Less formal doesn’t mean more equal

I spent Wednesday at the excellent ConnectingHR event. (See reviews here, here and here.) The event was subtitled ‘The Power of a Socially Engaged Organisation’ and, as you might expect from a bunch of HR people who came together through blogging and Twitter, much of the discussion was about the impact of technology and social media on organisations.

There were some fascinating stories about organisations harnessing the energy and creativity of their people by using various social media platforms but, inevitably, the question of control came up. What happens when senior managers try to control what is being said by employees? What happens if they find they can’t?

A couple of people gave examples of senior managers being wrong-footed by questions and comments that had grown out of these online conversations. In one case, a full-on revolt against that most sacred of cows, the distribution of the bonus pot, had the executive team on the back foot and, judging from their responses, feeling extremely uncomfortable.

Four years ago, a Demos report, Power and Responsibility at Work, observed:

The dynamics of the workplace are being reshaped by the ongoing relationship between networks – often informal, self- organising, horizontal, opaque – and the official structures of departments, line managers and appraisals. This is because people are able to work together more easily without the coordinating hand or disciplinary gaze of an organisation.

An individual may be quite close to the bottom of a formal hierarchy, but occupy a position close to the centre of several informal sets of relationships, granting him a degree of centrality that reveals his actual power.

Or, to put it another way, the water-cooler gurus can get a company-wide or even a global audience now. Grumbles about bonuses that might once have taken place around dozens of different coffee machines can come together in a critical mass of protest which overwhelms unprepared senior executives.

There isn’t much corporations can do about this. Sure, they can censor the networks and restrict access but these days anyone can set up a blog, Facebook group or Twitter account in minutes. If employees want to talk to each other, they can do so outside the company’s control.

There was much talk on Wednesday, then, about the erosion of managerial control and even the democratisation of organisations. But, while managers of today can’t expect to have the same levels of control over a workforce that their predecessors might have had, I still wonder whether this will really democratise organisations in any meaningful sense.

As I said last week, over the past half-century or so, there has been an inverse relationship between the formality of an organisation and the distribution of rewards. As the walls of hierarchy have fallen, the canyon between earnings has widened. There might be less perceived power-distance between senior people and everyone else but the wage differentials have shot up.

It’s as if the metaphorical Everyboss sat down with his employees and said, “Hey, you don’t have to wear a tie any more and you can stop calling me Sir. I’ll lose the big wood-panelled office and leave the door to my glass one open. You can do what you like on this social media thing and I’ll answer queries from whoever, whenever. Hell, I’ll even smile when that Aussie temp takes the piss out of me. You can have all this provided I get to keep more of the money!”

The decisions that really matter, the ones about the allocation of resources, are as tightly controlled as they ever were. Even in the companies that have driven the technology behind social media, things are not always as freewheeling as they look. These companies might have mountain bikes and snowboards in their reception areas, instead of expensive sculptures but, in their own ways, they are every bit as corporate as General Motors or Goldman Sachs.

As it grows, even Facebook is struggling to resolve the tension between the desire to create a non-hierarchical feel and the inevitable corporatisation that comes with being a large multinational. This comment on CNN tells you something about the way things work there:

“Mark decides what to do with the product, and everyone has to figure out how it will affect them,” says a Facebook veteran. “It’s not a discussion. It has a whiplash effect on everyone — and it’s part of the genius.”

The godfather of social media doesn’t seem too keen on letting investors have much of a say either. Lucy Marcus has an interesting take on this:

Several troubling issues call into question how this company can consider itself groundbreaking, innovative or new: the concentration of power in the hands of one man, the stranglehold on voting rights, the lack of diversity in the boardroom (which in a way is inconsequential, as the Facebook board does not have much bite anyway), and above all else the flagrant disregard of the lessons of the past several years about engaged, active and independent boards contributing to strong companies. Were Facebook striving to be an innovative company built to last, it would encourage healthy dialogue and diversity in the boardroom, and equal shareholder voting rights. It would not need to lock in power, but rather earn authority through excellent performance and results. The leadership would trust that a democratic boardroom would foster greater strength and stability than dictatorship, which brings a false sense of security. That’s a lesson we can take from the Arab Spring, where dictators thought that they held real control.

