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UNIT II: STRATEGIES OF ORGANIZING

CHAPTER 3 TRADITIONAL STRATEGIES OF ORGANIZING

The foreman should never be authorized to enforce his discipline with the whips if he can accomplish it with words.

Varro of Rome, ca. 100 BCE

If the words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame.

Sun Tzu of China, ca. 500 BCE

CENTRAL THEMES

· Traditional strategies of organizing attempt to control employees through rules, norms, and systems of rewards and punishments, all of which rely heavily on communication. But all control systems lead to resistance.

· If information is filtered as it passes through the formal chain of command, decision makers may have too little relevant information to make good decisions; if it is not filtered, they may be too overloaded with information to make good decisions.

· Both structural and personal/interpersonal factors lead to omission and distortion of information as it passes through formal channels.

· When the environment surrounding an organization is stable or not competitive, traditional strategies of organizing may function well; when the environment is turbulent or competitive, weaknesses in formal communication systems make it difficult for traditional strategies to succeed.

· In traditional strategies of organizing, leadership primarily involves managing, that is designing and implementing formal systems of communication, motivation, and control.

· Information and communication technologies offer ways for traditional organizations to avoid some of the problems that the strategy creates.

KEY TERMS

specialization

hierarchy

centralization

chain of command

bureaucracy

legal authority

time–motion studies

information overload

decentralization

unintended consequence trained incapacity

informal communication networks

redundancy

counterbiasing

face management

distributive justice

procedural justice

surveillance

regressing

working to rule

As the ancient comments at the beginning of this chapter suggest, neither the study of organizations nor that of communication in organizations is terribly new. Whenever people have depended on one another to complete tasks or meet their needs, they have formed organizations. By the time human beings joined together into families and clans, they had become involved in the economic activities of hunting and gathering. They had started to organize, which required them to communicate with other workers. After humans had become farmers, they developed more complex organizations with more complicated communication needs. With farming came villages and the need to govern large groups of people; with villages came the concepts of citizenship and community welfare, which created the dual needs of defense and the management of the village’s economy.

As villages became city-states, it became necessary for their managers to plan the operation of the society and to keep permanent records of the rules and procedures that they developed. The oldest written documents in existence deal with religion, management, and government, a combination that makes great sense when one realizes that the earliest managers also were governors and priests. As ancient religious and political civilizations expanded, their needs for effective economic organizations and effective organizational communication multiplied. As early as 2000 BCE, leaders recognized the importance of communication. Pharaoh Ptah-hotep instructed his sons and managers in the importance of listening skills, the need to seek advice and information from their subordinates, the importance of staying informed about what was taking place around them, and the necessity of clearly explaining each worker’s tasks and documenting these instructions in writing. The Chinese emperors Yao and Shun (ca. 2300 BCE) also searched for ways of opening communication channels between themselves and the peasants and advocated consulting their subordinates about the problems faced by the government. By the first century CE, Greek and Roman scholars had already suggested many of the key concepts of modern organizational communication theory. But it was the growth of the nation-state and the mercantile system that created separate roles for governors, managers, and priests. The large and complex firms of the Industrial Revolution made it clear that control and coordination could be achieved only through effective communication.

Unfortunately, the people who operated these organizations had few reliable guidelines. They had some experience in business and thus could rely on hunch and intuition. But peoples’ memories often omit or redefine their failures and overemphasize their successes, so experience often is not a reliable guide (Feldman and Feldman, 2006). Managers also could try to apply the principles used to run military organizations, which were the major large, complex organizations that existed before the Industrial Revolution (Mutch, 2008). But, overall, owners’ decision making suffered from a lack of concern for efficiency and a virtual absence of reliable information.

In addition, owner-managers often treated their employees in arbitrary, capricious, and even inhumane ways. Proslavery politicians of the 1800s defended that institution by arguing that the lives of slaves were better than the lives of workers in Northern textile mills. There was enough of a parallel to make the argument credible. As a result, workers began to organize politically and form unions. Labor–management relations became increasingly hostile, and confrontations between labor and management were often violent. The broad, rapid economic growth of the 1800s came to a screeching halt in the Crash of 1873. The economy never recovered fully, and living standards and social stability were devastated by a series of economic depressions during the 1890s, each one more severe than the last. By the early 1900s, both managers and scholars recognized that Western organizations faced serious problems in design and operation. In response to these observations, a group of organizational theorists proposed an alternate strategy of organizing, one that sought to manage the paradox between organizational and individual needs by enhancing efficiency, creating stable and predictable organizational situations, eliminating arbitrary supervisory behavior, and motivating workers through economic rewards and a sense of personal achievement.

TRADITIONAL STRATEGIES OF ORGANIZATIONAL DESIGN

A large number of people were involved in the development of the traditional strategy of organizing. One group, the bureaucratic theorists, attempted to improve organizations from the top down, by improving the effectiveness of administrative employees. Their perspective is associated with sociologist Max Weber. A second group developed scientific management, an approach that tried to improve organizations from the bottom up, by reforming workers’ tasks, efficiency, and rewards. The approach was developed by an engineer, Frederick Taylor. Both groups had the same primary concern – replacing the arbitrary, capricious, and inefficient practices of contemporary organizations with systematically designed, objective, and fair systems of management and supervision.

Traditional Structure and Communication

All organizations are structured. Indeed, it is structure that distinguishes organized enterprises from disorganized ones. Structure is important to members of organizations because it makes life predictable and clarifies each member’s area of responsibility. With predictability come feelings of stability and trust. Structure also makes formal authority relationships clear to everyone involved in the organization, and it lets every member know where to go for different kinds of information and expertise (Handy, 1995; Morand, 1995).1 But, the structure that emerges in a particular organization is not random or determined by outside forces. It depends on a series of choices that employees make.

Bureaucracy and Structure

Both the scientific managers and the bureaucratic theorists believed that organizations should be segmented into a matrix of formal positions that can be represented in a triangular “organizational chart.” The tasks that must be performed in the organization are divided among various groups of employees who have the specialized skills necessary to complete those tasks efficiently and effectively. The organizational chart also shows how the various positions are arranged, so that lines of authority are clear to all. The positions are arranged in a hierarchy; supervisors are directly responsible to their own immediate supervisors for their own actions and for those of their immediate subordinates. Decisions about major issues, policies, and procedures are centralized at the top of the hierarchy. This means that all the major decisions facing the organization are made by the people who occupy the positions located at the top of the organizational hierarchy. Of course, all members of the organization are responsible for making routine, day-by-day decisions in their areas of responsibility. But, they must base their decisions on policies and procedures that are established by the people at the top of the organization. When communication does take place outside of the immediate work group, it is formal, both in tone and in terms of the way in which it is communicated, and follows an established chain of command. That is, subordinates send messages to their immediate supervisors, who relay the information to their immediate supervisors if they deem it appropriate to do so, and so on. No one goes over his or her supervisor’s head. Of course, communicating in this way is slow, cumbersome, and vulnerable to many different kinds of communication breakdowns (examined in more detail later in this chapter). Because this particular organizational structure is so widespread, it is easy to forget a number of basic facts about it. The most important fact is that organizational structure results from choices. It is one of a large, perhaps infinite, number of ways in which an organization can be structured.

The kind of structure that we have just described is called a bureaucracy. As sociologist Max Weber noted a century ago, it is especially appropriate to Western capitalist democracies. To people raised in those societies, bureaucratic structures are so common that they seem to be natural, and normal (recall Unit I). As members of these societies mature, they learn that formal rules are necessary for the efficient operation of societies and organizations. Rules also protect people from arbitrary or harmful treatment by more powerful people. They are taught that societies “of law” are better than societies of “men [sic].” They come to value individuality, to believe that individuals have rights and that individuals are responsible for their actions. They learn to accept what Weber called legal authority, the notion that societies and organizations should be organized around a formal, objective (and thus unbiased), written set of rules, policies, and procedures. They begin to view people in terms of the roles that they play in society and organizations, and to view a person’s value, rights, and obligations in terms of the formal positions they hold. These taken-for-granted assumptions mask the fact that the bureaucratic structure is only one of a large number of available strategies of organizing. They also tend to obscure the fact that traditional strategies of organizational design have distinctive strengths and particular weaknesses.

In an organization using a traditional strategy, applicants are hired for a position solely because they are able to demonstrate that they possess the special expertise needed to perform their required tasks, not because of their political connections. Employees base their everyday decisions solely on the written policies, procedures, and rules of the organization, and document all of their actions in writing. To prevent favoritism, all employees must maintain detached, impersonal relationships with clients and coworkers, and keep emotional considerations from influencing their actions. Since communication is restricted to the chain of command, it is easy to determine who is responsible for any communication breakdowns, and corrective action can be taken. The bureaucratic theorists valued this kind of structure because they thought it would bring fairness and accountability to organizations, and also increase organizational efficiency. Everyone in the organization would know who was responsible for each task that needed to be performed. If those tasks were performed well, the correct people would be rewarded; if not, the responsible people would be punished. Every employee would also be held responsible for communicating relevant information up and down the chain of command. After they successfully completed a probationary period, employees would be guaranteed a job for life (assuming their performance continued to be adequate), and an adequate pension. As a result, they could not be pressured to show favoritism to powerful clients or supervisors. Organizations, and all their members, would be accountable for their actions, and the organization would be highly efficient.

Scientific Management

The second group of people who helped develop the traditional strategy of organizing advocated scientific management. Like the bureaucratic theorists, they were concerned with both accountability and efficiency. Frederick Taylor, the father of scientific management, was very disturbed by the common practice of managers blaming and punishing workers for their own bad decisions. The practice reduced organizational efficiency because it failed to hold managers accountable for their errors, giving them no incentive to improve their performance. It also inevitably drove a wedge between labor and management, and management’s primary goal should be to foster cooperative and productive relationships with their workers.

Although these attitudes may not seem to be all that radical today, they were to Taylor’s contemporaries. They were palatable only because Taylor coupled them with a set of efficiency-enhancing techniques that he could demonstrate had significant short-term economic benefits. Taylor believed that by using these techniques, firms would be able to increase their profits and the incomes of all their employees, including managers. Over time increased efficiency would allow these firms to reduce their prices, benefiting the entire society. The best known of these techniques was the time–motion study, in which a supervisor or consultant observes workers completing a task, breaks the process down into its elements or motions, and then redesigns it to minimize the number of movements necessary to complete it. By using the improved techniques, workers could increase their productivity, their income, and the organization’s profits. For example, Charley Conrad helped fund his college education by working summers and vacations in a metal-processing foundry. Initially he operated a drill press. But, the company conducted a time–motion study and found that workers taller than 6 feet could not efficiently operate the equipment. They had to bend over to reach some of the levers and as a result got tired sooner than the shorter workers did. Like every other operator who was taller than 6 feet, he was transferred to a section that had tasks that could be efficiently performed by people of his height. Even today, a century later, consulting firms, armed with sophisticated video technology, conduct time–motion studies and make recommendations that improve efficiency and reduce worker strain and fatigue, in both manufacturing firms and “high-tech” organizations. Taylor stressed that time–motion studies, and all of the other techniques he developed, should be used in close consultation with workers and in an atmosphere of cooperation and mutual gain. If they are used without first consulting workers, as they often are, they generate strong resistance, especially if there is a low level of trust between labor and management.

