The question of structural change and ‘decentralisation’: and related problems

Understanding the Importance and Types of Structure – How we see and understand them as in the follow visual examples of structure

Organisational Structure

What is organisational structure?

Structure:

is a pattern of relationships among positions in the organisation;

Defines tasks and responsibilities, work roles and relationships, and channels of communication;

Provides the criteria for structural effectiveness;

Organisational chart

An organisation structure is often presented by an organisational chart which implies:

Reporting lines channels of communication

Workgroups

Levels of seniority and responsibility

The Objectives of Structure

Division of work among members of the organisation;

The economic and efficient performance of the organisation and the level of resource utilisation;

Monitoring the activities of the organisation;

Accountability for areas of work undertaken by groups and individual members of the organisation;

Co-ordination of different parts of the organisation and different areas of work to achieve organisational goals;

Flexibility in order to respond to future demands and developments, and to adapt to changing environmental influences;

The social satisfaction of members working in the organization.

Bureaucracy and common images?

The common view of bureaucracy as being dysfunctional:

https://www.youtube.com/watch?v=VveTsyjFlNA

https://www.youtube.com/watch?v=yaJMD4AkZWs

However we need to be careful when dealing with the binaries and simplicities that underpin such approaches

Explaining the Supposed Shift away from Bureaucratic Organizational Processes to Decentralized and Network Based Approaches:

The cult of decentralization?

Idealist (but not very realistic) approaches to explain changes

Centralisation v. Decentralisation

Advantages of centralised and decentralised decision-making:

From Clegg et al (2005)

CENTRALISED	DECENTRALISED
Control	Speed
Consistency	Flexibility
Co-ordination	Responsiveness
Accountability	Relevance
Economies of Scale	Motivation

Why is there a challenge to bureaucracy or more centralised structures?

Bureaucracy is a source of much discussion, but it is felt we are moving

to a post-bureaucratic age:

Organisational Factors:

Impact of competition and unstable environments

Efficiency and reduction of costs – including organisational ones which target ‘bureaucratic costs’

Greater need for fast knowledge transfer and exchange

Technological change means greater organisational adaptation especially with new forms of organisation with the platform economy

Political and social factors:

De-regulation and marketisation – although current economic context may limit these influences

Greater need for employee autonomy and skilled employees

Note these factors do not always sit easily together or point to a specific direction of change – they can be contradictory

(source: Clegg, 2015)

There has always been a fascination with wanting to push the focus of organisations and work closer to the local and to de-bureaucratise, as in the 1970s

Decentralization, Networking and Change

Flexible Organisational Boundaries: Sabel (1994) talked of a greater flexibility within the organisation, and an ability to have a structure that covers various markets and to shift emphasis between projects.

De-centring: firms as a cluster of smaller business units; subcontracting/outsourcing; a greater emphasis on a decentralised approach in terms of structure: the use of information technology and quality management to ensure such developments.

The Boundaryless Corporation: the role of complex supply chains and outsourcing in creating greater interdependency

The Age of Collaboration?

This is seen to be the age of collaboration be it at the level of the team in the workplace (note the rise of teamworking) or between corporations.

The new organisation is – in theory - about co-operation and collaboration in order to develop strategies and products/services that facilitate a greater competitive ability on behalf of a firm, be it:

teamworking

greater collaboration between departments,

or joint ventures and alliances between firms

https://www.youtube.com/watch?v=LR3JTyi-Kek

Hence, we speak of a Post-Bureaucratic age – an age of networking and network-based management. There are various definitions of networks and networking. In effect it is a halfway house between bureaucracy with its hierarchical organisational structures and markets with its ‘open’ transactions (see Powell, 1991 – referenced in Ackroyd The Organisation of Business).

There are various points of co-ordination working together with a fair degree of autonomy. This degree of autonomy will vary.

A society whose social structure is made up of networks powered by micro-electronics-based information and communications technologies.

(Castells, 2000)

The problems and challenges of de-centering organisations

Tensions and Realities

Even Castells, the guru and academic behind concepts such as the Network Society, argues that all networks have hubs – key intersections and power points. There are hierarchical elements to any relation – unfortunately – and even within collaborative networks there may be dominant players. There are managers of networks.

