Are today’s managers more cowardly than their predecessors?

Charlie McMenamin says that no-one should be allowed to pontificate about public spending cuts until they have read this article by former Revolutionary Communist Party organiser James Heartfield. Given that I intend to continue banging on about the public sector and the need for intelligent cutbacks, I thought I had better read it.

In summary, Heartfield’s view is that British capitalism is now so crap that it needs to be supported by the state. That is why the government is nationalising and privatising at the same time. Privatisation, he argues, allows the private sector to make money from state functions while nationalisation and state intervention is used to prop up failing banks and car companies. Both are a result of capitalism’s decreasing ability to generate profits in the traditional way; by creating products that sell in the marketplace. It is because capitalism is now so feeble, says Heartfield, that it needs propping up by state spending on outsourced services and bailouts.

Given the catastrophic bank failures, it’s difficult not to give this argument some credence. But for Heartfield, the problem runs deeper than just the collapse of a few banks. In his view, capitalism needs to be supported by the state because today’s business managers are rubbish.

But it was not only government that is paralysed by doubts, the private sector, too is in the grip of an existential fear of change. Today’s Managerial Class are not used to confrontation:

‘CEOs have an average age of 50 in Europe meaning that their earliest experience of working life (1980, if they started age 22) was dominated by recession, whereas their career development would have taken place in an era of boom, from age 34 to 50.’13

Cowardly managers of bloated businesses usually call in the consultants to make the difficult and unpopular decisions about which divisions to close down, and which to develop.

Risk aversion among business leaders is their reaction to the industrial conflicts of the 1980s. The capitalist class’ historic mission to revolutionise production belongs to another era. These days they prefer stability to change.

Now I’d be the first to agree that conflict avoidance, especially over issues of performance and over-manning, is endemic in organisations. It has been a long-running theme on this blog. Where James Heartfield is wrong though, is in his assumption that this is a generational issue.

Conflict avoidance has been a problem in large organisations for at least as long as I have been in working in them; that’s twenty-three years if anyone’s interested. The previous generation of managers that Heartfieldrefers to, who made those swingeing cuts during the 1980s, were just as reluctant to confront performance issues as managers are today. Back then, I remember swapping stories about this problem with other junior HR managers from large corporations. We decided it was so bad that, in the late 1980s, a few of us designed a series of courses to encourage managers to confront poor performance, which we then helped to run in each other’s firms.

Apart from a few individuals who love a good scrap, most human beings steer clear of conflict. That was just as true among the senior managers of the 1980s as it is for today’s business leaders.

That said, in many ways it has become harder to downsize organisations and to confront performance issues. While macho management may have played a part in the corporate restructures of the 1980s, many of the redundancies were, in fact, bought with offers of early retirement. Companies used what were then extremely wealthy pension schemes to buy their way out of the conflicts they would have had to deal with if they had simply fired people. As the Observer noted last week:

At the time of the sale of British Telecom, thousands of unwanted staff were offered early retirement rather than redundancy by ministers who saw the company pension scheme as a no-cost solution to cutting jobs. It was a trick repeated many times during the 1980s as government-owned businesses were slimmed down in readiness for sale to the private sector.

Now that many pension schemes are under-funded, that option is no longer open.

Since the 1980s a number of other factors have combined to make it more difficult to dismiss people. Employment protection, to an extent dismantled by the Thatcher government, has been built up again since. Legislation in the past decade has encouraged employees to pursue grievances and increased the number of issues about which they can raise those grievances. Add to that the decline of deference and the ever more litigious nature of our society and managers are faced with workers who are much more difficult to discipline than they were twenty years ago.

None of this is an excuse for not managing performance. Good managers can still discipline and, where necessary, fire people for poor performance if they are properly trained and have the right skills. However, the minefield of laws, procedures, grievances and implicit threats of litigation gives the conflict avoiders plenty of excuses not to take action. The myth that “you can’t discipline people any more because of employment protection/equality legislation/health & safety/grievance procedures/threats of litigation/reputational risk/politically correct processes/interfering feminist HR directors” (delete as applicable) is prevalent in many organisations. It provides a never ending list of excuses for inaction.

The myth is so strong that in some organisations it has become self-fulfilling. Nowhere more so than in the public sector, where, in some organisations, the grievance culture is so entrenched, and the employee so protected by complex procedure that managers struggle to cope. As one HR Director for a large London borough explained to me:

As soon as we try to manage performance in a particular department the grievances start. They can be about anything – anything that will stall the process. If you invite someone to a meeting to review their performance, they submit a grievance and go off sick. When you try to contact them at home, they lob in another grievance for harassment and so it goes on.