Today firms such as the ones Taylor envisioned are often viewed as sweatshops where workers are treated like inhuman cogs in a giant industrial machine, just as they were in Taylor’s time. In addition, the term “bureaucracy” has a number of negative connotations – images of inefficient bureaucrats producing little save exhaustive expense accounts; of customers and employees alike being buried in red tape and treated as nonhuman cogs in a vast administrative morass; and of stubbornness when action is required, blind obsession with unchangeable policies when flexibility is necessary, and interminable delays when speed is crucial. These images of the traditional strategy of organizing are really quite ironic (Sewell and Barker, 2006b). The original purpose of this strategy was to create efficient and productive organizations in which people were treated fairly and equitably. The arbitrariness and capriciousness that Taylor and Weber observed in the organizations of their time were to be replaced by policies and procedures that treated everyone – workers, customers, and clients – in the same way. The biased and inefficient decision making of early firms was to be replaced by objective, data-based considerations. Although the strategy focused on meeting the organizations’ needs for coordination and control, it also was intended to meet individual employees’ needs for stability and autonomy. Bureaucratic structure is clear, stable, and predictable. But the traditional strategy is also problematic in two ways. Perhaps most important, its key elements – specialization, hierarchicalization, and centralization – place a great deal of pressure on an organization’s formal communication system. Consequently, communication breakdowns are highly likely. Second, the strategy sacrifices flexibility and responsiveness for consistency and predictability. This is neither an accident nor the result of “pointy-headed bureaucrats gone mad.” Bureaucracies are based on the universal application of predetermined, written rules, policies, and procedures. Everyone is supposed to be treated alike, and individual circumstances, needs, and differences are supposed to be ignored (Perrow, 1986). Although this trade-off is appropriate for some organizations, it creates serious problems for others.

Communication Breakdowns in Formal Communication Systems

For the traditional strategy of organizing to succeed, information must flow freely up and down through the chain of command. The decision makers at the top of the organization must receive accurate, complete, concise, and timely information about the extent to which orders have been carried out and tasks have been completed. They must also be informed about problems that have developed or are likely to develop in the future. In addition, decision makers must benefit from the specialized expertise of each employee along the chain of command. If that expertise is not available to individuals in upper management, their decision making will suffer. Similarly, information must flow from supervisors to subordinates, including information about policies, procedures, reward and rule systems, and the optimal means of performing each subordinate’s assigned tasks. If any of these communication processes breaks down, the organization will function at less than optimal efficiency. If the margin of error available to the organization is small, these communication breakdowns may threaten its survival (Snyder and Morris, 1984).

The Filtering Paradox

Unfortunately, processes of information exchange create a fundamental paradox. On the one hand, upper-level decision makers depend on receiving accurate, timely information from employees located lower in the hierarchy. However, if information flowed through the chain of command without any restriction, the upper-level managers would soon be overloaded and overwhelmed. For example, envision a moderate-sized hierarchical organization (one in which each supervisor has only four subordinates and the organization chart has seven levels). Each employee sends only one message a day up the chain of command. If no messages are filtered out, 4096 messages would reach upper management each day, creating serious problems of information overload.3 But, if every employee screens out only half of the information received, 98.4 percent of the information generated in the organization would never reach its decision makers. Consequently, the traditional strategy of organizing requires employees to both rely on formal channels for the information they need while simultaneously restricting the flow of information through these channels.

Structural Barriers to Information Flow

A number of factors complicate the filtering paradox. Some of these barriers to information flow involve the formal structure of the organization and the nature of human communication. These structural barriers exist regardless of who works in the organization, regardless of their individual characteristics or relational skills.

When one person communicates a message to another, each of them interprets it. The words that make up the message are meaningless until some human being makes sense out of them.4 When people communicate, they exchange their interpretations of information, not information in a “pure” form. When they interpret messages, they alter the message’s meaning. People condense messages, making them shorter and simpler; people simplify messages into good or bad, all or none, or other extreme terms; they assimilate new messages so that their meaning is consistent with information received in the past; they whitewash messages, so that they will not upset the people to whom they are sent; and people reductively code messages by combining them with other information to form a sensible overall picture. In the process of interpreting a message, people simplify and clarify it. They absorb some of the uncertainty and ambiguity in the message. But, they also change it. Interpreting information is inevitable because all messages carry some degree of ambiguity, and some degree of uncertainty about how they should be interpreted. When messages are interpreted, they are changed.

Interpersonal Barriers to Information Flow

A number of personal and interpersonal factors also complicate information flow (see Table 3.1). If people have different levels of organizational power and status, they exchange little information with one another. When they do communicate, it tends to be in writing (physical or electronic) rather than face to face. Their messages focus on tasks, with little informal or social content. Written messages are more ambiguous than those exchanged in open, face-to-face encounters, which makes it more likely that the parties will misunderstand one another (Albrecht and Bach, 1996). Differences in interpretations tend to reduce trust, which leads employees to rely even more heavily on written communication in order to protect themselves, and so on in a downward spiral. Supervisors could offset these effects by deemphasizing status differences, training their subordinates in communication skills, rewarding their subordinates for keeping them informed (especially about negative events), and encouraging them to seek clarification of ambiguous messages. However, they often do the opposite by verbally or nonverbally communicating, “I don’t want to hear about it now.”

Table 3.1 Factors That Distort Vertical Communication Structural Personal and relational 1. Processes of interpreting messages Condensation Accenting Assimilation to past Assimilation to future Assimilation to attitudes and values Reduction 2. Number of links in communication chain 3. Trained communication Incapacity Perceptual sets Language barriers 4. Large size of the organization 5. Problems in timing of messages 6. Problems inherent in written communication 1. Power, status differences between parties 2. Mistrust between parties 3. Subordinates’ mobility aspirations 4. Inaccurate perceptions of information needs of others 5. Norms or actions that discourage requests for clarification 6. Sensitivity of topics

Supervisors may talk only while on the run, use an annoyed tone of voice, physically move away from the subordinate, and allow other people to interrupt the conversation. Or they may simply fail to acknowledge or act on the information their subordinates provide, which discourages them from providing information in the future. Ironically, the supervisors who most strongly say that they want their subordinates to keep them informed seem to be most likely to discourage them from doing so.

If subordinates do not trust their supervisors, other factors come into play. Subordinates who wish to be promoted or recognized for past achievements and believe that the supervisor will have an influential voice on promotions are especially prone to withhold negative information from supervisors they do not trust. Those effects are increased when subordinates believe that their supervisors do not pass negative information on to them. They are especially unlikely to communicate negative information or information that deals with controversial or sensitive issues – precisely the kind of information that supervisors most need to have. In highly political organizations, withholding information is even more likely, especially when it is negative. As Chapter 8 explains, information is a potent source of power, but only if it is not widely available. Political battles – among individual employees and among units of the organization – often are information battles, and the side that is best at obtaining and exploiting secret information wins (Fulk and Mani, 1986).

Although this section has focused on barriers to the upward flow of information through the chain of command, the same factors and processes also hamper downward communication. One of the most consistent findings in research on organizations is that subordinates want their supervisors to keep them informed and feel that they receive too little relevant and useful information from their supervisors, even information that is necessary for them to do their jobs well. It also seems to be true of feedback about the subordinates’ performance, something that is especially frustrating for members of the Generation X and Millennial groups (recall the “Generations” case study in Chapter 1). Downward communication is selected, filtered, interpreted, and withheld in much the same way as upward communication. In addition, when supervisors believe that they should give their subordinates information only on a “need to know” basis, they filter an even higher proportion of downward communication, frequently withholding even crucial information.

As a result of these processes, cycles of communication are formed and perpetuated. Some cycles are positive; others are negative. Supervisors whose communication is considerate, frequent, and reliable tend to have subordinates whose communication is similar. Because they better understand their supervisors’ information needs, they can better summarize the information they receive without leaving out important details, thus reducing problems of information overload. These subordinates keep their supervisors informed, which makes them seem trustworthy, and when people trust one another their communication is more open and direct. The distortions related to differences in status and power are reduced. Conversely, supervisors who withhold information from their subordinates have subordinates who withhold information from them or bury them in detail. These subordinates view their own actions as a necessary way to protect themselves against an untrustworthy supervisor; the supervisor may see the subordinates’ actions as compelling evidence that they are hostile or unmotivated, which justifies the supervisor’s withholding information, and so on. No one individual is to blame (or should receive credit) for these cycles, although supervisors’ higher formal power means that they have a greater effect on the direction the cycle will take. These patterns result from complex, interacting systems of meaning creation and should be understood as complex systems of communication for which all parties are partly responsible.

How Traditional Strategies Complicate Information Flow

Each of the sources of communication breakdowns described in this section are present in all organizations. But, they are more of a problem in organizations that employ traditional strategies of organizing than in organizations that rely on other strategies. One of the key characteristics of traditional strategies is centralization of power and decision making. If an organization is highly centralized (that is, if its organizational chart is “tall”) messages will be exchanged, interpreted, and altered many times before they reach the decision makers at the top of the organization. In addition, it takes a long time for information to flow through long chains of command, so it may reach decision makers too late for it to be useful. Conversely, the decisions that are made at the top of the hierarchy – the policies and procedures that are created – will be exchanged, interpreted, and altered many times before they reach the people at the bottom of the organization who will implement them. They also may arrive too late to be useful. Communicating through formal chains of command is exhausting and time-consuming, as any student who has needed to change a registration for a course or find a “lost” student aid check is painfully aware. In Chapter 4 we will explain that organizations can choose strategies of organizing that reduce these problems. In them, decision making is distributed throughout the organization (that is, if it is decentralized) and messages are exchanged fewer times before action is taken on the information they contain. Fewer exchanges mean less interpretation and less alteration.

A second element of the traditional strategy of organizing is specialization. It increases organizational efficiency by making sure that tasks are performed by people with the relevant expertise. But, an unintended consequence of specialization is that it complicates information flow. As people are trained in an increasingly specialized set of skills, they become less and less capable of performing other tasks. They develop a kind of trained incapacity. The most obvious incapacity involves differences between upper management and lower-level workers. Managers often become incapable of understanding the processes through which their workers perform their tasks, even if they once did those jobs themselves. Conversely, lower-level workers become less able to understand complex, abstract thought. But, trained incapacity permeates the entire organization. Employees who play specialized roles interpret the messages they receive in a manner appropriate to those roles. Personnel officers interpret messages in terms of what they imply about future needs for hiring, firing, or training employees; and financial officers attribute meaning to messages based on the economic impact that they imply. As their training and experience progress, employees become less capable of taking the perspectives of other members of the organization when they construct or interpret messages.

Sometimes they may even create their own languages. Corporate attorneys learn to talk like corporate attorneys, IT personnel learn to talk like IT personnel, and so on. As employees become literate in the artificial language of their position or unit, they become less capable of translating their ideas into a language that other people can understand (Spence, 1978; Jablin, 2001). As a result, misunderstanding across specialties is quite common. The size of an organization in itself does not seem to increase problems of trained incapacity, but when an organization is highly specialized, trained incapacity can create severe problems.

Finally, traditional strategies of organizing attempt to formalize communication, which highlights power and status differences, and stipulates that relationships between supervisors and subordinates should be impersonal and governed by established policies and procedures. As a result, trust is reduced, written communication dominates, and misunderstanding becomes more likely. It is precisely in this kind of situation that the personal and interpersonal sources of distortion are most potent. In summary, traditional strategies rely heavily on formal, chain-of-command communication and paradoxically create a number of barriers to successful information flow. If organizational communication really did function as it is supposed to in the traditional strategy, most people would not know what was going on most of the time. (For an extended illustration of the concepts presented in this section, see Case Study 3.1, which begins on p. 83.)

