DEXTER DUNPHY is Professor of Management at the Australian Graduate School of Management, University of New South Wales, where he was also Director of the Centre for Corporate Change at the AGSM from 1990 to 1997. Dexter’s main research and consulting specialty is the management of organisational change. He has consulted to over 150 private and public sector organisations in Australia and abroad, while his research has culminated in 15 books, including the Australian bestsellers (with Doug Stace) Under New Management: Australian Organisations in Transition (1990) and Beyond the Boundaries: Leading and Re-creating the Successful Enterprise (1994). With a PhD from Harvard University, Dexter has held visiting professorships at Harvard, Keio University, Shanghai First Medical College, the National University of Singapore and the Helsinki School of Economics and Business Administration. He has been a recipient of a Fullbright Senior Scholar Award and of the UNSW Vice-Chancellor’s Award for Teaching Excellence. ANDREW GRIFFITHS is a lecturer in the School of Management, Faculty of Business, at Queensland University of Technology, specialising in the areas of workplace innovation and industrial adjustment, a field he developed as a researcher at the AGSM’s Centre for Corporate Change. His PhD examines organisational strategies and industry responses to competitive threats.
The Sustainable Corporation ORGANISATIONAL RENEWAL IN AUSTRALIA
Dexter Dunphy Andrew Griffiths
ALLEN & UNWIN
Copyright © Dexter Dunphy and Andrew Griffiths, 1998 All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without prior permission in writing from the publisher. First published in 1998 by Allen & Unwin 9 Atchison Street, St Leonards 1590 Australia Phone: (61 2) 8425 0100 Fax: (61 2) 9906 2218 E-mail: [email protected]
Web: http://www.allen-unwin.com.au National Library of Australia Cataloguing-in-Publication entry: Dunphy, Dexter C. (Dexter Colboyd), 1934- . The sustainable corporation: organisational renewal in Australia. Includes index. ISBN 1 86448 752 6. 1. Personnel management — Australia. 2. Organizational change — Australia. I. Griffiths, Andrew, 1969- . II. Title. 658.300994 Set in 11.5/14 pt Bembo by DOCUPRO, Sydney 10 9 8 7 6 5 4 3 2 1 Digital processing by The Electric Book Company, London, UK, www.elecbook.com
It seems customary for people asked to contribute a foreword to a new book to describe it as timely. In using that description, I do not in any way undermine the potency of that word. For this book is indeed timely. Not only does it provide the understanding that where we are as a society and economy is a result of our past; there is vision and hope for what we could become. It provides a clear focus, suggestions and tools for all of us who are interested in people and workplaces to concentrate and redouble our energies and efforts to develop truly sustainable enterprises. This book tells the story of the Organisational Renewal Movement of the past 30 years, and places the contribution of Australia and some Australians in a laudable context. In doing so, Dexter and Andrew provide the basis for us to celebrate and learn from the ‘heretics’, those who have dared to question prevailing assumptions and attitudes about the quality of life for people employed in organisations. More than this, they demonstrate that we have the capacity for innovation and risk taking, and are more than capable of taking the lead in the global issues of sustainability. However, this book is more than a celebration of the past. The imperative of sustainability, captured in the following chapters, is economic, human, ecological and environmental. Dunphy and Griffiths’ analysis of our options is compelling. They amply demonstrate the failure of the market model favoured by economic rationalists and others. They explore the new forms of organisational life, based on communities of practice, interdependence, flexibility and responsiveness. Fundamental to their argument is
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the significant role that corporate leaders must play in attaining those qualities. The long-term sustainability of their organisation, and of their planet, demands it. Our responsibilities become clear if we extend the definition of stakeholders beyond shareholders, beyond even staff and the immediate community, to include our future generations. It is perhaps salutary to reflect that consideration of seven generations hence was the foundation for many decisions of Native Americans. Dunphy and Griffiths’ call to action includes the assertion that the nature of the change process itself is now in need of change. Confronted with a broad range of examples and writers, we are inextricably drawn to the conclusion that we do indeed need to rethink our own values and assumptions. We need to secure different tools and alliances, to establish conversations and networks that draw on many traditions and professions, and to develop and implement new approaches to the challenges we face. As a member of the Organisational Renewal Movement for some 25 years, I am excited at becoming part of these new communities of practice. As National President of the Australian Human Resource Institute (AHRI), I am delighted to support this book and the ideas and vision it contains. Dexter Dunphy is one of Australia’s leading writers, thinkers and practitioners in the areas of management, leadership and organisational change. He is an active and valued member of AHRI, and has made significant contributions to the professional development of our members. He has always challenged our thinking, and provided ways of better understanding the world of organisational life, and our roles and responsibilities in improving the ways in which they operate. His collaboration with Andrew Griffiths has been as telling as ever. AHRI will certainly accept their challenge by providing forums for discussion and strategic conversations, promoting and becoming one of the key players in the new Organisational Reform Movement. All to assist our members in their quest to make their organisation a sustainable one. Viv Read President, Australian Human Resources Institute
CONTENTS FOREWORD ACKNOWLEDGEMENTS ABBREVIATIONS 1. THE ORGANISATIONAL RENEWAL MOVEMENT: FROM HERESIES TO ORTHODOXIES AND BEYOND PART 1. FOUNDATIONS OF ORGANISATIONAL RENEWAL: THE EMERGENCE OF INCREMENTAL HUMANISM 2. THE HUMAN RELATIONS AND ORGANISATION DEVELOPMENT MOVEMENTS (1966-1977) 3. THE SOCIO-TECHNICAL SYSTEMS AND INDUSTRIAL DEMOCRACY APPROACHES TO CHANGE (1966-1977) PART 2. REORIENTATION AND THE EMERGENCE OF TRANSFORMATIONAL STRATEGIES 4. CHALLENGES, CONSOLIDATIONS AND NEW DIRECTIONS (1978-1983) 5. STRATEGIC ALIGNMENT: HERESIES AS ORTHODOXIES (1984-1996) PART 3. NEW DIRECTIONS: THE SUSTAINABLE CORPORATION 6. BUILDING CORPORATE CAPABILITIES 7. BUILDING A SUSTAINABLE WORLD APPENDIX. SUMMARY OF MAJOR HISTORIC APPROACHES TO CHANGE NOTES SELECTED READING LIST INDEX
V VIII X
75 77 109 135 140 171 205 209 235 237
This book is the result of over three years collaboration by the two authors. However, it is also the product of 30 years of visionary planning and hard work by many change agents — academics, consultants, managers, union leaders and others who have attempted to transform Australian organisations. We honour their foresight and courage. Both authors participated in planning the research, conducting interviews with key figures in the Organisational Renewal Movement’s development, reading original sources, writing and drafting the chapters that form the book. Working together has been an enjoyable and stimulating process, aided by the dynamic environment of the Centre for Corporate Change (Australian Graduate School of Management, the University of New South Wales). The idea of tracing the emergence and development of workplace change and innovation in Australia had its genesis with Dr John Mathews (Faculty of Commerce, the University of New South Wales) and we are indebted to him for the original inspiration and for his comments as the work progressed. Philip Sutton (Green Innovations Inc., Melbourne) made significant contributions to our thinking on the issue of ecological sustainability in chapter 7. Invaluable conversations and interviews were held with managers, consultants, union officials and academics. There are too many to list here but we wish to thank some of those who contributed most to the Organisational Renewal Movement in
Australia and who were prepared to tell us their stories. We express our gratitude particularly to Alf Clarke, Reg Cole, Roger Collins, Alistair Crombie, Alan Davies, Anne De Lacy, Geoff De Lacy, Bob Dick, Fred Emery, Merrelyn Emery, Bill Ford, Doron Gunzburg, Robin Kramar, Russell Lansbury, Ian Marsh, Robert Owens, Hollis Peter, Dennis Pratt, Viv Read, Peter Saul, Neil Watson and Martin White. They and others helped us put together some of the jigsaw of organisational change in Australia. We are aware that there are still pieces missing — either because we had to omit many details and because of the complexity of the process. We have tried to offset any personal biases by seeking a variety of viewpoints; but, in the last analysis, we inevitably see the world through our own eyes. We wish to thank those organisations which supported this research financially: in particular the Australian Research Council through its funding of the Centre for Corporate Change, the Australian Human Resources Institute and the Australian Centre in Strategic Management (School of Management, Queensland University of Technology). Manuscript and document presentation for the book and the preceding research has been an extensive and exhausting task. Jean Rogers typed and formatted the full text with patience and accepted our interminable revisions with good humour. Cheryl Scott handled administrative and financial matters. Our editors at Allen & Unwin — Joshua Dowse, Christa Munns and Kate Ormston-Jeffery — provided insightful comments and suggestions for both structure and content. Finally, we thank our families who overlooked our absences and preoccupations. Andrew in particular wishes to thank Jenine Rassias for her encouragement, support and patience throughout the project. This book outlines critical challenges facing corporations in the next millennium. We hope that the ideas we have presented here provoke readers to take up the challenge of committing to the task of creating sustainable organisations that support human welfare and a viable future for all life on the planet. Dexter Dunphy and Andrew Griffiths
ACAC AHRI ANU ATO BCG BPR CABS CCC EI HR HRM HSM ID IR ISO IT MM OD ORM OT QWL SHRM STS TQC TQM TQMI UNSW
Australian Conciliation and Arbitration Commission Australian Human Resources Institute Australian National University Australian Taxation Office Boston Consulting Group business process reengineering Centre for Applied Behavioural Science Centre for Corporate Change employee involvement human resources human resource management human sustainability model industrial democracy industrial relations International Standards Organisation information technology market model organisation development organisational renewal movement organisational transformation quality of work life strategic human resource management Socio-Technical Systems Total Quality Circles Total Quality Management Total Quality Management Institute University of New South Wales
1. THE ORGANISATIONAL RENEWAL MOVEMENT: FROM HERESIES TO ORTHODOXIES AND BEYOND
In this book we tell a story that has not been told in full before. It is the story of a social movement that has attempted to transform the fundamental character of organisations in today’s world and which has given rise to a breed of new professionals — human resource managers and corporate change agents — those who dare to be brave harbingers of a future organisational world. We will be putting the case that this movement can play an active role in shaping the fundamental character of the corporations of the future. Unlike many other such movements, this worldwide social movement has been largely unresearched and even unnamed. We refer to it as the Organisational Renewal Movement. Why do we choose this name? Because the focus of those who have driven the movement has been the transformation or renewal of the traditional bureaucracies that dominated the first 60 years of this century. The philosophical and design principles on which these bureaucracies were based were the crowning achievement of the late industrial revolution, bringing unprecedented wealth to those economies which embraced them.
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These bureaucratic principles became the received wisdom among the corporate elite of both the private and public sectors in the Western world. They became so fully entrenched and internalised that many managers and supervisors who acted in accordance with them were themselves unaware of the organising principles. As fish swimming in water are unaware of the impact of water on their actions, never knowing any other environment, so managers who learned their trade in bureaucracies were often unconscious of the principles on which they acted and were unaware that there were alternative ways to organise people and tasks. However, a few individuals began to direct trenchant criticisms against this received wisdom — to voice values and views that were regarded at the time as heresies, or challenges to the existing order of things. These early heretics, as we shall see, questioned the prevailing notions about how to design and manage organisations — the very notions that had been successful in creating the corporations that formed the central core of modern capitalist society, notions that had even been copied on a massive scale by the rulers of the two largest communist societies, the Union of Soviet Socialist Republics and Maoist China, and by the successful emerging Asian Capitalist economies, most notably Japan. The early critics were mainly members of a new and expanding professional group — social scientists — and their criticisms were directed at inefficiencies in bureaucratic organisations, but even more at the dehumanising and exploitative effects of bureaucratic principles on the morale and satisfaction of the workforce. The Organisational Renewal Movement (ORM) has been global, and we tell the overall story here; but we concentrate particularly on the movement’s course in Australia. Australians have played a significant role in the movement’s international evolution; but, although the movement in Australia has been as innovative as in any other country in the world, even management texts used in Australia which discuss these innovations largely ignore the key leadership role played by Australians in international developments and the extensive initiatives in Australia throughout most of the movement’s history. The story we tell here demonstrates how this new social movement gained momentum and influence and eventually con-
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tributed to today’s prevailing corporate orthodoxy. The ORM invented along the way a valuable set of strategies for effecting large-scale corporate change and for managing and developing a corporate workforce. Over the course of its history, the movement’s central values also underwent a substantial and controversial evolution. Intriguing as this history is for its own sake, our motivation for writing the book is not primarily to contribute another historical documentary. We are change agents rather than historians. Our aim in telling this story is to learn how success was gained and at what price, and to use the lessons we can discern to inquire where the movement might go in the future; what tasks its members may set themselves now; and, in particular, what contribution they can make through organisational renewal to a sane and sustainable society in the 21st century. In our view, the ORM is poised powerfully to affect the evolution of modern organisations. The organisational world in which we live is in flux; today’s experiments in organising people, processes and resources will help shape the future economic foundation of society. What lessons can we learn from the past that will empower us to shape the future? History is merely an esoteric study unless we can use it as a guide to future action; history also sets us on a trajectory that has direction, momentum and energy. A new profession of organisational change agents and human resource managers emerged from this movement, but what trajectory is the new profession on? We will trace the trajectory to date but will be arguing in the latter part of the book that the trajectory should change; that the ORM needs a radically new agenda and a new role in shaping the corporate world of the 21st century. The change movement itself needs to be changed. We also hope to enlist your enthusiasm and commitment to contribute actively to shaping that new agenda and aiding in its realisation. But that is leaping ahead to the latter part of this book. We will start our story at the beginning and let the logic unfold. In this chapter we provide a brief overview of how the book is organised and of the major thrust of our argument.
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THE ORIGINS OF THE ORM The heretics who founded the ORM confronted a world marked by the massive success of a small number of preceding organisational reformers. The first great mind to chronicle the emergent central principles of modern bureaucracy was the German sociologist Max Weber. But the reformers who developed those principles further, articulated them in popular terms, and applied them to practical situations with dramatic effect, were the Americans Frederick Winslow Taylor and Henry Ford. Taylor was, in his time, also a great organisational heretic, attacking the incompetence of the managers who ran the emerging factories and the railroads and also the intransigence of the unions. He was brilliant, controversial, persuasive and he got results — in some cases, productivity increases of over 200 per cent. He understood the world he wanted to reform because, despite his wealthy background, he had spent time working in all kinds of jobs in factories. He attracted attention, followers and patrons, as well as enemies. His ideas were influential in his day but became even more so when taken up by Henry Ford and fused with Ford’s new mass-production techniques. Ford’s mass-production processes were enormously successful and took the organisational world by storm. Taylorism plus Fordism became the new orthodoxy, and reigned virtually unchallenged across the industrialised world from the early 1900s until the 1960s. In both private and public sectors, industrial and clerical factories were organised in hierarchical and bureaucratic structures. Where possible, work was deskilled so that workers could readily be replaced if they left; units were organised on functional lines; everyone had one supervisor; and everyone was closely supervised. Taylor’s ‘time and motion’ study approach to job design was enshrined in a powerful new profession — industrial engineering. As late as 1970 in Australia, the largest firm of consultants operating here earned 50 per cent of its income from work study — that is, industrial engineers conducting time and motion studies, with stopwatches, on the efficiency of workers’ physical movements. Taylorist principles were simply an extension, in the social
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sphere, of the principles of Newtonian science and its practical offshoot, machine-based manufacturing. The technical successes of manufacturing had come through improving tooling to such an extent that, instead of making each product separately, the product could be assembled with interchangeable parts (as, for example, in a Smith and Wesson revolver). Success had been achieved by breaking the whole into parts with highly specialised functions and making each specialised part interchangeable. The same machine model underlay the social system design, but in this case the interchangeable parts were the people who comprised the workforce. Once jobs were specialised, employees carefully selected, trained in their technical tasks and placed under authoritative command, the system could be relied on to repeat operations with predictable results. The chief task of the change agent was to eliminate variation in work processes and outcomes by creating a stable system. Ideally, only if management decided to introduce structural redesign could change occur and this would happen infrequently in response to changing consumer demand or improved technology. Henry Ford, for example, resisted varying the design or colour of his black T-model Fords until competitors with new designs and colours eroded Ford’s market share.
THEORIES OF CHANGE: CORE ELEMENTS At this point we break off our discussion of Taylorism to make some points about the core elements of theories of corporate change: for what Taylor was doing was crafting such a theory from his experience in working in and with the new factories and railroads of the industrial revolution. If we are going to discuss theories of change such as Taylor’s, we need to know what constitutes a fully fledged theory in this area. Having such a model will help us to compare the different theories that we are discussing and eventually to evaluate them. Theory is vital to the practitioner’s success. As the social scientist Kurt Lewin once commented: ‘Nothing is more practical than a good theory.’ Theories allow us to construct models of social processes, to structure and interpret shifting social realities.
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Theories simplify reality by identifying critical variables and then indicating how these variables relate to each other. Theories help us to simplify a complex reality, to understand its key elements and their interrelationships, and how it works overall. In this area, our theories are attempts to model the processes of organisational change, to define the critical points at which we can intervene in an organisation; they suggest actions (intervention strategies) that we can apply to these points to modify the organisation’s structures, processes or culture in order to influence organisational outcomes. Our success in doing this will, of course, depend on how much power and authority we have, who we can access, and our role in the evolving life of the organisation. In the field of organisational change, theories are necessarily infused with ideology. Our theories are value-driven, often selfserving, grounded in social movements and driven by social forces. This also applies to scientific theory generally, for example, to a theory such as Darwinian evolution. Scientific theory does not proceed in some kind of social vacuum but is an expression of the spirit of the times and of its cultural milieu. Theories of change are similarly infused with ideologies, but this does not mean that they are therefore irrelevant or scientifically impure. The truth is always partial. Theories of change are not only statements of what is, they are also manifestos in the ongoing debate about what we want society and its constituent organisations to become in the future. In our view, a fully fledged theory of change contains the following elements: ! a basic metaphor, often unconsciously held, of the nature of the organisation; ! an analytical framework or diagnostic system for understanding the organisational change process (why change occurs, what variables are critical in the change process); ! an ideal model of the effectively functioning organisation which suggests direction for change (survival, growth, profitability, etc.); ! an intervention theory and strategies which specify when, where and how to intervene so as to move the organisation closer to the ideal; and
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! a definition of the role of the change agent. For example, the prevailing medical model of change could also be described in these terms: ! basic metaphor: the human being as an organism; ! diagnostic system: questions, tests; ! ideal model: the healthy person based on medical norms; ! intervention strategies: remedies such as drugs and surgical procedures; ! change agent role: technical expert. Now we return to the bureaucratic approach to change and apply this model to it. We can summarise the bureaucratic approach to change as follows.
THE BUREAUCRATIC APPROACH TO CHANGE ! !
basic metaphor: organisations as machines; diagnostic system: task-focused structural analysis (hierarchy, positions, status, delegation, rules, job descriptions); ! ideal model: efficient, repetitive operations with predictable outcomes; ! intervention strategies: expert analysis, task redesign to ensure efficiency, selection and basic technical training, all introduced by authoritative command; ! change agent role: authoritative manager and/or technical expert. With this model, Taylor and Ford triumphed; their ideas changed and sustained the industrial world. As the above summary indicates, change agents in this tradition saw themselves as authoritative experts, working to introduce predictability and efficiency into work processes by job redesign, selection and technical training. It was these successful organising principles that the heretics of the ORM challenged. In the 1960s and 1970s, challenging the principles that had led to the massive success of the prevailing industrial system seemed crazy. It was like tilting at windmills. Nevertheless the heretics struck blows at the central Tayloristic doctrines, arguing that traditional bureaucracy had unforeseen dysfunctions. To counter these dysfunctions, they developed
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alternative theories of management and work organisation. They created pilot projects in organisations to demonstrate that their ideas would work better and they designed viable new paths to corporate success. The developments took place in a number of advanced economies, including Australia.
THE FIRST ORGANISATIONAL HERETICS There is nothing more dangerous to the existing order than a new theory. The Catholic Church, for example, rightly saw the potential danger that Copernicus’s new theory of the universe not only would displace the prevailing doctrine that the earth stood at the centre of the universe but, more importantly, would challenge the centrality of the Church in the lives of Christians. The beginning of the ORM and the first major attack on Taylorism came from some creative thinkers and researchers at the brash new business school at Harvard University. Their work began in the 1930s but extended well into the 1970s. These heretics were mainly social scientists, who came subsequently to be identified as the Human Relations school because they focused on human relations in the workplace. They were strongly influenced by the emerging social sciences of psychology and sociology and, from that vantage point, they attacked Taylorism’s restricted view of human nature and the creation of demotivating workplaces. As the Human Relations approach gathered momentum, it took on other emphases and new names such as the Organisation Development (OD) school and the Quality of Work Life (QWL) movement. But overall it was one humanistic movement which generated a new profession of ‘OD practitioners’ and ‘human resource practitioners’, who had a major impact on reshaping bureaucratic organisations in the 1960s and 1970s. With this humanistic thrust, the pendulum swung too far from the technical task processes in organisations. Taylorism had emphasised the technical to the exclusion of the human factors, but the Human Relations practitioners were also unrealistic in virtually ignoring the importance of technical processes in the workplace. The balance was redressed by another group of social scientists, this time centred at the Tavistock Institute of Human
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Relations in post-World War II London. Their work in factories and mines confronted them with the importance of technical as well as social systems in organisations. They devised a new approach — Socio-Technical Systems (STS) analysis. They were just as critical of Taylorism as were the founders of the Human Relations school but they developed a set of principles for reshaping organisations that stressed the need to jointly optimise both technical and social factors. They also strongly advocated introducing industrial democracy (ID) in the workplace. In the 1960s and 1970s the STS approach had a major impact on the redesign of organisational life in Europe, particularly in Sweden. It also found political expression in arguing for ID, which was most comprehensively introduced in Sweden. In the 1960s and 1970s both Human Relations and STS theories and practice were also influential in Australia, as we show in chapters 2 and 3. The Human Relations and STS approaches arose in Western democracies in the period of major economic expansion after World War II. Economic growth came to an abrupt halt in the 1970s, with the oil crises and recessions of the 1980s and 1990s. At the same time, world economic markets were undergoing a major transformation as business became increasingly globalised and the Pacific basin replaced the Atlantic as the world’s economic epicentre. Discontinuity and chaos replaced predictable growth; international competition and lowered tariff barriers exposed the majority of firms to unprecedented competition. This was a time of confusion for the ORM, particularly in Australia; we discuss this period in chapter 4.
THE ORTHODOXIES OF THE POST-TAYLORIST WORLD As a response to the new challenges, senior executives in a variety of leading corporations began to adopt the strategic management approach being developed at the Harvard Business School and promoted by firms like the Boston Consulting Group (BCG) and McKinsey & Company. In retrospect it is clear that the early ORM leaders had ignored two factors that were of increasing importance to organisational survival and growth: the first was the need to redesign firms for future competitive advantage rather than
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to simply remedy problems in the current organisation; the second was to focus on shareholders and customers rather than simply on management, employees and unions. If the organisation was to have a viable future, organisational redesign had to be directed from the present to the future and from internal stakeholders to external stakeholders. The dramatic and rapid reorganisation of the economic environment also meant that incremental changes were seldom enough for the firm to survive; radical reorganisation and transformation were often needed. Out of this turmoil, the leaders of the ORM moved to rethink many of their earlier ideas and to link human resource and organisational change strategies to the emerging strategic approach being adopted by management. The new themes for the movement became Strategic Human Resource Management (SHRM) and Organisational Transformation (OT) rather than Human Resource Management (HRM) and Organisation Development (OD). There was also a controversial and hotly debated shift in the central values of the movement from fulfilling workforce needs to reshaping workforce numbers and capabilities to serve emerging business strategies. The shift was important in repositioning the movement to influence the character and direction of the new field of corporate strategy. New attacks on the bureaucratic model developed independently of the ORM. Two of the most influential were Business Process Reengineering (BPR) and Total Quality Management (TQM). BPR was a powerful new attack on the traditional ‘silos’ of bureaucratic organisations, often supported by the use of the burgeoning computer-based information technology (IT) systems. This, with TQM, cut swathes through traditional organisations to create a clear line of sight to the customer. By the 1990s Taylorism as an ideology was in retreat, although still surviving through inertia in many organisations. The newly dominant strategic approach was based on rational assumptions: that is, its proponents assumed that senior executives had the power to introduce rationally devised strategic plans and to implement them as planned. This point of view came under increasing attack from critics who argued that business strategies, in reality, were the result of political processes within the organisation
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and outside it rather than being logically derived from rational market analyses and forecasts. These criticisms were absorbed and the strategic approach modified so that it was strengthened and acquired wider acceptance. Consequently the Strategic Management approach to change has almost universal acceptance today and has replaced Taylorism as the dominant paradigm. Along the way, strategies developed by the ORM became absorbed into the ‘strategic approach’ so that ORM became a significant contributor to the new orthodoxy. We describe how this happened in chapter 5. But, as we face the 21st century, new issues confront us. And new issues demand new ideologies. As we have said, we are not writing a history book but rather a manual for transformational change. What are the issues that will dominate the next century?
SUSTAINABILITY — CORPORATE AND ECOLOGICAL In chapters 6 and 7 we identify two issues that will be of paramount importance for the future of corporations. The first is how corporations can create sustained long-term performance, particularly the kind of performance critical in advanced, knowledge-based societies. Chapter 6 deals with this and outlines a struggle that is taking place between two contrasting ideologies that seek to shape our corporate future. The first of these ideologies is economic neo-liberalism (known in Australia as economic rationalism), which emphasises cost reduction, contractual working relations and short-term performance. The other is what we term the Human Sustainability Approach to corporate strategy, which seeks to balance short-term returns with investment in longer term strategic realignment. The Human Sustainability Approach also emphasises the critical importance of trust in relationships and of systematically building corporate capability, particularly the capability to reshape the organisation for future success. The ORM is particularly well fitted, at this stage in its history, to contribute to an awareness of the need to institute the Human Sustainability Approach and to develop the model further. The Human Sustainability Approach is compatible with the value placed historically by the movement on human knowledge and
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skills. We now have research evidence that investment in people and the systematic building of their knowledge and skills is vital to sustainable performance. Sustainability of this kind is simply a more effective way of doing business in most circumstances. The second issue of importance to the future is the contribution that needs to be made by corporations to ecological survival and sustainability. In the 21st century, this will be the foremost issue for all of us. We deal with this issue in chapter 7. This century has seen the demise of communism and the triumph of capitalism (even in countries, like China, still professing communism). In the future, however, with burgeoning world population, capitalism unmodified will threaten the sustainability of human civilisation. Traditional strategic management is increasingly being co-opted into the ideology of economic neo-liberalism, which is a system based on unsustainable economic growth in material goods and the exploitation of natural resources for shortterm returns to shareholders. Traditional strategic management is highly compatible with economic neo-liberalism: it stresses competition, talks of winners and losers, and accepts the exclusion of significant groups of the needy from the fruits of economic activity. Economic neo-liberalism also leads to the exploitation of the natural environment rather than its renewal for long-term sustainability. There is a parallel here, in that it is also exploitative of people, failing to systematically renew their knowledge and skills for the long-term sustainability of the corporation. Sustainability demands that we use all resources, including people and the natural environment, in a way that maintains rather than destroys future potential. We recognise that in the past and at present many organisations have been exploitative of people and the natural environment. We do not, however, see that a solution to this problem lies in rejecting these organisations as being beyond reform. After all, we are all implicated in a system we have inherited from a time when the human impact on the world was limited and less well understood. Rather, the issue is: How can we work to move organisations from being part of the problem to being part of the solution? We argue here for the redefinition of the strategic management
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approach to include the interests of a broader set of stakeholders, including the community, the biosphere and future generations. And we argue that corporations must take the lead in initiating new practices to support sustainability. Economic neo-liberalism ignores the powerful and important synergies in social and economic life. It fails to foster communities of practice that encourage inclusion and to create the cooperative change processes needed to envisage and establish the new economic, social and political forms required by a real shift to a philosophy of sustainable development. We argue for a radical review of the Organisational Renewal Movement itself, so that it can contribute to the emergence of a new order and the communities and synergies needed to support sustainability. A new community of endeavour can be formed by drawing on lessons learned in the history of the ORM. Developing the ORM as a critical force for societal change will involve it in a change of focus. Traditionally the focus of the movement has been on the implementation of corporate objectives and, more recently, strategies. By and large, in the past ORM activists did not question the missions adopted by organisations, but rather sought to influence the ways in which those missions were accomplished. So, as a result of the ORM’s efforts, quality of working life and organisational commitment in particular corporations was significantly improved. However, this sometimes created stronger commitment on the part of the workforce to business strategies that were decreasing the quality of life of the general community or undermining ecological sustainability. We must now ask of all organisations: Are your activities actually contributing to or subtracting from the ultimate viability of life on this planet? If an organisation is reducing the earth’s topsoil, polluting oceans and rivers, destroying the green canopy of plant life, pouring toxic gases into the atmosphere or threatening the economic viability of subsistence economies, we must ask: Can this organisation change? And, if not, does this organisation have a right to exist? We must try to influence organisations to support sustainable rather than ecologically destructive processes. And we must place our knowledge of how to produce change at the service of those organisations which actively attempt this.