Networks are not always based on neutral, transparent and formal relations. There are many different types and purposes and within them, there may still be hierarchies based on contract, knowledge, coercion, etc. Jensen (2004: 76) argues that networks vary between those based on ‘similarity and boundedness’ (‘clubs’), those based on ‘difference and functional relations’ (‘chains’) and those based on much looser and undefined relations (‘acquaintances’).

Many networks are formal but many are informal, e.g. links of business men and women with particular interests, social status and economic interests which can act as a form of hidden hierarchy.

Moreover, there is a problem, as Ackroyd has detected, of an increasing level of corporate concentration, which does not always sit well with the notion of networking: making us believe that networking is an operational factor and relation, and not one that underpins the very ownership and strategic decision making of a firm. This is clearly a point of discussion.

MacKenzie (see the journal Work, Employment and Society 2000 &2002 and Org. Studs. 2008) has argued that many firms decentralize and subcontract only to find that they eventually re-centralise in the face of problems and tensions in terms of production quality, organisational order and employment related issues.

Tensions and Realities (Continued)

EXAMPLE OF PROBLEMS WITH NEW ORGANISATIONAL FORMS: THE CASE OF OUTSOURCING

The text by Bowman et al (2016) argues as follows:

Outsourcing shifts the blame between different parties e.g. governments may blame the providers of a service it contracted to or vice versa

Creates (IRONICALLY) giant conglomerates which can control and influence bidding and limit competition for tenders which they win

Raises serious public control issues in terms of public services and their provision

Tensions and issues in the Boundary-less Organisations in terms of HRM

Impacts on commitment strategies in terms of who the employer is and what is the line of command. Barley and Kunda (2001: 78) argue: ‘to determine whether organisational boundaries are constructed differently today requires data on where people work, with whom they work, and, most importantly, how they conceptualise their identity and the social collectivities of which they are part.’

Generates the problem of skills development: ‘Many managers complained that they were no longer engaged in the tasks for which they had expertise - for example health service managers no longer managed health services but instead had become by default full-time auditors and monitors of inter-organisational contracts (Grimshaw and Hebson 2003).

Tension’s (Continued)

Clients may take a primarily short term interest in the contracting arrangement and also in the system of work organization within the supplier company. There are considerable dangers that the development of a complex supply chain may result in an institutional failure to allocate responsibility for either the development of a skilled workforce or of new and more productive ways of working. (See Rubery et al 2004).

Voice mechanisms for workers may vary across the different relations within and between organisations with the periphery becoming more fragmented and thus generating low trust and instrumental relations.

The impact on management

We have know for some time that decentralisation within organisations places great stress on management as it needs to coordinate a more complex array of units (Martinez Lucio and Noon, 1994)

As you decentralise it can lead to issues and problems related to the ability to manage in a fair manner and to sustain social and equality initiatives (Demmke, 2020)

There may be capability and capacity issues within management as they are called to account, communicate and engage directly with their workforce but without the strategic supports

In Defence of Bureaucracy

Some such as Byrkjeflot and Du Gay (2009) insist that bureaucracy has a place and that we cannot throw out these forms of organisations that easily:

‘One of the central functions of the civil service is to provide government with expert advice. This cannot be done in a proper way without a system of archives and files and routines for checking and making use of them.

As noted by Karl Deutsch a long time ago: Memory is essential for “any extended functioning of autonomy” and thus for bureaucracy, we argue, which in a democracy is supposed to take the role of “feeding back of data from some form of memory, and thus from the past, into the making of present decisions” (Deutsch 1963: 206).

….. We have thus suggested that the time is ripe for a return to the principles of Weberian bureaucracy, but have so far concluded that such a return is not likely given the current preoccupation with anti-bureaucratic reform. However, it is possible and necessary to put bureaucracy back in time, which means defending some of the central principles of bureaucracy against the claim of anachronism.’

Source: http://soc.kuleuven.be/io/egpa/org/2009Malta/papers/EGPA%202009%20byrkjeflotdugay.pdf

Part 2: The emergence of the creative economy as reality and myth

A more contemporary variation on this cult and development regarding decentralisation is the notion of the ‘creative economy’ and the ‘creative class’

The creative class?