Case Study 3.1 Feel Safer Now? Within days of September 11, 2001, pundits and politicians alike were trying to explain the intelligence breakdowns that allowed 20 or more terrorists to carry out attacks on the World Trade Center and Pentagon. Some commentators explained the event as the result of vast conspiracies.1 Others explained the breakdowns in less exciting terms. Like in the case of organizational accidents (recall the blackout case in Chapter 2), the dominant impulse was to blame “operator error”: [T]here were people at the borders who let these people in even though they didn’t have proper papers. … There were F.B.I. people who, when they got reports from Phoenix and Minnesota and elsewhere, didn’t think they were important enough to buck up to the higher-ups. There were security officers at the airports who let these people onto airplanes even though they were carrying materials that weren’t allowed on airplanes. (Thomas Kean, chairman of the September 11 Investigating Panel, cited in Shennon, 2003) It is clear that people, both inside and outside of formal organizations, often make errors in judgment that result from well-understood cognitive processes, biases that may “blind people to emerging threats.” We will examine these individual sources of “nonrational” decision making at length in Chapter 8. At this point, we only mention one dimension – information itself is meaningless until it is interpreted. But, interpretation is impossible without a frame of reference that allows decision makers to understand how the individual pieces of information they possess fit together. In this sense, decision making is a little like putting a 100-piece jigsaw puzzle (the items of information) together without having the picture on the boxtop (the frame of reference) available to guide the process. To make matters worse, much of the information available to decision makers is not relevant to a particular decision. Without a frame of reference, it is very difficult to know which of the pieces will be useful and which ones are “noise.” So, it is a little like taking four or five puzzles, dumping all of the pieces into a large box, shaking them around, and then giving them to the decision makers to assemble (again, without them having access to any of the pictures on the boxtops). Of course, after the event takes place, everyone has a frame of reference available that will make all of this clear (it’s like finding all of the boxtops), which is why hindsight is always better and “Monday morning quarterbacks” always seem to be smarter than the ones on the field. Keep this image in mind as we work through the events leading up to 9/11. There was a second kind of explanation offered for 9/11: almost as soon as the investigations began, informed (and uninformed) experts started attributing those breakdowns to “communication problems” in the US intelligence community that prevented “the necessary integration of information until it is too late” (Bazerman and Watkins, 2008). We will focus on this organizational explanation in this case study. Our story begins at the end of World War II, not in 2001. Myriad federal agencies have been in some way involved in national safety, from the Department of Agriculture to the Federal Aviation Administration to the US Coast Guard. Almost all of these organizations also have other responsibilities, ones that are either irrelevant or only tangentially related. The most visible and most important federal agencies are the Federal Bureau of Investigations (FBI), Central Intelligence Agency (CIA), and National Security Agency (NSA). When World War II ended, a proposal was made to continue the wartime Office of Secret Service as the CIA. The head of the FBI at that time, J. Edgar Hoover, fought the creation of the CIA, primarily on the grounds that the two bureaucracies were unnecessarily duplicative (see Riebling, 1994). Hoover lost the battle, but was able to ensure that the two agencies would have separate intelligence functions: one to anticipate and prevent actions by targets outside of the United States (CIA) and one to investigate and convict criminals who had acted within the United States (FBI). At the time, critics questioned this division of labor, since spies and saboteurs regularly cross national borders. But, it made sense as a political compromise. Over time the two bureaucracies developed different ways of doing business, different rules for operating and making decisions, and even attracted a different kind of employee. During the same era the operations of the CIA became progressively more secretive, even after the creation of the even-more-secret NSA maintaining secrecy came to be valued so highly that employees in one agency refused to share information with employees in another agency except on a “need-to-know” basis. But, if one agency doesn’t know the information that has been collected in the others, its members cannot know what they “need to know,” and cannot determine whether other agencies actually do need to know the information they have requested. The agencies became separate “stovepipes” or “silos” which house different collections of information, analyze that information in different ways for different purposes, and share with other agencies only in very rare circumstances. The silo problem means that the total amount of information available to decision makers in any organization at any given point in time is always less than the total amount of information possessed by all of the organization’s employees. Bazerman and Watkins describe this combination of silo structures and a demand for secrecy as the “fundamental paradox of intelligence gathering.” All organizations experience structural distortion in information flow – that was one of the main points of this chapter. But, intelligence organizations also must be committed to secrecy, which makes structural distortion even more likely. However, and ironically, the intelligence community also experienced serious problems of information overload. Sometimes leaders of one or more of the agencies complained that counterterrorism offices gathered very little information, especially given the size of their budgets – at least $30 billion per year (since the budgets of the NSA and CIA are secret, this figure is only an estimate). But, after 9/11 it seemed clear that their greatest problem was collecting too much information relative to the intelligence community’s capacity to process and interpret that information (the overload problem discussed earlier in this chapter). Processing the information was complicated further by the fact that much of the information collected was irrelevant to the upcoming 9/11 attacks. Indeed, former FBI Director Louis Freeh concluded that there was so much information available that “analyzing intelligence information can be like trying to take a sip of water coming out of a fire hydrant” (cited in Helm, 2002). The “communication breakdown” explanation for the US intelligence community’s “failures” before 9/11 is based on information that had been collected on three of the hijackers, Khalid al-Midhar, Nawaf al-Hazmi, and his brother Salim al-Hazmi; all three were aboard the plane that crashed into the Pentagon (Hill, 2002). Evidently, no government agency had any relevant information on the other 16 prior to 9/11. During 1999 the intelligence community began a worldwide effort to monitor people connected with al-Qaeda and Osama bin Laden. The community closely monitored a meeting in Malaysia, where the CIA discovered new information about al-Midhar (his full name, passport number, etc.) and learned that he was leaving Malaysia on a plane with Nawaf al-Hazmi. Eventually they decided that none of this information was important enough to pass on to the other agencies. The NSF’s (ultra-secret) database also included the name Nawaf al-Hazmi, along with information indicating that he was linked to al-Qaeda. A lower-level CIA employee, whose job it was to improve communication between the CIA and FBI, did brief the FBI and summarized the briefing for other CIA agents, but no one raised any “red flags” about this information. Later, an overseas CIA agent notified his headquarters that al-Hazmi had entered the United States, but the information was not communicated to the FBI because he had done nothing illegal or threatening (in fact, it evidently was not read by many people within the CIA). While investigating the October 12, 2000, attack on the USS Cole, the CIA uncovered links between al-Qaeda and a second hijacker, al-Midhar, and in at least one case passed the information on to the FBI. When the FBI agent asked why the CIA was following al-Midhar, he was told that the information could be given only with permission from his supervisor (a silo/secrecy effect). No formal request was made. The CIA had so many resources tied up investigating the attack on the USS Cole that it could not follow up on these leads, and the FBI did not do so because no crime had been committed. Consequently, it risked litigation and/or criticism for racial profiling had it investigated a group of Middle Eastern men when there was no evidence of criminal activity. The most egregious example of “not connecting the dots,” at least according to the US media, involved a presumed almost-hijacker, Zacharias Moussaoui. He had been in the United States for some time attending various pilot schools. When he made it clear to a trainer in Egan, Minnesota, that he did not want to learn how to take off or land, the instructor became suspicious and called the local FBI office. When he refused to allow agents to search his laptop computer, he was arrested on a charge of visa violations that the FBI had constructed in order to keep him in custody while conducting an investigation. They learned from French intelligence officials that he had connections to al-Qaeda. Local agents asked the Washington office to obtain a search warrant for Moussaoui’s computer. The Washington office made the request to the special US national security court, but did not include the French reports in the request. The request was denied, leading to a heated and now famous memo from Minneapolis Special Agent Coleen Rowley to the Washington office. Other agencies experienced similar errors – the NSA intercepted a message – believed to be a recorded telephone conversation – that referred to a “big event” planned for September 11, but it was in Arabic and was not translated until after the attacks (a resource/overload problem). A year later, in June 2002, President Bush reported that “the CIA and the FBI are now in close communications, there’s better sharing of intelligence.” The next day White House spokesman Ari Fleischer amended the president’s comments to contend that the needed changes were gradually being implemented. Eighteen months later, the independent Markle Task Force on National Security in the Information Age was less optimistic, concluding that information sharing “remains haphazard and still overly dependent on … personal relations among known colleagues” (an example of using informal communication networks to compensate for breakdowns in formal ones). In addition, there seems to be some confusion about the roles of two agencies created since September 11, the Terrorist Threat Integration Center, created to coordinate information gathered by the CIA, FBI and other agencies, and the Department of Homeland Security. As the chart at the end of this case study illustrates, each of the steps taken to improve communication in the intelligence community has added layers of bureaucracy to the intelligence community and/or communication links to its formal network (Arnold, 2003).2 Using What You Have Learned 1. Which of the sources of breakdowns in information flow described in this chapter seem to have been present prior to September 11? To what extent were the identified problems a function of insufficient amounts of information, inadequate flow of information, or errors in interpreting the information that was available? 2. As we indicated in Chapter 2, one of the difficulties in assessing the causes of accidents in separating actual system problems from what only seem to be problems because of the advantages gained by hindsight. For example, airport screeners were trained to search for bombs and the materials that could use to build bombs, not to think of an airplane filled with fuel as a bomb. Of the “errors” made before September 11, which were errors, and which merely seem to be errors in hindsight?

Figure 3.1 is an organizational chart from the Department of Homeland Security (which does not include the FBI, CIA, or NSA).

images Figure 3.1 Department of Homeland Security – organizational chart.

Note: This chart is a shortened version of the complete chart, which is 25 pages long. The complete chart is available at www.ndu.edu/library/docs/crs/crs_rl131500_20feb04.pdf.

Questions to Think About and Discuss 1. Using what you know about the sources of communication breakdowns in bureaucratic organizations, assess the likelihood of communication breakdowns in the new department, and among the new department and the FBI, CIA, NSA, and Terrorist Threat Integration Center. 2. What strategies would you recommend in an effort to compensate for any potential sources of communication breakdowns? Why would they work? 3. (The next two will take a little extra research). To what extent do the factors and processes described in this case study explain the communication breakdowns prior to the 2002 decision to invade Iraq (WMDs that didn’t exist, etc.)? What additional factors, if any, were involved in that decision? Good starting points for your research include the chapters in part 2 of Edwards (2007), and Whitney (2005). A somewhat less academic analysis is available in Drogin (2007). 4.

On April 1, 2011, the US government located Osama Bin Laden living in a suburban compound in Pakistan. A team of Navy Seals attacked his compound, killed him and a number of his followers, and captured others. What does the success of this mission tell us about the effectiveness of the US intelligence community? Of the Department of Homeland Security? Be careful to not deal in generalities. Instead focus on the nature of the tasks involved in the two cases (predicting and preventing 9/11, and finding and eliminating Bin Laden), the intelligence agencies that were involved, the communication processes with and between them, and the usual problems involved in “connecting the dots.”

Notes 1 For example, see the debate between David Griffin (2004) and the editors of Popular Mechanics magazine (Dunbar, 2006).

2 Also see US Senate Select Committee on Intelligence and US House Select Committee on Intelligence (2003). Also see The Spy Factory, especially the first half of the episode, at www.pbs.org/wgbh/nova/insidenova/2010/06/spy-factory.html.

Compensating for Communication Problems of Traditional Strategies of Organizing

So far in this chapter, we have argued that traditional strategies of organizing rely heavily on formal systems of communication and that it is normal for these systems to break down. That analysis may lead readers to wonder just how these organizations manage to survive. The answer is that many organizations have minimal needs for rapid and accurate task-related communication. Some organizations exist in extremely stable environments that place limited demands on communication. Problems can be anticipated and situations can be understood rather easily because they almost always are like those faced in the past, and tried-and-true solutions are generally available. Expertise, decision making, and authority can be centralized, communication can be restricted to the chain of command, and so on. Information can usually be obtained through formal channels, and the kinds of communication breakdowns that are discussed in this chapter can be anticipated and offset.

In stable environments, traditional strategies of organizing cope quite well with the limited amount of uncertainty that they face. In contrast, organizations in highly competitive, rapidly changing, turbulent environments are effective when their work and communication structures allow a free, open, and rapid flow of information, not the restricted, formal, and slow chain of command. This was first explained during the late 1950s by two British sociologists, Tom Burns and G.M. Stalker, and developed further during the late 1960s by US management scholars Paul Lawrence and Jay Lorsch. Their findings have been replicated by many people in multiple cultures, to such an extent that there now is a consensus: “Both practitioners and theorists agree that organizations today face enormous competitive pressures and must be highly responsive to rapid changes in the external environment if they are to survive.”6 Open communication structures (such as those of the “relational,” “cultural,” and “networking” strategies described in Chapters 4, 5, and 6) allow information about sudden environmental changes to be diffused more rapidly throughout the organization.

