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But in the same enterprise, serving the customer, especially in high-tech areas, requires almost complete local autonomy -- going way beyond traditional decentralization. Each of the individual service people must be the "boss," with the rest of the organization taking its direction from him or her.

There are thus vast differences in organizational structure according to the nature of the task. Though, as I have said, they share most of the same problems, a Catholic diocese is organized very differently from an opera company. A modern army is organized very differently from a hospital. But within them these big organizations typically have more than one organizational structure. In the Catholic diocese, for instance, the bishop is the absolute authority in certain areas; a constitutional monarch in others severely limited, for instance, in his right to discipline his diocesan clergy and virtually powerless in others -- he cannot, for instance, visit a parish in his diocese unless the parish priest invites him to do so.

Yet there are universal principles of organization. One is surely that organization has to be transparent. People must know and understand the organizational structure they are to work in. This sounds obvious -- but it is far too often violated in most institutions, even in the military. It took something like 20 years, for example, for the U. Air Force to really understand who should have the last word as to whether a new aircraft was ready to fly.

It turns out that the real boss was the sergeant crew chief, not the colonel who commands the repair crews. It is also a sound general principle for all kinds of organizations that any member of the organization should have only one "master. It is a very old principle of human relations that no one should be put into a conflict of loyalties -- and having more than one master creates such a conflict. That's where the so-called jazz combo teams, so popular now, often go wrong. The engineer member, for example, reports to the team leader, but she also reports to the chief of her specialty function.

So with the finance member: He owes loyalty both to the team leader and the organization's overall finance chief.

[Business And Management Research: Paradigms And Practices] [by: Erica Hallebone] - Erica Hallebone

It is a sound structural principle to have the fewest number of layers, that is, to have an organization that is as "flat" as possible -- if only because the first law of information theory tells us that "every relay doubles the noise and cuts the message in half. For one task they'll work in a team.

For another task they will have to work in a command-and-control structure. The same individual who is a boss within his or her own organization is a partner in an alliance and even a junior partner in a joint venture. Think of it this way: The executive of the future will require a toolbox full of organizational structures.

He will have to select the right tool for each specific task. That means he or she will have to learn to use each of the tools and understand which one works best for each task. And when, in the performance of a task, should he or she switch from one kind of organization to another? This analysis is perhaps most needed for the currently politically correct organization: the team. It is generally assumed today that there is only one kind of team -- the jazz combo -- where each participant does his or her own thing but together they make great music.

Actually there are at least half a dozen -- perhaps a full dozen -- of very different teams, each with its own area of application, each with its own limitations and difficulties and each requiring different management. Here are some examples of teams: The old-fashioned functional team is the kind that prevails in department stores.

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The different departments -- buyers, displayers, promotion and advertising, selling -- do not work together, and none of their members ever does the task of a member of another function, except in a rare crisis. The advantage of this team -- as with a baseball team -- is that each member can be trained in a particular strength, as are hitters, pitchers and catchers on a baseball team. And each member can be measured and judged against clear and specific goals. The weaknesses are rigidity, slowness in changing anything and the danger that each group will be focused only on its own function.


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It will do its job well but pay little attention to the organization's overall performance. Another team is exemplified by the way service to customers is now being organized by the world's major manufacturers of heavy equipment, things like Caterpillar's million-dollar drag lines or the even more expensive high-tech medical MRI machinery.

The service person assigned to the customer has the ball, in football parlance. The service person can and does call on anyone in the company to help a customer with a particular problem; that expert is then on the service person's team for as long as it takes to fix the problem. Similarly the big multinational banks have organized their work for major customers like a football team's. The executive in charge of an account, e.


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  • And he or she can recruit anyone in the that bank's -- and in any of that bank's locations -- to help the client. A final example: The team is the top management of the big German company. Each member typically has one clearly defined area of responsibility in which he still very rarely a "she" is the boss That area may be functional -- engineering -- or geographic -- e. Normally, the person in charge of such an area does not even consult his colleagues about decisions in the area; he just reports them.

