And whenever you've got three people, you've got politics. But when you set up an organization and there's constant competition among various individuals to get to a higher and higher part of the pyramid, you increase conflict and reduce productivity.
As a former CEO of a multimillion-dollar corporation put it, "Idle hands create politics," and all around us, technology is creating idle hands. As previously mentioned, however, the effect of technology on middle management was to dramatically reduce opportunity within the organization. As corporations moved more and more aggressively to eliminate the positions in the pyramid that middle managers were aiming for, they unwittingly created an atmosphere of political infighting, turf wars, inefficiency, and what can only be termed a "lifeboat" response to the threat that "you could be next." As middle-management reductions grew increasingly threatening, many executives like Stu Litt began to notice an unmistakable change within the organizations they worked for. "There once was a very strong cultural attachment to the company. People did extraordinary things on behalf of it. There was a lot of self-sacrifice on many levels. Maybe," reflects Little today, "that was an artifact of the times." Forty-six-year-old AT&T microelectronics manager Ken Heimberg points to the lack of challenge inherent in an environment where middle managers are tripping over themselves just to find something to do. "People are working on projects, and when the project is over, many are just sitting there not working very much at all."
From an environment of relative security under the patriarchal organizational structure that once promised "lifetime employment" and dominated corporate culture in the United States and elsewhere, middle managers were plummeted almost overnight into a state of corporate confusion in which all previous protection was lost and all bets were off. Later in this book, we will examine in close detail how individual executives have wrestled with the effects of that turmoil on a personal level and have grown beyond it, but for the moment, it is important to note that the distribution of knowledge throughout every level of the organization has spawned a grudging acceptance that a new management model is required.
Unseen Traps
One of the major differences between the famed downsizing of the 1980s and other recessions is that for the first time in modern memory, capable and experienced executives found themselves out of work not because of poor performance or purely bad economic times-the nation's economy was still growing-but because their jobs had disappeared, never again to be replaced. In corporations throughout the country, executives like Stuart Litt began to witness wholesale cuts of very talented people and with them a tremendous erosion of company loyalty. Indeed, much of the bitterness expressed by downsized executives is caused by the organizational view that the employee is an expense that the company would gladly pay to get rid of, rather than an asset whose intrinsic value lies in each individual's unique knowledge. In the words of a former purchasing executive at DuPont: "DuPont was a family company that, although patriarchal in nature, focused on the development of its employees until economic times got tough. Then they destroyed the whole sense of family." As corporations have begun recognizing that the need to downsize is structural in nature, they are becoming more concerned about their managers' feelings of not being valued or appreciated, and many are working diligently to restore more balanced relationships within their organizations.
As corporations responded to directives to "cut, cut, cut," and the concept of restructuring as an economic "good" grew, few corporations applied sound, long-term strategies to making reductions in middle management. Organizations lacking strategic vision for the long term failed to utilize the talent they did have, often because they themselves had not arrived at the fact that the reductions they were making were permanent in nature. As Ed Burrell, a portable executive who was downsized out of Union Carbide put it, "When I left, they lost one hell of a resource." For many corporations, the reduction of the middle-management class was still viewed as an interim cost-cutting measure, not as the wake-up call it in fact was, signaling that the old systems of management were no longer appropriate for a technologically driven society. In fact, many organizations actually compounded their problems by creating new inefficiencies that offset their cost savings, as it was discovered that there were too few people left to get the job done. When these inefficiencies were recognized at IBM and other organizations, they were able to lure back some of the very same people that they'd no-fault-terminated- this time, as contract managers. But many of the early-retirement incentives and "parachutes" were simply too good to pass up and consequently attracted the most talented people, thereby compromising both the strength of the organization and the morale of the employees watching the senseless and seemingly arbitrary pattern of executive exodus. As George Balinski, a former director of information systems for Mercedes-Benz of North America observed:
One problem with the attractive packages that companies offer long-term employees is that some people who never thought about leaving are taking the package because it's a window of opportunity they don't want to close. And yet the company loses its big knowledge base of people who know the internals of the organization.
This advent of what we call no-fault termination among the white-collar workforce brings into focus the single most significant impact technology has and will continue to have on the way we manage our businesses in the next century. Organizations are paring their inner core of executives to the bone. "Flat," "lean and mean," and "empowerment" have become the new buzzwords describing the need for companies to become more flexible organizations that can respond rapidly to technology and market shifts.