Fortunately, there are a number of steps that employees who find themselves in organizations that employ traditional strategies or organizing can do to compensate for the communication problems that are inherent in them. One strategy is to grow. Since competition and turbulent environments magnify the problem of “traditional” organization, managers can take steps to reduce those pressures. Large firms can pay other organizations not to produce competing products. They can purchase, and then dissolve, competitors, or they can become even larger. Monopolies and oligopolies are able to influence (perhaps even control) the prices and availability of inputs and sales in ways that reduce the environmental turbulence they face. Pharmaceutical firms have used all these strategies to prevent or forestall having to compete with low-cost generic drugs.7 In addition, managers also can often persuade government to insulate them against environmental pressures, by placing patent or copyright restrictions on their competitors, or by using tariffs or other restrictions to make foreign competitors’ products excessively expensive. Most US residents believe that government regulations and regulatory agencies were created to protect consumers or workers from organizations. This sometimes is true, but historically it has been much more common for regulatory systems to be created in order to protect existing organizations from competitors (see Conrad, 2011; and Wilson, 1974). Or they can shift their activities to sectors of the economy that have relatively stable environments and/or little competition.

The history of the largest US tobacco firms shows how these anticompetitive strategies can be used together. During the 1980s, they diversified, often merging with industries such as food production, which were located in more stable sectors of the economy and received less criticism from advocacy groups. For example, in 1985 tobacco giant Philip Morris purchased General Foods, and four years later it acquired Kraft Foods. Diversification also allowed them to use political and financial pressure to insulate them from external pressures. For example, television news organizations, which might have been tempted to air highly popular exposés of the tobacco industry, risked losing the massive advertising revenues that they receive from the tobacco companies’ food subsidiaries. Once tobacco firms had shifted much of their production and marketing to Asia, the link was no longer as useful, so they spun off many of their food operations (for example, Kraft Foods is no longer part of Philip Morris). In 2009, after decades of fighting proposals to allow the Food and Drug Administration (FDA) to regulate nicotine, Philip Morris suddenly supported regulation. Industry experts and Morris’ competitors complained that the change was designed to reduce competition. Morris’ internal research showed that its Marlboro brand had captured such a large market share that regulating the industry would be to the company’s advantage. Limits on advertising that would come with regulation, and difficulty obtaining FDA approval for new tobacco products would make it almost impossible for their competitors to ever catch up (Wilson, 2009). Of course, especially in a society that presumably values “free and open competition,” these activities raise important ethical and legal questions (see Chapter 12), so they must be implemented quietly and/or justified through appeals to socially acceptable values. But, they all reduce the competitive pressures that organizations face. Finally, organizations can rely on information and communication technologies to help them get around some of the liabilities of the traditional mode of organizing.

Employees also can compensate for the communication problems inherent in the traditional strategy. If they often find that their supervisors leave them “out of the loop” on important topics, they can strategically develop relationships with other people in the organization who are “in the know.” The informal communication networks they develop gives them the information that they should have received through formal channels (see Chapter 4). In addition, they can build redundancy into their own communication networks. If they suspect that they are receiving distorted information, they can engage in counterbiasing, in which they determine the probable biases of each person who communicates with them, adjust their interpretation of the message to compensate for these biases, and then actively seek out opinions from people who have differing biases. Fortunately, these compensating networks seem to emerge quite naturally unless managers actively suppress them, so they are there to be used.8 By acting strategically in their own interests, employees compensate for the weaknesses of traditional strategies of organizing.

TRADITIONAL STRATEGIES OF MOTIVATION, CONTROL, AND SURVEILLANCE

One of the goals of the traditional strategy of organizing was to replace the arbitrary and capricious treatment of workers that often took place in turn-of-the-nineteenth-century organizations with a scientifically designed and rationally implemented system of incentives and disincentives. The strategy assumed that all employees work to achieve goals, primarily economic ones, and a system that rewards them for following established rules and procedures and maximizing their own productivity would be in everyone’s self-interest. Labor–management hostility would be replaced with cooperative, mutually rewarding relationships. As traditional rule-and-reward systems were implemented, practitioners and scholars alike came to understand that those systems can succeed if and only if they are supported by effective communication.

Rules, Rewards, and Persuasive Communication

Like traditional organizational structures, rule and reward systems make our worlds stable, predictable, and in some ways simpler. Organizational theorist Karl Weick has noted that rules place parameters around our interactions with other people. Without those rules, we would constantly have to negotiate and renegotiate how we will act toward one another, leaving little time and energy for accomplishing tasks or pursuing other goals. For example, when hospitals provide parents of pediatric patients with a written list of rules about who (parents or nurses) will be responsible for different aspects of their child’s care, both the parents and the nurses are more satisfied. The rules make an ambiguous and stressful situation less difficult and allow the parties to spend their time and energy making detailed decisions about their child’s special needs (Weick, 1979; Adams and Parrot, 1994). Rules constrain our actions, but they also simplify our organizational lives. However, it is surprisingly difficult to design effective rule-and-reward systems or to implement them successfully. Doing so depends on communication and on being able to persuade members of an organization that the rules and rewards in the system are legitimate and fairly administered. Success also depends on the systems themselves, and how they deal with unintended consequences. To succeed, rules must be clear enough to be easily understood, specific enough to give employees precise guidelines for acting, and general enough to be applicable to a wide range of day-by-day situations. Rules will be seen as legitimate only if members believe that they are applied equitably to everyone in the organization and are produced by the organization, rather than by an individual supervisor acting on his or her own whim.9 Rules will be perceived as illegitimate if they are applied outside an accepted range of activities. For example, rules about employees’ private lives will not be accepted if employees perceive that their employer does not have a legitimate right to enforce them. At one time employees, especially managerial and supervisory personnel, gave their organizations the right to control much of their private lives. Today employees often refuse to accept company rules about where they should live, how they should spend their income, or what they should do with their leisure time.

For example, the management of Dell Computer Company created an uproar when it distributed a memo informing employees that their “Code of Conduct” for behavior at work also applies to the games of the local AA baseball team, the Round Rock Express (who play their home games at the Dell Diamond). Heckling visiting players and booing members of the home team are forbidden because they are “disruptive, unprofessional, offensive, or potentially slanderous”; acting “responsibly with respect to consumption of alcohol” is required. Dell employees are accustomed to rules that impinge on their private lives – 60 hour work weeks for its sales staff or mandatory overtime for technical support people – and generally view those intrusions as legitimate business requirements. But many of them believe that regulating their conduct at a minor league baseball game goes too far.

Rules systems also must be connected to a credible reward system. Employees must perceive that the rewards they receive are both substantial and important. Pay seems to have these characteristics, especially for employees whose incomes are low, whose tenure in the organization has been brief, whose commitment to the firm is low, and who feel that their pay is inappropriate when compared to the pay of other workers. The promotions and status that usually accompany pay increases also seem to be important to most people, especially those with a high need for achievement. Praise also is salient to most people and is positively related to both improved performance and job satisfaction.

Employees must also be persuaded that the reward system is fair. They must believe that rewards are based on performance, rather than on friendships or biases, and that individual employees are primarily responsible for their level of performance, and the rewards they receive. This is a difficult undertaking because people tend to attribute their successes to themselves or to factors within their control and their failures to others or to factors they cannot control.10 These problems are reduced when objective, quantifiable measures of an employee’s performance are available; they are magnified if an employee is involved in creative or managerial work which is more difficult to quantify. But, in the end, the key is a supervisor’s ability to provide persuasive performance feedback (Tracy and Eisenberg, 1990/1991). Feedback should both clearly confront a problem (or clearly encourage continuation of excellent performance) and allow all parties to save face. Face management is complicated by an employee’s status, race, gender, and ethnicity. For example, face saving is especially important to people who culturally have communitarian orientations – women and people from Latin, Asian, and Middle Eastern backgrounds (Nathan, Mohrman, and Milliman, 1991).

At least for people from Western societies, a reward system is seen as fair only if it also is seen as equitable. Employees do not evaluate the rewards (or punishments) they receive in a vacuum; they compare them to what others receive and what they believe others should have received. If they perceive that the rewards allocated by the organization are just, their job satisfaction is higher than if they believe the distribution of rewards are unjust (labeled distributive justice). Similarly, if they perceive that the process through which the rewards are allocated is fair (procedural justice), their trust in and evaluation of their supervisors, and their commitment to the organization will be higher (McFarlin and Sweeney, 1992). If they perceive that the reward system is not just they will be frustrated and may respond by reducing their effort, negotiating for increased rewards, leaving the organization, or rationalizing the inequity.

Supervisors have a number of persuasive strategies available to convince their subordinates that a reward system is just. Some strategies are overt – giving workers information that proves that they are being treated equitably; and others are covert – withholding information about the other employees’ rewards, for example. It is difficult to employ the first strategy successfully, as professors remember each time they try to respond to a student’s complaint that “I worked much harder than so-and-so and received a lower exam grade.” It is equally difficult to implement the second strategy, although organizations often try to do so through rules that forbid employees from discussing their raises (or salaries) with others. The primary effect of these rules seems to be to encourage employees to obtain the forbidden information, since the very existence of the rules creates the impression that the reward system must be inequitable. The fact that these rules often fail may be the best evidence in support of the equity theory’s assumption that people are very much concerned with the equity of reward systems.

Fortunately, supervisors seem to recognize just how important perceptions of equity are in the success of reward systems, and how difficult it is to allocate rewards in a fair manner. When they believe they have reliable performance information on their employees, and they can realistically determine which employee was responsible for which outcomes (positive and negative), they try to allocate rewards based on performance, even though they know that doing so can create competition and hostility within a work group. But when the situation is less clear-cut, or when the supervisors are concerned about “team building,” they tend to give approximately equal rewards to each of their subordinates. As a result, in departments in which people work closely together and are similar to one another in backgrounds, experience, and interests, rewards are more alike and there is less difference among the salaries of the various employees (Meindl, 1989; Pfeffer and Langton, 1988).

To complicate matters even further, employees’ responses to issues of equity seem to be culture specific. In a study of employees in two individualistic and masculine cultures (the United States and Japan) and a culture that is less individualistic and less masculine (South Korea), Kim and his associates found that all three groups of employees preferred equity-based reward systems over across-the-board systems, although the preference was stronger with the US and Japanese employees. This should not have come as a big surprise. A century ago, Max Weber noticed that in traditional Catholic, European peasant communities, raising the sum that workers received for each item they produced often actually reduced their output. Workers found that with the increased pay rates, they could maintain the same income with less effort. At some point, leisure time became more important to them than increased income, so working harder made little sense given their complex set of goals. With the coming of Protestantism, and its emphasis on wealth and consumption as evidence of moral goodness, increases in pay have a more positive effect on performance.12 In sum, there is no doubt that traditional organizational control systems influence employees’ actions and attitudes. However, there also is a great deal of evidence that these systems may have many unanticipated consequences. Implementing control systems requires that a number of requirements – communicative and otherwise – be met, and even if they are met, employees will still make their own decisions about how to interpret and respond to them. (For an extended illustration of the concepts presented in this section, see Case Study 3.2, which begins on page 92.)