    But there is a "speaker" -- usually elected by the board.

    He too normally has a specialty area of his own, but in addition he has a vote, especially when there is disagreement in the group. He is somewhat similar to the conductor of a good orchestra -- he sets the score. But each player plays his own instrument.

    And there are many, many more kinds of teams. We are now only beginning to explore them and to define the strengths and weaknesses of each and where each works or doesn't work. But unless we work out, and fast, what a given team is suited for, and what a given team is not suited for, teams will become discredited as just another fad. So executives will have this toolbox full of organizations, some highly specialized. They will need to be able to use each one properly and to think in terms of mixed structures rather than only pure structures.

    There are not yet many organizations that can do that. An exception is Merrill Lynch. It has organized its institutional business quite differently from its retail business, even though they are run by the same people. What in all this is the role of the chief executive? I doubt that anyone would assert that we really know how to organize the top management job, whether in a business, a university, a hospital or even a modern church.

    We talk incessantly about teams -- and every study comes to the conclusion that the top management job, requires a team. But here rhetoric parts entirely from reality, and we practice the most extreme personality cult of supermen chief executives -- Bill Gates, Jack Welch, Lou Gerstner, celebrities all. But how were these people selected and who will succeed them -- and by what process? What are the safeguards to assure that the successor will be the best person for the job?

    People pay little attention to the succession process, though it is, in fact, the ultimate test of good management. In this respect, a nonbusiness organization has done a much better job: The first conscious attempt to deal with the succession problem was made by the framers of the U.

    They figured out for the first time in human history how to assure orderly succession without the killings, poisonings, plots and coups d'tat that stained the history of royal successions. While I don't know of any cases of garroting of rivals in corporate successions, neither am I aware of any successful systems to assure successful succession in the corporate or organizational world. The Constitution made sure that there would always be a chief executive officer legitimately selected and waiting in the wings without being a threat to the incumbent, as were the crown princes of yore.

    The vice president who succeeds a president who dies in office may not be the best person for the job, but his legitimacy and authority is never in doubt.

    In no other area are the basic traditional assumptions held as firmly -- though again subconsciously, as a rule -- with respect to people and their management. In no other area are they so totally at odds with reality and so totally counterproductive. The second assumes that they really do want to work and require only proper motivation. McGregor asserted that Theory Y is the only sound one.

    A little earlier I had said pretty much the same thing in my book, The Practice of Management. That one way or another people need to be managed remains the prevailing view, but it is wrong. A few years later, Abraham H. Maslow showed in his Eupsychian Management ; new edition why both McGregor and I were dead wrong.

    He showed conclusively that different people have to be managed differently. Maslow is best known for his theory of the hierarchy of human wants -- from filling the belly to self-actualization. But for management, Eupsychian Management is his most important book. I became an immediate convert -- Maslow's evidence for his view that different people require different ways of managing is overwhelming.

    But to this date very few other people have paid much attention. On this fundamentally wrong assumption that there is only one right way to manage people rest all the other assumptions about people in organizations and their management. One of these assumptions is that the people who work for an organization are working full time, and dependent on the organization for their livelihood.

    Another such assumption is that the people who work for an organization are subordinates expected to do what they are assigned to do and not much else. Seventy years ago, when these assumptions were first formulated, during and at the end of World War I, they conformed closely enough to reality to be considered valid. Today every one of them has become untenable. A very large and steadily growing minority of the work force are no longer full-time employees.

    They work for an outsourcing contractor, be it a cleaning service or a data processing outfit. Increasingly, the big car and truck manufacturers build cars from parts made by suppliers, with the result that most of the labor in their product is supplied by people who do not work directly for the manufacturer. This is certainly true in the computer business. Other members of an organization's work force may be individual contractors working on a retainer or for a specific contractual period. This is often true of the most knowledgeable and therefore the most valuable people.