Public sector unions are particularly adept at using employment legislation to thwart management initiatives. They are already making plans to use the new equality laws to disrupt attempts to downsize the public sector with a rash of rights-based grievances and legal challenges to shared-services and outsourcing programmes.

Of course, there are ways of dealing with this and good managers and HR staff can face down this sort of behaviour but it requires skill, patience, resolve and sheer bloody tenacity.

And, to return to James Heartfield’s argument, that is what is lacking in many parts of the public sector, which is why, after failing to improve the performance of some of their activities, public sector organisations simply call in the consultants or outsource those functions to companies who are not so hamstrung by procedure.

Managers today are no more or less cowardly than they were a quarter of a century ago. There are, however, more obstacles to managing performance than there were then. Although some public sector organisations have made massive improvements in productivity, as a general rule, the private sector has proved better at managing performance despite the legal and procedural barriers. By contrast, many public sector organisations have allowed themselves to become bogged down in cumbersome and legalistic procedures, many of which go much further than legal compliance demands. It is for this reason, rather than a generation of cowardly private sector managers, that so many state functions have had to be outsourced to private firms.

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9 Responses to Are today’s managers more cowardly than their predecessors?

  1. jameshigham says:

    As I and many others have been pointing out for some years now, the problem is not capitalism. It is the international socialism as represented in Morgan, Goldman Sachs, BIS, Round Table groups et al who advise governments. One key figure in this, in British terms, is Paul Tucker.

    The immediate goals in America are different to in Europe – here it is tied in to post-Lisbon and the Blair/Brown utopia.

    It’s hardly fair to accuse “capitalism” of failing when Brown’s government has snuffed out incentive to start up small and medium businesses and those which do have their hands tied by a punitive tax code and a range of stealth taxes.

    It’s wonderful these calls for cuts which are going to be dumped onto the Tories plus the debt for two generations. And as I wrote, who will be cut first? The NHS patients least able to afford it and newly redundant middle-class employees.

    Brown’s lot have crippled “capitalism” and then turn around and say capitalism’s failed. As Chesterton said, “it hasn’t been tried and failed. It’s been left untried as too difficult.”

    We haven’t seen unfettered capitalism, the sort which gives the jobs, not the sort which now is losing jobs all across the country.

    Heartfield would be expected to trot out that balderdash because it is part of the dismantling of the bourgeoisie they have always subscribed to.

  2. Bob Macdonald says:

    You forgot to mention the biggest reason for this: the rise and rise and rise of the ethnically diverse society. Try firing somebody of a different race than you and then they throw back in your face the danger word: ‘discrimination’, or ‘sexism’. Watch your management career go down in flames. Better to let it ride and start a new department with new people. Smart business owners and managers practice ‘collapsing’ to get around this. As soon as you have the awkward squad digging their heals in and refusing to perform, collapse that enterprise (this can been done easily in the public as well as the private sector). ‘Collapsing’ works like this: in the public sector, redefine the project so that persons X, Y, Z no longer are qualified to work on it. Start up this new project in a different department and leave the awkward squad to twist in the wind under another manager. In the private sector, you just ‘collapse’ the business and re-start under a different name and registration: and of course, with new staff and terms. Rinse and repeat as often as necessary to stay ahead of the shiftless and the piss takers.

    • Rick says:

      Bob, you can only ‘collapse’ so may times and it doesn’t really work if you have built up a brand – you can’t just pack up and start again if much of your compnay’s value is in its name.

      The ethnically diverse society, in my view, is a red herring. It’s unfair to lay the blame for our litigious society and cumbersome employment laws at the door of ethnic minorities.

      The problem in this area is the use of employment law to try to atone for past injustices. Therefore companies are more afraid of dismissing women and people from racial and religious minorities than they are for dismissing people for other reasons.

      To put it another way, unfairly dismiss someone for being fat and you stand to lose £63,000. Unfairly dismiss someone for being black and the sky is the limit.

      Of course, the answer is not to dismiss people unfairly in the first place but that requires skilled managers and people who are not scared to face down vexatious challenges from aggrieved members of protected groups. It’s easy to say but, in the messy world of work, not so easy to do.

  3. Jo Jordan says:

    There is a underlying issue of profitability. The ultimate destination of any sector run competitively is high productivity and low returns.