Case Study 3.2

The Power of Rewards at Industry International1 Industry International is a manufacturing firm with about 2500 employees in a number of plants. It is often touted as a monument to the power of financial reward systems. In an industry that has been battered by foreign competition for three decades, it has remained highly profitable, in large part because its workers are 2½ to 3 times as productive as those of its competitors. Their compensation is also three times the average salary for US manufacturing employees. They are not unionized, have no paid vacations, and work 45–50 hours per week. Much of their income comes from a year-end cash bonus. Each year, after company taxes and dividends have been paid, the board of directors determines the size of the bonus pool, which is divided among the employees based on their base salary and individual merit ratings. From 1943 to 1994 the bonus percentage ranged from 55 percent to 104 percent; in 1994 it was 61 percent, meaning that an employee earning a $30,000 base salary and receiving a 100 percent merit rating would receive a bonus of $18,300.2 Base salaries and bonuses have increased faster than inflation since. The bonus is kept secret from October until a meeting-celebration in December. When the meeting ends the employees rush to their cars, bonus checks in hand, and tie up traffic for hours going to their favorite places of celebration. Most employees use the money to pay accumulated bills, in fact many spend far in excess of their base salaries and then put off paying bills and loans until the bonus checks come in. Other employees use the money for less mundane activities. One got his bonus in $100 bills, spread them on the living room floor, and, along with his wife, rolled around on them (among other activities) in celebration. Some made major purchases like houses, cars, and luxury items in cash. A few (mostly younger employees) used the money to gamble, hire prostitutes, or buy illegal drugs. When asked why they spend the money as they do, three answers were commonly given – to live the good life so valued in the United States, to assert their autonomy (one said, “Spending bonus money is the one thing they [management] ain’t telling me what and how to do”), and for the social status that money provides: “As soon as they [friends and neighbors] find out you work there, they think you have money coming out of your ears”; [another said] “They think I’m the richest s…o…b [ellipses mine] in the world”; [another recalled that] “years ago we made more money than professional football players.” What they don’t tell their envious neighbors is what they went through to get the bonus. Merit points are based on output, quality, dependability, and personal characteristics. The first two can be quantified, leading employees to “work like dogs” until dangerously exhausted by long hours and difficult working conditions; the last two cannot, creating a highly political atmosphere in the plant; most echoed one worker’s conclusion that “if you don’t go along with the system [managers], you could be the hardest worker in the world … and you would still be way short because you have not gone with the flow and you would be blackballed, and they give you what they want to give you.” But, circumstances do change for Industry International. Recessions led to lowered bonuses (55 percent in the recessions of the 1980s). Many workers lost their homes and cars because they were relying on large bonuses to pay mortgages and loans. Workers attributed the decline to many things, but primarily to management greed and incompetence – a “fat managerial level and more men at the top,” embezzlement, and mismanagement of overseas accounts. Whatever the reason, the recession made it clear to workers just how dependent they were on Industry International, and how much things had changed: “The whole philosophy [established by the founder and maintained until 1983] was that you worked hard and got compensated for it. You busted your ass, but you got compensated. Now you bust your ass and you don’t get compensated for it.” But, they have very few options. Most are too old to start over somewhere else and are limited by their education and training to manufacturing jobs, and high-paying manufacturing jobs are becoming very rare in the United States, a trend that has increased during the Great Recession of 2008 and beyond (Rich, 2010; also see Chapter 12 of this book). And, when the economy recovers, bonuses increase and the company expands. So, they sometimes talk about resisting management. They fear that management will eliminate the bonus system, replacing it with a form of profit sharing that is not as lucrative for the workers. Many predict a massive walkout or work stoppage if that happens. Others talk about unionizing the firm. Management has persuaded them that the bonus system relies on a non-union shop, but if the bonus system is eliminated they have no reason not to unionize. Others predict that employees would quit the company; still others predict plummeting productivity and quality, others threaten physical violence against management and sabotage of the plant. “If they got rid of bonus, they wouldn’t have the control over anyone. Bonus is what they have to keep the hold on you” (also see Campbell and Pritchard, 1976; Greene and Podsakoff, 1981).

Applying What You’ve Learned

1. A number of factors need to be present for rule–reward systems to succeed. Which of those factors were present at Industry International? Which, if any, were absent?

2. What resistance strategies are available to these employees? What could they do to keep from being so dependent on the system? What effects would those actions have on the system? Why? Questions to Think About and Discuss 1. There is a substantial amount of research evidence indicating that pay is the most powerful motivator for US workers, more so than for workers in some other countries. Why? 2. Would this kind of motivation and control system work differently in different societal contexts, for example, in a society that was not as consumption oriented as the United States or in a country with extensive social support systems for unemployed workers and their families (see Freeman, 1994)?

3. If you were the CEO of Industry International, what kinds of public economic policies would you want the government to follow? (Would you want the Federal Reserve Board to focus on keeping inflation low or keeping unemployment low? Would you want corporate income taxes to be a primary source of government funding or personal income taxes?) Why?

Notes

1 This case is based on Hancock and Papa (1996), and Gibson and Papa (2000).

2 Since Papa and his associates have never identified the real company that they called Industry International, it is impossible to update these figures. However, the Lincoln Electric company operates very much like Industry International. It gave comparable bonuses during the years covered in this case, and gave out average bonuses of $11,800 in 2002 and $10,800 in 2003 and comparable amounts in subsequent years.

Avoiding Unintended Consequences of Rule–Reward Systems

Unfortunately, rule–reward systems may inadvertently encourage behaviors other than those that were intended. In what has become a classic essay on reward systems, Steven Kerr provided a number of examples of “the folly of rewarding A while hoping for B.” For example, in politics, US citizens say they want candidates for office to make their goals, values, plans, and sources of campaign funding perfectly clear so that they can make informed choices. But, repeatedly, voters reject candidates who do so and reward those who deal with images and personalities rather than issues and solutions. Citizens want state adoption agencies to place children in good homes, but they also want state agencies to run as efficiently (which usually means as cheaply) as possible. So, legislators enact regulations that base adoption agencies’ budgets, prestige, and staff size on the number of children enrolled (that is, the number not placed in homes). Consequently, employees and administrators are inadvertently encouraged to make it difficult to adopt these children – by requiring prospective parents to not smoke, be of the same religion, have never been divorced, have a separate bedroom for the child, and so on. Similarly, universities are supposed to teach students, but tend to reward research activities that have only an indirect positive effect on teaching quality, especially in undergraduate courses. Students are supposed to go to college to learn something, but are rewarded by employers and graduate schools largely based on the grades they receive regardless of what they have learned, thereby encouraging them to take easy classes (which reduces their opportunities to learn), focus on getting high grades instead of on mastering of the material, and so on (Kerr, 1975).

Reward systems may also ignore the intangible rewards that employees receive from their jobs. Some professors in research universities actually do spend time and effort on undergraduate teaching, in spite of the organization’s formal reward system, because they receive intangible rewards from their interactions with their students. Kerr studied a medical insurance company that rewarded claims adjusters for quickly and accurately paying good claims and rejecting bad ones. But the size of the reward was too small to offset the hassles they received from turning down a claim. So, newcomers quickly learned, “When in doubt, pay it out!” It is the “net” reward, as perceived by individual employees, that determines the extent to which a reward system motivates them to act in ways desired by the organization’s leaders.

Finally, some tasks are complicated in ways that make it virtually impossible to design an effective reward system. For example, William Ouchi examined the reward systems in a number of retail stores (Ouchi, 1977).13 He found that those salespersons paid on a commission basis sold a lot of merchandise, but ignored other necessary tasks – ordering and arranging inventory, or training new salespeople. In contrast, people paid an hourly wage completed all the necessary tasks, but didn’t sell much merchandise. People paid on commission also had strong incentives to engage in unethical behavior. Presumably, it is possible to design reward systems that discourage unethical activities and encourage employees to complete support tasks. But, if salespersons receive no rewards for maintaining high ethical standards or completing support activities, especially in the short term, they will do what they are rewarded for doing (Kerr and Slocum, 1987). In sum, rule–reward systems are complicated because human beings are complicated. People actively perceive, interpret, and strategically respond to the guidelines and constraints they face. The people who design the systems clearly do not intend the systems to have these effects; indeed they cannot even predict that they will do so. Reward systems are powerful motivating agents, but their impact is determined more by the employees who interpret them than by the systems themselves.

Surveillance and Rule–Reward Systems

All organizational control systems require some form of surveillance, some process through which supervisors can determine the extent to which employees conform to policies, procedures, rules, and motivational systems. This is particularly true of traditional strategies of organizing because the primary function of supervision is worker control and because supervisors exercise control over everything from major policies and procedures to microscopic elements of task design and completion. The simplest form of control involves supervisors constantly looking over the shoulders of their subordinates. This kind of surveillance is still common in newly industrialized economies. In a Malaysia-based microchip plant, male supervisors constantly pressured female workers to increase their productivity; even trips to the locker room were penalized. Workers complained about being constantly spied upon and felt that they had no place to hide. The company set up an in-house “union” to serve as an additional watchdog (Ong, 1991). However, simple surveillance systems have two important disadvantages. First, they are highly inefficient, requiring organizations to hire and pay large numbers of supervisors to watch over their employees. This managerial overhead is especially large in US firms (almost three times as large as in Japanese organizations, and almost four times as large as in European firms), and it has steadily increased since the end of World War II. Second, they are very obtrusive (visible and “in your face”), which generates a great deal of antagonism between supervisors and subordinates.

Today supervisory surveillance is made much easier by the advent of sophisticated computer technologies. A 2000 study by the American Management Association found that almost 80 percent of US firms used some form of electronic surveillance during the previous year, a number that had increased by an astonishing 67 percent over the previous year. Annual surveys since 2000 have had similar results. The most common activities were monitoring internet use, listening in on or recording telephone conversations, storing and reviewing computer files, using video equipment to guard against employee theft and sabotage, and recording computer use (number of keystrokes per minute, time taken between entries, etc.) Indeed, computer monitoring is more common in the workplace than in any other part of society, in part because modern organizations are technology intensive, making it easy to monitor employees. For example, Metron Enterprise Behavior Analysis’s appliance helps managers identify which media employees use to communicate, identify groups of employees who communicate frequently, measure the productivity of each employee and each of the informal groups that the system identifies, and detect messages from employees who disagree with the policies or actions of a company or a particular supervisor (Dubie, 2007; Findlay and McKinlay, 2008). Historically, women are more likely to be monitored than men, and minority women are the most heavily monitored group. This is because it is easiest to monitor people whose jobs can be quantitatively measured – clerical work, data entry, or routine computer programming – and those tasks are largely performed by minority women. But, with the development of more sophisticated software, the range of jobs that can be closely monitored has been expanding.

Some computer monitoring is widely accepted, particularly in North America because of widespread acceptance of the doctrine of “employment at will,” which means that employers have the right to set almost any condition of employment and to fire workers for almost any reason. Like anything else, electronic surveillance must be justified, legitimized through day-by-day conversations among workers, and limited to acceptable behaviors. The most common justification is that management has a legitimate right to make sure that all employees are working hard, and to discover, expose, and control employees who disagree with company policies and/or may act in ways that disrupt smooth operations.15 A variant of this “coercive” rationale asserts that using electronic surveillance to detect and control workers shows that the organization “cares” about protecting compliant, productive workers from a lazy, disruptive, or incompetent few. Although two-thirds of North American workers accept these justifications, especially if they are managers and/or if the surveillance is being used to monitor other people rather than themselves, they also believe that the practice should not be used to monitor personal matters (anything done outside of work, or personal phone calls or emails unless they were in some way interfering with an employee’s work), or observe people while in “private” spaces such as restrooms or breakrooms. In addition, employees perceive that much of the information collected should not be made public. For example, the number of bathroom breaks that employees take in a day, or the duration of those breaks, should not be posted in public. Some technologies also tend to be viewed negatively, such as genetic screening of prospective employees, and the information collected should not be used to discriminate on the basis of race or gender. In 1996 a number of women workers at Mitsubishi Motors’ Chicago area plant filed a sexual harassment suit (we discuss this issue in Chapter 10). Management retaliated by threatening to make their health records public, information that it had collected when they filed claims with the company’s health insurance provider. Evidently, Mitsubishi’s management thought that a public revelation of the workers’ sexual history – forms of birth control used, abortions, treatment for sexually transmitted diseases, and so on – would coerce them into dropping the suit (Keyton et al., 2006). Not only did the strategy fail, but also it generated heated opposition from every woman in Congress, among others. Finally, and ironically, workers should be told about the surveillance system, preferably when they are hired or during new-employee orientation, but its operation should be unobtrusive, so that workers do not feel that they are constantly being watched.