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We live in a mysterious and beautiful world. The increasing power of the human race to eliminate, in a few brief years, multiple species of life derived over millenia, is now obvious. Similarly, it is becoming clear that we can affect, in short time spans, the intricate interdependencies of life forms on which our survival depends. As we move into the 21st century, the central task of all who value and celebrate the continuance of life must be to throw their weight on the side of the balance that favours ecological survival. Organisations are the component cells of our society. It is within each of them that the revolution in consciousness must begin and the commitment to positive action be formed. A renewed Organisational Renewal Movement is strategically placed to begin this most demanding of change processes. This is a handbook for those who choose to be part of the process of creating sustainable organisations that support human growth and the rich variety of life on this planet. Table 1.1 The Organisational Renewal Movement in Australia: an overview Strategic alignment: Challenges, Foundations of heresies to orthodoxies Consolidations and new Organisational Renewal 1984-1996 Directions (1978-1983) (1966-1977) Political impetus for Challenges to ORM Early renewal pioneers change • First wave of During this time Dunphy, Successive governments Japanese-inspired Emery and others return pursue new economic management to Australia and others agenda, creating a more techniques — different arrive (e.g. Cole, Peter) competitive corporate philosophy form bringing influences from environment (e.g. ORM's — gain Europe and USA. deregulation, IR reform, legitimacy in tariff reduction, manufacturing Creation of critical mass competition policy). companies but spread of support to the service sector. Centres established in New ORS philosophy • New technology — ORM universities and new Strategic change misses opportunities professional associations adopted — incorporates a created by train change agents who range of previous change technological change. promote new strategies (incremental • Erosion of political philosophies. and transformational). support with change of Leading ideas become government (Labor to Establishing validity of part of prevailing Liberal). ideas managerial orthodoxy. Pilot projects and change initiatives are established at field sites (e.g. Alcan, Luv Pet Foods, Shell, ICI and ATO).
ORGANISATIONAL RENEWAL MOVEMENT
Early change philosophies • Human Relations/OD • Socio-technical Systems Theory • Industrial Democracy/QWL Political support early attempts to build political support meet with some success.
Changes to philosophy/ideals • Challenges come from the Total Quality Movement. • Need for large-scale organisational change with the mining boom. Introduction of strategic planning and strategic HR management. • Change agents increasingly move into int • Professional associations and large consulting groups take on m • Debate in ORM over downsizing creates crisis of values.
ORM retools • Expolision of change initiatives used strategically to broaden base of movement. Range of change strategies enlarged: • incremental, e.g. job design, m • transformational, e.g. downsiz Centres of influence expand Universities, professional and industry associations, consulting groups increase in numbers and size. New future direction Debate begins over future directions for ORM: This book argues for • sustainability of busines performance through systematic development of human competencies • ecological sustainability.
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PART 1. FOUNDATIONS OF ORGANISATIONAL RENEWAL: THE EMERGENCE OF INCREMENTAL HUMANISM
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2. THE HUMAN RELATIONS AND ORGANISATION DEVELOPMENT MOVEMENTS (1966-1977)
THE BACKGROUND TO INCREMENTAL HUMANISTIC CHANGE In the late 1960s and 1970s the impetus for organisational change in the Western world increased, fed particularly by expanding economic growth. National economies grew as more firms internationalised and began to trade abroad. The growing rate of innovation and the diffusion of new technologies, particularly emerging information technologies, were also creating a faster tempo of social change. In this environment two central imperatives for Western firms were to develop more flexible operations to cope with new and different markets, and to attract and retain skilled personnel. It became clear to many managers that traditional bureaucratic structures were failing to cope with the challenges posed by a more dynamic environment. This growing awareness created a receptiveness for the ‘heretical’ ideas of thinkers who were responding to the ferment of social and economic change by challenging the inherited wisdom of past bureaucratic practice and arguing for its revision and redesign.
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The first major challenge to traditional bureaucratic principles came in the area that was proving most problematical for Western organisations—the creation of a skilled and committed workforce. It was here that the weaknesses of Taylorism were most apparent. The specialisation of labour and deskilling of jobs had created widespread alienation and demotivation. In an increasingly welleducated workforce, excessive supervision crushed employee initiative. It is not surprising that the challenge to redress these unintended consequences of bureaucratic systems came from social scientists, particularly psychologists. Their studies of the new area of motivation theory suggested potential solutions to these symptoms of discontent.1 The new heretics were a contrast to the change agents of the industrial engineering variety who had created the blueprints for modern bureaucracies. Industrial engineers, Taylor’s disciples, had focused primarily on the technical processes and tasks in the firm and viewed the workforce as imperfect adjuncts to the technical workflow and capital equipment of the organisation. The singlemindedness of industrial engineers and traditional bureaucratic managers working from a machine metaphor of the organisation had resulted in a dehumanisation of work, signalled by a high turnover of staff, low morale and commitment, industrial conflict and even sabotage. In an economic world where there was a shortage of labour, many employees were ‘voting with their feet’ in leaving strongly Tayloristic organisations and seeking workplaces where they could find greater job variety, learning and more meaningful and responsible tasks. The initiators of the ORM attempted to demonstrate that human-focused work systems could be more productive than task-focused work systems and that the workplace could (and should) draw on the capacity, commitment and skills of employees. They also attempted to show that less bureaucratic organisations could respond more speedily and flexibly to a rapidly changing environment.
THE BEGINNING OF A SOCIAL MOVEMENT Elton Mayo, a young Australian social scientist, travelled to the USA in 1922 and in 1926 joined the newly founded Graduate
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School of Business Administration at Harvard as Professor of Industrial Research. Mayo was an engaging conversationalist and a relentless networker, who developed strong relationships with some of the key US industrialists of his day and whose work was supported throughout his career at Harvard by the Rockefeller Foundation. Between 1927 and 1932, he and others at the school (particularly Roethlisberger and Homans) undertook a series of field experiments with the Western Electric Company in Chicago. The interpretation of the results of these experiments signalled the development of a new theoretical approach, known as the Human Relations school.2 The researchers began with a fairly orthodox set of experiments around the impact of such factors as lighting intensity on work performance. Their experiments led them to conclude that such aspects of the physical environment were relatively unimportant in influencing productivity compared with the informal social processes that prevailed in work groups (e.g. norms of restrictive work practices limiting productivity and the impact of supervisory attention in raising productivity). They concentrated, therefore, on the social-psychological factors influencing the workforce either to resist management-initiated change or to support it. Over the next 30 years these researchers and their followers developed a new analytic model, which emphasised the organisation as a set of social relationships — hence the name Human Relations school. Organisations were seen as having both formal and informal social structures, interpersonal processes and group processes. The Human Relations theorists developed an ideal model of organisations, which stressed the need to bring the organisation’s formal and informal social structures and processes into alignment, through augmenting a focus on productivity with a concern for employee motivation and morale. In particular, they attacked the notion of employees as interchangeable parts, stressing that individual employees had differing motivations; that the specialisation of labour and deskilling had created widespread alienation and demotivation; and that excessive supervision had crushed employee initiative. By recognising the contribution employees could make, rather than treating them as passive recipients of managerial direction, employees’ capabilities could be more
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effectively linked to the pursuit of organisational goals. Change agents within the Human Relations school were very much concerned with reducing the unintended negative consequences of bureaucratic organisations and making organisations work more effectively. Their intervention theories were at first simplistic — job rotation, job enrichment, group-based jobs, the provision of counselling and supervisory training directed to develop supervisors who had leadership skills and were more sensitive to the needs of others, and team-building exercises to develop the team skills of work groups. These notions were hardly revolutionary in themselves. Their significance lies in the different trajectory of thought that they initiated — that is, a search for the human rather than technical basis of productivity. This new direction was to fit well with the emerging values of Western society in the 1960s and 1970s, and the fledgling Organisational Renewal Movement (ORM) acquired new strength.
THE MOVEMENT EXPANDS Heresies do not become widespread movements unless they engage the hearts and minds of significant groups in society. In the 1960s a major revolution in social values occurred, accompanied by mass movements for social change, creating fertile soil for the ideas being advanced by the ORM. In many of the advanced industrialised nations there was a backlash against social conventions and the dehumanisation of work by industry. Globally, a groundswell of social reform began, with initiatives ranging from action to protect the ecological environment and more radical advocacy of civil rights, feminism and peace. This reformist approach was also linked to the emergence of ‘mass civil disobedience’ as citizens in the USA and other Western democracies, such as Australia, joined civil rights and Vietnam moratorium marches. In France and Italy action took the form of student and worker uprisings. All these movements were articulating and actioning the need for widespread social change and reorganisation. Elements within the more traditional
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labour and religious organisations increasingly linked up with these movements for social reform.3 Many of the heretics of the Organisational Renewal Movement were influenced by and participated in these new movements. In the USA other reformist and humanistic social movements swept through the middle classes. In particular, sensitivity group training and encounter groups attracted many thousands across the country and the values of these movements were highly compatible with the values of the Human Relations school. The encounter group movement produced leaders with humanistic and social reformist values and with enhanced interpersonal and group skills. Many of these leaders joined the Human Relations attempts to reform the workplace.4 In order to address rising concern over the negative features of industrial life, many national governments sponsored or established inquiries designed to link the need for economic adjustment to the rising expectations and education levels of the workforce. Several European nations undertook ‘quality of work life’ (QWL) programs, often in partnership with employer associations and unions: the Norwegian government sponsored an extensive industrial democracy project; Sweden conducted many QWL projects; in West Germany a humanisation of work program was established. These initiatives were not confined to Europe; in the USA the report Work in America5 was released, adding weight to the QWL initiatives already under way in several large companies. In Australia the Whitlam government established the Jackson Inquiry6 into Manufacturing Industry, which also gave significant attention to the quality of work life in Australian industry.7 The movement to reform organisations was not only influenced by the rise of social and protest movements, it was driven by hard economic realities. By the end of the late 1960s the postwar boom was faltering. Environmental stability for many organisations was now replaced by economic uncertainty. In the 1970s the slowdown in economic growth was further compounded by several events. These included changes to the international monetary system, which shifted from fixed to floating exchange rates, and the impact of the OPEC (Organisation of PetroleumExporting Countries) oil price rises in 1974 and 1978.8 These
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factors contributed to the general economic and social uncertainty, leaving many national governments unclear about how to undertake structural adjustment and industry change. Organisations also struggled with the need to create adaptive processes and more effective operating systems. These uncertainties provided the heretics with increasing leverage to pursue their objectives of dismantling bureaucratic systems and replacing them with human-focused work systems. The expanded Human Relations movement produced outstanding individual theorists, particularly in the USA. Maslow, Hertzberg and McGregor created new motivation theories that inspired novel approaches to work redesign. Lewin, Lippitt and a host of other small group researchers created the field of group dynamics, which inspired new approaches to team-building. Likert and others pioneered survey research, which provided a technical methodology for studying organisational morale and job satisfaction.9 By the 1970s the work of many individuals and groups emerged as twin movements directed at changing organisations: the Quality of Work Life (QWL) and the Organisation Development (OD) movements. Of the two, OD was the most powerful and influential theoretical tradition of organisational change in the period 1960-1980, but the twin movements overlapped and merged as they developed. OD was a populist movement with strong roots in Western, particularly American, democratic ideals. These ideals were being emphasised, at the time, as a counterforce to the rising tide of communist ideology and gained widespread support from liberal middle-class social activists.
DEVELOPING AN IDEOLOGY AND CENTRES OF INFLUENCE OD developed a strong set of values, a varied array of codified intervention strategies, and thousands of practitioners. The new social scientists who played a key leadership role in the movement were a rising social elite endeavouring to gain social recognition, status and power by defining a new professional identity and ideology. The movement developed institutional centres of influence, particularly in university-based business schools such as the
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Harvard Business School and the University of Michigan Centre for Social Research. A huge literature has emerged out of the practice of OD but the field is hardly a coherent discipline with a single integrated theory. In addition, the OD tradition has been much stronger in its elaboration of intervention strategies than in the development of analytical theories.10 Despite the obvious diversity in approaches, there are some common elements across the OD field. The first is the strongly humanistic values underpinning the field’s ideological base: it has been unashamedly people-centred. People were viewed as more than just hired hands — they were seen as having intellectual, emotional and social needs which had to be taken into account in the workplace. As a result of this emphasis and the social science training of many of its change agents, OD focused on the needs and aspirations, morale and satisfaction of the workforce more than on productivity and performance. In fact, for much of its history OD practitioners assumed that a more satisfied workforce was a more productive workforce, and placed the development of enhanced job satisfaction at the top of its reform agenda. The ideal favoured by OD practitioners was a harmonious organisation where people felt fulfilled by their work, were highly motivated, belonged to fully functioning work teams with high morale and meaningful work, and were led by humanistic supervisors who transmitted up the line the needs and aspirations of their group members. It was also an organisation where change was accomplished by mutual influence, open sharing of information and negotiated compromise. Much of the OD practitioner’s work involved paying considerable attention to an organisation’s climate and culture. In this sense OD was at the forefront of pioneering approaches to cultural change in organisations. OD interventions were, in the main, focused on incremental rather than radical change and directed at making change at the middle and lower levels of the organisation’s hierarchy or in relatively small organisations. In striking contrast to the bureaucratic approach to change, OD theorists favoured change by influence, participation and developing an emerging consensus rather than by authoritative edict. Effective change, in their view, demanded the full involvement of all those affected. The role of
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the change agent was not that of directive expert but rather of facilitator, helping organisational members to achieve their own aspirations for a new order. We can summarise the Human Relations/OD model of change as follows.
HUMAN RELATIONS AND OD APPROACHES TO CHANGE !
basic metaphor: organisations as networks of interpersonal relationships and cohesive groups; ! diagnostic model: a person-focused analysis of the social system; ! ideal model: a participative, organically evolving community of endeavour with high morale and job satisfaction; ! intervention theory: initiation of a process of participative selfdiagnosis, task redesign to ensure work motivation and satisfaction, team development, conflict resolution and interpersonal skills training; ! change agent role: facilitator of the process of redesign of human relations and workplace organisation. The Human Relations/OD approach gained increasing acceptance for two reasons. First, it addressed many of the problems created by the purely task-oriented focus of traditional bureaucracy — problems such as demotivation and low work commitment, absenteeism, informal group norms limiting output and industrial disputes. Second, in a time of economic growth, those firms which adopted the positive employee-oriented practices advocated by the ORM at this time were more likely to attract competent, skilled employees. More recently, organisations have sought to capture many features of the OD movement in their internal human resource departments and in some cases through the appointment of OD managers. How this came about is demonstrated in later chapters. However, the Human Relations/OD approach suffered from a naive attitude to organisational power structures and a general lack of awareness of or interest in the organisation’s overall business strategy. The attitude of many OD change agents could be summarised as ‘get the people side right and the business will take care of itself’. This proved to be a weakness that would eventually undermine the credibility of OD interventions.
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CHALLENGES TO MANAGEMENT ORTHODOXY In the formative years of the organisational change movement in Australia, a handful of individuals set out to challenge existing management assumptions and practices about the way in which work should be structured and organised. Some of the key figures came to Australia from study or work overseas in the 1960s. One was Fred Emery, an Australian who returned in 1969 after working at the Tavistock Institute of Human Relations, London, where he made a major contribution to the creation of the Socio-Technical Systems (STS) approach (which we discuss in the next chapter). Another Australian, Bill Ford, returned from the University of Illinois and UCLA in 1962 imbued with ideas for workplace change and workforce skill development programs. Dexter Dunphy, also an Australian, returned to the University of New South Wales in 1968. Dexter had completed a PhD in sociology at Harvard and held a joint appointment there in the Business School and Department of Social Relations.11 Hollis Peter, an American born in China, received his training as a social scientist while working at the Foundation for Research in Human Behaviour at the University of Michigan. He consulted for a number of petrochemical companies including Shell, and it was in connection with his work with Shell that he came to Australia in 1969 and eventually decided to stay. These social scientists had become more cosmopolitan through their overseas experience. When they returned they linked up with others in Australia who were already pursuing similar ideas — academics such as John Hunt and Wilf Jarvis at a new business school established at the University of New South Wales, and some change practitioners in business and government.12 Together these activists formed a small informal network, exchanging ideas and sometimes joining forces on particular organisational change projects or on training programs introducing the new ideas of work reform. Their target was bureaucratic organisations, whose many layers of supervision and management accountabilities were seen to control and limit the initiatives of employees. For many of the
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change agents, these structures were held responsible for the dehumanising and alienating effects that plagued organisations.13 Dunphy, in his 1972 ABC Boyer lectures The Challenge of Change,14 put forward the following case: The more I move around the industrial, commercial and government spheres, the more I am convinced that our productivity in Australia is less than what it could be. The answer, as management rightly keeps saying, is that the employees aren’t motivated. I am frequently asked to suggest how management can ‘motivate’ them. Such a question is nonsense. Motivation is not like an additive which you can put in petrol to give the car more zip. People are motivated — the problem is to make a better connection with their motivation. The initiative for this is primarily management’s responsibility although unions too have a role to play. The answer lies to a large extent in the reorganisation of work and the redesign of the organisation.15
Dunphy went on to say that organisations need to be redesigned to make work more challenging, meaningful and appealing, so that when people go to work they don’t feel that they have to leave their feelings and hopes behind at home; rather, they go to work ‘to live, learn and to grow’. These social scientists searched for and obtained evidence supporting these views and used this to argue the case for change. For example, Fred Emery and Chris Phillips conducted a survey for the Minister of Labour and Immigration in 1973, entitled Living at Work. This survey of 2000 non-managerial employees in both public and private sectors demonstrated that a link existed between job satisfaction and the quality of work life experienced by employees. It also demonstrated that bureaucratisation had a negative impact on the quality of work life of employees.16 Emery and Phillips found that bureaucratic organisations reduced the challenge and involvement people could obtain from their work,17 also noting that: ‘The big proportion of unskilled exposed to very poor conditions parallels the big proportion turned off by their work.’18 It was no coincidence that this group of disadvantaged workers was also unskilled, poorly educated and primarily foreign-born.19
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WHO WERE THE TARGETS OF CHANGE? Australian managers have repeatedly been portrayed over the years as poor practitioners of the art of management, conservatively Tayloristic and resistant to change. Early accounts of Australian managers20 argued that they were underskilled and undertrained. In a report on Australian managers in 1974, Byrt and Masters stated: Summing up, we can say that the great majority of Australian middle managers tend to be: dependent on government; insular; lacking in boldness and initiative; dependent on overseas sources for capital, ideas and techniques; reasonably but not highly educated; masculine in fact and in outlook; . . . conservative, fearful of radicalism in economics and politics; egalitarian both socially and at the workplace; practical and pragmatic . . . non intellectual.21
Similarly, Lansbury and Gilmour noted: The quality of Australian managers has been criticised by Denis Pym on four counts: firstly, the highly derivative nature of Australian management thinking, which is highly dependent on imported ideas and practices; secondly, conformity to the bureaucratic model of organisation due to an unwillingness to accept the need for change; thirdly, a fear of anyone who might threaten the established order, through the introduction of radical ideas, finally, the dominance of sleepers over thrusters in Australian managers. The vision of the future held by Australian managers, according to Pym, is little more than an extension of the past.22
The social scientists who formed the core of the early Organisational Renewal Movement in Australia were not only intent on changing the dominant ideology in organisations — they were determined to bring managers into the new age, showing them the viability and importance of the new concepts of participation, job redesign, teamwork and job enrichment. They needed to demonstrate the legitimacy of the new approaches to work organisation and the effectiveness of their change methods. However, management training and education
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was limited in scope, focused on bureaucratic processes, and dominated by specialist professional associations that were suspicious of innovation and unwilling to support any change which could adversely affect their interests. To overcome these forms of resistance, the heretics set out to create centres of expertise that would be responsible for diffusing ideas, concepts and methods of change; then, they also needed organisations that would become living experiments and exemplars of the new approaches. Not surprisingly, given the traditionalism of Australian managers, many of the first of these organisational experiments in Australia took place in the local divisions of multinational corporations. These organisations had managers who were more cosmopolitan in outlook and who were often aware of new approaches being trialled or adopted in the multinational’s home base. The heretics also developed theoretical frameworks and initiated research studies to provide legitimacy to the intervention techniques being used.
THE DIFFUSION OF OD CHANGE PHILOSOPHIES Like most social movements, the ORM was characterised by heterogeneity of thought and action. It was linked by a common desire to change current management practices and create organisations that were able to adapt to change. During this formative period, several centres emerged which took on the responsibility of diffusing the new organisational change concepts. There was no one dominant centre — rather, several with some distinctive and some overlapping interests. This is characteristic of local movements in general. For instance, the civil rights movement had a multitude of intervention strategies and emerging theoretical concepts, and its centres were formed around leaders who came from differing research traditions. Schon made the following comment on the civil rights movement in the USA: There is no settled content — of theory, technology or methodology — whose diffusion is the centre’s work. Instead, there is a shifting and evolving doctrine — a family of related doctrines.23
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This also describes the early ORM in Australia. In the new centres, change practitioners were trained, managers and employees were exposed to the new social science ideas, support mechanisms were established and ideas exchanged and tried out. The key centres emphasising OD approaches were located in the Department of Organisational Behaviour at the University of New South Wales (UNSW), the Department of Management at the University of Queensland and in the Personnel Practice Section in the federal government’s Department of Labour. This section was headed by Doron Gunzburg: other key figures were Helen Andreatta and Bronwyn Rumbold. Leaders in the centres were Dexter Dunphy, Wilf Jarvis, John Hunt and Bill Ford at UNSW and Hollis Peter, Bob Dick and John Damm in Queensland. They were academics and practitioners, strongly influenced by humanistic OD values, and their centres became the hubs of a thriving network of change activities in a range of organisations. The centres became focal points for training other managers and academics to become practitioners in the art of organisational change; they also played a crucial role in information dissemination and, finally, began to create intellectual order from what was at first an unsystematised and often eclectic set of intervention strategies. For instance, Hollis Peter, after a short stay with Fred Emery at the Centre for Continuing Education at the ANU (Australian National University), took up a new chair of management at Queensland University. He then established and led a series of two-week residential workshops for executives aimed at creating personal and organisational change and growth.24 Over several years, these workshops attracted hundreds of senior executives, who came in teams to work on change issues for their companies. Along with his colleagues, particularly Cliff Bunning, Hollis Peter was to play a major role in establishing a series of programs in the Queensland public service, which resulted in the training of a new cadre of internal organisational change consultants in the public service. The OD network in Queensland, which Hollis and Bob Dick had helped to establish, was supported by two associations: the Australian Institute of Training and Development, and the Centre for Applied Behavioural Science (CABS), a private consulting company that operated as an OD network. Key figures
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in CABS were Phil Hanford, George Blackgrove, John Damm, Garth Peters, Hollis Peter and Bob Dick. These two associations created a network of OD consultants and practitioners that played a crucial role in disseminating knowledge and provided a platform where new ideas could be tested. They were to have extensive influence in Queensland public and private sector organisations, and more widely across Australia. For example, MIM was a large mining company based in Queensland. MIM’s involvement led to major change programs at its oldest and largest mining site at the Mount Isa Mine, and also to the establishment of a new greenfield experimental site at the Agnew Nickel Mine, near Leinster in Western Australia. The major external consultant on this project was Dexter Dunphy. The Agnew Mine embodied new approaches to both technical and social planning. It was a departure from Taylorist principles and from mining traditions in most aspects of its operations, including the design of the associated town and of the structure and operation of the mine. It was intended by MIM executives as a test site for new organisational ideas which, when proven to be successful, could be transferred across to other company operations. Agnew’s first two chief executives, Ian Watson and Tony White, went on from running the mine to occupying the two most senior positions in MIM. Throughout the 1970s and early 1980s, similar workshops were run by the Department of Organisational Behaviour at UNSW. Organising these workshops, which similarly attracted hundreds of managers, were Dexter Dunphy, Bill Ford and Barry Maley, assisted by various practitioners. In Melbourne there was a very active OD network of practitioners, and Neil Watson and others ran many workshops there.
ESTABLISHING THE EVIDENCE: EARLY OD INTERVENTIONS The new knowledge generated in such field experiments was disseminated through training recruits as change agents using the university-based centres and emerging professional societies as hubs for information exchange and social influence. Driven by a need
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to reform and change, the leaders of the ORM in Australia initiated a variety of projects, acting opportunistically. It was a matter of ‘getting a foot in the door’, starting wherever an opportunity presented itself. The types of projects varied considerably, as did the intervention techniques used.25 This prompted some commentators to observe that, while these practitioners were making significant changes in organisations, OD hardly represented a coherent discipline with a single theory.26 A number of organisations emerged as key innovative players attempting to restructure work in a more humanistic fashion. In Australia, these were primarily the Australian subsidiaries of multinational companies, such as Shell, ICI, GMH and Philips Industries, and Commonwealth government departments such as the Australian Taxation Office and Customs. Simpson Pope was one Australian company, not a multinational, which adopted a program of team-based organisation in the late 1970s. The MD, John Uhrig, was a keen supporter of the initiative.
SURVEY FEEDBACK — A DIAGNOSTIC TOOL AT SHELL One of the first organisation development interventions in Australia was conducted at Shell under the guidance of Hollis Peter and Fred Emery. Senior managers at Shell were concerned about employee motivation and commissioned a survey to address the perceived problem. The purposes of the survey were to learn what employees thought about their work and identify problem areas, to understand the causes of those problems and, ultimately, to solve them.27 A survey was undertaken of the 3800 people employed nationally in Shell. It was the first large-scale survey of its type in Australia, and the results were published in 1971 as ‘Social Systems of Shell Australia’. In all, 2737 employees completed the survey, a response rate of 72 per cent. In Hollis Peter’s words (from interview): The results provided us with a clear indication of what aspect of the job was important to various levels of employees . . . money was more highly rated by people lower in the organisation . . . However the issue of satisfaction with jobs was almost as important as money. It was more important the higher one was in the organisation.
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As a result of the survey, action plans were developed and implemented in a variety of departments and sections throughout Shell. These included the establishment of a ‘managerial grid’ leadership training program at Shell’s Geelong refinery and the redesign of clerical jobs to raise job satisfaction. In line with most OD interventions at this time, the changes were mainly in leadership and work practices and were designed to have a positive impact on employees’ work satisfaction. The Shell survey was regarded as a success by the external change agents and by management. As a result, similar projects were undertaken in other organisations, such as the ICI Osborne plant in South Australia and the Australian Broadcasting Commission. At ICI, the survey enhanced management’s awareness of the importance of the organisation’s human systems, with consultative groups being used to implement a variety of OD interventions. As Pahlow (1976) stated: The overall program involved simplifying and improving our communication procedures, introducing management by objectives . . . industrial relations training, simplifying our organisational structure . . . While we have been making these changes, we have improved the factory’s capital productivity by 20 per cent and our labour productivity by 10 per cent.28
This early change program typifies one major OD approach — survey research used to diagnose existing problems in the organisation, followed by interventions concentrating on better communications between levels in the organisation, workforce involvement in planning and managing change, and introduction of skills training programs. The results demonstrated that such an approach could have a positive impact on both satisfaction and performance. All of these changes were undertaken while leaving in place most of the traditional industrial relations practices. Nevertheless, in many of these early organisational interventions, union shop stewards and industrial relations managers joined forces to resist the new cooperative working patterns threatening their organisational legitimacy, which depended on the maintenance of ongoing endemic conflict.29
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WORK REDESIGN AT PHILIPS A change program with a different emphasis was undertaken by Philips Industries in Australia, using two of its manufacturing facilities in Melbourne as pilot projects. Philips, a Dutch-based multinational, had experimented extensively with work redesign interventions in its European operations. The redesign of the two Melbourne factories demonstrated the new merger of OD and STS redesign approaches that developed in Australia. In this case Dexter Dunphy was the external change agent, and he worked closely with the Dutch industrial engineers in redesigning factory layout and redesigning workflows and jobs. This was a development from a broader program of change initiated by Philips Australia with the advice and involvement of Bill Ford and Dexter Dunphy from the Department of Organisational Behaviour at UNSW. During the 1960s Philips Industries was experimenting with various forms of organisational innovation, particularly in its headquarters in Eindhoven, Holland.30 But in 1972 a work-structuring experiment was undertaken at two plants in Victoria. This redesign ran from 1972 to 1975 and took place in the Philips Radio Telecommunications Division and Philips Consumer Products Division. Work structuring was defined as: The organisation of work, the work situation and the conditions of labour in such a way that, while maintaining or improving efficiency, job content accords as closely as possible with the capacities and ambitions of the individual employee.31
More specifically, work structuring involved the use of intervention strategies such as job enlargement, job rotation, job enrichment, the introduction of semi-autonomous work groups and delegation of responsibility. In the Radio Telecommunications Division the teamwork concept was applied with favourable results. Teams were created along product lines usually made up of 10-12 operators, and were working in the early equivalent of cell manufacturing. As Dunphy et al. stated:
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The reorganisation had, however, changed the work organisation from basically an assembly line operation, with individuals working in isolation, to a team activity.32
The Consumer Products Division, and more specifically the cabinet factory at Clayton in Melbourne, was suffering from what managers described as poor layout design, a labour turnover of 120 per cent per annum, and a conflictual style of industrial relations. The causes were identified as boredom, resentment, demarcation, poor management communication and bad factory layout. It was decided by management to undertake an entire physical relayout of the whole factory. The new layout was designed in consultation with staff and the unions, who actively participated in creating the new factory designs and work organisation. The results of the change program were impressive. In the Radio Telecommunications Division there was a 60 per cent increase in efficiency, losses in 1972 were turned into profits in 1973 and 1974, while quality control also improved. Similarly, the Consumer Products Division experienced an increase in efficiency, from an average of 92 per cent to 122 per cent, while absenteeism fell from 20 to 5 per cent.33 Dunphy et al. concluded by stating (from interview): The Philips case presented here represents a significant attempt to redesign industrial work organisation in ways appropriate to Australian conditions. The results indicated increased production, efficiency, an improved work environment and increased variety and responsibility for shop floor employees. At Philips we redesigned the whole factory from CEO to shopfloor staff. We concentrated on the TV and two way radio area. About six months after the reorganisation, the factory that was rejigged was regarded by Philips’ head office in Eindhoven as one of its most productive factories worldwide.
