Showing papers in "Academy of Management Executive in 1987"

Linking Competitive Strategies with Human Resource Management Practices

Abstract: Within academia there has been similar growing awareness of this need. Although this awareness is being articulated in several ways, one of the most frequent involves the conceptualization and investigation of the relationship between business strategy and the personal characteristics of top managers.2 Here, particular manager characteristics such as personality, skills, abilities, values, and perspectives are matched with particular types of business strategies. For example, a recently released study conducted by Hay Group Incorporated, in conjunction with the University of Michigan and the Strategic Planning Institute, reports that when a business is pursuing a growth strategy it needs top managers who are likely to abandon the status quo and adapt their strategies and goals to the marketplace. According to the study, insiders are slow to recognize the onset of decline and tend to persevere in strategies that are no longer effective; so, top managers need to be recruited from the outside.

Making Management Decisions: the Role of Intuition and Emotion

Abstract: The work of a manager includes making decisions (or participating in their making), communicating them to others, and monitoring how they are carried out. Managers must know a great deal about the industry and social environment in which they work and the decision-making process itself to make decisions well. Over the past 40 years, the technique of decision making has been greatly advanced by the development of a wide range of tools-in particular, the tools of operations research and management science, and the technology of expert systems. But these advances have not applied to the entire domain of decision making. They have had their greatest impact on decision making that is well-structured, deliberative, and quantitative; they have had less impact on decision making that is loosely structured, intuitive, and qualitative; and they have had the least impact on face-to-face interactions between a manager and his or her coworkers-the give and take of everyday work. In this article, I will discuss these two relatively neglected types of decision making: "intuitive" decision making and decision making that involves interpersonal interaction. What, if anything, do we know about how judgmental and intuitive processes work and how they can be made to work better? And why do managers often fail to do what they know they should do-even what they have decided to do? What can be done to bring action into closer accord with intention? My article will therefore have the form of a diptych, with one half devoted to each of these topics. First, I will discuss judgmental and intuitive decision making; then I will turn to the subject of the manager's behavior and the influence of emotions on that behavior. Sometimes the term rational (or logical) is applied to decision making that is consciously analytic, the term nonrational to decision making that is intuitive and judgmental, and the term irrational to decision making and behavior that responds to the emotions or that deviates from action chosen "rationally." We will be concerned, then, with the nonrational and the irrational components of managerial decision making and behavior. Our task, you might say, is to discover the reason that underlies unreason. Intuition and Judgment

Behind the Mask: The Politics of Employee Appraisal

Abstract: is really no getting around the fact that whenever I evaluate one of my people, I stop and think about the impact—the ramifications of my decisions on my relationship with the guy and his future here. I'd be stupid not to. Call it being politically minded, or using managerial discretion, or fine tuning the guy's ratings, but in the end I've got to live with him, and I'm not going to rate a guy without thinking about the fallout. There are a lot of games played in the rating process and whether we [managers] admit it or not we are all guilty of playing them at our discretion.

Managing corporate culture through reward systems

Abstract: This article discusses a study on the link between a firm's reward system and its culture. Seventy-five human resources managers from 14 companies in the U.S. were interviewed regarding their respective firm's managerial reward system. The research found that two forms of reward systems were most common, the hierarchy based-system and the performance-based system. Each of these reward systems was examined in terms of how they help reinforce a firm's cultural values and norms. The relationship between growth strategy and reward systems was also studied. It was found that most firms with a steady-state growth strategy employed a hierarchy-based reward system, while firms with evolutionary growth strategies use performance-based reward systems.

Corporate Mission Statements: The Bottom Line

Abstract: Developing a mission statement is an important first step in the strategic planning process, according to both practitioners and research scholars.' Several recent books on strategic management include entire chapters on mission statements, which attest to their perceived importance in the strategy formulation process. Nevertheless, the components of mission statements are among the least empirically examined issues in strategic management. No reported empirical studies describe the composition of business mission statements, only a few conceptual articles suggest desirable component characteristics, and no reported attempts have been made to link mission statements to corporate performance. This neglect is surprising since several studies have concluded that firms that engage in strategic planning outperform firms that do not.2 Thus, the research reported in this paper focused on the nature and role of mission statements in organizational processes; its goal was to improve our understanding of the link between strategic planning and firm performance.