Assessing the effects of computer surveillance systems is difficult. They have often been linked to a number of negative outcomes, especially among employees in Europe who tolerate less corporate invasion of their privacy, or those who see the systems as unethical. Adverse effects include lower job satisfaction, higher absenteeism and turnover, adverse health effects (including increased stress and anxiety), feelings of lost privacy, lower commitment to the organization, and high levels of resentment about being monitored. Ironically, they also can harm supervisor–subordinate communication. Supervisors who receive daily printouts of their subordinates’ activities feel less of a need to talk with them face to face, which harms their relationships and reduces their access to complicated information.

Heavily monitored employees often perceive that management does not trust them and treats them like children and fear that they are being set up for punishment or dismissal. Some resist the systems, often in creative ways. If the systems are obtrusive – for example, they flash messages such as “work harder” or “concentrate” on the workers’ computer screens when they slow down – the negative effects are more likely and more severe. Surveillance systems also can harm performance, especially for employees who perform complex tasks. Employees begin to believe that management is concerned with quantity of output, but not quality, and respond accordingly. They provide lower-quality service to customers and find ways to bypass complicated or otherwise time-consuming clients or activities. However, properly designed and implemented electronic surveillance may have net positive effects, especially if employees are actively involved in their design and implementation. Monitoring is perceived favorably if it is restricted to legitimate, performance-related activities, if it increases the fairness of the organization’s rule–reward system, and if it is linked to effective performance feedback. In these senses, employee responses to computer monitoring are very much like employee responses to rule–reward systems in general.

Resistance to Rule–Reward Systems

Resistance is an inevitable aspect of social or organizational control because control systems inevitably reduce members’ autonomy and creativity (recall the dilemma discussed in Chapter 1).17 The simplest forms of resistance are withdrawal and open rebellion. The former leads people to be progressively less involved in and committed to their jobs; the latter can culminate in sabotage. The disastrous chemical leak at Bhopal, India, in 1985 resulted in part from an employee’s rebelling against being punished (fired) for breaking what he perceived as illegitimate rules. A cleaning woman once admitted that she retaliated against an especially controlling employer by using her employers’ toothbrush to clean her commodes – for years. Employees also may resist rules by regressing, that is, by reducing their performance to the minimum acceptable standard that the rule–reward system allows. Employees resist electronic surveillance systems by finding ways to fool the computers, sabotaging the systems, or filing lawsuits.

Other forms of resistance are more complex. Employees sometimes rebel against their organizations by following rules exactly, robbing their organizations of the common sense and flexibility to make rule systems work. In Mexican maquiladoras workers covertly resist pressures to speed up production by engaging in tortuosidad, literally “working at a turtle’s pace.” Since their supervisors (US and Mexican) viewed their workers as “lazy,” they often failed to recognize that the slowdowns were strategic (Pena, 1987; Young, 1987). During 1991, a small number of American Airlines pilots resisted management by following FAA regulations to the letter – filing very complete flight plans, requesting detailed weather reports, and engaging in other activities that are completely legal but rarely absolutely necessary for flight safety. The number of flight delays and cancellations skyrocketed. Management retaliated by giving the pilots assignments that reduced their income (while denying in public that they were doing so). Pilots countered by following the rules even more exactly, eventually paralyzing the airline through their strategy of malicious obedience. Similar actions in 1997 and 2000 cost American $70 million and $225 million respectively. In 1997, United Airlines pilots virtually shut that airline down by obeying rules regarding overtime exactly; in 2000 the same strategy cost the airline $225 million. Even flight attendants, who have substantially less bargaining power, were able to force concessions from US Airways in 2000 after costing the company $40 million by working to rule (Goldberg, 2000).

Whether the consequences are massive or minor, all forms of resistance serve the same purpose: They allow employees to rebel against rule–reward systems, enhancing their feelings of autonomy and, sometimes, their need for creativity. Unfortunately for organizations, supervisors often respond to resistance by tightening the rule–reward system, which increases the probability of further resistance. The organization then finds itself immersed in destructive cycles of disobedience and dictatorial management. Unfortunately for employees, resistance rarely leads to major changes in organizations or organizational rule–reward systems. The nature of the traditional strategy makes it difficult to locate and resist real sources of organizational control. When resistance actually does threaten to force changes on an organization, high-powered members are usually able to change the systems to undermine resistance strategies. Finally, resisting rule–reward systems focuses attention on them and can unintentionally legitimize them. For example, resisters can be depicted as troublemakers, which adds credibility to the “caring” rationale for electronic surveillance. In addition, while resisters usually raise questions about the legitimacy of a particular rule–reward system or the way in which it is being implemented, they usually accept the legitimacy of some system of organizational control (they are resisters, not revolutionaries). Thus the relationship between control and resistance is paradoxical: Control inevitably creates resistance, which often supports systems of control.

TRADITIONAL STRATEGIES OF LEADERSHIP

Most contemporary organizational theorists view “leadership” as a process through which charismatic people develop and persuasively articulate a vision that challenges an organization to excellence and constant improvement. These perspectives contradict the traditional strategy of organizing, which focuses on stability (see Chapters 4 and 5 for more detail on contemporary views of leadership). In contrast, the traditional strategy dictates that supervisors will be “managers,” people who implement an existing set of plans, or “administrators,” people who develop routines for efficiently accomplishing particular tasks (Fine and Buzzanell, 2000). Traditional organizations are comprised of a kind of class or caste system that fosters clear distinctions among a managerial power elite, a “new working class” composed of lower-level managers and people with technical skills, and lower-level workers that must appear to be “like” upper management, both in terms of overall attitudes and behaviors and in terms of the images they project. People who advance through traditional hierarchies tend to come from the same schools, wear the same clothes, and develop the same communication styles and mannerisms of their higher ups. They must learn to please their superiors by accommodating their every whim and meeting their every need. “Good” subordinates will anticipate their superiors’ demands, prevent or solve the problems they encounter, and “help a superior perform well and look good,” even if doing so involves taking blame for the superior’s errors and giving him or her credit for the subordinate’s successes (Goffee and Jones, 2001; Smith, 1970; Kelley, 1992, 2004).19 They must demonstrate loyalty, both to the organization and to their sponsors in the power elite. They must keep their distance from people below them in the hierarchy. The most promotable ones develop a near obsession with following established rules because doing so is their only source of protection. Above all, they do not make waves; creative approaches and new ideas threaten the stability and predictability that are hallmarks of the traditional strategy of organizing. As a result, the people who are hired for upwardly oriented jobs tend to already have the appropriate credentials and behavioral styles. And, “fitting in” gets progressively more important as one moves up the organizational hierarchy.

Omar Aktour has provided an excellent example of these processes in a study of two breweries, one in Montreal and one in Algiers. Although there were some differences in the two settings, there were striking similarities in how one became promotable in these two very traditional organizations. From the day they arrived in the organization, employees who eventually became worthy of promotion engaged in a particular pattern of behavior. They were obsessed with doing more – a machinist who used his breaks to clean his machine or a quality control officer who repeatedly phoned the plant on his days off to make sure things were going well. They showed a strong capacity to keep lower-level workers in line and showed unconditional obedience and submission to their superiors. They kept their distance from the regular workers and took care to master the language of the elite – managerial jargon, including the most recent managerial fads, and upper-class accents. They zealously enforced rules and quotas, boycotted all unionizing activities (or informed on pro-union workers), appeared to suffer from their workload and worries, and constantly stayed on their bosses’ coattails. In both plants the formal job descriptions of managers and the official reward/evaluation system focused on objective performance criteria such as production per machine or number of equipment breakdowns. But, upper management described a “good” (promotable) subordinate in terms that had little to do with technical expertise or objective performance. To them, good subordinates are submissive, punctual, serious (absorbed in their tasks), malleable, and ambitious. As a result it is not surprising that the workers in these plants complained about the technical incompetence of their supervisors as well as about their untrustworthiness and political game playing (Aktouf, 1996).

Consequently, by the time people are promoted to managerial positions in traditional organizations, they have developed ways of thinking and acting that preclude their being “leaders” in the contemporary definition of that term. The only legitimate vision is that of maintaining the existing systems and structures; the only possible challenge is to do what the organization has always done more rapidly and efficiently. Such people are likely to be excellent “managers” and “administrators,” but not leaders.

INFORMATION AND COMMUNICATION TECHNOLOGIES (ICT) IN TRADITIONAL STRATEGIES OF ORGANIZING

Overcoming the Limitations of the Traditional Organizational Strategy

As we have emphasized throughout this chapter, the principles of the traditional strategy of organizing often create problems in their own right. To reap the efficiencies of bureaucracy, organizations must manage employees through hierarchical arrangements that can lead to resentment and resistance on the part of workers. The friction generated by intrusive managers reduces efficiency and saps employee energy. In order to avoid constant oversight by managers, the traditional strategy relies on rule governed coordination of work, often supported by technologies such as assembly lines. However, the rules must be kept relatively simple or employees will lose track of them, and simple rules promote a degree of inflexibility. When organizations try to build flexibility into rules by making them more complex, the rule books become dense and time consuming to consult. Almost any college catalog is a good example of this; aside from the standard curriculum, the rules are somewhat different for each major and degree and the result is a tome that must be carefully consulted when contemplating graduation or changing majors.

Another problem is that applying complex rules often requires access to information that front line employees do not have access to. When the authors bought their first houses over 30 years ago, they filled out applications that listed assets and debts and documented credit worthiness, but the bank employee who took the application had no idea whether this information was correct or not. It took several days, sometimes as much as a couple of weeks of telephone calls and formal requests for information, to verify that the authors were not deadbeats out to cheat the bank or ne’er-do-wells who would default on their loans.

These problems have in the past imposed limits on organizations employing the traditional strategy. However, in the past 30 years, the new developments in ICTs have enabled organizations to minimize the effects of these problems. ICTs make it much easier to support consistent use of complex rule systems and to provide needed information to front line employees than has previously been the case.

Workflow systems can route documents through channels just as efficiently as the assembly line routes physical objects. In some insurance companies, for instance, a claim application submitted by a field adjustor at her portable PC is automatically evaluated by a machine-based expert system to determine whether it needs further scrutiny by higher level employees. If it does not, the claim is routed through the system for direct payment; if it requires another look, it is routed to a manager, who evaluates it and may communicate via email with the adjustor regarding any questions, finally routing it on for payment or further scrutiny. The documents and related messages are all handled by the workflow system and the routing is almost instantaneous. The system uses a complex set of rules more rapidly and consistently than any person with a manual could.

ICTs can also be used to provide front line employees with information to guide them as they apply rule systems. For example, in today’s loan process the information that the authors provide is entered into a workflow system that enables the loan officer to verify information and check credit status much more rapidly than in the past. Often a same-day response is possible for even complicated loan applications. In a different field, sales of large computers, servers, and networks are facilitated by systems that the frontline sales associate can use to customize complex systems and networks via his or her laptop. These systems enable sales associates to give quotes for complex networks of computers and memory devices in real time, greatly enhancing the sales process. Many of the most compelling examples of how ICTs revolutionize traditional organizations are in the sales sector, but they also abound in manufacturing as well. In the 1950s and 1960s, machine tools were limited in the number of parts they could manufacture. It often took hours to “retool” to a machine so that it could make a different part and this often had to be done with the assistance of a foreperson or engineer. Modern computer controlled machine tools can make literally hundreds of different parts. “Retooling” is done by programming and the operator is generally trained in how to do this. Computerized machine tools enable the front line worker to control the process, increasing responsiveness and efficiency, yet still delivering adequate control over the work.