Richard Florida’s (2002) book is seen to represent the dawn of a ‘new kind of capitalism based on human creativity’

Thesis:

Urban fortunes increasingly turn on the capacity to attract, retain and even pamper a mobile class of ‘creatives’, whose aggregate efforts have become the primary drivers of economic development

Driving force of economic development not only technological and organizational, but also human

Creative types critical to capitalist growth (account for 30% of US workforce)

Cities must become ‘trendy’, ‘happening’ places in order to compete in lists that developed (league tables): the role of the local space

Rather than people moving for jobs, cities must restructure themselves in the ‘race for talent’

The creativity index

Florida created a method of ranking cities – the creativity index

Based on things like number of patents per head, density of bohemians, even ‘fitter’ residents

Winners are San Francisco, Austin, Boston and San Diego – these are places to be emulated

List attracted lots of media attention

‘Creative’ Cities Source of map https://www.researchgate.net/figure/The-map-of-UNESCO-Creative-Cities-source-https-enunescoorg-creative-cities-home_fig1_328637910

Cultural circuit of capital

Florida’s website: www.creativeclass.org

International bestseller, urban economic‐development policy handbook, and highly lucrative speaking tour

Hugely seductive

Well written in an almost chatty style, it reads like a series of well‐crafted after‐dinner speeches at various chamber of commerce dinners’ (Marcuse)

One of the most popular books on regional economies in last decade

Won awards (Washington Monthly, HBR, Money magazine, etc.)

Aspirant cities became Florida’s audience and market

Suggest creative transformation within reach for ‘ordinary places’.

Emergence of whole raft of urban development consultants to help fashion hipsterization strategies

Reception

Initially US cities took on board the prescriptions for growth, then the net was widened and rolled out globally

Simplistic assumption of ‘build it and they will come’

‘Cappuccino urban politics, with plenty of froth’ (Peck 2005)

Critique

Investments in soft culture of arts and culture is easy to some extent, but how this stimulates economic growth is less straightforward

Argument that growth derives from creativity, so creatives make the growth. If creatives come to cities and find what they want (tolerance and openness) then growth will follow. These causal mechanisms are not specified. Arguments are largely based on suggestive correlations

Critique

Neglects issues of intra-urban inequality and working poverty

What about the people who service these places?

Sees creative individuals as drivers while remaining two-thirds are ‘passengers’

There are downsides to lifestyle flexibilisation strategies but Florida glorifies the contracted-out, free agent economy

Florida pays no attention to divisions of labour within these employment practices and believes in creative meritocracy

Abandonment of comprehensive planning policies in favour of piecemeal development of urban fragments, usually aided with gentrification and image makeovers

About short-term concrete projects rather than progressive goals such as needs-based approaches and socio-spatial distribution

Read: https://www.thedailybeast.com/how-richard-floridas-creative-class-vision-for-the-urban-future-went-wrong

The case of UK digital and creative industries

Move to freelance, outsourced, and project-based working

E.g. BBC and ITV replaced large amount of core workforce with freelancers (Ursell 2000)

Sector being redefined not only by new technology but also by increased emphasis on flexibility – i.e. work time and skill applications that are more responsive to changes in market demand

Surge in ‘off the payroll’ workforce. Why?

Shifting competencies, fluctuating demand, rising labour costs (subcontracting to smaller ‘creative companies’ too)

UK digital and creative industries

Seeing polarisation of employment types

Studies reveal structural polarisation with a limited number of large firms sitting alongside micro firms, small start-ups and lone contract workers or self-employed (Bergvall-Kåreborn and Howcroft 2013; Flecker and Meil 2010; O’Riain 2010)

Within the sector, the ‘self-expressive entrepreneur’ (Christopherson 2008) is fairly commonplace

Growth of ‘venture labour’ (Neff 2012): workers adopt entrepreneurial values by investing time and human capital in their workplace in anticipation of a future payoff, despite the fact that many IT professionals can no longer anticipate or rely on long-term, secure jobs (Lazonick 2009).

Managing autonomy?