Expatriate Assignments: Enhancing Success and Minimizing Failure

Abstract: A major U.S. food manufacturer was seeking someone from corporate staff to head its Japanese marketing division. Mr. X was selected because he was clearly one of the company's bright young talents; he had also demonstrated superior marketing skills in the home office. Those making the appointment did not assess his ability to relate to and work with Japanese because it was assumed that a good manager in the United States would be a good manager abroad. Prior to his 18-month assignment, Mr. X was given some literature pertaining to Japan's geography, climate, banking, and educational institutions and was asked to share this material with his family. However, during the initial six months in Japan, Mr. X was unable to devote much time to company activities because he was preoccupied with problems he and his family were having in adapting to the new environmental setting. Similarly, in the last six months, he often worried about his upcoming job change. He heard that a peer and rival at home had just been promoted to a position for which both men had aspirations. What must he do to get back into the race? While he was trying to strategize about this new assignment, his wife continually questioned him about their new West Coast relocation. The result: In the course of Mr. X's 18-month assignment to Japan, his company lost 98% of its existing market share to a major European competitor. What went wrong? Why was Mr. X, a person with a proven track record in corporate headquarters, such a dismal failure in his assignment to Japan? Mr. X's experience is not unique. In a questionnaire survey of expatriate assignments within 80 U.S. multinationals, it was found that more than half of the companies had failure rates of 10-20%. Some 7% of the respondent firms had recall rates of 30%.1 ("Failure" in the survey was defined as the inability of an expatriate to perform effectively in a foreign country and, hence, the need for the employee to be fired or recalled home.) These statistics are consistent with the findings of others that approximately 30% of overseas assignments within U.S. multinationals are mistakes. These "casualties" not only represent substantial costs to the companies, but also constitute a human resource waste since most of those who failed had a noteworthy track record in the home office prior to overseas assignment. Such failures often constitute a heavy personal blow to the expatriates' self-esteem and ego. Hence, even if they are accepted back by corporate headquarters, it may take some time before they regain confidence in their own abilities. The unsettling experience for the person's family, both emotionally and physically, represents yet another consequence.

Executive Actions For Managing Human Resources Before And After Acquisition

Abstract: Whenever a young child who is attached to her mother is separated from her, she shows distress-and should the child be placed in a new environment, the distress is likely to intensify. The way the child behaves in this situation will follow a distinct pattern: At first she protests vigorously and tries by all possible means to recover her mother. Later, she seems to despair of getting her mother back, but nevertheless remains preoccupied with her. Finally, the child seems to lose interest and becomes emotionally detached from the mother.'2 What is happening to thousands of employees in acquired firms is similar to the loss of attachment experienced by the child. Employees attach themselves to organizations, jobs, coworkers, work routines, the application of personal skills, and performance and career goals. Like the child, many employees involved in acquisitions experience a powerful sense of loss when strong attachments are destroyed or changed.3 Loss is a common life process. Some losses are more permanent than others; for example, the loss that one experiences when a son leaves for college is more temporary than that experienced when losing a job. Each loss, however, involves a period of immediate grief, a period of adjustment to the loss, and a period that heralds the beginning of the next cycle in life.4 Elisabeth Kiubler-Ross defines death or loss in terms of stages: denial, anger, bargaining, depression, and acceptance." Kilbler-Ross's five-stage model and the concept of loss of attachment served as the theoretical underpinnings for our examination of the psychological and behavioral responses of employees of acquired firms. The loss of an organization, a job, a coworker, or a work routine, like the loss of a mother figure, a friend, or relative, can be disruptive and painful. Executives and consultants responsible for structuring acquisitions have shown creative expertise in putting together the legal and financial aspects of deals." Unfortunately, they have not exhibited corresponding creativity and expertise in understanding and dealing with the psychological trauma that these forms of corporate growth create for employees; continued failure to do so will likely undermine the success of an acquisition venture. Can managers in acquired firms be better prepared to deal with the loss of attachment that many employees experience in anticipation and after a deal is consummated? We believe that once managers become aware of the power of loss of attachment, they will want to help employees avoid many of the negative consequences of that loss. In this article we will discuss the implications of the loss of attachment that is experienced by many employees in acquired firms. We studied individuals who remained with the acquired firm and those who lost their jobs. The research findings point to specific steps that managers can take to ease the loss of attachment and minimize the negative effects.