The Philips Industries plant reorganisations demonstrated that effective changes could be made in both old ‘brownfield’ and new ‘greenfield’ sites, and that these changes could be made participatively. However, while the new approaches were diffused throughout Philips plants in Australia, there was little interest from most other Australian manufacturing operations, which were still shielded from international
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competition by tariff barriers and government subsidies. However, as will be discussed in chapter 5, many of the lessons associated with team approaches, such as job rotation, responsibility for quality, multiskilling and distributed leadership, are now standard work organisation characteristics found in ‘new’ high performing organisations. What has been learnt is that team systems are fragile and require broader organisational systems and managerial support to nurture and develop sustainable practices.
INTERVENTIONS AT THE AUSTRALIAN TAXATION OFFICE Significant attempts at work reorganisation were not confined to the private sector. For example, the Australian Taxation Office (ATO) was one government department that took up the new ideas early in the movement’s history and experimented with making widespread changes. A strong working relationship developed between second commissioner Pat Lanigan and external consultant John Hunt (then in the Faculty of Commerce, UNSW). Wilf Jarvis was also heavily involved.34 In March 1973 a comprehensive exercise in work improvement and the design of jobs was initiated . . . Deputy Commissioners were encouraged to undertake job redesign projects and adopt new methods consistent with the findings of behavioural science, as part of an integrated approach to management.35
One very significant move made early in this project was to open a decentralised office at Parramatta in June 1975. The Parramatta office was staffed with workforce members drawn from head office but who lived in and around Parramatta. This was an attempt to demonstrate at a greenfield site that a government service bureaucracy could operate more effectively on the basis of behavioural science theories. The efficiency of the new office was outstanding. According to Lanigan: The most far reaching development of all has been the setting up of a completely new office of 800 employees at Parramatta . . . The new office has established with unexpected speed that it is able to
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achieve a level of productivity corresponding to what has been achieved in the most efficient state branches.36
It was clear that the new forms of work organisation, which centred around reduction in hierarchical levels, introduction of semiautonomous work groups, participative job redesign and opportunities for enhanced staff initiatives, had made the critical difference in raising productivity. The employees had all been drawn from the main office in Sydney, where the performance continued to be much lower. Clearly, the new forms of work organisation had made the difference. Some managers at the ATO were keen to pursue such experiments on a national scale. The ATO was attempting to evolve new management styles and organisation principles based on the insight offered by the behavioural sciences. They regularly sent numbers of managers to training sessions offered by the Department of Organisational Behaviour at UNSW, the Centre for Continuing Education at ANU and the Department of Management, Queensland University. The projects at the ATO included STS interventions, job enrichment, and the use of teamwork along with improved project management techniques. However, the change programs were not organised into a single coordinated program. The states exercised discretion about the content of the projects and picked the areas where the ideas would be piloted. The ATO was an example of how most early programs were launched and sustained by the personal enthusiasm of one or two managers and involvement by one or more external change agents. If a key manager left, as Lanigan did later, the reforms tended to languish. The external change agents were also vital to the process, because at that stage few organisations had personnel who were aware of the new ideas — let alone sufficiently well informed and skilled to provide the intellectual agenda and expertise to introduce the changes.37
PIONEERING HUMANISTS: FRAGILE BEGINNINGS By the mid- to late 1970s a variety of change programs were under way in Australia in a range of private and public sector
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organisations. Many yielded demonstrably impressive results, both in terms of enhanced work satisfaction and performance. Nevertheless, the organisations undertaking such experiments represented a minority of Australian organisations.38 Consequently these pilot programs and organisational interventions proved fragile. They were often swamped within months or years by dominant organisational cultures that were unsympathetic to the changes (even where outstanding results had been achieved), or they were closed down when a conservative new executive replaced an enthusiastic reformer. Even within those multinationals that were supportive of the ORM, battles were waged between ‘innovative managers’ and the ‘counter force of technological specialists who strongly pushed Taylorist ideals’ (Bill Ford interview). Many of these organisational changes were insufficiently robust and gave way to more traditional work systems compatible with dominant managerial mindsets.39 But as one of the leading proponents of change asked and answered: Why then has it (teams, job redesign) not swept throughout industry, here or abroad? There are many reasons. Barriers to successful job redesign applications are often found in the organisational climate; managerial or union attitudes, practices and philosophy; the organisation structure or its technology. Lack of professional guidance may also add to the risk of bridging the gap between theory and practice.40
All three of the change programs we have discussed monitored and documented the results of the key interventions. Their success was therefore highly credible. However, many ORM-initiated projects did not do this. Why? Because the change agents were too busy making the changes to document them or lacked interest in doing so. Thus even those sympathetic to the ORM’s vision did not always find the proclaimed successes of such change projects convincing. For instance, the team of young scholars assembled by Bill Ford to review various workplace reform strategies (OD, survey feedback, works councils, productivity bargaining and suggestion schemes) for the Jackson report on manufacturing industries argued that the data to that point had not demonstrated the success of these approaches. Bill Ford wrote:
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. . . there are no reliable data available from these initiatives to indicate success or failure and in whose terms. Documentation is scanty, and politicians, academics, managers, public servants and consultants tend to rely heavily on vague reports and equally nebulous reporting methods . . . This is not an area of impartial observers . . . Secondly, the sponsoring of new initiatives has been left largely to traditional vested interests like companies with labour ‘problems’, consultants with ‘packages’, academics (particularly psychologists) with objective experimentations, government agencies with ‘productivity’ promotion. They offer gimmicks, techniques, tools and methods (often very value loaded) rather than learning systems out of which people involved can develop adaptive processes for resolving present and future conflicts.
Despite being critical of many early workplace reform initiatives, the Bill Ford research team remained optimistic about employee participation and the democratisation of work. They argued that: It is necessary to approach the whole issue of the democratisation of industry on a broad front. There is no simple solution. As a society, what we must try to do in the future is to move towards multi-faceted forms of industrial democracy and increase people’s involvement and control over decisions that will directly affect them . . . We need to be changing the Master and Servant Act. We need to be democratising the government of organisations.
and that: The basic change is that the managers and their experts must share the design and development processes with people who are affected by the designs. Otherwise the so called ‘experts’ will continue to design and build expensive, chaotic systems such as the Redfern Mail Exchange in Sydney.41
This statement illustrates the strong commitment to participative approaches shared by most ORM leaders at the time. The failings of large technocratic and bureaucratic workplaces, exemplified by the Central Sydney (Redfern) Mail Exchange,42 gave the heretics examples to further discredit traditional Tayloristic and technocratic approaches to organisational renewal.
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BUILDING POLITICAL SUPPORT Even when there was convincing evidence of success from ORM initiatives, success did not lead to widespread adoption by executives outside the organisations in which the reforms took place; often, there was little diffusion within the organisations themselves. The prevailing political and economic climate did not favour such change but rather created a climate of indifference and scepticism. Clearly there was a need to begin to change the larger system so that it would support reform. ORM activists began to turn their attention to wider political action. The Menzies Liberal government had established the Personnel Practices Section in the Department of Labour and National Service as one instrument to help settle ex-servicemen in the postwar years. The role of the section in the late 1960s and early 1970s expanded as several industrial psychologists took an early lead in undertaking and promoting the research and publication of ORM issues. Its mission was to examine ways of improving job satisfaction and productivity in industry. In the view of the leading industrial psychologist who worked in the section at the time (Doron Gunzburg interview): It was like a little academic unit in a public service framework. We used to get to talk to a lot of rotary clubs of all these things and we would be met with a great deal of suspicion and inevitably got a bit of a communist brand on us. On the whole, this was fairly radical stuff to be saying to people that there is a certain egalitarian approach that one might well take, which improves the way that managers interact with employees and that you can flatten out your hierarchy and that you can start to treat people like they have rights and responsibilities. And that if you give people responsibilities, they will exercise that responsibility. In the sixties you were still coming from a climate of very authoritarian attitudes, very traditional views of the gap between the managers and the managed, the leaders and the led and to suggest that you might start to break down some of these barriers was a bit seditious.
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For the people working in this section, the aim was to bring about innovation in the way that work and organisations were conducted. They played an important role as catalysts for change through the provision of advice and the diffusion of information and publications. They saw their job as being to stimulate the thinking of others rather than to carry out the changes themselves. It was a small beginning in the process of developing political influence and support, but a critical one on which future developments could be built.43 Following Menzies’ retirement, there was a quick succession of federal Liberal governments under Holt, Gorton and McMahon. Over this period, the policies of successive Liberal governments failed to reflect the values of a changing Australia and the party leadership failed to inspire public confidence. However, some important initiatives were taken.
ESTABLISHING THE PRODUCTIVITY PROMOTION COUNCIL An initiative of the Gorton Liberal government was the establishment of the Productivity Promotion Council of Australia. The Council’s objective was ‘to stimulate efforts from all sectors of industry, commerce, public services, professional societies and community towards continuing improvements in productivity performance’. The Productivity Promotion Council was to play a major role in publishing information on productivity improvement and disseminating it to the Australian public. ORM reformers saw the Council potential for spreading their ideas nationally, and actively sought to influence its activities. Gunzburg, Ford and Dunphy were particularly successful in this. For instance, along with publications, the Council produced films on the topic of workplace reform. Gunzburg notes: We produced one of the first films on the topic of workplace change. It was the story about a guy who was turned off at work and unappreciated. But on a weekend he was active and alive. Then we showed someone who worked at the newly redesigned Philips factory and they were just as alive and active on week days and having input into the organisation. The film was shown all around Australia. It
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was accompanied by a kit which allowed people to work through the issues.44
The federal government also gave out research grants to support industry innovations, and many cases of workplace change were documented by the Productivity Promotion Council. The grants were given to organisations to fund the employment of consultants and social scientists to undertake more pilot projects in workplace change. Under the Whitlam government, the Jackson Committee Report, ‘Policies for the Development of Manufacturing Industries in Australia’, was released — three days prior to the dismissal of the Whitlam government. The dismissal ended its life as a public policy document, but the members of the research team that provided the key ideas and case studies for the report went on to influence the direction of future reforms in many Australian companies. ORM reformers were beginning to realise the importance of influencing political structures to provide support for experimentation on a wider scale. They were also realising the need to build support within employer associations and trade unions. These bastions of power were, however, very conservative and suspicious of the ‘radical’ ideologies underlying the ORM. Gradually some legitimation was gained, but the footholds in these bases were still shaky and yielded little real power to the ORM. Nevertheless, these moves represented the beginning of a systematic attempt to create a stronger political base for the movement. The broader impact of the ORM on policies under the Whitlam government is dealt with in the next chapter.
CONCLUSION The ORM emerged as a result of the efforts of a small committed group of individuals (particularly academics and key line and staff managers), who established centres of influence and networks for diffusing information about workplace change. These early leaders were busy running workshops and academic courses to develop practitioners, implementing change programs within interested organisations, and disseminating the results of their research. The
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movement that they were creating was dynamic and energetic and saw much collaborative work and information-sharing. The ORM was united by a common desire to challenge the dominant organisational orthodoxies and to rebuild corporations incrementally on the basis of humanist values, but it remained somewhat heterogeneous in outlook and ideology. While individuals played a role in creating the movement, the interplay of global circumstance, rapid social and economic change and political and governmental policies created the context in which the movement was able to take hold. Members of the movement were committed to creating more humanistic work environments. However, these early researchers had to demonstrate also that the new work systems could deliver performance benefits. While many of the early programs were driven by concerns for quality, efficiency and turnover as well as quality of work life issues, for most ORM members QWL issues were paramount. By the mid-1970s the formative stage of the ORM was over. It was apparent that, while the managers of a few organisations were keen to try new ideas, most were complacent or sceptical and saw no need to change. Organisations experimenting with the new concepts were in the minority. Support for the management prerogative and for hierarchical, bureaucratised work systems remained the dominant orthodoxy. Orthodoxy was strongly reinforced by the ‘practices and precedents’ of Australia’s industrial relations tribunals, which cemented in place managerial prerogatives and entrenched conflict. Despite this, the movement had established some strong bases and networks and produced some impressive evidence for the impact of the new intervention strategies on performance and human satisfaction in the workplace. Limited government support had also been established. We are now in a position to ask the question: what can we learn from this stage of the ORM that we could take into a future change agenda for the movement? The first point is that movements are started and renewed by a few individuals who share a cosmopolitan and radical viewpoint that differs from the prevailing orthodoxy. The major initiators of the ORM were academics who had spent a significant time abroad
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and who, therefore, were in a position to realise that the traditional way of doing things is not the only or necessarily the best way. Their academic backgrounds meant that they brought to the reform process intellectual frameworks and agendas that allowed them to view the world of organisations differently from many in their society. They also had strong value positions that they had developed over their lives, influenced by family background and by their participation in reformist social and political institutions. These values provided consistent direction and personal validation to their activities even when they were experiencing indifference or antagonism. Individual commitment of this kind and a willingness to do and say different and sometimes unpopular things is a vital component of leadership in such a movement. Our second point is that reliance on the leadership of a few individuals makes the movement potentially vulnerable. For the movement to grow, it has to attract others and enlist their energies to support the unfolding purpose or strategic intent established by the forerunners. This happens most effectively when there are visible centres of influence that can be named and identified and which have at least a handful of committed individuals associated with them. These centres exist to diffuse the new ideas; they do this usually in the first place through building networks of likeminded or sympathetic individuals who are attracted to the ideas and who, in turn, contribute to the form of the emerging movement. These centres also promote and develop the core ideas of the movement through publications and training programs. There was active cooperation between personnel from these centres, but the geographical distribution of the centres led to differing approaches that enriched the knowledge and skills base of the movement. Third, the validity of the central ideas needs to be demonstrated. In the case of the ORM this was attempted through the establishment of demonstration projects in credible and interested organisations. In Australia local subsidiaries of multinationals were on the whole more open to the new developments than traditional Australian organisations. These projects needed to be evaluated carefully to be convincing. Some were, but many were not. Even where clear positive results were documented this was not in itself
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enough to ensure the diffusion and wider use of the ideas. The incompatibility of the ideas with the prevailing economic and political system and the conservative Australian managerial culture served to limit the impact of such demonstrations.45 Many of these experiments were abandoned, even where demonstrably successful, when the internal change agents who had initiated them moved on to other organisations or other assignments. This poses the issue of sustainability of change, an issue we return to in chapter 6. Fourth, the ORM grew as it connected with other movements with compatible values. In Australia and the USA the rise of the sensitivity training and encounter group movement involved thousands and provided an input of new activists into the ORM. These new recruits brought a range of valuable process skills with them that added to the effectiveness of interventions in the workplace. They also helped to give the movement a critical mass of adherents and so make a greater impact. These movements reflected a sea-change of social values, and the emerging social values were more compatible with the values of those in the ORM. Finally, the leaders of the movement realised that it was necessary to begin to influence the prevailing power structures — particularly government departments, employer associations and unions. By the end of the formative period some progress had been made in this area but the beachheads established were potentially vulnerable. Nevertheless, a substantial beginning had been made in challenging the prevailing corporate orthodoxy.
3. THE SOCIO-TECHNICAL SYSTEMS AND INDUSTRIAL DEMOCRACY APPROACHES TO CHANGE (1966-1977)
In chapter 2 we looked at the Organisation Development (OD) approach to organisational renewal. Here we cover another major influential school of thought — the Socio-Technical Systems (STS) or industrial democracy (ID) approach. In the late 1960s and 1970s this approach was particularly influential in Norway, Sweden, the Netherlands, the UK and Australia. Both the OD and STS/ID approaches to change were important during the formative period of the Organisational Renewal Movement (ORM), and in the northern hemisphere the two operated fairly independently of one other. In Australia, however, the distinction between the two approaches became blurred in the 1970s, with many practitioners drawing from both traditions. This reflects the intellectual and cultural interchange taking place at the time between Australia, the UK, Europe and the USA, as the OD approach was dominant in the USA while the STS approach dominated in the UK and Europe. Thus, this chapter covers the same historical period as chapter 2 but emphasises the other major intellectual tradition influencing the development of the ORM in Australia at the time. We also explore how, in the period 1966-1977, the ORM in Australia built supportive coalitions and developed a broad, eclectic
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and non-doctrinaire change agenda. We show how the movement began to exert influence on successive federal Liberal governments but then gained a more powerful position in political circles by influencing the change agenda of the Labor Party as it came to power. Despite the fact that this influence was not strong enough to establish ongoing ‘legislative support’ for the widespread diffusion of ORM initiatives as occurred in several European countries, the ORM in Australia attracted more industry support than in the previous period.
ORIGINS OF THE SOCIO-TECHNICAL SYSTEMS APPROACH The STS approach to change was developed in Britain in the early postwar period by researchers at the Tavistock Institute of Human Relations in London. The Tavistock was a research and consulting organisation set up after World War II by British social scientists, who had played an active part in Britain’s war effort. They had a strong commitment to using their behavioural science knowledge, and their wartime experience of applying this to practical affairs, to help rebuild the shattered economies of the UK and Europe and to strengthen the power and effectiveness of democratic institutions. The Tavistock social scientists, funded by research grants and consulting assignments, focused first on discovering ways to increase employee productivity and work satisfaction in British industry.1 This program of research led, for example, to the discovery of innovative work and organisational practices in a coal-mining seam in the British Midlands. The prevailing approach to work organisation elsewhere in the mining industry was based on longwall mining methods and increased mechanisation — jobs were broken down into differentiated task roles and coordination and control were exercised by the supervisor. In contrast to this, the organisational innovations at the Haighmoor mines revived old group working practices and placed miners in semi-autonomous work teams which were multiskilled, had planning responsibilities and operated with minimal supervision. The researchers saw this
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system as having very positive effects on productivity and work satisfaction compared with the prevailing ‘Tayloristic’ approach. Tavistock projects were conducted in several industries and nations. Overall they demonstrated that alternative forms of work organisation could be developed around the same or similar technologies, with successful outcomes for both overall productivity and work satisfaction. Several of these studies paved the way for the conceptualisation of the STS approach to change.2 The main architects of the emerging approach were the social scientists Eric Trist (British) and Fred Emery (Australian). From the 1950s and 1960s, this accumulating research evidence led the Tavistock researchers to reconceptualise the design of work organisations. Their work was in part a criticism of intervention strategies aimed solely at improving an organisation’s social system (as in the Human Relations and OD school). Such approaches to workplace redesign were seen as inadequate. Emery and Trist argued that work organisations should be viewed as socio-technical systems rather than simply social systems. A socio-technical system was described as a work system in which the social and technical components are jointly designed to produce a high-performance organisation with superior levels of job satisfaction and workforce participation in key work redesign and ongoing operational 3 decisions. Emery and Trist argued that attempts to optimise either the technical (production) or the social (human) system necessarily resulted in the suboptimisation of the whole.4 The resulting concept of ‘joint optimisation’ led the Tavistock researchers to consciously develop designs for organisational systems which balanced technical demands with the needs of employees and other organisational groups. Trist and Emery also referred to their theory as an ‘open systems approach’, and drew heavily on the writings of the biologist Von Bertalanffy in arguing that organisations should be viewed as dynamic open systems. The social and technical systems of organisations were seen as both influenced by their environment (inputs) and influencing their environment (outputs). However, in the application of the theory much more attention was devoted
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to the internal than to the external system: there was little regard paid, for example, to the demands of clients.
STS: FURTHER DEVELOPMENTS These concepts made a significant contribution to strengthening systematic organisational diagnosis; they also legitimised the introduction of work teams as a common form of intervention used by STS practitioners. Hence, STS during the 1950s and 1960s was a dynamic change theory which sought to address the technocratic excesses of the bureaucratic approaches to change and the excessively social focus of the Human Relations school. Despite its UK origins, the major impact of STS theory was felt in Scandinavia, particularly in Norway and Sweden. The initial beachhead in Scandinavia was the Norwegian Industrial Democracy Project, led by Einar Thorsrud along with Fred Emery.5 This project aimed to revolutionise industrial production methods and to actively engage the workforce in the design and management of the production process. The project was carefully monitored by representatives of the Swedish Employers Association (SAS), and its key principles were articulated and widely diffused by SAS through its member organisations in Sweden. An internationally renowned example of this was the Volvo organisation. There was a strong underlying ideology in the STS approach. The key STS practitioners held an ideological belief in democratic ideals, self-determination, and participation in decision-making by all in the workplace. Therefore, many of the interventions associated with STS, such as search conferences, semi-autonomous teams and the removal of supervisors, attempted to address what were regarded as power imbalances in bureaucratic organisations. There was a strong commitment to power-sharing in the workplace — that is, to a notion of ‘industrial democracy’. Participative action research was also heavily emphasised. With some guidance from the STS consultants, employees were encouraged to engage in data-gathering and interpretation designed to improve work systems. In this, STS theory anticipated later developments in Total Quality Management. These theorists and
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practitioners realised that, if managers were to be motivated to introduce such participative changes and workers to be genuinely involved, there had to be significant gains for both key stakeholders — that is, for both management and workers. As Pasmore and Khalsa6 indicate, ‘win-win’ solutions had to be produced. The history of STS interventions suggests that this was not always possible, and in a number of key change programs collaboration between management and the unions broke down.7 In the late 1980s there was concern about the lack of innovation in STS thinking. Some feared that it was becoming a stagnant force in the organisational change field.8 Nevertheless, there were subsequent significant developments in STS theory. For example, Fred Emery moved away from mainstream STS methods through his pursuit of change based on ‘participant design’. Emery argued that STS analysis was too clumsy and time-consuming and that equally effective results could be achieved through participant design. Participant design is influenced by the basic assumption that the most adequate and effective designs come from those whose jobs are under review, not from experts. We explore this later, when we deal with developments in Australia. A recent source of innovation in the STS tradition, later than the period we are discussing here, is the work of Dutch action researchers, who have reconceptualised the theoretical and methodological basis of STS. They argue that traditional STS has concentrated too exclusively on quality of work life changes and not enough on productivity. They also believe that the traditional focus of STS on separate social and technical subsystems works against the notion of a production system as an integrated functional system. Their work has led to a rejuvenation of STS theorising and practical interventions within the Netherlands.9 These recent developments indicate that the STS model is still evolving and changing in relation to new social conditions. STS theory and concepts have continued to expand over the past 40 years. However, its major characteristics as a change theory have been fairly stable.
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SOCIO-TECHNICAL SYSTEMS (INDUSTRIAL DEMOCRACY) APPROACH TO CHANGE ! !
basic metaphor: organisations as organic open systems; diagnostic model: Socio-Technical Systems analysis combined with participant redesign and work systems; ! ideal model: a representative democratic community composed of semi-autonomous work groups with the ability to learn continuously through participative action research; ! intervention strategies: participative action research and workplace redesign around socio-technical principles; ! change agent role: technical expert, facilitator, negotiator. This summary indicates that the change agent’s role was more varied than in the Bureaucratic or Human Relations models. Ideally, the STS change agent needed to combine the technical expertise of an industrial engineer with the interpersonal skills of a Human Relations facilitator (usually an applied social scientist). In addition, the emphasis on total system redesign demanded high-level negotiation skills, as a reworking of traditional power relations was central to STS redesign. In practice, change was often initiated by a small team of two to five change agents who, between them, possessed these very different skills. For intervention to be effective, however, all members of the change team needed to understand STS redesign principles so that they had a shared understanding of how the work redesign would proceed. The STS approach was taken up by many firms, particularly those in industry, because it offered an appealing balance between technical and human factors. In industrial, rather than service settings, achieving such a balance is often vital to high performance. The heavy investment in capital equipment demands strong attention to task organisation to maximise plant efficiency. Such efficiencies are most likely to be achieved, however, by a committed workforce with a clear understanding of how to manage work processes. At its best, this was what the STS approach achieved. However, its success demanded a skilled team of change agents and strong support from management, unions and workforce. These conditions were not always met.
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THE STS APPROACH IN AUSTRALIA Socio-technical ideas were brought to Australia quite early while Fred Emery was still engaged in the Norwegian Industrial Democracy Project. In the 1950s and 1960s academics and practitioners, such as Maxine Bucklow at the University of Sydney, Alf Clark at the University of New South Wales and Reg Cole (industrial relations manager for Alcan Australia), were already putting the emerging theory into practice.10 The first significant application of the theory was the reorganisation of the Alcan Sheet Metal Plant in Granville, Sydney, by Reg Cole.
ALCAN: PIONEER IN MULTISKILLING AND TEAMS Reg Cole arrived in Australia from the UK in the early 1960s and took up a position as an industrial relations manager with Alcan. In the UK he had become familiar with the socio-technical and industry work being undertaken by Trist and others at the Tavistock Institute. At this time Alcan was expanding rapidly in Australia, and Reg saw that the potential existed to put some of the socio-technical ideas — particularly teams and multiskilling — into practice. The two major sites that became the home to innovative organisational renewal practices at Alcan were the brownfield Granville Sheet Metal Plant in western Sydney and the greenfield Kurri Kurri smelter in the Hunter Valley. In Reg’s words: The first major change I got involved with was the fabricating plant at Granville. The old factory at Granville was pre World War II and its technology was also pre war. It was a grossly unproductive, classic Australian workplace with a number of specialist unions, triple handling of product, industrial mayhem. Just altogether a very inefficient plant. But it had a monopoly. These were the days when tariffs were the order of the day. There was no incentive to become productive. I was horrified at the ineffectiveness of the plant. However the ironworkers union were prepared to negotiate the changes even though the changes involved major reductions in people.
In order to do this, Reg had to go and battle with the entrenched managerial and industrial mindsets that dominated the industry.
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Implementing teams and introducing workforce participation and multiskilling appealed to the general production and process unions but not to the skilled union workforce. Nor did it appeal to the industry associations and other major employers in the industry, who saw Alcan as ‘breaking ranks’ and ‘stepping out of line’.11 As Reg described the situation: You had to go to the industry forum to get the industry to agree to change a particular aspect of the award. Every industry had its own forum and the industry representatives would sit around the table and determine what things were going to happen. If an individual company wanted to introduce, for instance, multiskilling, the rest of the industry would say ‘no, that’s a crazy idea’. When I started to raise ideas like different pay systems and pay for skills . . . the other companies would argue that the unions would not let you do it. The unions were blamed for everything. But I found that most of the time, while they (the unions) would say it was crazy, they would at least give it a go.
According to Reg Cole, the primary purpose of these agreements was to break with Tayloristic job design, eliminate union demarcation and extricate Alcan from the conservative management forums dominated by the industry and employer associations. The greenfield smelter at Kurri Kurri was covered by a separate agreement. This enabled the management at the plant to introduce teams and multiskilling along socio-technical lines. The production workers were encouraged to train and deploy their broader skills across the plant. By the mid-1970s executives at Alcan’s Montreal headquarters saw Kurri Kurri as the model smelter — the benchmark for Alcan’s smelters worldwide. Reg remarked: By the early seventies Alcan was a very exciting place. There were managers and union delegates all looking for things to change. By the early seventies there had been ten years of innovations, multiskilling and teams. There was an active group of change agents within the workforce, even to the extent that union delegates would be the strongest proponents of change.
The impetus for change at Alcan was lost when the CEO, who had encouraged and supported the changes, died. His replacement
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brought no commitment to the change programs and the philosophies underlying long-term cooperation between management and unions. Consequently Alcan Australia lost its reputation for being an innovative organisation in workplace restructuring. Many of the concepts that were pioneered in Alcan, such as multiskilling, teams, removal of demarcations and outsourcing, were rediscovered and promoted as ‘new’ concepts in the late 1980s and 1990s, even within Alcan itself.12 One of the key lessons that can be drawn from the Alcan case is, first, that ‘impossible’ sites can be transformed into global best practice through the energy, persistence and creativity of key individuals who are committed to a cause. Second, that stewardship by senior executives becomes crucial for the survival of such programs. In the movement towards sustainable organisations stewardship by senior managers will become a crucial factor in achieving changes. But Alcan was an exception. Elsewhere, both unions and employers felt comfortable with the existing arrangements and were threatened by change. In many organisations the industrial relations practices and institutions were used to resist and reverse many ORM-inspired changes. Most of the ORM pioneers were not industrial relations practitioners and they often simply accepted standard institutional practices such as union demarcations and standard award conditions. But those, like Reg Cole, who were familiar with the ‘industrial relations club’, could work their way through the tangled web of practices to create innovative opportunities. Reg later went on to join a greenfield site at Woodlawn mine, where he was a key member of a top team that included Mike Blackwell, a South African mining engineer, Chris Stroebel, Gordon Jackson and Ian Wild. The Woodlawn mine was an early working model of an innovative approach to creating a highperformance work system, well ahead of most similar developments overseas. However, during the 1960s through to the mid-1970s, apart from initiatives by a few individuals like Reg Cole, ORM change programs tended to be limited by prevailing industrial relations practices.13 After the Norwegian Industrial Democracy Project was completed in 1969, Fred Emery returned to Australia. As he expressed
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it, he came determined to ‘provide a bit of publicity to take up industry restructuring and workplace change’. He continued to believe in and promote employee participation and industrial democracy (ID) and to inspire others to become committed to these ideals. Fred saw the egalitarianism and mateship characteristics of Australians as helpful in terms of introducing ID into the workplace, but he also saw that entrenched bureaucratic cultures and closed echelons of upper management ranks worked against participative decision-making. With the assistance of others, he undertook a series of socio-technical redesign programs in Australian plants. The first of these took place at the Luv Pet Foods plant in Sydney.