    We have spent too long in tired industries. It’s almost as if we persist in learning Latin when we should have been learning French and German and we are introducing French and German when we should be learning Mandarin.

    I also suspect that as ‘cash cows’ have slipped quietly into ‘dogs’, managers have quietly resolved to ‘cash up.’ Salaries are high in dogs – because that is your last stop. After leaving the dog you might go to another dog but the situation gets worse and worse and sometimes it is time just to give up or start again on another career.

    I agree that managers hire consultants to make tough decisions. That’s why IT consultants do better than HR consultants. Putting in one wrong expensive system is soooo much more visible than making one bad hire. But the nature of consultancy work also varies by cash cow, dog, star and question mark. Cash cows only hire for data about their competitors when they need you as an intermediary or to referee among their own management team. Dogs don’t bother unless they have to put your report together with one of theirs to get funding (dangerous for your reputation).

    Hmm, and what do the stars and the question marks do?

  4. Frank Williams says:

    The UK has become the ‘dog pound’ when it comes to most enterprises. I remember visiting the Beeb’s online division and came away totally shocked at the hundreds and hundreds of people working on the sites. An equivalent operation in the US would have a quarter or less of the people.

    The basic rule of thumb is to double or triple the staff for a project in the UK if you want to meet deadlines. People just aren’t very productive (how can you be: hungover, over-long commutes, bad food, attitude).

    Compare buying something in a shop in London with say New York City. Bought a watch and the woman said ‘how do you like New York City?’, and we chatted about my trip. She was very friendly and positive. UK: can’t look me in the eye, curt, fucked-off manner, snooty, it goes on.

    But then you see the pathetic government the country has and it is no mystery.

  5. Ruth@VS says:

    I agree with your analysis. You have summarised rather neatly why I left HR – the managers are no different than they ever were but it is so, so much harder to deal with employees than it was 12-15 years ago.

    I am a little unusual in that I worked in both the public and private sectors. While there is some variation in the public sector, the overall atmosphere is one of absurd protectionism. We were forced to redeploy to an invented post an obese man who could no longer do his job because he couldn’t bend over or get down to the ground which were both requirements of his job. He should have been warned, advised and then dismissed. In some local authorities, dismissed employees have a right to appeal to councillors – 9 times out of 10 councillors will swallow the sob story presented and reinstate the employee.

    In the private sector it used to be much easier, but not any more. Women with children consider themselves untouchable, ethnic minorities or gay employees think nothing of sticking in a spurious claim (both have happened to me) in the knowledge that a company is more likely to pay up than fight it.

    We have imprisoned our economy in legislative red tape, and then wonder why companies move abroad.

    Bob Macdonald is right – one way is to collapse areas with problems, but the underlying issue here is we have created a generation of workers who believe they have absolute rights to do whatever they like at work, and their employer can do nothing about it.

    I run my own business now, and despite being a former HR Director, have no intention of ever, ever employing anyone. I will keep my business small and manageable, not grow it into a large one which employs people. As a result, I can comfortably ignore vast amounts of legislation while getting on with the business of providing a great service to my customers and gaining a less stressful living for myself.

    • Frank Williams says:

      I agree with you Ruth: I now run an international consultancy and have never been happier. I am the chief executive, the main employee, etc. Anyone I need, I hire on contract or freelance basis as needed. Because this is global work, I bypass all the UK red tape and headaches. And the cultural hang-ups.

      I have more fun too. Work is now various assignments and contracts which always have their own dynamic and different teams. It is fun and can mix it up how I like. If by the end of an assignment you are feeling cheesed off with the people or the job, that’s okay, because when its over, its over. New team, new job.

      Another plus is young people. You can keep a good mix on the team between very experienced people (oldies like me) and young people, who keep it fresh. When I worked in the NHS, it became like a dinosaur park in there, with burned-out 50-year-olds, and miserable 30-year-olds with their families. But you couldn’t get rid of them and just had to watch them come in every day and slump at their desks and count down the hours until 5pm.

  6. john b says:

    Compare buying something in a shop in London with say New York City. Bought a watch and the woman said ‘how do you like New York City?’, and we chatted about my trip. She was very friendly and positive. UK: can’t look me in the eye, curt, fucked-off manner, snooty, it goes on.

    Or, the American salesperson is false and annoying; the British salesperson is honest and doesn’t waste my time. Give me the latter any day of the week.

  7. Perhaps unsurprisingly, I really don’t agree with this. I’ve explained why over on my blog.

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