Effective Crisis Management

Abstract: M anagers, consultants, and researchers have traditionally focused on problems of financial performance and growth, but have paid little heed to the effective management of corporate crises. The negative effects of organizational and industrial activities have been treated as minor "externalities" of production. It can be argued that until recently, it was unnecessary to focus on such crises. Today, however, such crises as pollution, industrial accidents, and product defects have assumed greater magnitude. The consequences for many corporations-like Johns-Manville and A. H. Robins-have been near or actual bankruptcy. Corporate crises are disasters precipitated by people, organizational structures, economics, and/or technology that cause extensive damage to human life and natural and social environments. They inevitably debilitate both the financial structure and the reputation of a large organization. Consider the following examples: * In 1979, the Three Mile Island Nuclear Power Plant had an accident leading to the near meltdown of the plant's reactor core. The accident not only cost Metropolitan Edison-the company that owned the plantbillions of dollars; it altered the fate of the nuclear power industry in the United States.' The plant owners and operators paid $26 million in evacuation costs, financial losses, and medical surveillance; the estimated cost of repairs and the production of electricity via other means was $4 billion. * In 1982 an unknown person or persons contaminated dozens of Tylenol capsules with cyanide, causing the deaths of eight people and a loss of $100 million in recalled packages for Johnson & Johnson. In 1986 a second poisoning incident forced JJ compensation settlement is likely to be between $500 million and $1 billion. In addition, the company was forced to sell 20% of its most profitable assets to prevent a takeover attack mounted by GAF Corporation, which had acquired Carbide's undervalued stock after the accident.2 * In May and June 1985 deadly bacteria in Jalisco cheese caused the deaths of 84 people. The company that produced the product was forced into bankruptcy. The list of recent corporate disasters is virtually unending. It includes executive kidnappings; hijackings, both in the air and at sea; hostile takeovers; and such acts of terrorism as the bombing of factories and warehouses. Most recently, slivers of glass have been found in Gerber's baby food. Contac-an over-thecounter cold remedy-has also been the object of product tampering. Such incidents now happen on an ever-increasing basis. Further, the interval between major accidents is shrinking alarmingly.3 The number of product-injury lawsuits terminating in million-dollar awards has increased dramatically in the past decade: In 1974 fewer than 2,000 product injury lawsuits were filed in U.S. courts; by 1984, the number had jumped to 10,000. In 1975, juries had awarded fewer than 50 compensation awards of greater than $1 million each; in 1985, there were more than 400 such awards. The costs of productand production-related injury is one factor in the current liability insurance crisis. Many forms of liability insurance have simply vanished, and all forms of liability insurance have become so expensive, they are available only for small coverages. The purpose of this article is to argue that while the situation is grave, it is far from hopeless for managers, researchers, and consultants who are prepared to confront the problem directly. While no one can prevent all disasters-let alone predict how, when, and where they will occur-organizations can adopt a systematic and comprehensive perspective for managing them more effectively. Anything less than such a perspective virtually guarantees that an organization will be less than prepared to cope and recover effectively from a crisis.

Do Insiders Make Better CEOs than Outsiders

Abstract: Each year, 10%-15% of major U.S. corporations change their chief executive officers. The majority of these corporations (80% -85%) select their new CEOs from outside their organizations. Why do they prefer outsiders? Do insiders make better CEOs than do outsiders? Some of the nation's most respected companies-including GE, GM, IBM, and CocaCola-seem to think so. In his book Theory Z, William Ouchi asserts that promoting executives from inside is a characteristic of well managed companies in both Japan and the United States; the policy provides employees with opportunities to advance within the company and thus creates a sense of loyalty and stability.' Thomas J. Peters and Robert H. Waterman, in In Search of Excellence, echo this sentiment.2 According to them, successful American companies motivate their employees by providing job security and creating a "feeling of family." These organizations rarely hire managers from the outside. The most convincing argument for hiring insiders has been advanced by John Kotter.3 He asserts that successful managers acquire expertise through long tenure with one company (or companies in one industry). According to Kotter, insiders have advantage over outsiders for two reasons. First, insiders are more knowledgeable than outsiders about a firm's specific products, competitors, markets, customers, and employees. This knowledge helps managers understand a large, complex, and diverse sets of activities and make appropriate decisions. Second, insiders have established social networks-including superiors, subordinates, peers, and others-through which they gain the information and support needed to perform their job. Outsiders must devote a considerable amount of time to establishing such networks. While most companies replace their CEOs with insiders, a small number of companies hire insiders. Why? Researchers agree that troubled companies often need to hire outside CEOs because they are more likely than insiders to be able to alter existing strategies and values that caused the current problems.4 Outsiders are likely to take decisive action to turn around a bad situation, while insiders are likely to be slow in recognizing the urgency of current problems and may pursue the old strategies that are no longer effective. Chrysler and International Harvester recently replaced their CEOs with outsiders in the hope that the new CEO would turn aound their ailing operations. Given the above observations, experts generally suggest that troubled firms hire outsiders to turn around their operations and successful firms select insiders to sustain their superb performance. Although this view has been widely held in management literature, it has not been empirically tested. The purpose of this study is twofold: (1) to investigate the differential effects of outsiders and outsiders on corporate performance (as measured by profitability and stock price), and (2) to discern actual CEO hiring practices.