SOCIO-TECHNICAL REDESIGN AT LUV PET FOODS The Luv Pet Foods change program was undertaken between 1968 and 1972. Alf Clark, who was teaching organisational theory and social psychology at UNSW, was contacted by Linden Prowse, the CEO of Luv Pet Foods, to help implement a program of change that would make ‘full use’ of people’s capacities. After many months of work conducting a socio-technical analysis, the work organisation was redesigned and teams were introduced.14 The program was initiated by Alf Clark but handed over to Fred Emery when Alf left for the UK. According to Fred Emery: The organisational changes at Luv saw the removal of narrowly defined individual jobs and their replacement with shopfloor teams. These teams were responsible for staffing the production process and for working out their own overtime and quality control. The teams would start from the base of the production line and would follow the flow of work through to completion. They would then move to any bottlenecks and remove them.
The first-line supervisory roles were abolished and former supervisors were given new roles, such as coordinating activities between work groups and ensuring that the groups had the resources they needed to operate effectively. Employees became involved in the design of new equipment and technology, were
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multiskilled and took responsibility for their own quality control. In the new workplace climate that developed, staff turnover and absenteeism declined and productivity grew.15 According to Emery, when the company was taken over by a US-based multinational, Uncle Ben’s, management reasserted their prerogative to manage and the organisation reverted to a traditional style of management, with supervisors back in charge on the shop floor. Under these conditions productivity fell, and turnover and absenteeism rose. Eventually the plant was closed down and the operation moved to a larger site in western Sydney. The Luv Pet Foods experiment was small, but it showed that dramatic gains in productivity and work satisfaction were possible where work was designed on different principles. The principles of work design enunciated by Emery contributed to the ORM’s developing approach to workplace redesign. The successful redesign of Luv Pet Foods showed that these principles could deliver results in terms of increased effectiveness and workforce commitment.
CREATING A CRITICAL MASS OF SUPPORT The change programs at Alcan and Luv Pet Foods were isolated initiatives. A more solid base was established for the wider diffusion and promotion of socio-technical ideas and workplace democratisation when Fred Emery joined the Centre for Continuing Education at ANU. Fred worked from this base, establishing an active network of change agents.16 Other key figures involved in introducing STS approaches in Australia were Hollis Peter at Queensland University, Dexter Dunphy at the UNSW, several researchers attached to the Centre for Continuing Education at ANU (Merrelyn Emery, Alan Davies, Alistair Crombie) and, in Melbourne, Neil Watson, Doron Gunzburg and Chris Phillips. The early STS practitioners encountered difficulties in promoting their organisational renewal efforts. These difficulties were created by practical issues, such as the lack of experienced consultants to assist in traditional forms of socio-technical analysis and action research. In addition, the time and resources it took to
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change organisations using a consultative approach appeared excessive to many managers, and others were suspicious of what they saw as a ‘left-wing’ initiative. The method of analysis as originally conceived in the socio-technical tradition has also been criticised by some academics as too expert-centred and prone to creating dependency relationships and continuing reliance on STS practitioners.17
DO-IT-YOURSELF DEMOCRACY As a response to criticism of this kind, Fred and Merrelyn Emery came up with ‘participant design’ — a form of do-it-yourself workplace redesign, which they argued made the democratisation of work a reality accessible to all and no longer reliant on experts. In contrast to traditional socio-technical redesign, which they presented as being expert-centred, participative design encouraged employees to follow guidelines to redesign their own workplace. In our view, many of the earlier ORM initiatives were highly participative. The new approach was implemented in Australia in a human relations workshop undertaken by SAMCOR (South Australian Meat Corporation) and the Royal Australian Air Force. Their approach was to use a ‘deep slice’ of employees including managers and supervisors to participate in a three-day seminar in which they were educated in the principles and tools necessary to undertake an analysis of their workplace and jobs. They then worked out implementation strategies. As Merrelyn Emery (1974) points out, ‘Effective problem solving is more likely to be achieved by those involved in their own unique variant of circumstances, history and technology’.18 The Emerys’ ‘do-it-yourself’ approach to democracy at work spread rapidly in the period 1970-1978. For instance, between May 1970 and September 1976, the Centre for Continuing Education at ANU held 20 publicly advertised Development of Human Resources Workshops. Some of the companies attending these workshops were: ICI, SAMCOR, Shell, Alcan, CSR, Leyland, Alcoa, Control Data, and the government departments of Overseas
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Trade, Customs, Social Security, the Australian Taxation Office and the State Electricity Commission of Victoria. At the same time, the workshops in organisational change, which also covered STS theory and practice, were organised by Hollis Peter in Queensland and Dexter Dunphy in New South Wales. These also attracted substantial numbers of line and staff managers from a wide range of private and public sector organisations. The popularity of workshops reflected a rising interest from managers of Australian organisations in work reform and the ORM.
PROBLEMS IN IMPLEMENTATION ICI became one of the leading innovators in work redesign. Their newly established Welvic plant was a typical example of how the changes were introduced and the problems experienced in sustaining change.
ICI WELVIC: DEMOCRATISATION OF WORK AT A GREENFIELD SITE The Welvic plant at ICI’s Deer Park complex was one of the most enduring of the team-based organisations established during the 1970s, operating on this basis from 1973 to 1978. At this greenfield site, the roles and responsibilities normally performed by supervisors were allocated to employee shift teams. Operators in teams organised their own work schedules, arranged for maintenance work to be done and coordinated directly with staff functions. The reorganisation was highly successful: productivity in the early stages was double that of technologically similar ICI plants.19 By 1976 the plant had expanded, and operators had divided themselves into four teams working a continuous three-shift roster. The researchers noted that the team structures were working well.20 However, in 1978 researchers Gibbons and McCarroll found that significant changes had occurred in staffing, technology, organisation and remuneration since the last investigation. Several
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of the changes introduced by a new plant manager had curbed the autonomy of the teams. According to the researchers, product quality had improved but morale and motivation had declined. Operators felt that they now had fewer opportunities to make decisions and that operating procedures were closely specified and many decisions had to be referred upwards.21 Morale had also suffered, because workers were not paid a performance award. The new plant manager had not awarded the performance rate because he argued that the teams had not consistently met the overproduction targets.22 With reduced autonomy and intensified work, team members felt less committed to the organisation. As a result, team activity at Welvic slowly declined. The Welvic case clearly demonstrated that STS redesign could create substantial advantages, but it also raised the issue of how team-based systems could be sustained over long periods, particularly when managers in key line positions were replaced. It became clear that such systems demand ongoing support from senior management and the workforce if they are to continue to deliver results.23
PARTICIPATION AT ICI BOTANY: FACT OR FALLACY?24 Creating a greenfield plant redesigned on STS lines was one thing — redesigning a traditional plant was another. Fred Emery and Hollis Peter were asked to initiate work redesign and employee participation at ICI’s Botany plant. ICI Botany was a brownfield chemical manufacturing site that was characterised by traditional bureaucratic work structures and systems and had a long history of industrial disputation. In the early to mid-1970s Emery and Peter held several job redesign workshops at Botany. These were initially well received but later encountered political problems and industrial action. The project staggered on for some months but was eventually brought to a halt. There are different views as to why the program failed. The consultants stressed the fact that the part of the Botany complex that took up the new ideas most enthusiastically was closed within four months by the Board (located in Melbourne).
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This led to widespread disillusionment on the part of the workforce. It was typical of the lack of integration between many OD interventions and overall business strategies at the time. The personnel manager stressed that the supervisors were left out of the work redesign process, felt (correctly) that their jobs might be threatened and so sabotaged the change program. Other informed observers noted that some senior managers were concerned that shifting greater power to the workforce would undermine managerial authority.25 Probably all three factors contributed, but all point to a more fundamental feature of the situation — a high level of distrust between management and the workforce at ICI Botany. This particular project failed, but in the late 1980s and 1990s the ICI Botany plant became a highly innovative and participative organisation. The new humanistic approaches depended on establishing high levels of trust, but most traditional Taylorist establishments in Australia had high levels of distrust and so any incidents feeding distrust could destroy the effectiveness of a program. Experiences such as this led ORM practitioners to conclude that they were swimming against the cultural stream. For progress to continue, changes needed to be made in the socio-political environment that maintained the traditional workplace culture. An opportunity to tackle this formidable task suddenly emerged.
INITIATIVES UNDER THE WHITLAM FEDERAL GOVERNMENT The Whitlam Labor government was swept to power in 1972 with an agenda promoting widespread economic and social change. The election slogan was ‘It’s time’ — that is, time to make significant changes in the political economic and social life of Australia. The Labor politicians saw themselves as a reformist government in the vanguard of social and political change. This agenda for widespread change was seen as an opportunity by ORM leaders. As a result of their direct influence, the new federal government played an important role in supporting and encouraging workplace change. On coming to power, members of the Whitlam government and,
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in particular, Minister for Labour Clyde Cameron, made speeches highlighting the importance of employee participation and industrial democracy.26 Much of the content of his speeches was drawn from the work of Bill Ford and Dexter Dunphy. Bill eventually became Cameron’s adviser. But, as Dufty noted: When the ALP was in power in Canberra, Clyde Cameron made a number of speeches putting forward the view that industrial democracy was an idea whose time had come . . . Naturally enough there was no support from management and not a great deal from the unions.27
To match its rhetoric, the Whitlam government assisted the ORM by disseminating information on new approaches to work organisation and job design, providing access to Commonwealth grants and encouraging initiatives in federal departments so that they could become exemplars of organisational renewal. This hastened a general trend that had emerged under the previous federal Liberal administrations. The Personnel Practices Section of the Department of Labour was reorganised into a much more fully resourced Working Environment Unit in a new Human Relations Branch. Dexter Dunphy was seconded to the Department of Labour for six months to work closely with senior officers in this reorganisation. Several political initiatives demonstrated the new government’s commitment to the ORM’s vision. One initiative involved establishing missions to look at the humanisation of work programs overseas. Bill Ford was heavily involved in this initiative: ‘It was with this mission that we got the government interested in Sweden and Germany. This was a big breakthrough in moving the focus away from the traditional emphasis on England and the United States.’ Under this program Doron Gunzburg from the Department of Labour spent an exchange year in Sweden studying work organisation there and reporting the findings to inform the Australian government’s policy. This overseas secondment resulted in a fruitful dialogue being established between Swedish and Australian change practitioners and unionists. The dialogue continues today and has had a major impact on Australian change initiatives and government and union policies over the past two decades.28
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The new federal Labor government also established TUTA — the Trade Union Training Authority. It was set up to assist trade unions to cope with the challenges facing Australia in relation to workforce training, education and technological change. Because the unions were seen as major stakeholders in the economy, it was thought that a well-educated, independent trade union movement would work in the national interest. As Bill Ford, then Clyde Cameron’s adviser, stated: ‘Part of the reason that it was set up was because we believed that you needed a skilled trade union movement to understand what these issues were going to be about in the future.’ The government also played a crucial role in promoting change by encouraging government departments to use researchers and organisational development consultants to implement changes to work organisation and job design. These organisations became training grounds for researchers and consultants as they worked with line managers and others to find what worked and what did not. Over time, however, the Whitlam government’s support for the initiatives weakened as the government encountered a series of political problems that threatened its survival. In addition, many of the change programs undertaken in government departments ran out of momentum. These change programs encountered institutional limits around pay systems and job classifications and were blocked by traditional entrenched union and management work practices. The Whitlam government was returned in 1974. However, in 1975, it was sacked amid great political controversy. Malcolm Fraser’s Liberal/National Party coalition subsequently won a landslide victory in December 1975. Much of the ‘program for reform’ came to an abrupt end. Some members of the Liberal Cabinet, such as Ian McPhee, continued to support and promote the renewal movement, although with less internal party support. For instance, Doron Gunzburg, influenced by the tripartite approach being undertaken in Sweden, helped the Minister establish the first tripartite steering committee, the National Employee Participation Steering Committee, in 1978.29 Outside the government sphere, the ORM continued to increase its influence and the momentum for organisational change
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grew. The federal Labor government of Gough Whitlam (19721975), by pursuing its reformist agenda, had created conditions that were conducive to further social and economic change and, before being removed from office, they had put the issues of workplace reform, industrial democracy and employee participation on the political agenda. An example of this was a major program of change in CSR, which involved a meeting of 4500 CSR employees (a diagonal slice through the company) from all over Australia. The CEO of CSR at the time was Gordon Jackson, who had authored the key report on workplace change under the Whitlam government. The meeting was, for part of the time, divided into small groups. Group leaders included researchers such as Viv Read, Alistair Crombie and Daryll Hull, who had worked with Bill Ford on the Jackson Report. The groups discussed how the quality of working life in CSR could be improved. This reflects the strong themes of workforce participation in organisational change and the focus on workforce satisfaction. It was also significant that the ORM was beginning to exert strong influence on a few key CEOs, such as Gordon Jackson of CSR and Rod Carnegie of CRA.
INFLUENTIAL BOOKS Every social movement has books that either stimulate debate or inspire action. They become sources of inspiration to followers, or represent evidence or the validity of the movement’s ideals. Several books and influential publications emerged — specific to Australia — which made significant contributions to the issues and debates over the form and content of organisational renewal in Australia. These included Doron Gunzburg’s book, Bringing Work to Life: The Australian Experience.30 This important collection brought together the ideas of key players representing differing interests and approaches to organisational renewal. Some were OD practitioners, others socio-technical scholars, some academics and others managers. Key contributors included Wilf Jarvis, Fred and Merrelyn Emery and Hollis Peter, who provided introductions to
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Bringing work to life is a statement of how work can be reformed to provide the conditions necessary to allow for the growth and development of people. As the contributors to this book demonstrate, when the work environment allows for the expression of these qualities . . . the benefits are considerable not only in terms of human well being but also in organisational effectiveness.31
The book discussed successful cases of organisational renewal in Australia. Up to this point most of the published cases available were from either the UK or the USA. Along with early Australian journals, such as the Personnel Practice Bulletin and Work and People, the book provided insight into a variety of intellectual frameworks for renewal, and became a ‘source’ of ideas. It was not a handbook of strategies for change but rather sought to establish legitimacy for organisational renewal. A second influential book of the time was editor Robert Pritchard’s work, Industrial Democracy in Australia.32 This collection of papers focused specifically on the current debates on industrial democracy and employee participation. Key contributors were Alistair Crombie, Dexter Dunphy, Robert Pritchard, Bill Ford and Geoff Anderson. The book argued that, if organisational renewal in Australia was to progress, the issues of human needs, information access, accountability, power and the law needed to be examined. Whereas the Gunzburg book provided a justification for change, the Pritchard papers highlighted the complexity of issues involved in renewal, and emphasised the importance of political and legal issues. Along with the workshops and diffusion centres, these publications spread the ideas of the renewal movement and influenced managers, academics and policy-makers seeking avenues for organisational change.
DUNSTAN’S SOUTH AUSTRALIAN INITIATIVES In South Australia Whitlam, an active
the Labor Premier Don Dunstan was, like social reformer. It was under his leadership
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that concrete actions were taken to move industrial democracy from the rhetoric of political speeches to active government policy. Despite general resistance to the notions of industrial democracy on the part of employer associations and trade unions, the South Australian government in 1973 released a report on worker participation in management. It became the first government in Australia to take a significant initiative in establishing industrial democracy.33 In early 1974 the Unit for Quality of Work Life was established in the South Australian Department of Labor and Industry.34 Linden Prowse, the former owner of Luv Pet Foods who was employed to head the unit, was a strong supporter of Emery’s ideas and based many of the unit’s initial programs on them. By early 1974 the unit had become involved in introducing forms of worker participation in 30 different organisations, mainly in the private sector. This sudden onslaught of activity, combined with Prowse’s negative views on unions, resulted in a backlash against the unit’s activities by the local union movement. Critics from the union movement argued that the Emery-inspired approach to the democratisation of work would result in small groups of workers negotiating individual pay rises in return for output. In reality, the union movement’s major opposition to democratisation and participative design was the belief that it would lose influence with the workforce: the unit’s approach would result in the creation of ‘rival’ democratic structures that would compete with unions and, as a result, reduce the collective strength of the workers and diminish union influence.35’ There were other problems too, as Anderson noted: The technique of the participative design workshop has been used in a variety of situations with some success. However, my experience with the workshops conducted in Adelaide leads me to the conclusion that they had shortcomings. Primarily they do not adequately come to grips with the aspects of the job that exist outside of psychological criteria. Wages and conditions, technology and job demarcations, to name only a few, obviously have an important bearing on the job and the satisfaction that can be derived from it. In the Australian context, demarcation virtually determines the extent to which jobs
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can be redesigned. Equally, the need to fully utilise capital equipment will be a prime factor in the freedom allowed within a manufacturing process.36 Because theoretical solutions might be devised, participants often left with a too simple view of how these problems might be overcome . . . The workshops had tended to present an unreal view of the nature of the problems and the strength of the opposition and the participants were usually overwhelmed when they returned to the reality of their factories and offices.37
The unions lobbied successfully for curtailing the unit’s activities and a change in its direction from encouraging the participant design approach to the advocacy of union-dominated works councils. At the state ALP conference in 1977 Dunstan agreed to get rid of Prowse and to change the name of the unit. As a result, the unit was moved to the Premier’s Department; a new Director, Phil Bentley, was appointed; and it was renamed the Unit for Industrial Democracy. Its program moved away from direct shop floor redesign and job-enrichment programs towards an emphasis on what were termed ‘structural changes’. The new changes to policy included: an acknowledgment of the role of unions in the process; changes to the management hierarchy in organisations so that workers were represented at the Board level; and the creation of joint workshop committees. Employee councils and joint management councils were also established.38 As a result of this change in direction, the unit lost further support in the business community and was forced to concentrate its activities primarily in government departments. But overall the controversy and changes in its role weakened the unit’s influence. As Bentley stated: The absence of legislation has meant that the practical strategy adopted by the unit is to implement whatever form of industrial democracy is acceptable to management, unions and workers as long as this is not incompatible with the framework of the Government’s policy recommendations.39
By 1978, when Dunstan three to nearly thirty, disbanded it.
resigned, the unit had expanded from but the incoming Liberal government
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In mid-1978, before the unit’s demise, a large international conference on industrial democracy was held in Adelaide, with a range of international and Australian speakers. While this seemed like a recognition of success for the industrial democracy approach at the time, the attempt to support it legislatively effectively ended with the Dunstan government’s demise. From this time on it became increasingly clear that Australia was not going to follow the German or Swedish path to legislative support for a sharing of power in the workplace.
EMPLOYEE PARTICIPATION AND INDUSTRIAL DEMOCRACY The debates over employee participation in management and the forms that industrial democracy should take in Australia were complex and divisive. Early forms of industrial democracy that were espoused by the Centre for Continuing Education (CCE) concentrated on democratic processes and shop floor action. As Emery so often said, ‘The idea was to get rid of the bloody foreman’. This CCE-inspired process was quite influential early on and, as indicated earlier, was used as the first model for employee participation in South Australia. However, while organisations were willing to take part in job redesign, not many were willing to set up works councils without being compelled to by legislation. Little agreement existed either between unions or managers over what industrial democracy was or in what form it should be implemented in the workplace. As Anderson (1976) noted: The key concept is that worker participation and industrial democracy are not synonymous concepts. While many schemes which require participation are worthwhile and can also contribute to the growth of democracy within organisations, they should be seen for what they are, as minor alterations to the existing situation. Democracy is a concept which should not be reducible and in terms of implementation, it must provide a process by which participation in decision making at all levels can occur.40
Hollis Peter, reflecting on the demise of the South Australian Industrial Democracy Unit (SAID), noted that some of the change
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practitioners were not so much concerned with the practical outcomes of industrial democracy but rather with the democratic processes involved: My own impression was that they were more caught up with the industrial
organisational change aspects. They were after a greater degree of worker control in the organisation — changing dimensions that we thought were improvements were not so relevant to them as making sure that workers ran the workplaces. Which doesn’t say much about productivity or even QWL or even job redesign. But as they used to say, if you believe in democracy, then you have to have it in the workplace even if it has no effect on productivity or how people feel, it’s good for them. The results that they could show were not tangible to either workers or to management. Unless you have a real improvement in job satisfaction and productivity it will fail. The fact that you are more technically democratic does not mean that it will last. SAID had a hard time reconciling QWL and productivity with technical aspects of democracy.41
For many managers industrial democracy had implications of worker control. Similarly, many unionists, particularly union leaders, were opposed to the forms of industrial democracy being promoted by various change agents because they felt that it would threaten union power. For instance, at its conference in 1976, the Amalgamated Metal Workers and Shipwrights Union argued that the following position be adopted: The AMWSU model is based upon free collective bargaining through independent (working class) trade union organisations. We are specifically opposed to any joint productivity consultation councils or committees which appear to be the main feature of some industrial democracy
founded — we do not want to see trade unionists ‘pimping’ on their work mates and giving each other the sack — this has been our experience both by observation and involvement. We are attempting to separate the ‘chaff’ from the ‘wheat’. The chaff in this case being the cosmetic job enrichment-participation
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schemes. These involve the implementation, usually by management, of
making is derived through consensus and being binding, involves the sacrifice of union independence and in many cases also sets up a worker representative body alongside the union.42
Despite the increasing cynicism and diverging opinions of the major industrial actors, the employer associations and the unions did take policy positions on ‘industrial democracy’. For instance, in 1977 the ACTU adopted the position that industrial democracy could be both representative and participative only if the unions were the only channel for worker representation.43 Under increasing pressure, the federal Liberal government released, towards the end of 1978, a policy on employee participation. But as Clegg noted, while the federal government recognised the need for a policy on employee participation, the model that they advocated was based on voluntarism. It endorsed organisations having the free will to develop their own specific employee participation programs — if they saw that as worthwhile. Clegg argued that a government policy leaving the initiative for employee participation to management would mean that in times of recession there would be few employee participation schemes introduced.44 Similarly, Lansbury and Prideaux argued that: Any meaningful discussion of Industrial Democracy in Australia must take account of the dominant influence of the conciliation and arbitration system. Despite its achievements, the system has encouraged a high degree of centralised decision making in the field of industrial relations and protected the prerogatives of management.45
They also noted that the industrial democracy movement, despite much experimentation and innovative restructuring on the shop floor, had generally been strongly resisted by both employers and trade union leaders. Even those state governments that had adopted general policies designed to encourage industrial democracy (South Australia and New South Wales) had demonstrated a reluctance ‘to take concrete action in this direction’. By the time the federal government had released its position statement on employee participation, the forces promoting
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industrial democracy had run out of momentum. Many of the early democratisation of work projects had failed to take hold and the initiatives in South Australia were being scaled down. The union movement, despite having adopted a positive official position on industrial democracy, still excluded itself from many workplace change initiatives and remained suspicious of many of the associated behavioural science interventions. Many managers who had promoted these initiatives in their organisations often moved on as they encountered resistance to implementing and undertaking changes of this kind. With the recession of 1977/78 other managers sought to implement austerity measures in their organisations by cutting budgets for change programs, training programs and workplace innovations. By the end of 1978, support for industrial democracy was waning. Generally, management and unions had lost interest in both the representative and participative forms.46 Attention was shifting strongly to issues of organisational survival as global competition and uncertainty increased.
CONCLUSION During the period 1966-1977, the ORM continued to grow. Its numbers swelled as new researchers and practitioners were trained in universities and large numbers of managers took part in work redesign seminars, received training in the social and behavioural sciences and attempted to introduce changes into their own organisations. Organisational change initiatives continued to take place in an ad hoc manner in both private and public organisations. But although for the majority of organisations, change and renewal remained peripheral issues, a growing number of organisations were creating management and internal change agent positions with responsibilities for organisational development and STS redesign. It was in these organisations that the movement and competencies associated with the ORM were taking hold. However, some of the change agents and researchers involved in the movement were encountering increasing difficulties. First, as demonstrated with the quick rise and fall of the first wave of industrial democracy initiatives in Australia, resistance by both
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managers and unions ensured that old practices and customs remained, and many of these new initiatives failed or were not sustained. The major peak bodies, government, employers and the ACTU were developing their own policies on employee participation and industrial democracy, but much of this was mere rhetoric. The ensuing political debate and disagreement meant that it became an issue that many organisations simply avoided. Second, where changes had been introduced, they had encountered institutional as well as internal organisational blocks, such as difficulties in changing pay conditions, removing job demarcations and upskilling employees. Unions protected their demarcation boundaries, managers protected their right to install new technologies and work practices in the way that they saw fit, and professionals resisted workplace redesign that involved transferring some other professional skills to other employees. The industrial relations system remained locked into adversarial relations characterised by a ‘them versus us’ approach to negotiation, creating a climate of distrust. Some vital lessons emerged during this period. It became clear that, while it was important to train change agents and establish centres for diffusion, these alone would not be sufficient to challenge the customs and precedents that had become entrenched institutional practice. Another lesson learned was the importance of building political coalitions. For the ORM to be an effective force against organisational orthodoxy, it needed to create links with other broad-interest groups to build the momentum for reform and to create a broader base of support (both inside and outside organisations) to help institutionalise new practices. In hindsight one can also see the benefits for ORM of creating a broad agenda accommodating different alternatives. There was a value in having alternative models and eschewing a narrow, doctrinaire approach to change. The OD and the STS approaches to change had differing ideologies and interventions. Consequently, when the ID initiative failed to find support, it was possible to take key elements that formed part of it, such as semi-autonomous work groups, and find support for them on other grounds. Another lesson learned was the value in having individuals and groups who take on very different roles in the movement. We
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distinguish three kinds of activist roles—anchors, pragmatists and popularisers. Anchors are activists such as Fred Emery and Neil Watson, who through their dogmatism and unswerving beliefs become both a source of inspiration and strength for followers and a target for protagonists. No matter what criticisms are made of them or their views, they refuse to compromise their ideal. These radicals seize the attention of key groups, stimulate controversy and place issues on the change agenda. It is also important to have pragmatists—those who, while being committed to the notions of organisational renewal and the creation of humanistic workplaces, realise that they must find specific compromises and organisational solutions acceptable to various organisational stakeholders. Examples of leaders of this kind in the ORM are Dexter Dunphy, Bill Ford and Hollis Peter. The ‘anchors’ often see the ‘pragmatists’ as selling out their ideals, while the ‘pragmatists’ see themselves as finding realistic solutions and making the ideals and theories of the ‘anchors’ work in practice. Finally, there are the popularisers, like Wilf Jarvis of the Department of Organisational Behaviour at UNSW and Phil Hanford and others in the Centre for Applied Behavioural Science in Queensland. ‘Popularisers’ play a key role in promoting and making the new ideas and theories acceptable and accessible to lay people and managers. They often work the conference trails— putting abstract concepts into parable-like stories and organisational fables in order to make them digestible. Professional associations, such as the Australian Institute of Training and Development (AITD) and the Institute of Personnel Management Australia (IPMA), later to become AHRI, can also play a vital role in popularising the new and developing approaches. At times tension and acrimony will exist between the three types (anchors, pragmatists and popularisers), but all three roles are important for the success of a broad and progressive social movement. Despite the continued growth and the expansion of OD through consultancies, management education and training courses, by the late 1970s the organisational change movement had been unable to exert a powerful influence on the prevailing managerial and union philosophies and mindsets. The change movement’s association with leading universities gave the ORM some legitimacy;
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there were growing numbers of committed managers in middlemanagement ranks and a few senior executives. Attempts to establish effective political coalitions with governments had not had continuing success.47 There was, however, a realisation that changing organisations was a political process in two ways: first, internal organisational change was political in the sense that organisational power structures and stakeholder interests had to be taken into account if effective change was to be made and, just as importantly, sustained. Second, it became clear that change at the organisational level could not be isolated from change in the wider societal context which sets the ground rules for how organisations operate. Macroeconomic and microeconomic change were interdependent, and the movement would need to operate politically at both micro and macro levels if real change was to take place and be sustainable. The movement had progressed in the face of the widespread conservatism of Australian elites, as the conditions for major change in Australian society had not been present to this time. However, massive new economic and social forces were about to alter this situation and, at the same time, challenge some of the central values of the movement. We turn to this in chapter 4.
