October 2007 – Why management isn’t working

Amid the complaints and grumbles over the postal strike I have been quietly enjoying a break from those packages that promise so much when they drop through the letter box yet deliver so little when you look inside.

It’s difficult to explain the sense of optimism with which I approach each new package. Unlike those bland white envelopes that you just know are either circulars or bills, there is something about the Jiffy bag that triggers a sense of expectancy.

Perhaps it’s the knowledge that someone has gone to a lot of trouble to ensure that it got here. Indeed, if it contains a book, you know that countless hours have been spent in the research, writing, editing and publishing. There’s the distribution network, the warehousing, the sales team, the catalogue. A lot of time is invested in the preparation of a book.

Then you look at the cover and your heart begins to sink, even before you turn to the contents. This is the reality of today’s management book market. It explains why I found myself last week delving through the pages of Peter Drucker’s seminal work, The Practice of Management, first published more than half a century ago.

There was another reason for revisiting Drucker’s book. I wanted to remind myself about management principles because I’m not seeing much that is good about management just now.

Instead I’m reading about a National Health Service that has bungled the training and recruitment of junior doctors to such an extent that as many as 10,000 have found themselves unable to progress their careers in the UK after medical school training at a cost of £250,000 for each doctor.

The interim findings of an inquiry headed by Prof Sir John Tooke, chairman of the Medical Schools Council, published this week, criticised the complexity of a job application and interviewing process that could be put down to failures in management and leadership.

Why stop at training and recruitment? The criticism could be levelled at many other areas of health service management. Will Hopper, the Co-author of the Puritan Gift, one recent management book that actually delivers on its promise, was lamenting last week the disappearance of the Nightingale hierarchies that dominated health service management up to the 1970s.

“At least we knew then who was in charge and that meant that wards were cleaned thoroughly, unlike the position we have today where there is so much outsourcing and where no-one wants to take responsibility,” he said.

But this is the modern way. No-one seems to be in charge anymore. The same could be said of the BBC where the excellence of much of its programming and frontline presenters has been undermined by poor management that has compromised the network’s reputation for integrity in a series of recent debacles, including the rigging of radio and television phone-ins.

This leads me to doubt one of Drucker’s opening remarks in The Practice of Management. “Management will remain a basic and dominant institution perhaps as long as Western civilisation itself survives,” wrote Drucker at the time. Basic, yes, but is it accurate fifty years on to describe management as “dominant?”

Much of what we once knew as management – the administration of the workplace – has been contracted out to specialist providers who, the theory goes, should be more capable of doing this so-called “none-core” work.

It was C K Prahalad and Gary Hamel who first introduced the concept of core-competencies in a 1990 Harvard Business Review article. Their subsequent book, Competing for The Future, was one of the most influential management books of the 1990s but its central message – that organisations should concentrate on what they do best – was often pursued with far too much enthusiasm and too little rigour in assessing what was meant by a core competence.

Too many managers – and human resources managers have as much to answer for here as anyone – sought to discard the less popular in-house work and hang on to the sexier functions such as talent management and succession planning.

Much of the dull work – payroll, cleaning, security, even training and recruitment in some cases – was put out to contractors. By relinquishing this kind of work, managers evaded responsibility. In time a second generation of management stepped up to the plate with no previous experience in the grunt work of basic administration. This meant there was no-one around to compare what now passed for the status quo with what went before.

The result in many organisations has been a competency vacuum in management where the core excellence of a business is undermined by a distinct lack of excellence elsewhere. This is a fundamental weakness in the theory and practice of core competencies.

Coupled with flatter hierarchies and laxer reporting regimes that emerged from the 1990s fashion for corporate reengineering, it has led to a crisis of management in some organisations.

“There is a certain unconscious humour in the new instructions issued to hospitals,” write Will and Ken Hopper in The Puritan Gift, “In reviewing existing ‘out-sourcing’ contracts, they were told that they could employ ‘an in-house person whose job is to keep the place clean.’ – or, as we used to say, a cleaner.”

How did we get from Peter Drucker’s focus on management by objectives that concentrated on management outcomes, to the abdication of management that exists today?

Part of the blame must be levelled on a fashionable obsession with leadership and a kind of corporate greed – not the greed for ever higher salaries – although this is one symptom of the malaise – but a desire for power without responsibility.

You can see this in the way rugby and football team managers are habitually chopped when their teams fail in major competitions. You rarely see the people who wield the axe shouldering any blame.

Perhaps this has something to do with the recent concentration on corporate governance. Boards must focus so much on their monitoring and deal-making role today that solid management disciplines can be neglected. But there should be no corresponding avoidance of accountability. The board of Northern Rock, for example, cannot devolve accountability for presiding over catastrophic borrowing policies that led to the bank’s collapse. The buck has to stop somewhere.

When Drucker was writing in his prime, attempting to analyse the qualities needed in a manager he outlined one qualification that could not be learned but that every manager should possess. That quality was character. Define it as you wish, but if you strip away all the theories, all the fads and all the processes, good management comes down to basic human qualities. It was true then. It remains true today.

See also: Lessons of history ignored by management