Peters and Waterman Revisited: The Unended Quest for Excellence

Abstract: Tom Peters and Robert Waterman's In Search of Excellence' has sold more than five million copies. Rather quickly it has become one of the most often quoted books in the popular management literature. Many business firms reportedly are attempting to conform to the eight principles of excellence the book identifies. Daniel Carroll proposes that it is the informal manner in which Peters and Waterman present what appears to be practical managerial advice that has appealed to business people.2 This style of presentation and relatively uncomplicated approach to "practicality" is carried a step further in the Peters and Nancy Austin sequel, A Passion for Excellence.3 Here the authors suggest that only four-not eight-attributes must be mastered for a firm to achieve excellence. Although this book has been criticized for failing to break much new ground, it has sold many copies. Peter Drucker proposes that it is the reduction of complex business problems to a small number of seemingly practical actions that is attractive to American managers.4 But despite the commercial success and general acceptance of In Search of Excellence, concerns about it have been expressed. Carroll, for example, criticized Peters and Waterman for their failure to specify precisely how the excellent companies were analyzed and how the eight attributes of excellence were identified. He also suggested that the authors' supporting evidence (an occasional reference to financial analysis, a series of anecdotes about companies, and quotes from executives) was incomplete and even wondered if the companies were actually visited and how the judgments and findings were synthesized and corraborated. Carroll concluded his review of the book with the suggestion that the authors' dependence on secondary sources and potentially defective research design disallowed any contribution the work may have made to management theory. Bruce Johnson, Ashok Natarajan, and Alfred Rappaport expressed concern regarding the performance indices Peters and Waterman used.5 They argue that the six items used (compound asset growth, compound equity growth, ratio of market value to book value, average return on total capital, average return on equity, and average return on sales) measure only a firm's financial performance. Further, they propose that "the dominant economic goal of a firm is the creation of shareholder wealth," and suggest that a firm's economic performance is the outcome Peters and Waterman should have examined. They contend that judging corporate excellence solely on financial (accounting-based) measures can be misleading and that return to shareholders is the true measure of a firm's "excellence." Finally, an examination of the "excellent" firms' performance since publication of In Search of Excellence, reported in the November 5, 1984 issue of Business Week, revealed that many companies-such as Johnson & Johnson, Dana, and 3M-have encountered difficulties. One may question whether these companies were in fact "excellent" in the first place. Another fundamental question is whether Peters and Waterman's eight attributes fully explain what is required for a firm to achieve excellence. Under close scrutiny, some of the prescriptions for excellence are not completely consistent with contemporary management thought. Michael Porter emphasizes that firms operating in different competitive environments should formulate and implement strategies that are consistent with their unique situations and conditions. It may be necessary for firms in different environmental settings to develop more (or less) flexible structures. Alfred Chandler adds that a match should exist between a firm's strategy and structural form. In contrast to the contingency management approach, Peters and Waterman propose the same eight principles of excellence for all firms competing in all types of environments.' It is also possible that the Peters and Waterman definition of excellence is too narrow. We've already noted that financial performance alone was examined by the two researchers. Gordon Donaldson and Jay Lorsch found that strategists' decisions are intended at least minimally to satisfy the demands of three constituencies: the capital market-shareholders and major suppliers of debt capital; the product market-primary customers, suppliers, and host communities; and organizational members-employees.7 Barry Baysinger, Gerry Keim, and Carl Zeithaml suggest the importance of a fourth constituency-the political and regulatory one, made up of federal and state governmental agencies.8 Thus, accounting indices and a vague "innovativeness" rating may not adequately capture all the factors associated with a firm's ability to achieve longterm excellence. Finally, while the research design and execution procedures used by Peters and Waterman appear to be rigorous, data were not included in the book for readers to examine. As a result, one cannot review their data analyses to verify the results. It seems, then, that the Peters and Waterman work may be one of advocacy rather than of science. When advocacy dominates

High Hurdles: The Challenge of Executive Self-Development

Abstract: H arvey was just what the board had been looking for in a CEO. He had a strong track record in turning around failing businesses, he was a marvelous strategic thinker, and he understood the company's products and markets. There was only one problem with Harvey: He was a loner. Harvey got along poorly with just about everybody. He was by turns cold and distant or downright abusive. "That's just me," Harvey once said when someone found the courage to bring this up with him. "I'm not trying to win a popularity contest here, you know." And so the company tolerated Harvey because they desperately needed his skills. He had inherited a vice-president who was good at working with others, and who began to act in Harvey's place at staff meetings and so forth. Eventually Harvey worked his managerial magic and the company turned around. A year later the board dismissed Harvey-his abrasive personality was no longer tolerable in the smoothly running organization-and he went off to save another company. It was too bad, as it turned out, because not long after Harvey left, the company got into trouble again. They really needed Harvey and what he could do for them. A board member said of him: "Damn Harvey! We couldn't live with him and we can't live without him." We tell this story to illustrate some of the issues of managerial development at the highest organizational levels. Perhaps the most important of these is why Harvey's organization did not try to help him improve his interpersonal ability. In general, why is it that when performance problems arise in high-level managers, the solution organizations usually prefer is to transfer, demote, or fire the executive? In effect, a game of "musical chairs" is being played in corporate executive suites.' Organizations may also try making up for an executive's performance problems by hiring associates with compensating strengths, but either way the solution of choice is to move (or remove) the executive or to change those around the executive; in other words, to use selection instead of development. Much less frequently do organizations attempt to create, in a manner of speaking, movement within the executive-that is, to encourage the executive's personal and managerial growth. This paper is about self-development-the efforts of the executive to improve himself or herself, efforts that other people may well aid or hinder. By self-development we mean the conscious, deliberate effort to come to terms with one's limitations. We do not mean the kind of development that springs almost automatically from the new experiences that bring out latent abilities in the executive. We are also not concerned here with the considerable development executives have undergone on their way up.2 Our interest is in self-aware, self-directed improvement once managers have reached the highest levels. This paper explores the hypothesis that executives avoid coming to terms with their limitations and that the executive's organization and the people who work directly with the executive shy away from attempts to help. It is based on interviews we conducted with 40 individuals-22 executives and 18 experts on executives, including internal specialists in executive development and external consultants. The people interviewed came from a wide variety of organizations, large and small, public and private. The 40 interviews took from an hour to three hours each; this resulted in over 400 pages of interview transcripts, which we subjected to careful analysis. We were looking for patterns in what executives found problematic about their jobs, how likely it was that executives acknowledged these difficulties, and what conditions affected whether executives became aware of their problems or attempted to do something about them. For this study we defined an executive as an upper-level manager in a line position with general management responsibilities, or a highlevel head of a function such as chief financial officer or vice-president of administration.9 Self-development is important because no executive can escape having deficits and because deficits matter to executives and their organizations. These deficits run the gamut: difficulty in thinking strategically; trouble adjusting to a job with large scope; a proclivity for viewing all problems through the lens of one's specialty;4 discomfort with one's role as public figure and organizational spokesman; an introverted personality that people lower in the hierarchy experience as aloofness; a susceptibility to let power, posi-