PART 2. REORIENTATION AND THE EMERGENCE OF TRANSFORMATIONAL STRATEGIES
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4. CHALLENGES, CONSOLIDATIONS AND NEW DIRECTIONS (1978-1983)
This chapter draws its title from a period of considerable confusion for the Organisational Renewal Movement (ORM). From the late 1970s to the early 1980s (1978-1983), a time of major political, social and economic change in Australia, the ORM experienced a period of accommodation and realignment. This represented a difficult time for those committed to humanistic change and led to debates over the values and future directions of the movement. The debates centred around issues of ‘pragmatism’ versus ‘puritanism’, and arose as the movement was ‘exported’ from university centres, developed stronger political connections, and became increasingly incorporated into private and public sector organisations. Successful diffusion modifies theory and ideology. Major world recessions in 1977/78 and in 1982/83 had a strong impact on Australian organisations. This impact was exacerbated by the reduction of tariff and bounty protection and the opening up of the Australian economy to fierce international competition. As a result, many existing innovative change programs were abandoned. The economic changes created strong pressure for a shift in the movement’s ideology. For many ORM members it was a period of deep moral conflict, as the humanistic
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foundations of the movement were eroded by pressures to adopt a more ‘hard-edged’ approach to organisational change. A radical reinterpretation of the nature of organisational change took place as more change agents, often trained by or influenced by the ORM, took up key positions in organisations. They increasingly modified the founding ideology of the ORM in response to strong economic pressures but kept the ‘tools of change’ that had been developed by the movement. So the first area of debate in this period emerged around the issue of modifying the core values of the movement and what this meant for intervention strategies. It was during this time also that the humanist approaches to change, OD and STS, which emerged from the USA and Europe respectively, were challenged. The Japanese, in leading the first wave of East Asian industrialisation, developed very distinctive management strategies and techniques. One of the core features of their approach to organisational change was continuous and incremental improvement using small, supervisor-centred, problemsolving teams. These teams were not driven by concerns for industrial democracy as in the STS model, nor were they focused on individual work satisfaction as in the OD model. Rather, they were linked to a strategy of continual improvement of production processes through the use of rational problem-solving. The Japanese approach was strongly driven by business concerns and focused on work process redesign. The approach was spectacularly successful in producing internationally competitive products. This added to the value debate by raising the question of whether more humanistic approaches could produce comparable results.1 Nevertheless, universities and professional associations in Australia were systematically educating increasing numbers of highly committed change agents in incremental humanistic approaches— particularly OD practitioners, who continued the impetus for change at the enterprise level. At first the Japanese approaches had little effect on the training programs offered through the ORM, but they represented a potentially powerful challenge. A second challenge to the ORM came from the application of new technologies in the workplace. These became a driving force for change in the Australian economy. They were largely an opportunity missed by members of the ORM, most of whom did
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 79 not have technological training or interests and therefore failed to question how management approached its introduction and use. In Australia Bill Ford was exceptional in that he had a visionary awareness of the need to develop technical skills which would underpin future industrial competitiveness. Bill had been studying skills development in Japan, Europe and Australia since the mid1970s and had been attempting to raise public, industrial and government awareness of Australia’s shortcomings in this area. However, the issues that he raised were largely ignored until the mid-1980s.2 A third challenge to the ORM arose with the realisation by some managers that the kinds of incremental changes advocated by OD practitioners were the equivalent of ‘changing the deck chairs on the Titanic’. Incremental changes were failing to realign organisations to the new turbulent and transformed economic conditions. In Australia this became apparent during the mining boom. Although the mining boom was short-lived, it led to a new emphasis on comprehensive strategic planning, as this was vital to the success of the massive projects planned and, in some cases, implemented. The mining boom saw the use of strategic human resource planning for the first time in Australia. Personnel and other people-related staff functions (training, OD, industrial relations or IR, manpower planning) were transformed into unified human resource departments, undertaking strategic human resource planning. Overall, in this period we can discern the emerging initiatives that would shape the future directions of the movement, but this is much clearer now than it was at the time. In particular, a humanistic ideology was giving way to an ideology based on the imperatives of competitive business strategy; incremental approaches to organisational change were being challenged by transformative approaches; and collaborative/consultative leadership styles were giving way to a renewed emphasis on the authority of the senior executive team to direct the change process. The term strategy is derived from military usage and, in the new tough world of economic competition, the rise of the strategic approach signalled that organisations were being put on a ‘war’ footing.
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SETBACKS: WHERE TO FOR THE ORM? By 1979, many of the organisational change initiatives in the manufacturing sector and elsewhere had been halted or slowed down. These initiatives had been started and carried through in a period of corporate growth within a period of economic expansion. As the economy moved into recession, people-centred change programs were often the first initiatives to be slashed in economising measures. For instance, in 1980 GMH announced the closure of its Sydney Pagewood plant with the loss of 1500 jobs and BHP announced the retrenchment of 10 000 of its Port Kembla and Newcastle workforce after the federal government refused to restrict steel imports. At senior management level, commitment to these programs had often been based on a perceived need to create a work environment that would retain and attract competent workers in a situation of high demand for such skilled people. As the economic growth cycle faltered, this was no longer a driving imperative. The popular slogan ‘People are our prime resource’ was replaced with statements like ‘Back to basics’. The Liberal government (1975-1983) under Malcolm Fraser largely abandoned the Labor Party’s economic and workplace reform agendas. Fraser espoused a policy of non-interference in the private sector (except on tariffs) and was intent on cutting back government spending. The changes meant that the introduction of systematic organisational change was no longer driven or supported by federal government policies and initiatives. Systematic organisational change was now entirely a matter for the discretion of senior executives in the private sector. Faced with the problems of survival, many Australian managers who had initiated workplace reforms, or supported such ventures, abandoned them. In some cases the initiatives languished, as in the normal process of succession the senior managers who had initiated them were replaced by others who focused on ‘bottom-line’ results. Consequently, many OD, personnel and training managers became disillusioned and demotivated as their work in introducing participative practices was reversed, replaced by new directive or coercive managerial styles adopted to match emerging tough-minded business strategies.
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 81 As the ‘good times’ ended, organisational survival became the central preoccupation of most executives.3 With the departure of Premier Dunstan in South Australia in 1979, the political debates on industrial democracy and employee participation also collapsed. Government and private sector executives alike struggled to handle the issues of economic recession and high inflation, increasingly resorting to reducing staff numbers. The result was a dramatic rise in unemployment. Between December 1975 and January 1980, unemployment rose from 275 400 to 439 200 and remained at around 10 per cent of the workforce for some years.4 Downsizing challenged the basic values of many change agents in the ORM. One of the authors remembers a discussion that took place late one night over drinks at an in-company workshop not long after 700 members of the company’s workforce had been laid off. The personnel manager turned to the executive responsible for putting the decision into effect and said resentfully: ‘You know, when you were putting off our employees, I tried to bring to your attention some cases of personal hardship for special consideration. But you wouldn’t even listen to me.’ The executive replied bitterly: ‘Look mate, if I have to fire 700 people, I don’t want them to have human faces.’ It was a painful period for all those affected, and many who had struggled hard to introduce workforce changes based on humanitarian ideals felt that the world of work was moving back to the dark ages of exploitation of workers by owners/managers. Some change agents resigned rather than have their ideals compromised. They often became external consultants, working for companies where there was still openness to their ideals, and seeking solace in the change programs still occurring overseas in firms such as Volvo in Sweden. In retrospect, several important lessons for the ORM emerge from this period of destabilisation and economic uncertainty. In an environment undergoing radical change, there also has to be radical realignment in a movement’s ideology. ORM’s ideology had focused primarily on meeting human needs in the workplace. The imperative now was to ensure that strategies were adopted that retained workplaces for people to work in. Increasingly Australian operations, particularly labour-intensive manufacturing
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operations, were being closed down because of their inability to compete with imports, or moved offshore to areas where labour was cheaper. But at that time, managers generally and members of the movement were often divided over the directions to pursue, how to proceed, what interventions to use and the scale of change required. In this confusion, the Total Quality Movement emerged, coming in like a wolf child from the night. It had no philosophical basis in the existing ORM tradition, and sprang not from existing centres but from the multinational companies associated with the automobile industry and, later, a broader range of manufacturing companies. At the time, Total Quality Management offered managers immediate improvements and a ‘step-by-step’ programmatic approach to organisational change. With the benefit of hindsight, this new approach was also an incremental approach which did not tackle the need for new business strategies to reposition the business and for change strategies to transform missions, structures and work processes. As it turned out, it was too little, too late, but that was not obvious to many at the time.
THE CHALLENGE OF JAPANESE MANAGEMENT TECHNIQUES IN AUSTRALIA The use of production teams fell out of favour within the manufacturing industries, while many other workplace change initiatives were abandoned or scaled down. But for many Australian manufacturers a new trend emerged. This was the drive to establish quality circles and to adopt Japanese-inspired management practices.5 6 The growth in international competition had seen Japan, initially in the automobile industry and later in the electronic consumer industry, emerge as a major innovative competitor for the Western nations. In the auto industry the big three American producers were struggling to survive the onslaught from their Japanese competitors. Initially, Japanese success was attributed to low wages. But the Japanese onslaught intensified as the wages of their auto workers rose, and American and European consumers
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 83 were increasingly buying small high-quality Japanese cars in preference to larger US-built cars. Japanese competition intensified further as Japan moved successfully into a range of consumer industries. The shock created chaos in whole industries in the West, and academics sought desperately to explain the basis of Japanese economic success.7 As the ‘cheap labour’ explanation for Japanese success was abandoned, new explanations were sought. The earliest and most popular was that the success was due to the Japanese industrialists’ use of Total Quality Management (TQM) to improve manufacturing processes. Consequently, in the West, Total Quality Circles (TQC) became the first of many marketable ‘quick fixes’ for the emerging Western industrial crisis. The TQM approach appealed to managers: it was problem-focused, engineering-based, rational, and management could direct the change agenda. It espoused employee participation but emphasised that management set the agenda. Consequently, unlike industrial democracy approaches, TQM posed no challenge to managerial authority. Finally, it could be readily linked to some of the emerging strategic requirements of organisations.
TQM AND THE QUALITY MOVEMENT The ‘quality movement’ had its beginnings in the 1920s at Bell Laboratories, where Edwards, Dodge and Shewhart,8 a group of statisticians, devised the first techniques for controlling quality in manufacturing processes. In its early format this involved process control charting; the frequent sampling of a process; and the plotting of the results onto statistical control charts.9 By employing these methods, TQM practitioners devised a management philosophy for quality control based on a preventive approach. But it was not until World War II, when the military required reliable equipment, that quality techniques and methods were employed more extensively. After the war, quality was introduced into a wide range of manufacturing operations through the formation of separate quality control departments. At this time, quality control was emphasised mainly in those industries which had strong links
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with the military and therefore had to meet the military’s quality control requirements. It was also during this period that the quality movement, only a minor movement in the USA, diffused to Japan. Beechler and Pucik have described how American organisational theories were disseminated throughout Japan. They have identified five stages of diffusion. In the first stage, which occurred directly after the war, American organisation theories were used as a ‘counterweight to the diffusion of Marxist ideas that were ideologically unacceptable to most managers as well as to the American occupational authorities . . .’10 It was recognised in the postwar period that Japanese production methods were significantly behind those of the Western world. In order to improve quality, US quality standards were introduced. In this phase the first quality control seminars held in Japan were conducted by Allied General Headquarters, and followed up by a series of seminars promoted by W. Edwards Deming in 1950 onwards and also by J.M. Juran in 1954. As Beechler and Pucik point out, ‘The QC technology introduced by Deming and Juran, although eventually modified substantially by the Japanese, played a large role in modernising Japanese management’.11 The cultural transfer of many of the modern US management techniques was also facilitated by the Japan Productivity Centre and through joint missions to both Japan and America by managers and engineers. These methods included job enlargement and enrichment and group methods associated with the Human Relations school. Quality circles emerged in Japan as a result of the integration of quality movement ideas as expressed by Juran, Deming and others with these American HR management techniques.12 Up to this point, practitioners such as Deming and Juran had argued that quality control was the responsibility of management. While managers and engineering staff realised the powerful potential of quality methods, it was only when supervisors were encouraged to discuss quality practices with shop floor employees that quality circles emerged.13 In a very short time, quality control methods and practices moved from being solely management’s responsibility to actively involving employees, as originally advocated by Deming, Juran, Feigenbaum and others. By including
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 85 employees in the quality improvement process, Japanese managers were able to harness employee knowledge and competencies in order to eliminate technical and quality variances. This became a source of competitive advantage, as the integration of quality management onto the shop floor was not undertaken until much later in the functional and departmentalised factories of the West. The leaders of the quality movement, W. Edwards Deming, Joseph Juran, Kaoru Ishikawa and Armanad Feigenbaum, supported the adoption of an incrementalist approach to changes in the workplace; their approach concentrated on progressively improving the efficiency and effectiveness of core processes, particularly by eliminating problems that could cause deviations from the ideal quality standards of the end product. While each of these experts developed separate approaches to quality improvement, there were strong similarities between their approaches. All these change theorists argued that quality should relate to all activities within an organisation and that seeking quality improvement is crucial to reducing variations and creating an environment of continuous learning and incremental change. Japanese managers elaborated and built on the work of these change agents so that the preventive approach to quality became synonymous with Japanese manufacturing practices and world best practice. So highly regarded were these agents that the Japanese awarded Deming the Second Order of the Sacred Treasure and also named a national quality award after him — the Deming Prize.14 Deming’s approach to quality cannot be reduced to a simple set of techniques; rather it is a way of organisational life. Deming’s philosophy hinges on the premise that by controlling variation in a system the objective of total quality can be reached. For Deming, achieving excellence in quality is a never-ending process. It requires that managers look beyond their own organisations and encourage suppliers, customers and other stakeholders to join them in the process of quality improvement.15 In implementing quality improvement, practitioners devised a series of tools to facilitate the quality methods. These tools included flow diagrams, Pareto charts, brainstorming, histograms, control charts, sampling, statistical methods and tests. Through the use of these techniques, managers saw themselves as empowering
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employees to control variance in the delivery of products and services. The rapid spread of support for the quality movement outside Japan was facilitated by Japan’s economic success. Western managers were searching for the key to this economic miracle and focused on the quality movement as the most likely source of the success. In fact, Japan’s success rested on a more complex set of factors, but the attribution made the quality movement a major force worldwide for incrementalist change in organisations. The expansion and diffusion of the quality movement in Australia has been reviewed by Dawson and Palmer,16 who also examine how quality concepts have been applied in Australian organisations. Their research identifies the important role played by governments and private consulting organisations in TQM’s diffusion. They show how extensive government support assisted the spread of TQM concepts. In particular they cite the example of the Queensland government, which used procurement policies to force organisations to adopt quality management practices: ‘Nationally the main mechanism is the National Industry Extension Service (NIES) subsidy for companies using consultants to introduce approved Quality Management programs’.17 NIES, through the consulting firm APTECH, designed and promoted a TQM package that consultants could buy a licence to use. These packages were relatively cheap to obtain, which meant that many small operators could afford to buy the licences. In the early to mid-1980s Enterprise Australia, a private consulting firm, also played a crucial role in helping to launch and promote quality management in Australia. This organisation was responsible for helping to establish the TQMI (Total Quality Management Institute) in 1986, which set itself the goal of diffusing quality management practices throughout Australia. The TQMI ‘takes corporate not individual members and seeks to promote awareness of the general need for quality improvement at the most senior levels of management and government’.18 An Australian TQM award was established in 1988. In 1990 these diffusion centres (Enterprise Australia and the Australian Organisation for Quality Control, the TQMI and the Quality Society of
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 87 Australia) were organised under an umbrella organisation — the Australian Quality Council.19 As in the USA, quality circles followed by quality management were the first waves of Japanese-inspired change techniques to reach Australia and the most readily diffused. They initially came via the multinationals, primarily those involved in the automobile and components industries.20
QUALITY AT FORD AUSTRALIA In Australia Ford executives were concerned with growing customer complaints and the defect problems that were occurring in their vehicles during the 1970s. As a response to this, they increased end-of-line quality assurance and control, a move which had no significant effect on reducing quality problems. So, during the early 1980s, Ford modified its approach, putting in place a series of ‘quality at source’ initiatives and introducing employee involvement groups. (These closely replicated quality circles in Japanese manufacturing companies.)21 While management was keen to use groups to raise employee participation, their primary motivation was to increase awareness of quality issues and reduce costs. These voluntary groups identified and tackled quality problems with the help of engineers and managers. By the end of 1988 there were 310 employee involvement (EI) groups at Ford, covering more than 28 per cent of the workforce or 3500 workforce members.22 By the end of the 1980s these EI groups were being scaled down as the Ford Q1 program was being introduced. The new Q1 program signified a shift at Ford from using groups mainly as a mode of employee participation to using them more as a strategic tool for achieving quality and productivity improvements.23 This proved to be an effective strategy, as it integrated quality approaches with organisational systems and business strategy. Many in the ORM either did not have the technical skills, nor did they see the relevance of these approaches to ‘humanistic change’. This was a missed opportunity to link to other professions and to expand the movement’s impact.
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QUALITY CIRCLES AT BENDIX MINTEX While the quality approach to change spread rapidly, it was open to claims of being a management fad. Many organisations attempted to improve quality but had little success in integrating this approach into their business practices and systems. For instance, management at Bendix Mintex aimed to improve the company’s competitive position through the application of continuous improvement. In 1987 over 140 staff were introduced to the concepts of TQC in training sessions and the first TQC teams were established in the plant. Teams were cross-functional and consisted of representatives from management, engineering services and the shop floor. In 1988 management appointed a TQC development officer and the number of teams proliferated to 28. By 1989 the number had peaked at 40. There were many significant process improvements introduced and quality problems rectified. However, the momentum of the TQC change program declined dramatically during 1990 when the number of teams was reduced to 17, and a month later the project and the TQC awareness workshops were halted; enthusiasm had waned as teams struggled to marshal the technical resources to solve the problems they identified. While it was recognised by management that a number of the teams had made considerable progress, the results sought by the quality teams were generally not achieved. By the time of the project’s completion, over 10 000 hours in staff training had been conducted and over 500 people exposed to some form of TQC awareness.24 But in management’s view the process had not been cost-effective.25 This is another illustration that new systematic change initiatives, whether from within or without the ORM, often fail. The reasons for these failures are often not identified or documented. The organisation goes on to the next fad and little if any organisational learning takes place. Other ‘engineering’ or system-focused techniques also proved popular, particularly in manufacturing organisations. These included ‘Just in Time’ (JIT), ‘Value Added Manufacturing’ (VAM) and ‘World Class Manufacturing’ (WCM) approaches which involved the development of long-term relationships with suppliers
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 89 and customers, the reduction of inventories and buffer stocks, and an emphasis on the interrelated nature of manufacturing systems.26 To our knowledge, one of the first programs to establish integrated Japanese manufacturing systems in Australia was undertaken by Mitsubishi in 1980.
MITSUBISHI AUSTRALIA AND JUST IN TIME SYSTEMS The Mitsubishi automobile factory in South Australia was one of the first published cases of the use of a range of Japanese manufacturing practices in Australia. The previous owners, Chrysler, sold the plant to Mitsubishi in 1980. Mitsubishi then proceeded to implement Australianised forms of Japanese management practices in the organisation. As a result, in two years the time to manufacture a car was reduced from 60 to 22 hours, and labour turnover fell from 55 per cent to 12 per cent.27 Kriegler and Wooden (1985) attributed the turnaround in performance to the implementation of various Japanese management practices. One of the central features was the introduction of the flow assembly line with minimal inventories and the JIT (Just in Time) system of production. This eliminated the need for a buffer stock of parts. It also created a system vulnerable to strike action, and this was avoided by the development of a participative management style and cooperative industrial relations. The changes also involved the application of quality groups and multiskilling. Clearly a ‘whole-system’ approach had been more effective than the introduction of one particular intervention such as TQM. In New South Wales the Technology Transfer Council introduced a scheme to promote and show the benefits of JIT for manufacturing organisations. As the result of the project, which was undertaken in 28 companies across New South Wales, it was demonstrated that the participating companies had experienced significant improvements in the form of reductions in changeover times, in work in progress, in lead times, in rework and in inventory.28 With such evidence of success, it is easy to see how these technically dominated and engineering-focused strategies appealed to many technically trained managers as the best means of improving organisational performance.
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PROBLEMS WITH TQM Quality circles were popular with management because they were based on voluntary team meetings to discuss quality problems relating to either product or process improvements. These team meetings were normally led by a supervisor or engineering expert, and were conducted within set time limits. Members of the circles were taught very basic statistical techniques and methods for problem-solving. As Cole states: ‘The circles concentrate on solving job related quality problems. The circle solutions are presented to management for action, with the circle members having no authority to implement the solutions on their own.’29 Quality circles differed markedly from the semi-autonomous work teams advocated by OD and STS practitioners. Quality circle groups usually included representatives from different stages of the production process, rather than being a team responsible for one stage only. In the manufacturing sector the trend towards the adoption and use of teams to improve product and service quality continued through much of the 1980s. Manufacturing firms introducing quality circles often found that the approach was initially very successful at identifying problems and arriving at proposed solutions. But this success created a burden for engineering and maintenance staff, who often could not process all the issues raised and had difficulty finding the resources to tackle them. The introduction of quality circles also required that time be found for employees to participate in these circles and to be trained in basic statistical or problem-solving techniques. This resulted in higher costs associated with training and time spent away from production duties. Finally, many of the quality circles and employee involvement programs lost momentum: the enthusiasm of shop floor employees waned when suggestions were not translated into tangible outcomes. Employees also often found that their experiences of empowerment did not match the managers’ and consultants’ ‘hype’ about it. Because groups were not empowered to make effective decisions and take actions, general employees came to view TQM programs as another management fad. We can now summarise the major characteristics of the TQM approach to change.
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THE TOTAL QUALITY APPROACH TO CHANGE !
basic metaphor: organisations as continuous process improvement systems; ! diagnostic model: TQC/TQM methods of analysis; ! ideal model: focus on continuous improvement in order to reduce variations and enhance product reliability and customer satisfaction; ! intervention strategies: the use of TQ circles or groups to harness employee knowledge and equip employees with the tools to make improvements. Change driven by management from the top down; ! change agent role: expert and teacher of knowledge relating to techniques of quality improvement. The expert empowers others. At first glance the role of the change agent in TQM may seem similar to that of an industrial engineer introducing Tayloristic work methods. However, there are two significant differences. While the TQ change agents play a similar expert role, they are working actively to transfer this expertise in diagnosis and implementation to members of the workforce rather than retaining the skills. In addition, the TQ change agent has to master some of the social facilitation skills necessary for initiating and sustaining group work. The role, therefore, demands a mixture of technical and social skills rather than technical alone. The TQ Movement acquired popularity for several reasons. First, its connection with Japanese success in seizing a major share of key world markets gave it wide publicity. Second, it had substantial appeal because the post-World War II shortage of goods and services had been overcome and competition was intensifying, both locally and globally. TQM redirected attention to the importance of customers and clients and offered a promise of meeting customer expectations more effectively. The failure of many TQM change programs to deliver on this promise, for the reasons outlined above, led to widespread disillusionment that this was simply one more management fad.
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TECHNOLOGY: A MISSED OPPORTUNITY Another major force for driving work redesign during this period was the impact of new technologies being introduced into the workplace. More attention was paid to the impact of technology in shaping the future of work and the future composition of society. At the wider societal level, there were concerns that the new technologies might increase unemployment. The federal government established a Committee of Inquiry into Technological Change in Australia in 1980 to look directly at this problem. The debates on technological change focused on two levels: society and the firm. For unions, new technology was an issue that could have a significant impact on their members and membership numbers. In particular they expressed major concerns over job losses and deskilling. Often these concerns were realistic: there were many choices available to managers in the way they chose to apply new technologies, but many managers saw the introduction of new technology primarily as a means to increase productivity by downsizing the workforce and to regulate pay claims by threat of unemployment. However, they often did not have any real understanding of the potential impact of new technology on their enterprises. The introduction of ‘lofty cranes’ to the building industry was a case in point: management was quick to see the advantages that the cranes provided in terms of speed and efficiency, but it failed utterly to anticipate the vulnerability of building projects to industrial action resulting from a small elite group of crane drivers being able to agree to stop work on projects in cities such as Sydney and Melbourne. In many cases, decisions about new technology were made by engineers who were removed from the everyday production and industrial relations realities in the workplace. Front line managers often had to deal with the unintended consequences of the application of new technologies, such as more industrial disputes and the lack of skills needed to operate the new machines. In one of our interviews, Bill Ford cited many examples of this: one was
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 93 a brewery in Australia that invested in new technology for a plant upgrade from a German company, only to find that the instructions on its use and repair were written in German (which no-one could read). As a result, for some time the plant could not be operated effectively by either employees or managers. Many Australian organisations had similar experiences with ‘turnkey’ projects, not only in terms of language but also from the fact that the equipment was often designed for a workforce with different skill levels or industrial conditions. For example, the German workforce was generally more highly skilled than the Australian workforce, and the Japanese workforce was not affected by demarcations that prevented Australian production workers from carrying out basic machine maintenance. Bill Ford argued that: . . . the failure to develop organisational and government policies on the human aspects of technological change is making Australia a technologically dependent and highly vulnerable society. This is being accentuated in Australia’s apparently increasing tendency to resort to the importing of ‘technological packages’ and ‘turnkey projects’.30 31
For service sector organisations, the issues were somewhat different. This sector had lower rates of unionisation and many of the unions were not as powerful as their counterparts in manufacturing. Service sector organisations in particular were introducing computers and mainframes and there was speculation about the ‘paperless office’.32 But, as Williams noted in 1983, the new technology was often introduced in ways that actually reinforced rigidity in bureaucratic organisations. For instance, in many cases typing pools were replaced by word processing pools, thus perpetuating the factory-like organisation and conditions of work. In government agencies such as the Australian Taxation Office, these earlier technological choices left the organisations with major problems in the 1990s when they tried to introduce more flexible work practices. Williams33 compared the actual approach to technological change used by most Australian managers to what he saw at the time as the desirable but seldom-used alternative (see table 4.1).
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Table 4.1 Approaches to technological change Actual approach Preferable alternative • Human and technical designs taken • Technical system designed by experts into consideration from start • Centralisation of control • Interfaces between humans and technical systems designed to allow self-management • Flexible, adaptive technology • Technical system designed to operate same way under all conditions • Participative design • Technocratic implementation with little employee participation Its consequences Likely consequences • Problems addressed through • New technical system has unexpected integrated design problems • Employee dissatisfaction and conflict • Employee requirements satisfied Customer needs satisfied through • Customer dissatisfaction through poor • flexible technology and committed service delivery workforce Source: Adapted from Williams (1983:86).
In this period failed approaches to technological change proliferated, and the possibility of using the introduction of new technology to achieve long-term organisational change outcomes was largely ignored. The ORM to this point had developed a sophisticated set of change competencies relating to interventions in the social system. However, by and large the movement had failed to attract and recruit engineers and the new profession of IT systems analysts. Consequently, technological change programs were often managed separately from other organisational change programs led by ORM practitioners. The lack of integration often led to negative consequences for both.34
THE SHIFT FROM INCREMENTAL TO STRATEGIC CHANGE The third major challenge to the ORM also came from outside the movement. Incremental changes, long advocated by ORM, were being seen as less relevant for turning around organisational performance in increasingly turbulent economic conditions. In
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 95 Australia, large-scale restructurings of organisations emerged first from the application of strategic planning and management techniques in mining projects and, second, through modernisation programs in state and federal public services and agencies.
THE MINING BOOM AND BUST The mining boom of 1979-1983 was to have a significant impact on approaches to systematic planned change in Australia, and helped to shape the new ideology and direction of the ORM. Doran wrote: In 1980 media coverage and public discussion of mining again reached a peak, as plans were announced for a large variety of mineral projects. In the wake of the 1973 and 1978 oil shocks, against a background of fears of an impending energy crisis and a search for alternative sources of energy, there was talk of a further resources boom in Australia.35
The Fraser government and several state governments were keen to promote large-scale mining projects in Australia. The onset of the mining boom saw major new investment projects planned and initiated in Australia and many existing mining operations expanded or geared up for expansion. Some of these projects were larger than any previously undertaken in Australia and some of the largest in the world. They involved more complex handling of finances, new technology, new organisational partnerships, large-scale investment and human resource planning. Esso’s Rundle project in the Bowen Basin (Queensland), to which Dexter Dunphy was consultant, for example, was extensively planned but never carried through. If it had been launched it would have been the largest mine in the world in terms of tonnes of earth and rock shifted. Some projects required the creation of new towns and infrastructure to support miners and families. Most projects required not only the establishment of new organisation and management approaches but also the creation of new or significantly extended community and organisational environments that would enable these often isolated sites to attract the skilled workforces they needed. A characteristic of large-scale mining
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projects is that they demand long-term strategic planning and coordinated implementation of a complex process of institution and community building. As mining and energy organisations responded to the heightened demand for mineral resources, the changes actively involved some ORM practitioners in strategy development. As a result there was a significant shift in the emphasis in ORM to the importance of strategy and on an upgrading of the role of strategic human resource management. Consequently, the new projects had a significant, if unintentional, impact on the management of change and organisational design in large organisations. In 1980 Hilmer characterised this change as the transformation from ‘operational to strategic management’.36 He argued that mining companies in Australia had undergone significant changes in the past 20 years, growing in size and complexity. This required a constant shift in their management styles, from an emphasis on increasing generating efficiency to being able to strategically manage an organisation and large-scale projects through distinct phases of growth. The mining boom enhanced awareness of the competitive advantages that could be created as a result of effective strategic planning and led to a closer alignment of technical planning with human resource planning. As Dunphy and Mills37 noted in 1982, large-scale, resource-based projects were a major challenge for managers, not only because of their technical requirements and massive investment but because of the issues they raised in relation to management skills, the use of human resources and planning. These large-scale mining projects were challenging for several other reasons: there was a lack of managerial expertise in Australia for managing projects of this scale, and there was also a lack of technical expertise in the array of the new technologies available. Dunphy and Mills38 described effective strategic human resource planning as requiring knowledge of the following areas: ! organisation design ! manpower planning ! industrial relations ! remuneration
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 97 ! training ! organisation development ! community relations ! employee relations. They suggested that, for long-term success, organisations needed to take all of these areas into account and, through the planning process, integrate them at each phase of a mine’s development. The underlying theme here was the need for larger companies to develop a new strategic function, giving an important place to a holistic form of human resource management.
