Why we must reinvent the human side of management

19 February 2015 -

Some of the greatest thinkers on leadership styles have suggested simple solutions to management’s current malaise

Simon Caulkin

In 2004, London Business School’s (LBS’s) late Sumantra Ghoshal wrote a celebrated article called ‘Bad Management Theories are Destroying Good Management Practices’. To prevent future Enrons, Ghoshal arrestingly began, business schools didn’t need to create new courses. They just needed to stop teaching a lot of old ones. Why were managers at companies like Enron, WorldCom and Parmalat doing things that destroyed their companies and their own legitimacy? It wasn’t that they had become evil, Ghoshal reasoned. Instead, he argued, they were shooting themselves (and their companies) in the foot because of their own beliefs, and in particular the assumptions that management was based on: individual self-interest, the primacy of shareholders, the conviction that companies were a second-best alternative to markets and should as far as possible act like them. Their leadership styles were inherently flawed.

Based on those assumptions, today’s management theory, he summarised, was undersocialised, reductive and amoral, evoking behaviour more appropriate to supervising a prison or a madhouse than a team of valued employees. Ghoshal would have taken no pleasure in the crash of 2008, even though it confirmed everything he had put forward.

Of course, he isn’t alone in concluding that management has gone astray. Gary Hamel and Julian Birkinshaw, also of LBS, have both written extensively of the need for management reinvention. Together they established a Management Lab at LBS, and Hamel set up an online Management Innovation Exchange promising ‘fresh thought and new discoveries from the trenches of management innovation’. General Electric’s former chief executive Jack Welch surprised many by declaring his conversion to the idea that shareholder value was ‘the dumbest thing in the world’, a refrain that has been developed by the global head of McKinsey, Dominic Barton, and the Rotman School’s Roger Martin. Colin Mayer, a previous head of Oxford’s Said Business School, is a another on the list of those who warn that today’s governance and management models are leading us not out of the mire but further into it.

Yet despite this high-level support, the development of a new management paradigm is agonisingly slow. Vested interest is one reason. Another, more insidious, is that those underlying assumptions are still in place, and their effect is to curdle many well-meaning experiments at source. Hence apparently benevolent management practices morphing into their opposite. HR is now about sacking people and keeping wages to a minimum, not improving workers’ careers. Customer service has become customer obfuscation – AKA confusion marketing. Retailers are in thrall to the “How are you today?” synthetic personalisation of e-commerce while systematically de-personalising the face-to-face side of their business.

And instead of being a way for enlightened companies to ensure that the interests of employees and company are shared, as in the official literature, performance management has become synonymous “not with developmental human resources management and agreed objectives but a tightly monitored experience of top-down, target-driven work”, as “Performance Management and the New Workplace Tyranny”, a report for the Scottish Trades Union Congress put it. At the extreme, whole companies can get turned into toxic, reversed-out travesties such as banks that impoverish people rather than enrich them and hospitals that shorten life rather than lengthen it.

Instead of the reductive economics-based model that rules today, Ghoshal wanted to see a managerial theory of management: one that brought out the best in people rather than the worst. Being based on trust rather than compliance it would need less policing and thus also be more efficient; a force for good in both senses. With the internet’s potential for dark as well as light – look no further than the Prism suggestions of “total surveillance” – increasing by the day, reinvention along those lines is even more pressing than a decade ago. Yet it’s important not to give up hope. The prize is more than just money, and the first and most important step isn’t complicated. It’s not about learning fancy techniques or complicated theory. It’s about putting your hand up and saying, “Hey, I’m human.”