Unions and the New Management

Abstract: The union movement in the United States is in trouble. Indicators of its health show it is very ill. The only debatable point is whether the illness is terminal or simply represents another one of the down cycles from which the union movement has suffered during its lifetime. The severity of the illness is best illustrated by declining membership: Data from the Bureau of Labor Statistics show that union membership has fallen from 23%(, of the workforce in 1980 to 18.8%, in 1984, the lowest in recent history and the lowest of any other free industrial nation, with the possible exception of Spain. This decline represents a loss of 2.7 million union members. As recently as the 1950s, over 30, of the workforce belonged to unions. Data from decertification and certification elections point to a significant decline as unions lose an increasing number of elections. The reasons commonly cited for the decline in union membership are many and varied. Some reflect trends in the economy: globalization resulting in the decline of traditionally unionized industries such as automobiles, garments, food processing, and steel; a sharp growth in the service sector, which is harder to organize; the emergence of nonunion competition in newly deregulated industries such as airlines and trucking; and a decrease in demand and/or overproduction in industries, e.g., meat packing. Other threats to unions include automation, the changing legal situation with respect to union organizing and employee rights and, finally, the changing expectations of the new workforce. Unions are not the only institutions threatened. The changing environment has made its impact on the viability of many businesses themselves and on the way in which they are managed. In fact, management's actions in adjusting to an altered environment have constituted further threats to the health of unions. Believing unions to be an encumbrance to competing effectively in a rapidly changing global economy, some managements resort to antiunion tactics with increased intensity, sophistication, and success. More important, from our perspective, management is trying to create a new way of managing, one more suitable to a rapidly changing economy, increasingly advanced technologies, and a better educated, more sophisticated workforce. This new approach to managing includes greater responsiveness to employee needs for involvement, responsibility, and meaningful work. As part of the new way of managing, these organizations accept responsibility for creating a positive and motivating work environment for their employees. In doing so, they discover that the result is a stronger, more competitive enterprise. The increased adoption of involvement-oriented management approaches raises the question of what role there is for unions. The role unions once filled is not viable in the new management environment: they must change or continue to decline. Should we worry about their decline and possible extinction? We take the position that society should be very concerned about the rapid weakening of organized labor. It potentially eliminates effective input by a major stakeholder, labor, into the decisions shaping businesses of the future. In the past, unions have been the primary voice for workers. Now their survival depends on finding a new role, given the changes that have taken place. Before we can discuss some of the changes that unions will have to make, we first need to consider the success in fulfilling their traditional role. We will then look at the "new management" to which unions must adjust.

Successful Executives: How Independent?

Abstract: A folklore values the notion of independence. Our heroes—like Franklin Delano Roosevelt, Dwight David Eisenhower, and Lee lacocca—are individuals who appear larger than life. Yet while they appear individualistic and independent, such people actually depend on a host of others in their public and private lives. Consequently, they achieve success while not being torn apart by the accompanying demands and stresses. Their attachments to many people through their public and private support networks enable them to sustain success and manage heavy demands and stresses with a minimum of distress. They recognize their own limitations and form relationships that enable them to transcend those limits. Those who are not able to extend themselves in this way may suffer from problems rooted in separation anxiety that inhibit them from forming healthy attachments to other people. In light of these observations, executives pursuing success should ask themselves two questions: (1) Is forming healthy attachments with other people an integral part of my behavior? and (2) Is separation anxiety a personal problem that poses a health risk to me? Exhibit 1 contains a set of ten questions. Take a couple of minutes to answer each question. We will come back to your answers at the end of the article and see what they suggest about you.