Normative forms of control:

Employ young male workers with ‘zero drag’ (Kunda 1992) that are presumed to be more inclined to work long hours and can dedicate their time and energy to the profession, working as and when required (Barrett 2004)

Workplaces characterised by informality and team-working

Temporal autonomy and technical autonomy adopted as strategies to extract utmost value (Barratt 2001): the illusion of autonomy

Tales of ‘rags to riches’ generating massive wealth yet may conceal uneven development

Re-formulation of control

Changes in employment contract

Shift from waged labour to independent producers and small firms

Reputation functions as substitute for hierarchy

ensures contract delivery due to short-term nature of work, competition to get into market and need to ensure access to work flows through networks of jobs which depend on how performed in last job

Move away from salaried or waged forms of exchange within an internal market to a network or external market of competing and numerous small firms or contractors

Myths and issues

Emergence of creative cities narrative reveals how cultural circuit of capital subsequently shapes policy and economic development

As a ‘creative capital’ Greater Manchester appears more like an assemblage of disconnected parts than a cluster

Any big picture ambition quickly overtaken by interests of property developers who have focussed on turning money-making plots into rentable space(Froud et al. 2018)

Gillespie et al (2021) point to how broader dynamics around housing and local economy can undermine even creative and inclusive spaces within cities such as Greater Manchester - https://www.versobooks.com/blogs/5110-the-housing-crisis-in-manchester-capital-of-the-long-90s

In contrast to Florida’s celebratory portrayal of bohemians working in CI, much of the day-to-day experiences are fraught with uncertainty and tensions

See Jamie Peck’s critique even back then: https://www.eurozine.com/the-creativity-fix/

Summary Part1 and 2

So we need to think in terms of the dynamics of ….

How do bureaucratic and centralized approaches to organizing differ from the de-centralised and networkbased approaches?

Are we in a post-bureaucratic age? How does the cult of locality, decentralization and autonomy remake itself constantly?

What are tensions linked to each of these types and how they evolve?

Is the creative economy which is premised on a more de-centered view of the organization a reality or a myth or even a cult?

References for decentralisation

The original lecture was developed my Professor Miguel Martinez Lucio – the third part draws from Professor Debra Howcroft

Please see Chapter 15 and 16 in Huczynski and Buchanan (2015) for more in-depth discussion of the topic

Ackroyd, S. (2002). The organization of business: applying organizational theory to contemporary change. Oxford University Press.

Byrkjeflot, H., & Du Gay, P. (2012). Bureaucracy: An idea whose time has come (again)?. In Reinventing Hierarchy and Bureaucracy–from the Bureau to Network Organizations (pp. 85-109). Emerald Group Publishing Limited.

Castells, M. (2000). Toward a sociology of the network society. Contemporary sociology, 29(5), 693-699.

Clegg, S. R. (2012). The end of bureaucracy?. In Reinventing Hierarchy and Bureaucracy–from the Bureau to Network Organizations (pp. 59-84). Emerald Group Publishing Limited.

Demmke, C. (2020). Institutional change and increasing ambivalence of reform effects and reform outcomes. Public Administration in Central Europe: Ideas as Causes of Reforms. In edited by Stanisław Mazur (ed.) Public Administration in Central Europe: Ideas as Causes of Reforms London: Routledge

Jensen, T. E. (2004) ‘The Networking Arena’ in T.E. Jensen and Westenhalz (eds.) Identity in the Age of the New Economy: life in temporary and scattered work practices Cheltenham, U.K.; Northampton, MA : Edward Elgar

MacKenzie, R. (2000) ‘Subcontracting and the Reregulation of the Employment Relationship: A Case Study from the Telecommunications Industry’ Work, Employment & Society Vol. 14,No. 4, pp. 707–726.

Martinez Lucio, M. and Mike Noon. "Organisational change and the tensions of decentralisation: The case of Royal Mail." Human Resource Management Journal 5, no. 2 (1994): 65-78.

Rubery, J., Carroll, C., Cooke, F. L., Grugulis, I., & Earnshaw, J. (2004). Human resource management and the permeable organization: The case of the multi-client call centre. Journal of Management Studies, 41(7), 1199-1222.

Grimshaw, D., & Hebson, G. (2005). Public-private contracting: Performance, power and change at work. Fragmenting work: Blurring organizational boundaries and disordering hierarchies, 111-134.

Barley, S. R., & Kunda, G. (2001). Bringing work back in. Organization science, 12(1), 76-95.

Bowman, A., Ertürk, I., Folkman, P., Froud, J., Haslam, C., Johal, S., ... & Tsitsianis, N. (2015). What a waste: Outsourcing and how it goes wrong. Oxford University Press.

Sabel, C. F. (1994). Flexible Specialisation and the Re‐Emergence of Regional Economies. Post‐Fordism: A Reader, 101-156.

Weber, M. (1946). Bureaucracy. From Max Weber: Essays in Sociology, 196, 232-235.