At the turn of the twenty-first century, Aviall Inc., an aviation parts distributor headquartered in Dallas, implemented an integrated IT inventory management system to enable it to have more control over its work processes. In 1999 the company lost 20 percent of its accounts and $70 million in business, in part because of a botched effort to implement an inventory system. The company conducted a major overhaul of its systems in 2000, installing an extranet for customers to use in purchasing parts. This system enabled the company to offer 380,000 parts to the company’s 17,000 customers, using 20,000 different pricing schemes. Web sales rose 60 percent and cost per order declined from $7 by phone to 39 cents via the web. The company also upgraded its inventory control and warehouse system enabling managers to track products in inventory and move it around more effectively. This system enabled sales managers at Aviall to know what was in stock and initiate sales incentives on overstocked products. The system also enabled Aviall to know what sorts of parts its customers ordered, which gave salespeople the information needed to target their sales pitches. Customers were able to cut expenses in the order process and track shipment using the system. They are even able to download invoices and see them ahead of receiving the order. This system enabled Aviall to “have their cake and eat it too” (Melymuka, 2003). Aviall continued to upgrade its systems throughout the first decade of the twenty-first century. In 2010 it linked its system with Pentagon 2000 using a web-based system that makes Aviall’s inventory easily accessible for Pentagon 2000s aerospace customers (PRNewswire, 2010). Pentagon customers will have a direct web link to Aviall’s parts network utilizing the latest technologies which will shorten time to fulfill orders and increase efficiency.

ICTs enable organizations to exert control over work processes in a very efficient, complete, and relatively unobtrusive manner. They enable organizations to implement systems of rules to regulate work that are complex enough to be flexible. They enable organizations to give front line employees detailed information and support so that they can operate independently using the rules. As the next section illustrates, ICTs also enable organizations to extend the workplace into the home.

Telework

As noted in Chapter 2, telework refers to a wide range of arrangements in which employees work outside the traditional office and conduct a large portion of their work via computer or telecommunications linkages. A survey of information technology executives from 120 private firms in 2007 found that 20 percent of the employees of these firms telecommute and most of them were planning to increase telework (Dubie, 2007).

While not all telework is performed in traditional organizations, a good deal is, and this raises some issues that are worth considering at this point. The nature of telework varies widely. Some teleworkers conduct all their business from home; the telephone salespersons for some catalog companies mentioned in the previous section are one example; but many other professional employees work out of their homes as well. Some employees telecommute only part time, working at home a few days a week or month, and going into a regular office the rest of the time (Konradt, Schmook, and Malecke, 2000). Another type of teleworker is the road warrior. The advent of reliable ICTs, as we have seen, makes it possible to coordinate complex work, such as sales of high ticket items with complex specifications at distant locations or in the field.

Many insurance firms have done away with central offices, assigning agents and underwriters to the field, where they work out of cars and hotel rooms via telecommunications and email. At AT&T, about 5 percent of the company’s 373,000 employees do their work from cars or hotels. These road warriors save their companies millions in overheads each year. But they also complain of the lack of a feeling of belonging to their organizations and of the stress of living on the road many weeks a year.

Telework is feasible for any job that centers on paperwork and information processing. There are a number of incentives for telework. For organizations, the attraction stems from lower overhead since they don’t have to maintain office buildings and, for the many teleworkers who work on a part-time basis, don’t have to pay benefits. For the worker, advantages include closer contact with home and family (except for the road warrior), a more relaxed lifestyle away from the formality of the office, avoidance of office politics, and fewer long commutes. There are also advantages for the public, since less commuting means less expense for highways and other infrastructure and less automobile pollution. Evaluations of telework support its advantages. The majority of studies suggest that teleworkers are more productive and less costly than those based in the office.

There are several prerequisites for teleworking arrangements to succeed. First and foremost, the technological infrastructure must be developed. Often this means that high-speed transmission lines must be installed by the phone companies or other communication carriers. The organization must also purchase the proper technology (computers and high-speed modems) for processing and moving the information. Second, all involved must have developed “communication discipline,” that is, they must be in the habit of using their email, workflow, and other ICTs to stay in contact and coordinate their work. These new media require users to develop new patterns of behavior based on different communication modes (usually written) than the verbal channels with which most people are accustomed. Managers must be able to trust that commands issued via communication technology will be followed; employees must learn to understand what managers mean over media such as email that do not offer the direct personal contact that often provides extra information and detail. A final prerequisite for effective telecommuting is that home workers must create a work environment in their homes. Provisions must be made so that family matters do not constantly intervene in work. Some employees take on considerable expenses in setting up and equipping home offices. Since some office equipment is too expensive to be installed in the homes of all workers, many companies have set up satellite offices where employees can come when they need office facilities. Satellite offices are also places where employees can work with information too sensitive to transmit over public media.

A major barrier to effective telework arrangements is the discomfort of managers who can no longer see what their employees are doing. Before they become accustomed to electronic media, many middle and upper managers are wary of supervising employees they cannot see. “Management by walking around” is premised on visual contact and face-to-face communication. Managers do not know what they will find, but walk around to see what is happening; in the process they see things that work and should be done more and problems that have to be addressed. Management is very different with teleworkers. The information technology provides ways to monitor work, but understanding and working with the information requires managers to learn new procedures and skills. Managers who do not have these, or who are uncomfortable with new technologies in general, are likely to perceive a loss of control due to telework. A manager at a major truck manufacturer learned that sending blunt emails similar to the orders he gave in person could cause problems. “People would say, ‘Why did you ask me that? Are you angry at me?’ said the manager. “If you see them every day, they figure, ‘That’s just Dave – he has to get stuff done.’ But if you’re not seeing them on a frequent basis, you have to explain yourself.” Managers in new telecommuting programs are often counseled to take communication courses to avoid this type of problem (Brandel, 2002, 50).

Telework may also present some problems for the employee. The line between work and private or family time often blurs for teleworkers. Telework may be convenient in the sense that it gives the employee a more informal and flexible work environment; but it also makes it more convenient for others to reach the employee. Most teleworkers – and almost all road warriors – report that they work more hours. When work intrudes into the family space, there is nowhere for employees to escape work-related stress and get a break from the pressure. Teleworkers must exert considerable effort to keep their nonwork lives intact.

Despite these disadvantages, telework is here to stay. It is simply too attractive to both organizations and employees. Some futurists predict that telework will reverse the growth of cities and suburbs. If a travel agent can work as effectively from a farm 100 miles from Minneapolis as in the city, there is nothing to keep him or her in the city. A corporation that can locate satellite offices around the country in cheaper rural locales could be sorely tempted to vacate its high-priced suburban campus. It is possible that telework will encourage dispersion of the population and a general move away from the cities. The result may be further deterioration of cities and, eventually, suburbs, as those holding the highest paying jobs disperse more evenly around the country.

Ethical Issues in the Use of ICTs

The use of ICTs helps classical organizations overcome several of their inherent limitations. However, the use of ICTs for purposes such as monitoring employee use of ICTs and keeping track of their activities raises ethical issues. How far should organizations be able to go in monitoring employees? Some argue that if an organization provides the ICTs to employees they should be able to monitor and control everything that goes on in the system. The organization is not paying for personal facilities for its employees; they should use the system for work and nothing else. Further, if an employee engages in illegal or questionable behavior – sexual harassment of a coworker, fraudulent use of the internet, or lobbying a politician – the organization will be held liable, because it provided the means to the perpetrator.

The other side of the argument holds that even in the workplace employees expect some degree of privacy. While it is true that the organization provides the ICT, personal use with reasonable bounds should be allowed, particularly since the company often expects employees to check their email or voicemail from home on their personal time and may request that employees work extra hours. Being able to take a few minutes to order Christmas gifts from the office is reasonable compensation for the organization’s infringement on personal time and private life. The vast majority of employees do not engage in questionable activities using ICTs and they should not be penalized for the misdeeds of a few. Moreover, employees will always make some personal use of organizational resources; they make phone calls related to private matters and use the photocopier for their tax returns. Is there really any difference between this and some private use of the internet? There is no clear resolution to this issue at present.

An overwhelming proportion of employees use the internet for personal reasons at work. A study by Verton (2000b) indicated that costs to the organization of this behavior can be substantial. A company with 1000 internet users who do personal web surfing for one hour per day can lose more than $35 million in productivity costs each year. However, the study also indicated that the great majority of firms were not concerned about this type of cost, because they believed that increased morale among employees more than compensated for it. Most organizations in the survey indicated that they tolerate private use of the internet as a perk for their employees. Over 80 percent of the firms surveyed indicated that they have a written internet use policy to guide employees.

The ever-increasing capacities of network ICTs to keep track of what employees are doing has encouraged firms to ask their information technology departments to monitor employees to detect illegal or illicit activities (recall the discussion of cyberspying in Chapter 2). The ethical issues involved have put some staff in IT departments in a difficult position. Their relationship with their users is sometimes compromised by users’ resentment of monitoring, and this distrust can compound problems in keeping complex systems running. As one manager commented, “Our [IT] department philosophy is that if users fear us the job gets ten times harder. Fear leads to cover up and spin. When we are trying to find [the cause of] a problem, what we need is the truth.” This can extend beyond possible misuses to almost all problems with ICTs, resulting in breakdowns in the communication system and other key systems the organization needs to operate effectively. To counteract this, IT departments try to develop clear statements of monitoring policy and informally reassure other employees they are not trying to catch them out, but instead their primary goal is to maintain security.

A second privacy-related problem concerns organizations’ use of private information about customers and employees. The increasing integration of computer networks enables information from different databases to be linked and shared within and across organizations. Information about employees’ health histories, for example, might be compiled and shared among companies. Since employees with health problems often result in higher insurance costs and more time missed from work, some organizations might use this information in their hiring decisions. There has long been a debate about the appropriateness and legality of compiling and using this type of information, and laws and standards have been proposed. This issue is clearly on the public’s mind. Fear of having health problems included in a company database and ultimately disclosed has led some people to avoid seeking treatment for serious maladies or to seek private treatment that they pay for themselves.

Information about consumer preferences can also be captured by ICTs. A group of 70 electronic commerce companies, including IBM and First Union Corporation have been developing a data-sharing specification called Customer Profile Exchange (Verton, 2000a). This promises to enable companies to compile massive databases on customers and to comb through them to discover purchasing patterns, lifestyle information, and other information about customers. This possibility has raised concerns that the companies are overstepping the bounds of their customers’ privacy. More recently, Facebook and Google have been in the news because of similar concerns about the information they capture about users and clients.

Case Study 3.3

Scenes From the Electronic Sweatshop

Barbara Garson, playwright and investigative journalist, investigated how computers were transforming office work. Her book The Electronic Sweatshop documented some negative consequences that occurred when information and communication technologies (ICTs) were used to coordinate and control work in traditional organizations. Here are two vignettes based on her book that illustrate the dark side of ICTs:

Until the late 1970s, airline reservation agents were valued, long-term employees of the major airline companies. They had to learn and remember the companies’ fares, routes, and policies and apply this knowledge to solve problems for customers on an individualized basis. This made them highly skilled employees who were difficult to replace. Some made as much as $15 per hour in the early 1980s, good money at that time.

However, once computerized reservation systems were developed, companies attempted to redefine the work of the reservation agent. Much of the problem solving was built into the system: the agent simply had to type in the place of departure and destination, and the computer listed the available times and seats. There was, however, still need for a human in the loop, because each customer’s circumstances were so different that adjustments had to be made. However, while the airlines still had to have people on line, they wanted to regulate their behavior as much as possible to maintain strict cost and quality control. Based on studies of the work process involved in making a booking, conversations between agent and customer were broken into typical segments, with recommended scripts and prompts assigned to each. For example, if a customer called up knowing what he or she wanted, agents were instructed in ways to get the reservation down as quickly as possible, so they could go on to the next customer. In cases in which customers were fare shopping, agents were taught ways to probe for a sale; for instance, one strategy was to tell the customer that there were limited seats at the low fare and that the seat could be held for 24 hours at no cost, which insured that many customers would call back and offer another opportunity to close the deal. Agents were also told never to ask yes or no questions such as “Would you like to book?”; instead they were to ask, “Would you like the 10 A.M. or the 2 P.M.?” All transactions between agents and customers were tightly scripted. Supervisors listened in without the agent’s knowledge and graded them on how well they kept to the script and efficiently booked passengers. Too much small talk or empathy could get the agent a lower grade. The companies also set performance targets: in the company Garson studied, agents were supposed to make a sale during 26 percent of their calls.