For Successful Organization Culture, Honor Your Past

Abstract: Recently an executive asked one of us to help him "install a new culture" in his company. He spoke about needed changes as though one could go to a culture cafeteria and pick the particular elements and amounts desired; for example,"go heavy on the 'bias toward action' but easy on the 'close to the customer' stuff." Not many executives believe that deep and enduring aspects of an organization can be replaced with such ease. However, the time frames executives consider when attempting to implement bold new strategies-to downsize, to increase quality dramatically, or to reduce costs-suggest that many are either not clear about the difficulties involved or choose to ignore certain, key principles of change. Indeed, we argue that executives often take for granted the current skills of their organizations and are much too ready to change them. Perhaps an example or two of some recent major change efforts will help clarify our concerns and set the stage for our suggestions.

Management: The Problems of Success

Abstract: T hirty years after City Manager Luther Gulick applied management principles to the running of a municipality, the Federal Government, which had grown out of control in the New Deal years, was finally organized more effectively. It was not until 1950 and 1951, that is, more than 10 years later, that similar management concepts and principles were systematically applied in a business enterprise to a similar task: the reorganization of the General Electric Company after it had outgrown its earlier, purely functional organization structure. Today, surely, there is as much "management" outside of business as there is in business-maybe more. The most management-conscious of our present institutions is probably the military, followed closely by the hospital. Half the clients of a typical management consulting firm are nonbusinesses: government agencies, the military, schools and universities, hospitals, museums, professional associations, and community agencies like the Boy Scouts or the Red Cross. Increasingly, holders of the advanced degree in business administration, the MBA, are the preferred recruits for careers in city management, in art museums, and in the Federal Government's Office of Management and Budget. Yet most people still hear the word business when they hear or read the word management. Management books outsell all other nonfiction books on the best-seller lists, yet are normally reviewed on the business page. And while one graduate business school after another renames itself the School of Management, the degree they award has remained the Master of Business Administration. Most management books, whether for college classes or the general reader, deal mainly with business and use business examples or business cases.

The Professional as the Executive's Ethical Aide-de-Camp

Abstract: nagging question in the minds of most Americans following the Challenger space shuttle explosion on January 28, 1986 is, how on earth could NASA management officials have allowed the shuttle to take off, given what appears to have been clear-cut warnings about problems with the shuttle's solid rocket booster joints. Whatever pressure the managers were facing to launch the shuttle, didn't they know enough technically to realize that the lives of the crew were in serious danger? If, in fact, they did not know enough about the technical apparatus of the shuttle, as good managers should they not have been in constant contact with their trained professionals regarding the spacecraft's safety?

The Slack Is Gone: How the United States Lost Its Competitive Edge in the World Economy

Abstract: T mmediately after the Second World War the United States enjoyed a crushing economic advantage because its productive machinery was more modern than anyone else's (and had not been bombed). But by the early 1970s, the forces that would eventually destroy South Chicago were being set in motion around the world. As investment capital became more mobile, companies were freer to shop for locations with lower wages and better "business climates," whether in Tennessee or Taiwan. The oil-price increases engineered by OPEC in 1973, and the resulting inflation, reduced the standard of living for most Americans-but not for workers in the heavy industries, whose unions had negotiated the cost-of-living adjustments known as COLAs. This was a temporary advantage for them and a long term disaster for their industries. During the late 1970s, when chronic inflation eroded the dollar's value in international trade, American goods became artificially attractive to foreign buyers-and American manufacturers were lulled into an artificial sense of security about their ability to compete. They were not prepared to adapt when circumstances changed in the early 1980s and an overvalued dollar drove their foreign customers away.' It is by now no secret that, in recent years, the economic performance of the United States has declined, especially when compared with that of other nations such as Japan. On the other hand, little careful analysis has been done on why this has occurred. Such an analysis is more critical than ever, but before we as a nation can determine how to regain our competitive edge, it is first necessary to understand the factors that shaped the old way of doinig business and why the old paradigm no longer applies. Only then can we look clearly at the new rules and new organizing assumptions that are essential to success in today's environment. In the pages that follow, we will consider the factors that are responsible for the recent economic difficulties of the United States: the evolutionary path of the modern U.S. corporation and the kinds of consumer markets it created to complement its organizational structure; the special kinds of labor-management agreements that evolved as a result; and the role the government assumed in managing the U.S. economy. In addition, the predominant position that until recently the U.S. had commanded in world markets contributed to its failure and, paradoxically, as a result of enormous successes, not failures, in managing the domestic economy, this nation was that much more vulnerable to the various world crises of the mid-1960s and 1970s. Finally, the refusal of Third World countries to play along with the "rules of the game" according to conventional economic theory added to our economic problems. To put it succinctly, the hardships we are currently experiencing are directly traceable to a failure to understand the critical role played by every one of these factors.2

Visions, Values, and Strategies: Changing Attitudes and Culture

Abstract: I 'm pleased to be able to share with you a strategic change process that we began at the BankAmerica Corporation back in the Spring of 1983. My job, as head of corporate human resources, was to help the chief executive officer achieve the goal of returning BankAmerica Corporation to a level of profitability where it should be, and to do it strategically versus short term. My challenge was and is to work with line managers to revamp human resource practices, thus enabling us to change the attitudes and hence the culture of the organization. To get started, we conducted what we call a "root value study." We went back to the founding principles of the organization. I would like to explain our background so that you might see what changed in the corporation. It may seem like a commercial, but I think that once you see the CEO's change agenda you'll understand what we're trying to do. One of the most unique aspects of this approach is that we have tried to measure the change in employees' attitudes as well as the behavior of our managers through personnel practices. Most of this information has come through interviews and employee opinion surveys. To the extent possible, I will share that information with you.