    Even if employed full time, fewer and fewer people are subordinates -- even in fairly low-level jobs. Increasingly they are knowledge workers. Knowledge workers cannot be managed as subordinates; they are associates. They are seniors or juniors but not superiors and subordinates. This difference is more than cosmetic. Once beyond the apprentice stage, knowledge workers must know more about their job than their boss does -- or what good are they?

    The very definition of a knowledge worker is one who knows more about his or her job than anybody else in the organization. For example, the engineer servicing a customer does not know more about the product than the engineering manager does. But she knows more about the customer -- and that may be more important than product knowledge. The meteorologist on an air base is vastly inferior in rank to the air base commander. But he is of no use unless he knows infinitely more about weather forecasting than the air base commander does.

    The mechanic servicing an airliner knows far more about the technical condition of the plane than the airport manager of the airline to whom he reports, and so on. An executive, therefore, is not just being polite when he or she refers to an employee as an "associate.

    Business and Management Research

    A regimental commander in the army, only a few decades ago, had worked his way through all the jobs occupied now by his subordinates: platoon commander, company commander, battalion commander. The only difference in these respective jobs was in the number of people each commanded; the work they did was exactly the same. No longer. Except for a very brief period early in their careers, many of today's senior military officers have spent little time commanding troops.

    Their main experience more likely lies in administration, logistics or even research. Similarly, the vice president of marketing may have come up the sales route and know a great deal about selling. But he or she knows little about market research, pricing, packaging, service, sales forecasting. The marketing vice president therefore cannot possibly tell the experts in the marketing department what they should be doing. In that sense, they are associates, not subordinates. The same is true for the hospital administrator or the hospital's medical director with respect to the trained knowledge workers in the clinical laboratory or in physical therapy.

    Their relationship, in other words, is far more like that between the conductor of an orchestra and the people who play the instruments. The conductor may not even know how to play a violin, yet the success of his conducting depends upon the quality of his associates. And just as an orchestra can sabotage even the ablest conductor -- especially even the most autocratic one -- a knowledge organization can easily sabotage even the ablest, especially the most autocratic, superior.

    What this means is that even full-time employees have to be managed as if they were volunteers. In this the typical corporation can learn a lot from the Salvation Army or the Catholic church. Like volunteers who work for the church and for the army, knowledge workers own their means of production, which is their knowledge. Their means of production are theirs, unlike the machinery, the buildings, the raw materials that industrial workers require to do their jobs.

    Furthermore, we have known for 50 years that money alone does not motivate employees to perform much more than it motivates volunteers. Yes, dissatisfaction with money grossly demotivates.


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    • Satisfaction with money is, however, mainly a "hygiene factor," as Frederick Herzberg called it all of 40 years ago in his book, The Motivation to Work. What motivates -- especially knowledge workers -- is what motivates volunteers. Volunteers, we know, have to get more satisfaction from their work than paid employees precisely because they do not get a paycheck. They need, above all, challenge.

      They need to know the organization's mission and to believe in it. They need continuous training. They need to see results. Implicit in this is that employees have to be managed as associates, partners -- and not in name only. The definition of a partnership is that all partners are equal. It is also the definition of a partnership that partners cannot be ordered. They have to be persuaded. Increasingly, therefore, the management of people is a marketing job.

      And in marketing one does not begin with the question, "What do we want? What are its values? What are its goals? What does it consider results? It goes beyond this and involves aligning the employees' goals with those of the organization -- and vice versa. Managing people will become increasingly crucial in developed countries like the U. For the only competitive advantage developed countries can still hope to have is the productivity of their knowledge workers.

      The productivity of the knowledge worker is still abysmally low. It has probably not improved in the past or even years -- for the simple reason that nobody has worked at improving the productivity. All our work on productivity has been on the productivity of the manual worker. This will require, above all, very much changed assumptions about what constitutes management.

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