Time on and off line was carefully monitored by the computer system as well: AHU (“after hang up”) time, the time between calls, was supposed to be 14 seconds on average if the agent wanted a raise. To keep one’s job and get raises, the agent had to be available, plugged in, 98 percent of the time for bookings.

For this, the new agents were paid $5.77 an hour.

The Automated Social Worker

When New York State installed a computer system to keep track of its welfare system, it took a job that it would seem is impossible to automate and turned it into a series of steps. Most social workers take up the profession because they want to help people. They are taught in school that every person is an individual and that it is important to take each individual’s needs into account to help them. People attracted to this field typically enjoy working with others and hope to make a difference in people’s lives. However, the computerization of

work in New York did not take this approach.

Job analysis divided the social worker’s tasks into units and assigned a time value to each. For example, making a food stamp change counted 0.5, authorizing funeral and burial expenses counted 0.7, and replacing a lost or stolen welfare check counted 0.4, where the numbers stood for tenths of an hour. As a worker does each of these tasks, they are toted up to give a figure for hours of work done. Once a worker reaches his or her allotted 160 hours (actually the target is about 120 hours per month, because 40 hours are required for staff meetings, maintaining work records, and other activities), he or she is done for the month. An experienced worker can do most of these tasks in much less time than the official time figure, so they can get credit for 160 hours with much less work.

So do the workers stop working when their credits reach their limit? Although we have not provided a full list of tasks here, suffice it to say that activities such as making exceptions for clients, trying to help them with their special problems when the help goes outside procedures, and providing sympathy are not among the officially sanctioned list of tasks. The tasks list refers only to bureaucratic operations involved in registering parties for welfare and delivering their services, not to the human side of welfare. Garson found that the social workers spent the time they had left after satisfying their hourly credits on these other activities – coaching clients in how to get the best benefits, giving them sympathy and support, and working around the system – and also in helping and counseling each other. The social workers made the system human by “gaming” the system.

Sadly, social workers who really try to help clients within the system often receive poor performance evaluations. If they diligently carry out their work, it takes more time than is allotted in the work analysis. One social worker commented,

Now if you is a person with a problem, you don’t want to just tell it to everyone. You want to feel it out first. “This [social] worker, does she have some sensitivity to my problem? Can she hear me?” But I can’t hear her. I can’t listen to her. I’m just trying to get my points. The whole system is survival. And she goes away feeling as bad or worse than when she came down here. … [S]ome people come here, they are at the end of their rope. They think, “You is a social worker. That’s something. Maybe you can help me.” And they start telling me about a child that is getting out of hand, starting to drink, not coming home.

This woman was a dedicated social service employee who wanted to do the best she could for her clients. But engaging a client in this way was not efficient and did not earn her the points she needed to make her hours. She had been “written up for Corrective Action” three times in the previous four months. Garson concluded, “The fact is that Jo Martin is not an efficient [social worker]. But a human service department that’s organized so it can’t use her true skills is profoundly inefficient.”

The system used to organize social workers was very similar to the scientific management systems set up to control work under the traditional strategy of organizing. However, unlike the studies of physical labor conducted by management scientists, New York’s studies made a profound error. Sympathy for the client and advocacy for his or her needs are an important part of the social worker’s job that were simply omitted from the analysis; the system captured all the physical motions of being a social worker, but ignored the spirit of the profession. This may have been inevitable in a system that was intended to enable computerization of social work. Behaviors that could be counted were emphasized because number crunching is what the computers at that time did best.

A good deal of the social worker’s time was spent filling out papers that documented all the papers they filled out for clients, so that their work records could be entered into the computerized system. The next step was to set up the system so social workers could enter their activity records into networked computers themselves. As the system developed further, the workers would enter in data about their clients directly, and the system would guide the social worker through the steps of authorizing burial expenses and other activities. In theory this might eliminate the labor of filling in forms, freeing the social worker up to engage their clients. However, judging by how the system had been developed at the time of Garson’s interview, it is doubtful that this was the direction it would take. Instead the social workers would simply have their case loads increased.

Ironically, the dedication of the workers to their clients kept this system going. Garson had the following conversation with one of the supervisors: G: What do you think of the time standards and point system? S: I blame the union for the way it’s operating. G: You mean because they’re sabotaging it? S: No, because they’re not sabotaging it. G: What do you mean? S: If they followed the rules the department issued them, this system would have collapsed in three months. … If I were a worker and a union activist, the first time I did 100 percent in the first 3 weeks of the month I’d stop work. And if they tried to make me do anything over 100 percent, I’d fill out an overtime form. The problem is that all the workers have developed systems of their own to get the points they need and still deliver timely service. That’s what keeps this place going.

Since Garson’s book was published, ICTs have transformed work and work relationships in almost every occupation and organization.

Applying What You’ve Learned

1. Are the airlines and the social work agency engaging automating or informating their work? (See the section below on the impacts of ICTs on work.)

2. How do these organization apply the principles of the traditional bureaucracy in their systems? What are likely reactions of employees to the system controls?

Questions to Think About and Discuss

1. What are some of the benefits of the computerization of work discussed in these cases for the employees involved? For customers or clients? For the organizations?

2. Would you like to work in these jobs (assuming that pay was up to your standards)? Why or why not?

3. Do you agree with the supervisor’s suggestion concerning how the social workers could shut down the system? What might management do if the social workers tightly conformed to rules?

Note

This case is based on Garson (1988).

Postscript: Automating versus Informating

The impact of ICTs on organizations and their employees depends in part on how they are used. Once applications are in the office or on the work floor, employees can begin to master computers themselves. They can use the computers to analyze their work and improve it. Shoshanna Zuboff argued that the preferred strategy for organizations is not simply to use computers to automate work and replace employees with machines. Instead she advocated using information technology to informate work, to enable workers to learn which processes are effective and which are not. Informating is possible because computers – properly programmed and utilized – can generate information on how the work is done and the output associated with different configurations of steps or methods. This makes workers smarter about their work and also better able to suggest and make improvements. As the case on the Electronic Sweatshop illustrates, computers are sometimes used in a very different way, to deskill employees and turn them into servants of the machine. For informating to succeed, those at the top of the organization must be willing to share power with those lower down. Those at lower levels must feel some control over their work and some power to make changes before they are willing to take the initiative to change how they work based on the new information. While management often initiates the empowerment of workers, distributed technologies themselves may also shift the balance of power downward. Enhanced communication via email and other telecommunications facilities make it possible for lower-level employees to form coalitions and share information that increases their power in the organization.

CONCLUSION: COMMUNICATION AND TRADITIONAL STRATEGIES OF ORGANIZING

We have spent a substantial amount of space discussing traditional strategies of organizing because they are so relevant to modern employees. The traditional strategy, with its tight hierarchy, focus on the structure, formal communication, rule–reward systems, and written policies and procedures, is still the dominant strategy used in the United States for governmental agencies, educational institutions, and many private firms. Bureaucratic modes of management are the norm rather than the exception throughout the world. Although very few organizations conform completely to the strategy, many employees entering organizations today find themselves in situations much like the traditional bureaucracy. Procedures and policies are documented in writing; job-related communication flows through the chain of command; positions require specialized skills and are filled at least in part because applicants fulfill established, written criteria; and decision making is centralized near the top of the organization. The development of ICTs promises to enhance the effectiveness of the traditional strategy and has in a real sense revitalized it.

Of course, real organizations – even those in which the traditional strategy is in evidence – deviate in a number of important but predictable ways from what the traditional theorists envisioned. But, understanding the traditional strategy is important because many people will spend most of their lives working in organizations that are “traditional” in many ways.

NOTES

1 This section is based on two sources, McPhee (1988) and McPhee and Poole (2001).

2 For excellent summaries of Taylor’s ideas, see Taylor (1978) and Locke (1982).

3 This is why computerized management information systems, recently installed in virtually every major organization, have had perplexing effects. Computer information systems do not filter information. In theory, they allow every employee, no matter where in the organization, to instantly access any part of its information base. However, no one can process all the information. Unfiltered formal communication will literally bury upper-level managers in information, at least until they learn to use the equipment to screen out messages. High-speed computer systems may only allow them to be buried more quickly. The “solution” to the problem of communication overload is for upper management not to use the systems, which defeats the purpose of installing them in the first place. See Rice and Gattiker (2001).

4 The “classic” study of sources of communication breakdowns is Roberts and O’Reilly (1974). Also see Jablin (1987), McPhee and Poole (2001), and Eisenberg (1984).

5 See Downs and Conrad (1982) and Fairhurst (2001). For an extended analysis of how one’s nonverbal cues influence interpersonal communication, including communication by the other members of the relationship, see Burgoon, Buller, and Woodall (1995); and Manusov and Billingsley (1997).

6 See St. Clair, Quinn, and O’Neill (2000, 244). The original studies were published as Burns and Stalker (1961) and Lawrence and Lorsch (1967). An excellent summary of subsequent research is available in Sutcliffe (2001).

7 See Conrad and Jodlowski (2008) and Angell (2004). One strategy alone, paying generic drug companies to delay the introduction of competing drugs, is predicted to have cost US consumers $35 billion, and the US treasury an additional $2.6 billion, between 2010 and 2020 (see “Drug Company Payoffs,” 2010).

8 See Monge and Contractor (2001). Employees also compensate for weaknesses in traditional motivation and control systems (see Katz, 1964; Williams and Anderson, 1991).

9 For an excellent analysis of how difficult it is to design policies that provide equity (which is not the same thing as “equality”), see Stone (2002).

10 Explanations of these processes are part of “attribution theory,” a model summarized effectively and applied to organizational reward systems in Bettman and Weitz (1983) and in Staw, McKechnie, and Puffer (1983).

11 An excellent summary of the importance of equity in Western societies is available in Sampson (1986); a fine cross-cultural comparison is available in Kim, Park, and Suzuki (1990). Summaries of the effects of perceived distributive and procedural justice are available in Brockner, Tyler, and Cooper-Schneider (1992); and in McFarlin and Sweeney (1992).

12 See Weber (1958). Initially, this relationship was constrained by Protestant concepts of self-restraint and saving for the future. Over time the concept of financial gain eclipsed self-denial in Protestant theology, especially in the United States. See Valeri (2010).

13 This concept is developed in greater detail in the final sections of Chapter 9.

14 The best source for data on managerial overheads is Gordon (1996). Superb summaries of these ideas are available in Aronowitz (1973), Braverman (1974), Burawoy (1979), and Edwards (1978).

15 The two justifications were first developed by Sewell and Barker (2006a). A useful model for understanding negotiations about the boundaries of acceptable surveillance was developed by Petronio (2002), and applied to organizational surveillance by Allen, Coopman, Hart, and Walker (2007).

16 See Allen et al. (2007), Adler and Tompkins (1997), Aiello (1993), Aiello and Svec (1993), Balitis (1998), Botan (1996), and Kidwell and Bennett (1994).

17 Hannah Arendt (1958) provides an explanation of the inevitability of resistance. Michel Foucault (1977, 1980, 1984), a theorist whose work we will cite frequently in this book, draws similar conclusions. Foucault’s work is difficult to understand, but an excellent summary is available in Barker and Cheney (1994).

18 Charles Conrad (1995) summarizes the research underlying these conclusions and examines the relationship between leadership and resistance in Conrad (in press). The most important background sources are de Certeau (1984), Burawoy, (1979), Clegg (1976), and Ferguson (1984).

19 For an alternative perspective, see Chaleff (2003) and Banks (2008). The primary source for this section is Ferguson (1984).

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