THE ORM AND THE MINING INDUSTRY Two leading experiments in establishing greenfield mining sites according to these principles were the Woodlawn copper mine in New South Wales and the Agnew Nickel mine in Western Australia. Both involved key leaders in ORM (Chris Stroebel, Reg Cole, Fred Emery, Bill Ford and Viv Read at Woodlawn; Dexter Dunphy at Agnew). The Agnew mine was 50 per cent owned and fully operated by MIM. Situated in a remote region in the far east of Western Australia, it involved planning and developing a new town and a new mining operation. It broke new ground in almost every area of traditional mining practice and was regarded by the company as highly successful. Woodlawn was an innovative greenfield site, where the application of innovative human resource principles resulted in the development of a new management culture and organisation design that incorporated much of that time’s best practice. It was an open-cut copper mine, established as a result of a partnership between CRA and an American resources company. This greenfield site embodied many practices that were considered revolutionary then but which are today considered standard practice. Key to the success of the Woodlawn site was the appointment of Mike Blackwell, the CEO, and innovative human resource management professionals Chris Stroebel, Gordon Jackson and Reg Cole (who worked at the site from 1975 to 1985); the latter three had been part of Bill Ford’s research team on the Jackson
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Report. Also Rod Carnegie, who had been a member of the taskforce for the report, played a key role in supporting the Woodlawn project. They wanted to create a mine that would foster teamwork and to develop a skilled labour force by introducing multiskilling to develop career paths for workers. Along with these innovative developments, at Woodlawn union demarcations were reduced and the unions involved were limited to three. This was an innovative concept and well ahead of any of the award restructuring initiatives that were to emerge in the late 1980s. In Reg Cole’s words: Woodlawn was where we brought it all together for the first time. We really went to work on it. For instance, with multi skilling we employed 20 contractors (from the local TAFE) to design all the skills training programs. It was really quite professional. One of the problems with Woodlawn was that they wanted a young workforce. They wanted 50 per cent to be female. They never got as high as 50 per cent but they got as high as 40 per cent. Woodlawn today is two underground pits. But it is interesting that in going underground, they took with them all of the practices associated with the open pit. It was a very successful commercial operation.39
These large-scale mining projects saw the first real attempts in Australia to integrate functions such as personnel, training, industrial relations and organisation development and relate them systematically to business and investment strategies. They also underlined the need to develop and institutionalise a professional body of experts to plan and manage organisational change and human resource issues. Rod Carnegie was so impressed by Blackwell’s work that he subsequently appointed him to fill the critical role of instituting similar policies throughout CRA’s other Australian operations. A few days before he planned to take up his new role, Blackwell suddenly died. Carnegie subsequently went on to work closely with another UK ORM pioneer, Elliot Jacques, and to institute major and systematic strategic human resource strategies across CRA. Jacques’ work was more structurally driven and less concerned with process, but Carnegie, with inputs from Chris Stroebel
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 99 and Viv Read, nevertheless had a major influence on another successful CRA mining operation, the Argyle Diamond Mine, established in the early 1980s. The mining boom created intense activity in the early 1980s, but the flow of investment peaked in 1982/83 and virtually ceased in 1982/83 (see table 4.2). With the onset of recession and the raising of interest rates, big investment projects in Australia became less attractive financial propositions. However, the mining boom had firmly established the need for a strategic approach to corporate change and confirmed the vital role of strategic HRM (Human Resource Management) in the change process.
PUBLIC SECTOR CHANGES At this time (1977-1983), the public sector in New South Wales was one of the leading areas undertaking planned, large-scale organisational change programs. In these change programs, reformers were concerned with moving the focus in the public sector away from bureaucratic administration to the economical delivery of services. In the public sector, issues of privatisation and corporatisation were hotly debated and major corporate change projects initiated in some public authorities. In New South Wales these debates culminated in the ‘Wilenski’ reports. Peter Wilenski, at the time a professor at the Australian Graduate School of Management at UNSW, was commissioned by the Labor government under Wran to review government administration.40 Together, Directions for Change (1977) and Further Report: Unfinished Agenda (1982) were Table 4.2 Inflow of foreign investment in enterprises in Australia: mining industry ($A million) Year Total 1979/80 599 1980/81 1322 1981/82 1573 1982/83 2631 1983/84 97 1984/85 390 Source: Australian Bureau of Statistics.41
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designed to revolutionise governmental approaches to administration. Wilenski’s five key recommendations were: 1. Elected politicians should make the most important decisions. 2. Flexible management structures should be instituted in order to increase responsiveness. 3. Appointment to and promotion within the administration should be solely on the basis of merit (this marked the real beginning of equal opportunity legislation in Australia). 4. The structure and processes of administration should be substantially modified (it was noted that pyramidal structures inhibit effective communication between managers, staff and members of the public and affect service delivery negatively). 5. The final theme concerned itself with issues of ministerial responsibility and accountability.42 43 Wilenski argued that: If government is to continue to develop the base for commerce and industry, provide services that protect and support less advantaged people and also broaden the opportunities and extend the freedoms of ordinary citizens, it needs to place much greater emphasis on improving public management. In part, it is a matter of breaking up hierarchical structures so that the talents and energies of people trapped in the middle and lower reaches of the bureaucracy may be released and put to use.44
This was a major broadside directed against the Taylorist cracies of Australian governments.45 Wilenski described the used by the review in these terms:
The review staff in consultation with the government selected a few critical areas in which to pursue and implement change by following a path of ‘selective radicalism’ towards the broad objective of a more democratic, more equitable and more efficient administration.46
The Wilenski reports represented an early but significant attempt to modify traditional public sector bureaucracy on a large scale. Many more such government inquiries and recommendations were to follow elsewhere in Australia over the next few years.
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 101
ORM RESPONSES AND CONSOLIDATIONS The rapid rise of Japanese management practices and their popularity with managers and engineers had not been anticipated by many in the ORM. Similarly, the application of new technologies remained isolated from the humanistic orientations of the ORM, while large-scale projects required new sets of skills and intervention approaches. The responses of the ORM to these challenges varied considerably. One was to acknowledge these challenges but to resist their incorporation into the ORM because of philosophical differences. This was particularly the case with the quality approach to change. The result was that many new technical and engineering consultancies and change agents emerged to take up these technical, problem-solving approaches to renewal. Many ORM practitioners saw these as ‘Johnny come latelys’, ‘peddling’ simplistic solutions that used the rhetoric of empowerment without its substance. Other ORM practitioners incorporated TQM approaches in their repertoire of intervention strategies. ORM’s initial successes had tended to reinforce the value of what members of the ORM were currently practising rather than to lead them to re-examine their basic assumptions. Members of the ORM now struggled with the notion that they needed to modify their values in view of critical changes in the environment. They were encouraging organisations to be adaptable but they too had to learn to become adaptable. But some within the movement saw the challenges, particularly those involving large-scale change and strategic planning, as presenting new and exciting opportunities. They could see that the changes that were occurring in the economic, social and political context of these organisations required a corresponding shift in the direction of the movement.
ORM AND THE TRANSITION TO STRATEGIC CHANGE MANAGEMENT Despite the lack of overall political support, at this time a growing number of ORM practitioners were actively involved in introducing
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changes in government departments, service organisations and the resources sector. Traditionally, most ORM efforts had focused on job redesign at the shop floor. However, a shift was occurring with ORM practitioners taking on advisory, training or facilitating roles with upper-middle and senior managers. As more internal and external consultants began to practise, they sought more systematic ways to exchange ideas. An OD network had been established in Melbourne during the early 1970s but had lapsed. It was revived at a conference, ‘Seminar 1983: Managing Personal and Organisational Change’, conducted by the Melbourne Organisation Development Network and attended by ORM practitioners from across Australia. This conference reviewed the progress of OD over the past decade. In a paper presented at the conference Hollis Peter talked about the changing roles of IR and OD practitioners. He concluded that, while they studied the same field, they came from very different subcultures, characterised by different goals, roles, methodologies, training and values.47 Hollis Peter argued that IR and organisation change practitioners seldom worked together, had separate professional associations, and effectively lived in two separate intellectual worlds. He went on to argue that, if the IR system did not support the broader changes being made by managers in organisations, it was only a matter of time before IR specialists would be swamped by the emergent organisational culture that was moving away from a confrontationalist approach.48 These proved to be prophetic words. In a more hopeful vein, he saw some organisations as having successfully bridged the gap between the two fields: these organisations were achieving changes in a cooperative and strategic manner. The reinvigoration of the OD network in Melbourne signalled the growing numbers of ORM practitioners and the development of broader professional networks. It also indicated growing acceptance within organisations of the ORM change agents and their use on large-scale change projects. As Dunphy pointed out in another paper delivered at the conference: There is currently a major shift taking place in the traditional role of OD. Practitioners within the movement are moving beyond the
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 103 solving of lower level problems to the larger role of enterprise human resource planning. This is reflected in the structural reorganisation of many companies where the functions of OD, training, personnel, industrial relations, manpower planning, public relations and technical efficiency are being brought together into a single division with its manager reporting to the chief executive. It is also reflected in the comprehensive human resource planning being undertaken for large scale projects, particularly in the mining and processing industry.49
This change coincided with the growing professionalisation of the human resource function. In the larger organisations ‘personnel officers’ were redefined as ‘human resource managers’, and became responsible for a wide range of human resource functions such as training, organisation development and safety. In some instances they were also given the responsibilities associated with industrial relations, although many organisations still continued to operate separate human resources (HR) and IR departments.
THE EMERGENCE OF HUMAN RESOURCE MANAGEMENT Mitchell50 and Wright have documented the rise of personnel management in Australian organisations and traced the development of the personnel function as a profession. Two professional associations played important roles: the Australian Institute of Training and Development, and the Institute of Personnel Management Australia. The first was strongly influenced in its early days, particularly in Brisbane and Sydney, by the ORM pioneers. The second was strongly shaped by professional personnel managers from within organisations. Mitchell noted that, from 1972 onwards, there had been a shifting emphasis in the profession and a name change from Personnel Management to Human Resource Management (HRM). This change in occupational name corresponded with a broadening of the range of responsibilities and functions of these departments. Traditional personnel departments had been concerned mainly with recruitment, selection, pay and wages. The new HRM approach broadened this role and became an integral part of the strategic
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management of the organisation, including the management of change.51 The approach taken by the HRM practitioner differed from the traditional approach of the personnel practitioner, in particular seeing the use of strategic HRM as a means of giving the company a distinct competitive advantage through the capabilities of its employees.52
THE ORM’S INCORPORATION INTO ORTHODOXY We have noted that prior to this time the introduction of ORM initiatives had relied on the enthusiasm of particular change agents and managers. Increasingly, however, many of the ORM methods were being adopted and used in a more systematic way by the newly formed HRM departments. The relative emphasis moved from relying on external experts to implement episodic change to hiring and developing internal change agents with the competencies needed to manage ongoing change. This marked an important transition period in which the ORM shifted from being seen as a heretical movement external to most organisations, trying to gain a beachhead, to being part of the normal internal functioning of the organisation, with growing access to the executive team. Thus ORM became part of the prevailing managerial orthodoxy. With this transformation came a shift in the original value base of the movement. A new philosophy appeared to be taking hold, which was much more proactive and increasingly linked to the strategic business direction of the organisation rather than seeking justification through its impact on the work satisfaction and personal fulfilment of employees. As ORM initiatives spread from the university centres to industry itself, there was a need for a handbook that would provide change practitioners with a systematic approach to selecting and using change strategies. This was provided in 1981 by Dexter Dunphy’s book, written in collaboration with Bob Dick, 53 Organisational Change by Choice. Dunphy and Dick outlined a philosophy of change based on a fusion of OD and STS theory, with chapters outlining appropriate process interventions for achieving change at different levels of organisational systems —
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 105 personal, group, intergroup, and the organisation as a whole. This book was unusual at the time in stressing the role of power, politics and conflict in organisations. It was regularly reprinted until 1996 and made a major impact on the practice of organisational change in Australia in the 1980s.
NEW DIRECTIONS AND NEW IDEOLOGIES Internationally, by the end of the late 1970s and the beginning of the 1980s, three distinct approaches to change had emerged. In Sweden, Germany, the Netherlands, Norway and the UK variants of the socio-technical approach were popular. Leaders of the movement in Australia were closely following the work initiatives that were occurring in these northern European countries, particularly in Sweden. The Volvo experiments in work process redesign at Kalmar in the 1970s and Uddevalla in the 1980s provided renewed hope that attempts to humanise work and implement workplace democratisation could be successful. These two plants were held up as exemplars of workplace democratisation.54 Nevertheless, a range of Australian socio-technical initiatives took place which were in no way simply derivative of the European development but represented autonomous parallel developments in their own right. What was not fully appreciated was that humanisation of work programs such as these took place within the context of full employment and relatively protected domestic markets. Nevertheless, during this period they appeared to offer demonstrable proof that alternative approaches to work organisation were economically viable and could produce high-quality competitive products. The experiments also took place within the context of corporatist agreements between unions, business and governments. This consensus model appealed to many leaders in the Australian union movement and in the ORM. In the USA, Organisation Development (OD) and Organisational Transformation (OT) were the dominant philosophies: the OD movement was changing. As the need arose to respond to new international competitors, many OD change agents accepted the criticisms levelled at the OD movement — that it was neglecting business imperatives, ignored organisational politics, was
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directed at the lower levels in organisations, and most importantly that it was failing to make major changes fast enough. Change made by most OD practitioners was not significantly radical to meet the emerging demands of increased international competition. Consequently, OD was remodelled into OT.55 56 This was an attempt to maintain the emphasis on participative approaches to change while accepting that changes must happen faster and be transformative. The chief instrument for increasing the scope, depth and speed of change while maintaining involvement was seen to be the ‘charismatic change leader’. In Japan new approaches were developing and attracting growing interest. Because of Australia’s orientation to Europe, North America and Asia, approaches from all these geopolitical areas were being monitored by the ORM, and a comprehensive series of borrowings was beginning to create the basis for a more holistic approach to organisational change. Overall, the Australian branch of the ORM drew extensively on overseas developments but was highly innovative itself, and was directed to working out a new synthesis of these approaches that fitted the Australian cultural environment. What can be learned from the experiences of members of the ORM in this period of uncertainty? One lesson is that changes in the external circumstances affecting a movement such as this can be seen as either a threat or an opportunity. For many of the ‘anchors’ of the movement, the changes threatened their strong ideological convictions and led to fight or flight behaviour. For pragmatists the changes represented new opportunities and the fusion of new ideas with old in an attempt to create a novel synthesis. The traditional anchors were increasingly sidelined as new centres of influence and new leaders emerged or older ones adapted. A second lesson is that the continued growth of a movement relies on its realignment to the emerging values of the period and of one or more emerging upwardly mobile elites. In this case, it was the new HRM managers and practitioners who saw the potential of ORM’s ideas for strengthening their organisational legitimacy and influence.
CHALLENGES, CONSOLIDAITIONS AND NEW DIRECTIONS 107
CONCLUSION When the mining boom ended, the federal government finally had to face the process of structural adjustment of the Australian economy. The process of initiating and carrying this through meant that transformational change would be needed for most Australian organisations. Fortunately the mining boom had seen the first movement away from small, piecemeal, uncoordinated change initiatives, sponsored most often at middle-management levels, to strategic organisation-wide change programs initiated by senior management. The lessons learned of the key role that could be played by strategic planning and strategic HRM were taken up by leading companies in other industries. This more systematic approach to change would be necessary to carry most Australian organisations through the difficult economic transition ahead. In addition, the growing number of trained change agents both inside and outside organisations represented a resource that could be utilised in the transition. The period had seen a shift in ‘ownership’ of change programs from being primarily in the hands of external consultants to being mainly in the hands of line managers and internal staff experts. External consultants still played an important ‘partnership’ role in many change programs: in particular, large consulting companies such as McKinsey & Company, Andersen Consulting and PA Management were increasingly active in transmitting strategic concepts and workplace redesign strategies. The large consulting companies were quick to see the market potential of the growing managerial concern with workplace reorganisation, and drew actively on ORM initiatives in Australia and worldwide. The change strategies developed in the ORM began to be ‘adopted and adapted’ by the large corporates, particularly those that were overseas-owned. The new link to strategic planning also placed systematically planned change on the agenda of boards of management and senior executive teams. Gradually, systematic planned change was becoming incorporated into standard management practice. The process of the institutionalisation of the ORM was now well under way. However, the majority of small to medium-sized Australianowned firms were still largely unaffected by the change movement.
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In most of these firms Australian managers continued to manage traditional ‘Tayloristic’ work environments in an authoritarian manner. Within the public sector also, the traditional monumental bureaucracies were still largely in place. The Wilenski reforms had been the first real challenge initiating widespread structural and cultural changes, but the bureaucratic traditions of most government departments overwhelmed many change initiatives. In March 1983 the Labor government under Bob Hawke came to power with a reformist, corporatist platform. The new government was promising a whole range of changes, including industry restructuring, policies of financial and market deregulation, industrial relations reform and industrial democracy. All of these reforms were to occur within the institutional context of an accord with the unions. The term ‘accord’ entered everyday language, along with the words consensus, consultation and cooperation. Optimism pervaded the labour movement and social reformers saw that opportunities now existed to make fundamental changes to Australian organisations, institutions and practices. The drivers of change were to be macroeconomic reforms. These reforms included the deregulation of the Australian financial markets, the floating of the Australian dollar, and a commitment by the government to industry restructuring through tariff reductions. These changes in policy were to dramatically alter the economic environment for both public and private sector organisations in Australia. They created an impetus for organisational change never before experienced in Australia, apart from the mobilisation of industry for each of the two world wars. This scenario for large-scale economic and social change was seen as an enormous opportunity by some key figures in the ORM. At last there was the possibility of a coordinated and systematic linking of large-scale change at the macro level of the economy and the micro level of the firm and government organisations. The ORM was strategically well placed at this time to complete the move from being a heretical movement beating at the institutional gates, demanding admission, to becoming a driving force for change within the core structures of Australian society.
5. STRATEGIC ALIGNMENT: HERESIES AS ORTHODOXIES (1984-1996)
I believe that an instant innovation takes 20 years to prepare for. We’re now seeing the fruition of learning from a lot of dead ends, from a lot of mistakes. But now one of the advantages that we have, is that we’ve got a lot of people trained and a lot of people moving the knowledge base of change. (Bill Ford interview)
In this chapter we explore the widespread diffusion and increasing influence of the Organisational Renewal Movement (ORM) in Australia from the early 1980s to the election of the Liberal/National Party federal government in 1996. The movement began in the 1960s in the activities of a few peripheral individuals and groups. It became, in this later period, a torrent of diverse change attempts across the Australian economy, initiated by governments, professional associations, employer bodies, consulting companies and individual consultants, academics and unions. No single chapter can do full justice to the scope and complexity of these initiatives; therefore our treatment of this period will necessarily take a ‘broad brush’ approach. During this period, changing economic and political forces undermined the foundations of custom, practice and precedent that
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had characterised Australian organisational and institutional life. The pressures on organisations to respond to change were enormous. In many cases organisational survival dictated that transformational rather than incremental changes be undertaken. An economic revolution of epic proportions was in the making, and Australian corporations would never be the same again. However, this demand for large-scale organisational change required that the ORM retool. Change practitioners had to abandon minor interventions and take the opportunity to lay the new foundations for organisational competitiveness. The situation created opportunities for ORM to influence the directions of change but also challenged some of the central values of the movement. In particular, the movement was increasingly caught up in the rising ideology of organisational change — strategic management. Consequently, we find that during this time (1983-1996) many of the earlier ideas, philosophies and incremental intervention strategies were appropriated, modified and used under the banner of strategic approaches to change and as part of large-scale transformational change strategies. By adopting a ‘strategic mindset’, the ORM gained wider acceptance and became an integral part of corporate orthodoxy. Much of the ORM’s radicalism was lost in the process. No longer were ORM practitioners heretics on the outer: they became a new elite, exerting a widening influence from within the establishment. The changes in the economic environment created the context in which the movement could achieve ‘lift-off’. Managers searched for ways to transform their organisations as an issue of survival. There was a new openness to change, arising in part from desperation but also from the emergence of a new generation of managers who were more oriented to change. While much was achieved, the process of increasing acceptance by political and managerial elites came at a cost. To achieve widespread support and become an orthodoxy, the movement itself had to undergo change. Before we go on to demonstrate how the movement to orthodoxy occurred, we would like to introduce the reader to the major characteristics of the strategic approach to change.
THE STRATEGIC APPROACH TO CHANGE The prevailing theoretical approach to organisational change today can be referred to as the ‘strategic approach’. This approach is so widely accepted in today’s organisations and business schools that it is easy to regard it as ‘reality’ rather than a historical construct. The field of corporate strategy emerged in the 1960s from the work of a number of managerial thinkers, particularly Philip Selznick, Kenneth Andrews and H. Igor Ansoff in the USA. They were actively involved in consulting to leading multinationals, which were confronting a series of problems emerging out of the growing pace of economic and social change and the increasing complexity of their organisations. The executives of these companies were looking for more effective ways to control the activities of their growing organisations and to develop strategies that would seize industry leadership and ensure the success of their international operations. The approach therefore focuses on planned, purposive competition and begins by looking outward from the firm, scanning the competitive environment. The aim is to identify the optimum strategy that will bring the firm competitive advantage in its markets. Thus the behaviour of competitors is monitored very closely and, once a viable strategy is determined, an implementation plan is put into place that will reposition the organisation so as to capitalise on the new strategy. This approach often demands a high level of internal change, including mergers, acquisitions and divestments. There is a strong commitment to streamlining organisational processes to create efficiencies and to benchmarking current performance against that of the leading global players. The centrality of the firm’s overall corporate strategy demands that all change programs within the organisation must be integrated and mutually reinforcing, actively supporting the strategic repositioning process. Strategic management was subsequently developed further and popularised by leading consulting companies, particularly the Boston Consulting Group, in the 1960s and 1970s. Consequently, by the early 1970s most large multinational corporations were attempting to develop or had developed a corporate strategic approach, with long-range plans to deal effectively with anticipated
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PROBLEMS WITH THE STRATEGIC APPROACH In its earlier forms, the strategic approach to change assumed that managers were rational decision-makers who could make accurate forecasts and that organisations were essentially passive tools to be directed to produce the desired outcomes. There was a strong tendency to ignore differing political interests within the organisation and the inherent difficulties of transforming a powerful existing corporate culture. In 1985 Pettigrew (a UK academic) criticised this early strategic approach, arguing that it suffered from three general limitations: 1. Its analysis of environmental factors was often limited to the competitive environment of the firm. While this was an important factor to consider, other major political and social factors affecting the firm’s future were ignored. 2. It assumed a primarily rational approach to strategy development, whereas strategy development is often more political, chaotic and disorganised than a rational decision-making model implies. 3. It almost exclusively concerned itself with the content of strategy and had little, if anything, to say about how to achieve the strategic outcomes.1 Pettigrew’s criticisms neatly encapsulate three critical weaknesses of early strategic formulations and, in each of the areas identified above, there emerged a major debate, which has led to subsequent modifications of the strategic approach. Pettigrew, and others associated with the Centre for Corporate Strategy and Change at Warwick University, significantly expanded the examination of environmental factors, as we discuss below. In addition, the overly rational assumptions of the early strategic planners were widely questioned and such criticisms led to a major debate in the field about the relative value of ‘deliberate’ and ‘emergent’ strategies.2 3 The result has seen much attention being paid by researchers to the open-ended nature of strategy and the impact of political interest groups in shaping the planning process.4
NEW DEVELOPMENTS IN THE STRATEGIC APPROACH In this regard, there have been two major developments within the strategic approach. One is the increasing attention paid to process, and particularly to political process. For example, Dawson5 has argued strongly for more attention by researchers to the process of strategic implementation and particularly to the political processes involved. He has written a number of detailed cases from this perspective. The other major development has been the increasing amount of attention paid to the issue of organisational culture and to corporate cultural change. Much of the research in this area has been impressionistic and based on little or no empirical research. A recent example of this is the treatment of culture change in Trice and Beyer.6 By contrast, Kotter and Heskett’s work7 represents a systematic researchbased attempt to trace the impact of some important features of corporate culture on performance; the authors showed performance to be strongly related to the degree to which the corporate culture emphasises meeting corporate stakeholder expectations. Their work is significant because it demonstrates that corporate culture does have a major impact on corporate performance and that, although difficult to change, corporate cultures can be made more performanceenhancing. Another major problem with early strategic formulations was the assumption that undertaking strategic planning in itself guaranteed success (Pettigrew’s point 3 above). The idea that the implementation of strategy was non-problematical was, in fact, naive. Strategists are now distinguishing the formulation of strategy from its implementation and placing more emphasis on the effective implementation of corporate strategy through well-designed and managed change programs. In addition, strategic planning is no longer seen as simply the formulation and linear execution of strategy. Rather, it is recognised that in the process of implementation the strategies may be thoroughly reworked and elaborated as more and more organisational units and stakeholders become caught up in the political process of corporate change and influence the emergent strategies. Early contributions to understanding the strategic implementation of change advocated universalistic approaches: that is, they
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advanced the idea that there was one path to be followed by all successful organisations in implementing change. Different theorists described different paths but each claimed that theirs was the one true path to success. For example, Beer, Eisenstadt and Spector8 use the evidence that they have gathered from six of America’s largest corporations to develop a universal theory of organisational renewal. While they advocate a strategic approach, they are critical of corporate-driven, top-down change programs as a means of achieving organisational renewal. They argue that there is little evidence for the success of this approach. Their evidence suggests that those organisations which are relatively successful in renewal target isolated, peripheral operations, then spread these changes through the organisation in a more organic fashion, and formalise systems and structures late in the change process. This view is in direct contrast to another ‘one right way’ strategic philosophy — Business Process Reeingeering. BPR advocates a top-down approach, with primary attention devoted to systems and structures. BPR advocates also advance convincing case studies to attest to the effectiveness of their approach.9 More recent works acknowledge that possibly up to two-thirds of BPR efforts fail.10 How is the practising manager to decide which of the advocates of these contrasting ideologies is the more credible? Out of the conflicting views of the universalistic strategic thinkers there emerged a challenge to universalistic prescriptions. This challenge still closely identified with the strategic approach but abandoned universalistic prescriptions. The newer approach is referred to as ‘contingency theory’, which argues that what is the right approach to strategic change will vary according to the nature of the situation. In a generic sense, contingency theory emerged in the 1960s as a major new initiative within organisational theory. A series of researchers examined a variety of factors such as technology, degree of environmental uncertainty and organisational size. (For a succinct summary of the work of these authors see Burnes.11) Their studies showed that in effective organisations factors such as these are linked to very different strategies. In other words, the evidence pointed strongly to the fact that there is no single formula for strategic success that is valid under all circumstances.
Contingency theorists were slow to apply their reasoning to the study of organisational change. However, Pettigrew and Whipp have used a contingency approach to explore the process of organisational change. Their study ‘attempts to link the competitive performance of British firms to their ability to adapt to major changes in their environment’.12 These researchers adopt a ‘contextualist’ approach. They define three very broad sets of contingent variables: the content of a chosen strategy, the process of change, and the context in which it occurs. They analyse two contextual levels: the inner context of the organisational culture, structure and politics; and the outer context, consisting of the business, economic, political and societal factors that impinge on the strategy. Those who use a contextualist approach favour research, using longitudinal studies and the collection of detailed qualitative data. They argue that strategic change can be meaningfully examined only within a particular historical and social context, and that successful change programs depend on detailed knowledge of a particular organisation’s context. The major problem with the contextualist approach is that it has proven difficult to draw out the practical implications of these theories for managerial choice about change alternatives. The factors to be considered are so multifarious that it is unclear from their work which contingency factors are most critical for the manager to take into account in making strategic choices. Lawler13 uses the evidence he has gained from organisations he has worked in and researched to develop a strategic approach to organisational change that is contingent on the degree of participation which already exists in the organisation. Lawler argues that there is a movement away from traditional and bureaucratic management styles to a more participative approach. These participative management approaches he identifies as TQM, employee surveys, job enrichment, teamwork, gainsharing, QWL and new plant design. Lawler proceeds to provide evidence that these participative approaches are applicable in different circumstances and must be implemented in different ways. He argues that, while each of these approaches can be used to move an organisation closer toward participative management, the particular participative methods that worked best are dependent on the
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degree of involvement that already exists in the organisation. Therefore, for Lawler, the methods of participation to be used in moving an organisation to ‘high-involvement management’ are contingent on the organisation’s current levels of workforce involvement, the industrial relations situation and the organisation’s business strategy. This is essentially a contingent approach to identifying the key factors needed to create a ‘high-involvement organisation’ which, in Lawler’s view, leads to strategic competitive advantage. Dunphy and Stace14 have also presented a contingency model for strategic change. This model gives priority to two key factors that emerge from the literature on change as critical areas of choice for managers: the scale of change needed effectively to reposition the organisation strategically, and the style of change leadership needed to effect the change. Dunphy and Stace advance evidence from field studies suggesting that strikingly diverse approaches to managing change can be equally successful but in different circumstances. Using the two key variables identified above, they define a number of ‘ideal types’ of change process and suggest the circumstances critical to the choice of these alternative paths to change. In addition, they examine how a variety of other important variables, which managers can often influence, need to be aligned with these change strategies. The strategic model is still evolving. It is, however, the dominant contemporary model of organisational change and, while there are differences within it, its central characteristics can be identified.