The '60s Kids in the Corporation: More Than Just “Daydream Believers”

Abstract: Jim, the marketing manager, approaches Hank, the engineering project leader. "Hey, Hank. When can we get this model ready for display? You know, that sales convention is coming up in two weeks, and Jane claims that if we don't show, the competition is really going to close in." "Sorry, Jim," Hank explains. "We're just not satisfied with the speed of this computer. We need at least six weeks; before that there is just no way. My people won't tolerate getting it out earlier if it's not perfect. They've worked too hard to do that." "Okay, Hank," Jim continues. "How about just a prototype for people to look at with a promise of the increased speed to come later?" "Forget it, Jim," Hank insists. "Engineers don't work that way. You can't just promise, you have to deliver. Besides, sending the prototype would be dishonest. Tell Jane to come down here, and I'll explain it to her." This scenario, which actually occurred, is repeated all the time in literally thousands of bureaucratic settings, not just with engineers but also with health professionals, financial professionals, lawyers, teachers, scientists, and so on. Most professionals insist on doing things "right." In this particular case, not only did Hank and his professional group insist on conformity to technical specifications; they maintained a value system that could not justify a loosening of standards, an easy-out approach. Further, they challenged their corporate executive (Jane was the marketing vicepresident) while demanding to be involved in the final decision. Isn't this insubordination beyond the acceptable limits of corporate practice? How can any organization tolerate this kind of behavior and remain productive? To finish the story, it's necessary to point out that Hank was raised in the 1960s. Although he wasn't a campus radical per se, he did pay heed at a gut level to the protests against the Vietnam War that occurred during his college days. He was sympathetic to that cause and even wrote couple of articles about the Pentagon for his college newspaper. He delayed entering the corporate world for several years after graduating with a degree in engineering, refusing to work for any organization with any connection to war-related mater*ials or processes. Finally, he joined a computer start-up company that became very successful. He turned down several offers to move into higher-paying management positions but eventually agreed to serve as the leader of a high-performance product team. He was known as brilliant but somewhat arrogant. Hank worked his own hours, but he got things done. Jane would come down and talk to him. In this instance, Hank's project team missed the demonstration. Hank convinced Jane that the performance of the machine would outstrip any advantage the competition would derive from being first out. It turned out he was right. There are many Hanks who have infiltrated our modern-day organizations, no longer as protestors, campus radicals, or even troublemakers. Indeed, many of them are serious, devoted, professional employees who are retained, as Hank was, if only for their record of extremely high performance. Yet they're different from nonprofessional employees and even from other salaried professionals. They're still '60s kids. They still believe in full participatory rights in their local society. They're interested in assuming positions of responsibility and autonomy, if not power, but they won't be denied the opportunity to use their individual initiative in solving organizational problems. These are the '60s professionals, and in this article I'll tell you not only who they are and what they're like, but how, like Hank, they can successfully be assimilated into bureaucratic life.