Even the hippie capitalists, it seems, want to keep control of the important stuff.

So, while it is difficult to deny the impact of technology and changing social attitudes on organisations, I’m still not convinced that this will lead to any form of organisational democracy. Real sharing of control would mean that big decisions about resources would be opened up. Corporate leaders are still extremely reluctant to do that.

Organisations might look less stuffy and hierarchical than they used to and the senior people in them will almost certainly be called upon to justify themselves more often. But the really important decisions will still be made by a powerful few. That will still be true even when the powerful few swap pin-stripes for t-shirts.

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7 Responses to Less formal doesn’t mean more equal

  1. Pingback: Less formal doesn’t mean more equal - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. B.O. Locks says:

    An amusing anecdote told by Stephen Fry many years ago illustrates to me how bosses will always struggle to suppress the human spirit.

    The anecdote concerned Disney World employees who had come to refer to their place of work as “MouseVitch”. The bosses objected and issued an order forbidding the use of the appellation.

    The irrepressible employees, of course, complied with the order and henceforth referred to their workplace as “Duckau” !!

  3. Dave Timoney says:

    If communications technology destablised corporate power, then business would be reluctant to adopt it. We have moved in 25 years from a generation of executives who expected their PAs to handle their email to one that is often an early and aggressive adopter of new technology. BlackBerrys did not start out as a shop-floor initiative.

    You say that “managers of today can’t expect to have the same levels of control over a workforce that their predecessors would have expected”, but arguably the technology provides them with much greater control. For example, the focus of data loss prevention (DLP) technology is internal threats to information assets. That means understanding what staff are up to, not worrying about external hackers. Staff moaning (while self-editing) on a SharePoint discussion thread is less worrying to management that an unfettered and unobserved discussion down the pub.

    The IT revolution of the last 30 years has delivered huge advances in productivity, the value of which has been disproportionately diverted to executive remuneration. The real quid pro quo is not dress-down and Friday beers in exchange for bonuses at the top, but the willingness of business to fund white-collar jobs that should by rights have been automated out of existence, as many blue-collar jobs have.

    Much of this pseudo-work is effected through the displacement activity that new technology has allowed, notably via email, the Web and now social media. We have also seen the creation of ancillary roles of dubious benefit in the comms-heavy areas of marketing, CSR and public relations (anywhere you find a debate over “measuring effectiveness” you can expect to find made-up jobs). The expansion of IT as a corporate function has ironically provided a new area for the creation of such roles. In most IT shops the techies are a small minority, easily outnumbered by project managers, business analysts, relationship managers and generic line managers.

    As the advance of automation continues inexorably, work increasingly becomes a status symbol and class token. Productivity-driven rewards will continue to grow at the top end, wages (when you can get them) will continue to be forced down in real terms at the bottom end, while the middle will accept stagnation to maintain status and remain part of the conversation.

    I was amused that the event you attended talked of “the socially engaged organisation”. This would be the same organisation that closed its final salary scheme. Twitter is not a substitute for a pension.

  4. Gareth Jones says:

    Your comment:

    “there has been an inverse relationship between the formality of an organisation and the distribution of rewards. As the walls of hierarchy have fallen, the canyon between earnings has widened.”

    This assumes a number of things that i dont think are true. Firstly, the walls of hierarchy have not fallen! Precious few organisations have really moved to reduce hierarchy at all, its still the prevalent format for organisations. Secondly, you are assuming that the reward divide happens in the companies where the walls of hierarchy have come down – which isn’t the case. Thirdly, many people confuse the new, social media/tech businesses with democratic organisations and they are not! Google, facebook etc they all get talked about like they are in a similar vein to places like S***o (here we go again!) etc but its just not true.

    There are still precious few of these organisations out there and in the ones that are truly more democratic, i dont believe the “you can have the snowboard as long as i can fill my CEO pockets and get that yacht full of babes. The earnings divide is alive and well in the hierarchical organisation!

  5. Pingback: The social enterprise, more equal or more successful? « Careergro Blog

  6. Pingback: The one with the paradox of metrics | Masters or Bust

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