STRATEGIC APPROACH TO CHANGE ! ! !
basic metaphor: organisations as purposive competitors; diagnostic model: strategic analysis of the environment and of other key contingent factors; ideal model: a highly efficient organisation, meeting international productivity and profitability benchmarks for the industry, with a committed workforce supporting the organisation’s strategic direction; intervention strategies: environmental scanning, including com-
petitor analysis; strategic redirection and repositioning; design and implementation of integrated organisational change and HRM programs; ! change agent role: corporate strategist, technical expert in strategy implementation, integrator of varying strategic action programs. The summary emphasises a substantial shift in the role of the change agent, who now occupies a much more significant role — being responsible for the substantive development of the corporate or business unit strategy. In addition, the change agent needs the skills of strategic implementation, including the ability to integrate a range of change programs and projects which, in a complex organisation, will all be proceeding at the same time in different divisions, business units and work groups. In reality, the key change agent roles are often performed by the chief executive and the head of the HR function. Most managers will also have significant responsibility for implementing changes in their areas of responsibility. There are usually also specialised change agents — internal or external consultants — who provide additional expertise such as back-up to line managers in areas like industrial relations, team building or work redesign. The strategic approach makes change central to organisational functioning — an ongoing process of organisational self-transformation. For this approach to be successful, however, the environmental scanning, strategy formulation and implementation processes needs to be a seamless, coordinated and interconnected web of actions throughout the entire organisation. However, achieving this in a large complex organisation made up of a variety of factional groups with varied and often conflicting interests is a challenging task indeed. It is an ideal that few organisations are able to achieve and sustain over substantial time periods. The Strategic Change Approach gained widespread popularity because it provided purpose and direction at a time of major economic turbulence and transformation. It was clear to many senior executives that business could not continue as usual and this approach offered a key to the direction that corporate transformation could take.
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THE POLITICAL IMPETUS FOR STRATEGIC CHANGE Within Australia, the sudden explosion in organisational change projects during the late 1980s and 1990s can be attributed to several factors. Without doubt, however, the prime factor was the reorganisation of the Australian economy. This began with the devaluation of the Australian dollar by 10 per cent in 1983 and the subsequent deregulation of the Australian financial services sector, and the resulting integration of the national economy into the developing global economy. The move was foreshadowed by the Liberal government’s Campbell Committee Report (1978) and implemented by a federal Labor government through a series of wide-ranging legislative actions. This was one of the most dramatic shifts of policy in Australian history, reversing major political and economic policies adopted over the 80 years since Federation. The Hawke Labor government’s reform agenda centred on the economic restructuring of the economy. The chief instruments for achieving this were the floating of the Australian dollar, financial deregulation, and the freeing up of investment regulations. For most of this century Australia’s domestic economy had been relatively isolated from world competition due to distance and protective tariff barriers. By 1983 there had already been some reduction of tariff barriers, but financial deregulation and the entry of foreign financial institutions into the Australian marketplace led to a dramatic restructuring of the Australian financial services sector and this, in turn, had a massive impact on both private and public sector organisations. Other drivers used by the federal government during this period included industry restructuring through tariff reduction, the use of export enhancement schemes and government assistance provided for selected industries to support their transition to international competitiveness (e.g. the automotive, textile, clothing, footwear and steel industries). The macroeconomic reforms were followed, particularly under the Keating Labor government, by policies of microeconomic reform, which included the Australian Best Practices Demonstration Program to encourage innovation in industry work practices. These reforms culminated in 1995 in the National Competition Policy.15
In addition, massive restructuring of the public sector occurred during this period. One important aspect of this was the growing support by governments of all political persuasions for policies of commercialisation, corporatisation and privatisation within the public sector. These three sets of changes are closely related but different: commercialisation is principally concerned with putting government-owned enterprises on a commercial footing in order to improve their operational efficiency and financial performance, while retaining government ownership; corporatisation involves changing the legal status of a government-owned enterprise to allow the enterprise to act with greater autonomy; privatisation involves a complete shift from public to private ownership. All three processes were pursued in different circumstances within federal and state government bureaucracies.
INDUSTRIAL RELATIONS REFORM Another important element of the economic reform process was the attempt by the Commonwealth government to change industrial relations practices. Here the initiation of the Accord between government, unions and selected representatives of business and industry played a vital role in facilitating the changes. In particular, attempts were made to change the existing Australian industrial relations systems by significantly enhancing the role and importance of enterprise-level bargaining. The aim was to provide a path by which enterprises could reduce the massive labour inefficiencies sanctioned over the years by the traditional centralised bargaining system, and to increase the flexibility of both labour management relations and the variety of possible work conditions. With a Labor government in power, this had to be accomplished with the cooperation of the unions. An enterprise-based system promised to allow more rapid and effective adjustment to a highly volatile and competitive world economy. In this process, the union movement itself played a vital if cautious role. The first major impetus towards decentralisation of industrial relations occurred in March 1987, when the Australian Conciliation and Arbitration Commission (ACAC) handed down a national wage case decision which introduced a two-tiered system, combining
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centralisation and decentralisation.16 The movement towards decentralisation was further developed through the introduction of the ‘structural efficiency principle’ (award restructuring), which was put in place in August 1988.17 Many organisations were able to harness the award restructuring process and link it to the strategic direction of the business. For example, these initial steps towards the decentralisation of the industrial relations system were taken further by organisations such as ICI at its Botany operation, where the concept of award restructuring was extended to enterprise bargaining by the use of the Section 115 agreements of the Industrial Relations Act 1988. These agreements enabled organisations to experiment with changes to work organisation, skills development and workplace initiatives and to have the changes recognised by the Industrial Relations Commission. At ICI Botany, for example, a traditional enmity between management and unions was gradually transformed into a collaborative process of enterprise renewal.18 In October 1991 the ACAC acknowledged the need to extend the concepts of enterprise bargaining.19 It is still too early to estimate the overall effect of enterprise bargaining on the restructuring of Australian workplaces. Some organisations used the process to develop cooperative arrangements between employees, unions and managers in facilitating the process of workplace change. These organisations used enterprise bargaining to help commit the organisations to instituting comprehensive and continuous career and skills paths; pursuit of quality; reward systems; and new forms of work organisation. But many agreements, while impressively written, have in effect delivered little in the way of the improvements outlined in the agreement. Despite the difficulties associated with increasing the decentralisation of the industrial relations system, workplace reform through enterprise bargaining has become an ongoing feature of the Australian industrial relations system.
MAJOR FACTORS AFFECTING THE WIDESPREAD RENEWAL OF AUSTRALIAN ORGANISATIONS A further source of change at this time was the growing acceptance by opinion leaders in the Australian community that, if Australian organisations were to compete effectively in domestic and inter-
Table 5.1 Factors influencing the shift to widespread corporate renewal in the 1980s and 1990s • Floating of the Australian dollar (1983) and deregulation of the financial and banking sectors (1984-85) • Industry restructuring through major industry plans for the automotive, steel and textile, clothing and footwear industries • Development and use of a prices and incomes accord with the union movement, including the development of a social wage and selective industry support policy • Industrial relations reforms — shifting from a centralised bargaining system to one that is increasingly enterprise-focused • Higher education reforms initiated by John Dawkins — shifting the universities’ focus towards integration with industry and a role as educational service providers • Introduction and use of a government levy on training: the government used the levy to induce Australian firms to invest money in training to enhance the skills of their workforces • Microeconomic change — exposing government monopolies and duopolies to increased competition: commercialisation, corporatisation and privatisation of government enterprises and departments; airline deregulation and telecommunications deregulation. These reforms continued under the Hilmer (1993) National Competition Policy • Push for labour market deregulation by various employer interest groups, most notably the Business Council of Australia, which was also active in encouraging innovation within and between organisations • The increasing importance of the service sector for the Australian economy
national markets, they needed to be substantially restructured from their monolithic and hierarchical forms and to adopt new and more flexible approaches to carrying out their business operations. Sheltered for years by geographical isolation and the protectionist policies of governments of all political persuasions, most Australian organisations were extremely vulnerable to international competition. The majority of Australian companies were led by poorly educated managers who were often dropouts from the educational system.20 Most had little experience of operating outside Australia, and those who had were primarily selling bulk commodities rather than value-added products. Within the organisations themselves, most personnel were unskilled or using skills that were rapidly becoming obsolete. In the areas of toughest competition such as manufacturing, enterprise workforces were usually multiethnic and often illiterate in English, making communication and upskilling difficult to achieve. They were often deployed around outdated
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equipment, within the constraints of award conditions which created massive inefficiencies and inflexibilities, and subject to inefficient bureaucratic procedures. The result too often was poorquality products and ineffective ‘services’. The early ORM initiatives had only begun to tackle these problems. A further force for change was the increasing ability of the organisational change movement to supply the intellectual frameworks and intervention strategies to facilitate the massive reorganisation at enterprise level demanded by the economic restructuring. There had been a slow but steady maturing of systematic theoretical approaches to organisational change and to the development and testing of intervention strategies. Theory and practice were increasingly being diffused to change agents and managers through publications, university courses, conferences, and management and union training forums. Australia was in the fortunate position of accessing a wider range of approaches to organisational change than most other countries, particularly compared to the USA. Australians actively interested in exploring options were seeking them systematically from the UK, Europe, Asia and the USA. While the plethora of competing models led to some confusion, it created an awareness of a range of options and a diversity of approaches. This was useful at a time of critical re-examination of approaches to organisational renewal. In this regard, ORM was flexible and adaptable. Most ORM leaders saw that there was a need for the movement to change its orientation in order to keep in touch with changing external circumstances. A continuing impetus was provided by the growing number of academics being recruited to schools of management, commerce and business. These academics often had overseas training and experience and brought a more critical appraisal to traditional Australian management practices. But professional associations and consulting firms also played increasingly important roles. The Australian Institute of Training and Development (AITD) and the Institute of Personnel Management Australia (IPMA), later to become the Australian Human Resources Institute (AHRI), were holding regular state and national conferences in the 1980s and 1990s which attracted growing numbers of professionals interested
in organisational change and HRM. These two organisations, along with the Australian Institute of Management (AIM), offered regular and varied programs in strategic planning, change management and HRM. The Trade Union Training Authority (TUTA) was also active, and made a significant impact on a new generation of union leaders. Large international consulting firms, such as McKinsey & Company and Andersen Consulting, had substantial operations in Australia and brought international experience and expertise to bear on their Australian operations. Their client organisations included most of the leading Australian organisations and the Australian operations of overseas-based multinationals. Change management and strategic HRM became important component ‘practices’ in their range of expertise. In 1996, Andersen Consulting alone had over 3000 consultants specialising in change management in their worldwide operation, 150 of them in Australia. A host of other consulting companies were also active — many of them operated by single individuals, often working in consultant networks. In addition, a number of academic research centres played key roles in documenting successful change strategies, developing models for effective change and disseminating leading-edge practice. These included the Centre for Corporate Change (the Australian Graduate School of Management at UNSW), Monash Key Centre in Industrial Relations, the Australian Centre for Strategic Management at the Queensland University of Technology, the Australian Centre for Industrial Relations Research and Training (ACIRRT) at the University of Sydney, the Industrial Relations Research Centre in the Faculty of Commerce, UNSW and the National Institute of Labour Studies, Flinders University. Along with many individual academics, they developed and exchanged innovative ideas, documented best practice and influenced corporate, industry and government policies. Some of these centres were practically oriented and worked closely with organisations, others were more theoretically oriented and took on a role of pushing forward the intellectual agendas of the movement. Both roles were important in institutionalising movements and changing or modifying orthodoxies.
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The widespread program of national economic restructuring did not therefore take place in an intellectual or change skills vacuum. The ORM, while not presenting a unified approach, was injecting a range of ideas into the national debate, and was active in the design and implementation of a growing number of programs of planned organisational change. Opportunities for employing these ideas and change strategies had never existed on such a large scale before. Lectures on ‘coping with resistance to change’ tended to drop off the agenda as the growing readiness to change in many enterprises gave way to an active search for effective change models. The Hawke Labor government set out to reinforce this approach by shifting the emphasis away from industry restructuring (through industry plans) to the promotion of enterprise level competitiveness through initiatives such as the Best Practices Demonstration Program.
THE DEVELOPING IR/HR LINK At the end of 1982 there was renewed interest in industrial democracy (ID) and employee involvement. This was the result of the election of state and federal Labor governments, and coincided with the renewed debate on the future direction of Australian industrial relations. Crombie and co-workers published a study entitled Industrial Democracy in Australia 1972-1992: Profiting from our Experience.21 They described the earlier ID movement as a false dawn which had neglected to bring the union movement onside. They recommended that the government follow several possible courses of action. The first was to introduce legislation along the lines of an industrial democracy act. If it did not want to follow the legislative path, it could introduce an industrial democracy accord, along the lines of the Wages and Income Accord. Neither of these specific recommendations was pursued. The Hawke government initially appeared keenly committed to the concepts and notions of ID as part of the restructuring of the Australian economy.22 But it is unclear whether this commitment was mere rhetoric or whether the pragmatics of politics subsequently dictated a lessening commitment to ID.23 24 25
The government proceeded with its green paper, Industrial Democracy and Employee Participation, which was released in December 1986.26 This title was designed to appeal to both managers and unions. Managers through their respective associations were opposed to the use of the term ID and were happier with the notion of employee participation, while many of the unions by this time felt more comfortable with the term industrial democracy.27 In outlining its case for ‘Why change?’ and for companies to adopt forms of ID and employee participation, the government gave the following reasons:28 ! Economic development and effectiveness: Australia must develop organisations that are innovative and responsive to changing market conditions. Competitiveness can be achieved through the development of a highly skilled workforce. This in turn requires a re-evaluation of institutions, work practices and systems. ! Human resource development and workforce needs: there is a need to provide participative mechanisms to assist in the design of training and development and to address management control systems that undermine human resource development. ! Improving industrial relations: IR can be improved by developing cooperation and consensus through participative mechanisms. ! New technology: participative approaches are more effective in the use and development of new technology. ! Social justice and equity: ID can lead to more democratic societies and therefore to more justice and equity. In the absence of determined political and business support, once again ID measures were not implemented. The tide had turned against such ‘widescale humanistic changes’. However, many of the concepts that the advocates saw as being important components of ID, such as multiskilling, teamwork, empowerment and job redesign were linked by ORM practitioners to notions of corporate competitiveness and efficiency. Adaptation requires compromise. In the case of the ID movement, its first and second round of efforts ended in failure to institutionalise industrial democracy in any form. However, while the ID philosophies were rejected, many of the core ideas and
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practices were taken up, diffused and relocated within the ‘strategic approach’.29 Over the past two decades much of the responsibility of organisational change implementation in many organisations moved into the domain of the human resource (HR) function. In the process, industrial relations moved away from its legalistic origins and became more aligned with the broader concerns of HR departments. In many organisations, IR and the HR functions merged. A key accomplishment of the late 1980s and early 1990s has been the development of coordinated programs of organisational change which involve IR systems and institutions but are jointly managed by line managers and HR practitioners. What has been emerging here is a comprehensive model for strategic enterprise realignment designed to achieve sustainable competitive 30 advantage primarily through people-focused strategies. Three major Australian ORM leaders who have made ongoing contributions to the creation of this model are Professor Roger Collins, Professor Dexter Dunphy and Dr Doug Stace from the Australian Graduate School of Management.
RETOOLING THE MOVEMENT NEW APPROACHES TO TRANSFORMATIONAL CHANGE As a result of the major changes we have been discussing, most Australian organisations underwent at least one period of transformational change — that is, a major reformulation of their basic mission, strategies, structures, personnel numbers and human 31 resource practices. Fundamentally this was a reaction to the massive rewriting of the rules for operating successfully in the Australian economy and the exigencies of a major economic recession. What separates the late 1980s and early 1990s from the other major periods we have discussed is the widespread use of large-scale transformational change approaches. In the 1980s a major debate emerged about whether organisations can achieve success using only incremental participative change32 or whether they need to
go through periodic radical upheavals. Dunphy and Stace33 documented widespread use by many Australian organisations of transformational change using directive change leadership. As Stace saw it, this happened because most had failed to change in time to respond to the massive discontinuities occurring in their markets as a result of deregulation, recession and the rise of global competition. This transformational change often involved downsizing, decentralisation and the shedding of non-core businesses. Stace and Dunphy distinguished two kinds of transformational change in Australian organisations. A few were able to achieve rapid redefinition of their business and reshaping of their corporate strategies, structures and cultures under charismatic leaders. These ‘charismatic transformations’ were possible because the chief executives were able to mobilise the commitment to change of key stakeholder groups. Examples of organisational change of this kind occurred in Westpac Bank and Australian Airlines in the mid-1980s and in the State Library of NSW in 1988-1989. However, there were relatively few examples of organisational transformation being accomplished in this way. By far the more common type of organisational transformation was a ‘turnaround’ — that is, transformational change led by directive or coercive CEOs. These CEOs faced significant opposition from some stakeholder groups, but were able radically to redefine the core business of the organisation, divest non-core businesses and undertake successive workplace restructures, downsizing and retrenchments. Examples of this included National Australia Bank (1982-1985), MLC Life (1984-1987), and Pacific Power (1988-1991). For example, in this period Pacific Power, a public utility, turned a $40 million per annum operating loss into a $700 million per annum operating profit; cut the workforce by almost 50 per cent and restructured into five profit-accountable, market-driven production and distribution business units. The process, however, had significant human costs in terms of dislocation of the lives, employment and careers of many employees. Much organisational change took the form of a desperate but unimaginative struggle for survival. A study by Waldersee and Griffiths34 surveyed 300 large Australian organisations to investigate the types of changes they had undergone in the past three years.
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The researchers found that Australian organisations focused heavily on changes related to efficiency and cost control but largely ignored innovation and globalisation. When the authors compared the results of the 1996 survey to an earlier 1993 survey,35 two possible scenarios emerged. One indicated continued reliance on slash and burn management, characterised by downsizing and re-engineering with a focus on controlling costs. The other possible interpretation of the data is that a final phase of downsizing and restructuring is taking place, focused in 1996 on senior management rather than lower levels of the organisation. In this latter case we may expect the adoption of different strategies in future. Whichever scenario is correct, it is clear that the emphasis has been strongly on cost reduction to the exclusion of more innovative strategies. We have more to say about this in chapter 6.
NEW INITIATIVES FOR INCREMENTAL CHANGE During the mid- to late 1980s, incremental change strategies were still used by many organisations not currently involved in transformative change or which had avoided transformative change. Many of these organisations were creating high employee involvement through the use of teams, quality management or continuous improvement programs. Other incremental change strategies pursued during this time relied on upskilling and multiskilling of workforces, often in conjunction with award restructuring. For many organisations, particularly in the manufacturing sector, this involved managers negotiating with unions on the development of new skills training and career paths for employees. Such attempts to develop a multiskilled and flexible workforce ran into major difficulties. Many organisations had workforces that were diversely ethnic in origin. These reflected the various migrations that had occurred to Australia from southern Europe, central Europe and Asia. The need to multiskill raised problems that had previously been ignored — in particular, the problem of nonEnglish-speaking workers. Many companies proceeding down the path of enterprise bargaining, organisational change and workplace reform had first to put in place programs that would teach their workers basic English language skills.
Workforce upskilling Traditional Australian organisations had highly specialised jobs and clear job demarcations. Many organisations in manufacturing relied on immigrants as ‘factory fodder’ to fill the narrow, underskilled process work jobs that characterised Australian industry. On the other side, the craft-based unions, whose members were skilled, jealously defended their specialist skills and the demarcations that supported the jobs of their members. With the economic restructuring that occurred from the early 1980s and the growing internationalisation of the Australian economy, the impact this was having on the competitive position of Australian firms became clearer.36 The Australian government, industry and unions were faced with choices between: ! competition based on maintaining a workforce with low skill levels and low wages, and ! competition based on high skill levels, higher wages but value adding.37 Needless to say most Australian unionists, governments and employers wanted to follow the high-skill path — yet the existing institutional frameworks supported the low-skill option. The education system was elitist, with universities not focused on industry. Trades had restricted access to the education system, resulting in a hierarchy of work and skills at the plant, with significant barriers to progression at key points in the hierarchy. But the issue of skill development could not be seen in isolation from other changes needed to support it. As Bill Ford (1987) argued: Skills and skill formation are central to the development of a productive culture but so are adaptability, commitment, innovation, participation, technology and work organisation. It is essential that skills and skill formation are not discussed in isolation from the other requirements of a productive culture.38
In another article he went on to state: ‘Skill formation is an emerging holistic concept that embraces and integrates formal education, pre employment activities, induction, on the job and off the job learning, equity and personal development and career options . . .’39
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Award restructuring was ‘concerned, above all, with the reform of the skills formation process and the industrial relations frameworks within which enterprises function’.40 While the award restructuring process played a crucial role in encouraging upskilling at the enterprise level, it was a slow and lengthy process, regarded with scepticism by many managers. The process effectively demonstrated how existing work practices, procedures and methods had become inimical to the flexibility demanded by the new competitive environment, but changing these practices proved extremely difficult. Nonetheless, award restructuring did provide a forum whereby management and unions could come together to talk about reforming the production process. Therefore it was a major step towards enterprise bargaining and the new round of workplace reform initiatives.41 For many organisations that are wanting to move towards notions of ‘best practice’ and develop new workplace cultures, the issue of skills development has become crucial. For example, in those organisations introducing teams, much effort has to be put into developing the appropriate skills mix — in technical skills (to enable multiskilling), in supervisory skills (to encourage self-management), and in team process skills (to develop skills of coordination, conflict resolution and problem-solving). Similarly, organisations introducing quality circles and continuous improvement programs also need to develop skills of problemsolving with a quality and service focus. For many of these organisations the delivery of skills programs has shifted from the ‘blanket coverage’, ‘just in case’ approach to an approach where skills are taught on a ‘just in time’ basis. This has worked well in team environments in various organisations. But as Ford (1995) notes: . . . although there has been considerable national debate and policy formulation around the issue of skill formation since that Congress (ACTU 1987), the rhetoric has not been matched by innovative practice. Australian public and private enterprises and skill formation providers are still restricted by conventional training concepts. They have yet to break down many of the strong barriers of custom, practice and tradition.42
Team-based organisation The 1980s were dominated by the introduction of off-line teams devoted to quality improvement (as seen in chapter 4). In contrast, the 1990s has seen the re-emergence of a focus on on-line production teams. Despite the sudden plethora of workplace change initiatives, the organisations introducing on-line teams are still in a minority. The teaming strategies being employed differ in complexity and outcomes, with some organisations introducing teams along traditional socio-technical lines, while others have used a more eclectic mix of practices. In some of these organisations, a novel synthesis has emerged of socio-technical approaches and Japanese-inspired quality practices. In Australia significant differences have emerged not only in the types of team strategies adopted but in the methods used to design teams. In many Australian high-performance organisations, team interventions have resulted in significant changes not only to shop floor jobs but also to broader organisational structures and practices. Recent case study evidence suggests that team strategies appear to fall into three categories: ! ‘quality teams’, often found in lean production environments associated with the electronic and automotive industries; ! production teams which are semi-autonomous or self-managed; ! supervisor-led teams.43 The movement to team-based structures is having a wider impact than earlier team-based interventions. For instance, at Bendix Mintex the movement to team structures resulted in the transformation of production from functionally based production areas to cellular manufacturing. The manufacturing cell consists of a small group of operators working a group of machines and producing a well-defined set of products or components. The teams are responsible for planning their operations while ensuring the quality of their outputs. The installation of cellular teams has also had a significant impact on the traditional functional roles of maintenance and corresponding support systems of accounting, logistics and a redefinition of managerial roles and responsibilities.44 Similar developments have occurred at ICI Botany in the Steam and Power
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Plant and at CIG Gas Cylinders.45 In these organisations, the introduction of teamwork has been accompanied by significant changes to industrial relations practices and to organisational support systems. The adoption of teamwork has been based on the principles for establishing self-managed teams. Teams assume responsibility for their own quality, production, selection and maintenance and negotiate their boundaries of control and areas of responsibility with management. Not all organisations have introduced teams with such high levels of responsibility and autonomy. At Kellogg and BTR Engineering, the team strategy is based on the use of supervisor-led teams. In these teams much of the planning and coordination of activities continues to be the role of the team leader, but is undertaken in consultation with the team. While some decisions may be delegated, the responsibility for decisions remains largely centralised in the role of the team leader.46 In contrast to the earlier ORM initiatives on teams, which emphasised the importance of team autonomy, in these supervisorled teams managers placed narrower limits on the power and responsibility of team members. But generally, under the new strategic approach to change, teams have been established to contribute to the goals and performance of the organisation, with human satisfaction criteria a secondary consideration. This is in marked contrast to the HR approach of the 1960s and 1970s. Those few Australian organisations that have been able to harness the full benefits of teams have done so by linking them into their organisation’s strategic objectives and creating both management and union/workforce support. These organisations have used teams as a means to deliver continuous productivity and innovation benefits to their organisations.47
THE ORM: WHAT HAS BEEN LOST — WHAT HAS BEEN WON? Starting in 1979 and accelerating through the late 1980s and 1990s, there was widespread acceptance of the need for organisational renewal. As we have seen, Australia experienced massive economic and social changes as the economy was deregulated. These dramatic
changes to the economy affected organisational life. Organisational change programs became less reliant on individuals promoting renewal and more reliant on strategic HRM and the development of internal organisational change competencies. By this time the reforms advocated by the movement were increasingly being incorporated into management practice. However, some apparent renewal was mainly cosmetic — simply an obsession with managerial fads, fashion and hype. During this period the movement came into its own as a profession, as a recognised field of study, and as part of the prevailing orthodoxy. Many in the movement sought to come to grips with this new situation. In light of the changing political and economic circumstances, they set about modifying the values and practice of the movement. For instance, they appropriated many of the ORM’s early ideas and intervention strategies and used them under the banner of strategic approaches to change. To this repertoire of incremental change practices they added knowledge and experience of corporate strategy which they subsequently applied to large-scale transformational changes. Their influence spread, through corporate HR departments and senior management teams, as the human resource functions increasingly became an integral part of corporate strategy. Their influence was not confined to the private sector but spread to government and union circles. It was expressed in the renaming of the leading professional association (the Institute of Personnel Management Australia; IPMA) as the Australian Human Resources Institute (AHRI), and the subsequent dramatic growth in its membership and range of activities. In 1998 AHRI had over 13000 members and was offering a broad range of courses across Australia. This change in direction of the ORM coincided with the emergence of a new elite, who espoused the values of the rising strategic orthodoxy. Business, union and government leaders who had spent decades fighting for protection from international competition were replaced by managers who now sought to create organisations that were internationally competitive and strategically aligned with the emerging opportunities in dynamic local and overseas markets. In government circles, senior bureaucrats
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espoused the need for ‘freeing up’ the marketplace from the constraints restricting economic growth and activity. The national governmental agenda initially concentrated on changes in macroeconomic policies but later shifted to microeconomic reforms. The union movement and in particular its peak body, the ACTU also adopted a change agenda over the past decade. Under the Labor government, the union movement’s access to government played an important role in influencing the debates on industry restructuring, skills development and industrial relations reform. In the process, unions were also strongly influenced by the strategic model of change and developed an explicit philosophy of strategic unionism. Learning to cope with change and having a political voice to shape change at both corporate and macroeconomic level were the hallmarks of strategic unionism.48 Major differences exist between the outlook of the dominant elites in the Australian corporate world, in terms of outcomes and priorities. But they are similar, in that they now virtually all embrace the philosophy and language of strategic change and are committed to policies they believe will support the Australian economy’s future development. Growing institutionalisation brings with it increasing orthodoxy. Orthodoxy is current practice — it implies comfort. Social movements exist to challenge; they are prickly by nature. Therefore, as a movement becomes more accepted, it is either absorbed into the status quo or is reinvigorated by some new ideal.
BEYOND THE STRATEGIC MODEL? The strategic approach to change has been instrumental in legitimising organisational renewal, but it has become the prevailing orthodoxy. In part 3 we argue that the ORM needs to be reinvigorated by taking into account major issues affecting the present and future world in which we live. Just as many principles of the early renewal movement were questioned, we issue a challenge for change practitioners to develop a new radicalism that questions some of the core assumptions of the strategic model. In our view, the renewal movement itself needs renewal.