Change in the Bell System

Abstract: I welcome your kind invitation to this Academy of Management symposium because I consider its subject matter so critically important to all business. Southwestern Bell, of course, recently experienced the historic breakup of the Bell System, the dissolution of a century-long relationship with AT&T. That extraordinary experience qualifies us, I suppose, to discuss organizational change-and perhaps some other topics as well. It's clear that a good deal more than court-ordered divestiture is driving change in today's economy and boardrooms. For example, it is crystal clear that our economy is undergoing a fundamental shift. It is changing rapidly and basically from a production base to an information base. It is equally clear that our economy is no longer national but global in scope. The ramifications of these two trends are vast. And we could spend the rest of this symposium and many more discussing them. My point is simply this-managing organizational change is a topic American business needs to examine and understand, because fundamental change will be the order of the day for the foreseeable future. And, obviously, the company that can adapt its culture to change, quickly and successfully, will have a powerful competitive advantage. Southwestern Bell's story of adaptation to change is still being written. I will share our progress with you, discuss our organizational changes, and review steps we've taken to change our corporate culture. Then I would like to generalize from our experience and briefly comment on issues this audience is particularly well suited to address. The divestiture story became hot news January 8, 1982. On that day, AT&T and the federal government announced settlement of antitrust proceedings that had dragged on since November of 1974. At stake, nationally, were almost one million employees of the Bell System, about $103 billion in assets, 3.2 million shareholders, and 84 million telephone access lines and customers, which were served by 10,000 central offices. Divestiture dramatically rearranged all those big numbers. It created seven independent regional companies, Southwestern Bell among them, and a new, slimmer AT&T, which had to divide up those assets. But the change went well beyond dividing resources. At Southwestern Bell, divestiture meant we had to redefine the mission and strategy of a century-old business. We had to rethink the functions of some 90,000 employees as well as deal with their questions and very real anxieties for an uncertain future. Of course, we also had over 8 million customers who had become accustomed to quality service regardless of divestiture or anything else. And, effective January 1, 1984, we would have 1.5 million new shareholders, literally overnight. (The role of investor relations was totally new to us because Southwestern stock was wholly owned by AT&T.) To sum up the scope of divestiture for Southwestern Bell, we identified 2,000 major activities that had to be accomplished to become a stand-alone corporation. As you might guess, this huge task gave rise to some heroic metaphors. One that had wide currency was that divestiture was like taking apart and reassembling a jumbo jet while in flight. I should point out, too, that the scope and complexity of the job were made no easier by the very real emotional content of divestiture. Many employees thought divestiture unwise. Many felt a sense of personal loss at no longer being a part of Ma Bell's family. But personal bias, however real, could not intrude. We had our marching orders. And our job was to make the best of them to create a new organization-a new organization that just happened to have a century of history and tradition.

The Theory-Practice Gap: Myth or Reality?

Abstract: The series of papers that follow were first presented at an All-Academy of Management Symposium dealing with organizational change at the 1985 National Annual Meeting. The committee that organized the symposium did so with the beliefs that: (1) organizational change and redirection, the process of making and keeping organizations competitive in changing environments, is an important topic; (2) many executives were wrestling with just these issues, and had some interesting insights to share with us; and, most importantly, (3) an examination of what these executives and their organizations were doing would probably reveal that, in fact, many of the things being tried were consistent with research and theory in organizational behavior. In other words, in spite of the fact that some of our colleagues have bemoaned the gap between our research and the world of practice, our research, whether or not it has formed the basis for what was being done, was quite applicable and indeed was being applied in a number of contexts. Three industries that were facing particularly turbulent times and in which change was certainly required were banking, telecommunications, and computers. With increasing deregulation of banking and with the growth of competition from other kinds of financial institutions such as brokerage firms, savings and loans, and mutual funds, the days when a license to operate was almost the same as a license to make money were over. Interstate banking was either de facto occurring or on the horizon, and turbulence in the world economy was playing havoc with loan portfolios. Nowhere was or is this more evident than at one of the nation's largest banks, the Bank of America. Thus we decided to see if we could get Bob Beck to share with us his observations on the goals, the practices, and the preliminary results of what is surely one of the largest attempts to change an organization's culture, reaffirm its values, and revitalize its strategies and operations. His description of that process is a case study of the use of measurement, feedback, and information systems to both demonstrate the need for change and to help guide the change process. Telecommunications is and was yet another industry facing rapid and dramatic change that required new ways of operating and thinking. Since the late 1960s decisions of the Federal Communications Commission (FCC) have slowly eroded the monopoly position the phone companies had on long-distance service, and new technologies were making it possible for competitors to develop even in the local service market, at least with respect to business customers in the downtown areas. These technologies and regulatory changes pale in comparison with the significance of the antitrust decree that forced the breakup of AT&T effective January 1, 1984. The divestiture created seven new operating entities as well as a new AT&T, and required the splitting up of people, assets, and activities on a truly tremendous scale. The largest of the newly created operating entities was Southwestern Bell, a company with about 90,000 employees and 8 million customers. Zane Barnes graciously volunteered to share with us his experience in managing the company through the period of divestiture. His remarks speak to the importance of communications, having a clearly defined strategy, and of the role decentralization and delegation has played in making Southwestern Bell more responsive to new opportunities and new competitors. And there is the case of the computer industry. Although the changes that IBM itself faces, particularly in the personal computer and minicomputer markets, are far from trivial, we wanted to get the experience of someone competing in this rapidly changing business but without the same kind of dominant market position and size, which would be both more important and more resource constrained. Jim Renier of Honeywell describes a major effort at organizational renewal, predicated on applying some basic managerial and behavioral science concepts in a consistent and intelligent fashion. In addition to charting a somewhat new strategy, the Information Systems division embarked on a process that involved getting enthusiasm, commitment, and teamwork from its workforce more effectively. Renier's discussion of how this was brought about deals with issues of the connection between organizational and personal goals and the role of ethics and morals in organizational change. These three case studies are interesting, both compared with each other-what was the situation, what was done, how did it work-and compared with other things that might have been done. It is particularly important to see the extent to which these major change efforts followed or departed from what might be derived from the organization development literature and the more general literature on organizations. This exercise will, I believe, be fruitful for executives, consultants, and academics who teach and conduct research in these areas. My impression is that there are remarkable consistencies among the cases and between