PART 3. NEW DIRECTIONS: THE SUSTAINABLE CORPORATION
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INTRODUCTION TO PART 3
To this point in our narrative we have been concerned primarily with the past — not for its own sake, but for what we can learn that will help us act with more grace, effectiveness and power in the future. We have treated the ORM as a social movement and traced its development and influence through major transition periods in the latter half of the 20th century. We now turn to the future and ask: Where can this movement go from here? What could be its most valuable contributions to the evolving organisations in our society and to society itself? What can we learn from the past that we can take forward? We see two major areas in which the ORM can make a future contribution. The first centres on the building of corporate capability, particularly the capability to manage effective change into the future. The search here is for the important factors that underlie continuing corporate performance — that is, sustainable productivity. This is not a new issue for the ORM but it is of increasing importance to the modern corporation, and the ORM can play an enhanced role in the building of the strategic capabilities that support sustainability. This is the focus of chapter 6.
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The second area of contribution centres on what will be the foremost issue in the 21st century — that is, sustainable economic development and the protection and renewal of the biosphere. Ecological sustainability is an entirely new charter for ORM but one to which we can bring a unique and vital contribution. We deal with this in chapter 7. As we examine these two issues we will draw on the lessons that can be learned from the history of the movement to date and apply them to an agenda for future action. Following is an outline of the major lessons learned from the movement’s history distilled from our discussion to this point.
THE ORM LESSONS !
A social movement begins with the energy of a few committed individuals. To survive and grow, the movement needs to build a broader support base. Reliance on a few key individuals makes the movement vulnerable. To secure its base, the movement needs centres which are nodes within networks which can diffuse its new ideas and practices, and develop its arguments and evidence for change. The movement must have a core philosophy with a strong intellectual grounding whose central ideas can be demonstrated through careful analysis of the results of pilot projects (developed between the research centres and organisational participants). However, positive results will be insufficient to change a status quo supported by dominant elites. A broad change program, with alternatives, is needed. To extend its influence, build a broader support base and overcome the resistance it must anticipate, the movement needs to work on three levels: i. the social values of the emerging elites ii. the major institutional players (governments and their agencies, professional associations, etc.), and iii. the micro level of organisations and their sub-units (divisions, business units, etc.). The movement needs a coalition of those who can fill the
different roles of ‘anchor’, ‘pragmatist’ and ‘populariser’. The creative tension between these roles must be understood and harnessed. ! The anchor takes an uncompromising stance on the movement’s values and agenda, expressing the movement’s ideal in its purest form. The pragmatist moves between the ideal and real worlds and brokers practical compromises. The populariser makes the core ideas and strategies of the movement accessible using the arresting language and images of the day. ! Major change takes years. The movement must develop realistic strategies and convincing change agendas on all levels — strategies to exert pressure on the existing power structure — to capture the commitment of one or more of the emerging elites, and to gain support and examples of successful change actions at the organisational level. ! The social, political and economic environment is vital for stimulating or retarding change. Major changes in these ‘external’ circumstances pose both threats and opportunities. They are best reacted to as opportunities to develop a new synthesis of the movement’s ideas, of its tools and its strategies, so that the movement can realign itself with the renewed values of the society and in particular of its emerging elites. ! The success or failure of a particular project is less important than the movement’s overall strategy. Discontinuation of a change program may in fact lead to dispersal of change agents to other organisations, and actually promote the diffusion of new ideas and practices. ! Success is as important to the movement’s development as are its setbacks and changes to the external environment. Success modifies values and expectations. The movement must be mature enough to build on its strengths, but also to continue to challenge its basic paradigm and current operating philosophies so that it can continue to contribute to creative social change. We now move to discuss a future agenda for the ORM and return at the end of chapter 7 to the issue of how these lessons may be applied to the implementation of that agenda.
6. BUILDING CORPORATE CAPABILITIES
The drive for performance among sports professionals has intensified to such an extent that an increasing number of them are willing to risk their reputations and long-term health through the use of performance-enhancing drugs. This is an example of how an exclusive focus on short-term performance can lead to longterm deficits. Similarly, in modern organisations the pressure for short-term results can lead them to sacrifice capabilities vital for sustained performance. In early 1998 major power cuts occurred in Australian and New Zealand cities (Brisbane and Auckland). It appears that corporate capabilities associated with maintenance had been substantially reduced in the pursuit of enhanced short-term efficiencies. The obsession with short-term performance and failure to consider how performance could be sustained in the longer run proved to have heavy costs for those organisations, their stakeholders and clients. So what is corporate performance? And how can it be sustained?
THE HIGH-PERFORMANCE ORGANISATION The latter part of the 20th century has been a critical time for traditional organisations. Faced with declining tariff protection and
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dramatically increased global competition, managers have been attempting to adapt their organisations for survival and growth in these changed circumstances. Other significant social changes have made an impact. There has been a dramatic increase in the speed of technological and social change. The engine driving this has been the ever-increasing rate of technological innovation, including communication technologies, which has shortened product life cycles and speeded up feedback loops from customers to manufacturers and service providers. Societal differentiation and rising consumer expectations have also accentuated the demand for quality goods and services and shifted demand away from mass production to ‘mass customised’ or fully customised products. In some instances the resulting organisational changes have been dramatic — in effect, major transformations — as firms have been downsized, have had the number of hierarchical levels reduced and been redesigned around strategic business units rather than functional departments. For many firms and government instrumentalities, however, the changes have been more incremental. Bureaucracies have simply been nudged in the direction of being more adaptable, flexible and responsive to environmental changes. In this case, some traditional bureaucratic features are still discernible, but other characteristics have been substantially modified. In seeking to move away from traditional bureaucratic structures, many of the alternatives that have been instituted are ones that the ORM has advocated for many years. All of these changes in the structures and operations of organisations have been driven by one central imperative — initially the search for survival but beyond that for the secret of a high performance that is sustainable over lengthy periods of time in a rapidly changing and often unpredictable environment. Managers have been asking: ‘How do we create and maintain highperformance organisations in this new and challenging world?’
DEFINING PERFORMANCE This brings us to the issue performance and how it can
of how we should define corporate be improved. Drawing on work by
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Hilmer,1 we can distinguish three major kinds of corporate performance (see figure 6.1). The first kind of performance improvement relates to cost. If a firm is to compete on price with other firms producing similar products or services, then cost becomes the vital factor in success, and the search for ongoing cost reductions is the way to sustain success. Standard ways of reducing costs are: bringing down the costs of materials through, for example, bulk purchase; reduction of labour input through more efficient work processes; reduction of inventories; negotiation of better terms on capital, and so on. Most firms compete on cost to some extent, but cost is less likely to be the main issue where the firm has a unique product or service or a unique production process. Cost competition is dominant particularly for bulk commodities, such as coal or sugar, or generic products and services, such as paper tissues or house cleaning. Even where particular products and services have unique qualities, there is relentless market pressure for that uniqueness to be eroded as other firms copy and improve on the formerly unique qualities, undercut on price, taking away market share from the innovator. For example, for many years the motorcycle manufacturer Harley-Davidson had a major market share and an outstanding reputation in its field. Then Honda and Yamaha began to compete by producing smaller, lighter bikes that were substantially cheaper. They captured the small-bike sector and inexorably reduced Harley-Davidson’s market share. Harley-Davidson had to fight back with new design and styling features that restored some of the unique quality that their bikes had lost, but they also had to review their materials and manufacturing costs so they could compete on price. A second approach to performance improvement comes from improving the quality of the product or service through adding value of some kind — that is, adding a feature or characteristic that will increase its value to potential customers. Every product has two sources of value: the first is its value as a commodity, for example as a paper tissue: the second is some distinctive benefit provided that makes it more desirable to the consumer than the generic product alone. Thus the paper tissue may be moisturised, or packaged under a ‘quality’ brand name such as Kleenex.
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Figure 6.1 Factors affecting organisational performance
P E R F O R M A N C E
direct labour overheads
materials, energy sales and distribution cost of capital deisgn quality
service competencies image responsiveness
innovation reliability technology
Source: F. Hilmer, Coming to Grips with Competitiveness and Productivity, Economic Planning Advisory Council Paper 91/01, February 1991, p.14.
Innovation around adding value is a potential source of performance improvement. Product and service innovation is a major area for firms to seek competitive advantage. Innovative firms like 3M have made product innovation the central thrust of their corporate success over many years. Being an innovator is a strategic choice, with very different implications from competing primarily on cost, because adding value usually incurs extra costs, such as those associated with research and development (R&D) and marketing. A third approach to performance improvement comes from flexibility — that is, maintaining the ability to monitor, respond to or even anticipate changing market demands and to move in speedily with appropriate products or services to meet the emerging demands. Motorola, in the electronics industry, is a firm that has specialised in outstanding flexibility performance. The speed
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of change in the electronics industry is, however, so great that Motorola estimates that it has only six months from launching a new product to reap the benefits before a competitor has put a similar or improved version of the product on the market. Innovation, speed to market and organisational flexibility become key components of success in this approach to creating a highperformance organisation. Outstanding success stories in this area are the Korean semiconductor firms Samsung, Hyundai and LG Semicon. In the past decade they have launched wave after wave of innovative products, seized massive market share in an industry in which they were new entrants — halving the existing time from the initiation of product development to market and at the same time dramatically increasing the yield of high-quality chips. Their strategy has been to buy in ideas, talented people and new technologies, and then leverage these resources through a process of accelerated learning which systematically improves their performance as they move through successive product generations.2 Adding value, innovation, flexibility and market responsiveness are critical factors in ensuring the continuing viability of enterprises. Unless organisations move to compete on these performance factors, they will cease to exist. How are Australian organisations responding to these new challenges?
COMPETING ON COST: THE SEARCH FOR EFFICIENCIES Faced with massive global competition, the majority of Australian executives have sought to survive and compete mainly on the basis of cost competition. Two surveys carried out in 1993 and 1996 show that the two most used approaches to making organisational change at both points in time have been downsizing and restructuring.3 Downsizing is essentially an attempt to reduce the contribution of the cost of labour to the overall costs of production. Restructuring is evidence of an attempt to reorganise to meet the demands of a rapidly changing marketplace. In the past 12 years Australian organisations have retrenched 3.3 million full-time workers; effectively this means that one in
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two full-time employees has been retrenched in just over a decade.4 Two-thirds of these retrenchments have been in the low-skill sectors of the economy — a point that we return to later. There has been, at the same time, a net growth in jobs, but the growth has been entirely in part-time or casual work. The effect of these changes has been to reshape the typical workforce in large organisations, creating a core of full-time employees backed up by casual and outsourced employees who can more readily be put on or off as work expands or contracts. The scale of some downsizing is dramatic: Telstra, for example, has announced plans to eliminate 22 000 jobs over three years as it moves to privatise, and the Commonwealth Public Service is to be cut by 27 000 by mid-1998. How effective has downsizing been in increasing the performance of those organisations which have downsized? Systematic research studies show that downsizing often has the opposite effect to that intended, particularly three to five years after the event. The following summarises the results of some research studies on the effects of downsizing: ! Of 1005 downsized US firms, less than one-third experienced the profit increases they expected; only 21 per cent achieved satisfactory shareholder returns on investment increases, and 46 per cent found that reducing employees did not reduce expenses as much as expected.5 ! By contrast, 90 per cent of companies that had outperformed their competitors in their industry sectors had stable organisational structures or only one reorganisation in the past 10 years.6 ! In general, the stock value of most downsized firms tends to show declines two years after they made workforce reductions.7 ! A US study found successes and failures among a sample of 100 downsizing firms, which included firms that were initially in a financially healthy state.8 ! Many firms discover after the fact that dismissed workers served critical functions and have to be replaced at substantial cost.9 However, not all downsizing is disastrous. Overseas and local studies have identified both successes and failures. Studies in a variety of Australian industries by Dunphy and Stace10 provide
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several examples of downsizing that led to successful turnaround and longer term success for troubled organisations. For example, Pacific Power, an Australian electricity utility, went through multiple organisational restructures from 1987 to 1992 and the staff of 10 000 was reduced by 40 per cent. Over that period, it increased its operating profit from minus $155 million to $703 million per annum; reduced its total debt by $1.8 billion; paid cumulative dividends to the NSW government of $960 million; increased its return on assets from 5.4 to 12.5 per cent and increased labour productivity by 86 per cent.11
WHEN ARE DOWNSIZING AND RESTRUCTURING APPROPRIATE? Downsizing provides no automatic benefits and is often counterproductive. Members of the ORM have been ambivalent about downsizing (as noted in chapter 5), and widespread downsizing represented a crisis of values for many ORM practitioners in the late 1970s and 1980s. But it was a vital part of the strategic approach at a time when many Australian organisations were struggling for survival. It was also unclear at that time what its real impact would be on productivity and performance. So when does downsizing make a useful contribution to the firm’s future? Downsizing can be a necessary part of a strategy for turnaround when a firm is faced with a crisis of survival. This is often the case where the firm has failed to keep pace with a changing market environment, resisting making changes to its traditional but increasingly outdated goals, strategies, structures and processes. Often transformative change is triggered by a change of CEO or a takeover. But downsizing needs to be part of a total strategic reorientation of the organisation and a prelude to moving to a process of continuous adaptive change. It is one tool for bringing about strategic realignment in crisis situations. Not all downsizing is transformational — it can be an element in ongoing incremental rather than transformative change; however, such downsizing tends to involve more limited reduction of workforce numbers and to be targeted around specific shifts in business strategies.12 For example, in one US study, Bruton, Keels and Shook
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distinguished two types of firms that successfully used downsizing to re-establish or maintain high performance; these were referred to in the study as ‘risers’ and ‘rollers’. The ‘risers’ started from a position of declining performance, downsized substantially, and then established a high-performance outcome. Risers tended to be smaller firms among the Fortune 500. While they downsized substantially to offset their decline, they ‘had the strategic wisdom to see that continued or increased commitments to R&D were an avenue to long-term success and an important key to their dramatic turnaround’. ‘Rollers’, on the other hand, were initially in the top-performing group and made relatively smaller and specifically targeted personnel cuts as part of a more comprehensive set of overall business strategies. Restructuring and downsizing work to the firm’s benefit when they are part of a wider set of business strategies. Downsizing undertaken without a sense of strategic insight, as a blind reaction to the necessity to cut costs to survive or as a copycat action (‘because the competitors are doing it’), is more likely to be a formula for compounding the firm’s problems than solving them. Large financial investors, looking for quick returns and profits, may force downsizing on the firm even though the firm may not be in a position to recover from the change. Downsizing brings other potential problems of which many managers are ignorant, or downplay even when they are aware of them. One of these is ‘survivor syndrome’. Most people, including managers, realise that many of those ‘downsized’ suffer a range of personal psychological consequences — from anxiety and depression through to, in extreme circumstances, suicide. The impact on the survivors’ attitudes is less well known, although extensively documented.13 Survivor syndrome refers to the impact of downsizing on those who do not lose their jobs; the effects include increased job insecurity, decreased organisational commitment, cynicism and decreased work motivation. Survivor syndrome is strongly evident in Australian firms that have downsized,14 and is intensified where several downsizings occur rather than a single downsizing followed by other positive strategies for organisational development.15 Downsizing has had a widespread impact on the morale of the Australian workforce. Recent workplace surveys show that people
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perceive themselves as working harder than ever, over longer hours, and being more discontented with their lot.16 What is more, they feel that this is throwing their family life out of balance.17 Widespread downsizing brings with it broader social and economic problems. Unemployment benefits and social security payments become an increasingly heavy economic burden for the state; psychological and physical health problems multiply; downsizing deskills rather than upskills the population, and contributes to an intergenerational pool of chronic unemployed caught in a spiral of deteriorating skill, poverty and despair. Australians will be paying the cost for generations as the impact of unemployment and poverty show up in the adult lives of those who were the children of the unemployed poor.
IS COMPETING ON COST ENOUGH? Downsizing used as a major strategy is an attempt to compete on cost by reducing the wages and salary bill of the organisation. But how successful is a solely cost-based competition strategy of this kind for most Australian firms? Most cannot compete effectively as low-cost producers in an era of global competition. One major factor militates against it: since the collapse of the iron and bamboo curtains, over 1.5 billion low-paid workers have been added to the global workforce. The game of competing globally on the basis of low labour costs is a game we cannot win. We need to find another strategy where we stand a chance of competing successfully. What other choice is available?
THE CHOICE FOR AUSTRALIA: A LOW- OR HIGHSKILL ECONOMY? Table 6.1 poses the choice before us: a choice between a lowand a high-skill economy.18 The same choice exists for most of our industries and corporations. On the left we have the traditional system we developed in the first half of this century as we industrialised. Work was labour-intensive and relatively low-paid. The basic design of the production system, whether relating to
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goods or services, was one of mass production of relatively undifferentiated products which were also mass-marketed. Products were fairly basic, without a lot of value-added features. There was little innovation, the organisation spent little on R&D and was reactive to emergent industry and government policies. Organisational structures and systems were relatively inflexible, with the emphasis on predictability of ongoing operations. This is the Taylorist world we describe in chapter 1. Into this industrial system we fed large numbers of low-skilled and often non-literate workers to replace Australian-born workforce entrants as their educational levels began to rise. In the postwar period, successive governments and business leaders from traditional industries made gigantic efforts to perpetuate the early industrial revolution rather than revise approaches to work design or to shift to newly emerging industries. Despite this, with deregulation, many organisations in our traditional industries closed down or moved offshore as they found that they were unable to compete on cost despite using migrant labour. We were already losing the game of competing on cost alone. And, as with most ‘developed’ economies, the Australian economic base was shifting to the service sector, where the knowledge and skills of the workforce are vital to maintaining high performance. The right-hand side of table 6.1 shows the viable alternative path of choosing to compete primarily on adding value and developing organisational flexibility. This choice involves continual Table 6.1 The choice for Australia? The low-skill economy (competing primarily on cost) • • • • • • • • •
labour-intensive low wages mass production mass marketing low value-added late adoption, little innovation low R&D expenditures reactive to emergent industry and government policies rigid structures and systems
The high-skill economy (competing primarily on value added and flexibility) • knowledge-intensive • high wages • mass customised/customised • niche marketing • high value-added • early adoption, rapid innovation • high R&D expenditures • proactive in regard to industry and government policies • flexible structures and systems
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investment in introducing advanced technologies, in R&D and in developing and acquiring leading-edge knowledge and skills. It also involves progressively abandoning traditional labour-intensive industries and investing in the emerging knowledge-intensive industries of the future. This means developing a highly skilled, well-paid workforce, mass customising or customising products and services which are then niche marketed. The choice involves a fundamentally different way of leading and managing organisations — demands new structural forms and flexible work systems for the organisation, a transformed approach to work design and new cultural values. These changes are however a natural evolution of the ideas that have been developed and diffused by the ORM over the past 40 years, and they reflect the societal shift from an economy based on agriculture, mining and manufacturing to a service-oriented economy based on knowledge capital. We now examine this fundamental shift in the nature of our economy and society and how we can turn this transformation to our collective advantage.
KNOWLEDGE-BASED WORK AND THE KNOWLEDGE-BASED ORGANISATION The real corporate capital today is not financial resources, raw materials or the physical assets of plants and machinery, but knowledge and professional skills. Microsoft’s shares are not highly valued by the sharemarket because of its physical assets but because it is able to continuously produce leading-edge software, setting industry standards, and because of the skill of its managers in forging critical industry alliances. The key problem for contemporary knowledge-based organisations and societies is that even the most advanced of them is vulnerable in a world marked by rapid depreciation of knowledge capital. Even leading knowledge-based organisations, such as IBM, have had to learn that they must anticipate significant market shifts and the innovations of new competitors. This explains the spate of academic and popular writings on the ‘learning organisation’. Increasingly, organisational survival and success is based not
BUILDING CORPORATE CAPABILITIES
mainly on cost-cutting or on the ability to meet current market demands but on the capacity to learn and change, to anticipate future environmental developments — better still, to initiate them, and to redeploy resources imaginatively to capitalise on these developments.19 As de Geus has pointed out: ‘the only competitive advantage the company of the future will have is its managers’ ability to learn faster than their competitors’.20
CREATING SUSTAINED CORPORATE SUCCESS We now have a good deal of research evidence about the factors that strongly influence longer term corporate success — that is, the factors that lead to sustained performance over time, particularly for knowledge-based organisations. One key study was carried out in the USA by Collins and Porras,21 who compared companies in the same industry that had sustained success over many years with those that did not. The companies that achieved sustained longterm performance behaved very differently from those whose performance was more erratic or poor. The ‘visionary’ companies ploughed a greater percentage of each year’s earnings back into the company, investing more in their future and returning less in cash dividends to shareholders. They invested more in new property and plant, in new equipment and in R&D. They also invested earlier and more aggressively in technical knowhow, new technology, new management practices, and in ‘human capital’, that is in training, recruiting and in the professional development of their staff. They were the early adopters and innovators in their industries, were strongly future-oriented, looked beyond immediate returns and planned for future high performance. Their behaviour is an example of the learning organisation in practice and of the need to take organisational learning seriously by investing in it. This distinctive behaviour had impressive results: their performance was over six times that of comparison companies and they outperformed America’s stockmarket by a factor of 15. As we discuss later, this approach to building corporate capability stands in marked contrast to the search for continuing economies which is characteristic of the economic rationalist approach. It seems that
THE SUSTAINABLE CORPORATION the old adage that you must spend money holds. Collins and Porras make the point that:
Profitability is a necessary condition for existence and as a means to more important ends, but it is not the end in itself for many visionary companies. Profit is like oxygen, food, water and blood for the body; they are not the point of life, but without them, there is no life.22
The critical contribution of ‘human capital’ to superior organisational performance is shown in another study. Frederick Schuster23 set out to research whether a significant relationship exists between the way in which organisations manage their employees and profitability. The survey covered 1300 of the largest industrials and non-industrials in the USA, of whom a representative group of 45 per cent responded. The survey showed a statistically significant positive relationship between the use of employee-centred management practices and superior financial performance. For example, the average return on equity of those firms using one or more ‘innovative Human Resource practices’ was 11 per cent higher than the return on equity of those firms not using any of the practices. Investment in ‘human capital’ makes sense in the knowledge-based economy. Australian studies by Dunphy and Stace and by Turner and Crawford reinforce these points. The Dunphy and Stace case studies24 found that organisations performed better when they were strategically well positioned in their changing environment and pushing the pace of internal organisational change fast enough to match the external pace of change. This amounted to a process of relentless continual improvement. Organisations failing to react to the external changes showed poor performance. This was also true for organisations undergoing major transformational change, because their energy was mainly directed inward in order to accomplish the reshaping of the organisation. The higher performing organisations, by contrast, were of two kinds: either service organisations which were primarily building human capability, or manufacturers with heavy investment in capital equipment which were building technical capability. The most convincing evidence of the need to build corporate capabilities to achieve enduring continuing corporate success comes
BUILDING CORPORATE CAPABILITIES
from another Australian study. Turner and Crawford25 collected 243 detailed case studies of major organisational change programs in Australian- and New Zealand-based organisations. They measured a range of factors including competencies, perceived effectiveness of the change program and perceived organisational performance. Their data analysis found that the competence levels in an organisation significantly affect both current business performance and change effectiveness. (Change effectiveness can be seen as a way of measuring potential future performance because effective reshaping of the organisation is vital in a changing economic environment.) So, as the other studies we have reviewed also indicate, investing in building corporate competencies is no waste of resources but is the path visionary companies travel to achieve corporate success. The Turner/Crawford results take us further by showing just how particular clusters of competencies affect performance. Five clusters of competencies (‘corporate capabilities’) contributed either to operational performance or change effectiveness — a surrogate for future performance — or to both. But the capabilities affecting current operational performance are strikingly different from those needed to reshape an organisation effectively for future performance. Operational performance is distinctively determined by the capabilities ‘business technology’ and ‘market responsiveness’. Business technology is the competence to command and understand the technologies and processes through which the organisation produces and delivers its products and services to its market. Market responsiveness is understanding, selling and responding to the organisation’s markets and customers within the context of the broader external environment. By contrast, the distinctive competencies associated with reshaping the organisation for future performance are ‘engagement’ and ‘development’. Engagement is the ability to get organisational members involved, committed and motivated to act to achieve the organisation’s purpose and future directions. Development is developing all the resources of the organisation — personal, physical, technological — and the systems needed to achieve the firm’s future direction. The fifth capability, ‘performance management’,
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Figure 6.2 Corporate capabilities
Capabilities Business technology (Biztech)
Marketing and selling
Source: D. Turner and M. Crawford (1988) Change Power: Capabilities that Drive Corporate Renewal, Business and Professional Publishing, Woodslane, Sydney – in press.
contributes to both effective operational performance and reshaping the organisations. To achieve high performance, now and in the future, organisations have to work at building corporate competencies over significant periods of time. They have to invest in two very different types of corporate capabilities, and these exist in tension with each other. One set ensures that the organisation has the products and services the client wants today and that the organisation can deliver them now; the other set of capabilities is needed to change the very operations that are ensuring current success. The changes must be made to ensure that there will be different products and services tomorrow for customers whose needs and expectations are changing, or to attract new customers. Building the capabilities for reshaping organisations for the future is the most critical factor in sustained corporate success.
BUILDING THE CAPABILITIES FOR SUSTAINED CORPORATE SUCCESS How do corporations build capabilities, particularly those that reshape the organisation for continuing future success? This is where the ORM can make a major contribution because of its
BUILDING CORPORATE CAPABILITIES long-term skills.
Building the corporate knowledge and skill base The first requirement is that the corporation’s CEO, senior executives and HR personnel make a commitment to build over time a strategically relevant competency base to support current and future performance. This requires courage and commitment, particularly given current pressures on corporate decision-makers to deliver present returns at the expense of investment in the firm’s longer term future. It also requires a decision to share power with others in the organisation, for an organisation built on expertise at all levels can no longer be directed from the top down.
Adopting a strategic perspective We indicated earlier that the skill base has to be ‘strategically relevant’; that is, comprise a capability platform from which current and future performance can be launched. An effective strategy for positioning and repositioning the organisation in its environment is essential to determining the knowledge domains and key skills that will be needed. These will vary, for example, according to whether a division is moving to become a highly innovative new entrant to a growing market or is striving to maintain market share in a well-established market in which it is already a dominant player. Strategy is more than a set of business goals, financial objectives and analysis of how competitive advantage in the marketplace can be effectively pursued. All of this, the traditional province of business strategy, means nothing if the strategy is not known to the members of the organisation, wherever their position; strongly committed to by them; and actionable in their terms. Strategy must be clearly articulated and embodied in specific action plans for every unit and individual in the organisation. Everyone in the organisation must understand the significance of the strategy to their work and express the strategy in their day-to-day actions. Thus, stimulating the creation of meaning becomes one prime task for executives and managers in the modern organisation; another
THE SUSTAINABLE CORPORATION is the building of organisational commitment strategy that expresses that sense of meaning.
Beyond competition: reinterpreting strategy The term strategy is taken from military use, and contemporary business texts and speeches are filled with the stirring rhetoric of competition and win/lose imagery. Economic rationalism and market rhetoric stress the competitive nature of capitalism, and this tough talk has great appeal to macho male executives. Yet an analysis of modern texts indicates that there is another side to corporate success, that has to do with the ability to develop appropriate alliances; to build collaborative and mutually supportive relationships with suppliers and customers; to network widely; to create a strong set of corporate values and to live by these values; to manage the interests of an increasingly wide range of stakeholders; and to ensure that the corporation acts as a responsible corporate citizen of the wider local, state and international community. Perhaps the most appropriate analogy to the modern economy is a rainforest or a coral reef. Both are complex living systems which reveal intense competition, both between species and within species, to occupy specific niches. For example, when a ‘forest giant’ crashes to the ground in a rainforest, it brings down with it a host of other plants and living creatures and opens up the forest canopy. As sunlight penetrates to the forest floor, seeds that have lain dormant spring to life and there is then intense competition to fill the space. It is possible to describe a rainforest solely in these terms. However, this description would miss the vital synergies and mutual dependencies between the living creatures that support the rainforest and give it integrity and coherence. A balanced view of living systems therefore holds in our attention the dynamic interplay of competition and collaboration. Both are needed for continuity and for adaptation to environmental change. The same features are characteristic of modern economies. They depend on elaborate infrastructures of communication and resourcing, governmental policies, programs and regulation, community involvement and commitment, reciprocal relationships of support between
BUILDING CORPORATE CAPABILITIES
a myriad of groups, an underlying set of community values that set the implicit processes of exchange that go well beyond written law. This is generally overlooked and/or devalued by contemporary economic rationalism. The role of collaborative processes in economic success has, however, been clearly documented in studies of the economically successful north-eastern Italian industrial districts. There a blend of cooperation and competition, pursuit of specific interests and trust-based relationships has been shown to produce highly productive and innovative results.26 Similar features of the Japanese economy have been documented and described as ‘alliance capitalism’: ‘The Japanese industrial fabric is a complex web of social and corporate values, long-standing political, economical and managerial relationships (within as well as between firms) and stable yet plastic practices.’27 Like most Asian managers, Japanese managers place great importance on the development of synergistic relationships as the basis of good business practice, and invest great energy in them. What these studies show is that, within the corporation and beyond it, success is not simply achieved through competition but through establishing a supportive infrastructure of norms and values; these create a climate of trust, and a volunteer rather than conscript mentality. Commitment is vital in the knowledge-based organisation but it cannot be compelled or contrived: commitment emerges naturally from the matrix of a shared experience of grappling with the problems and opportunities presented by a dynamic environment. When this leads to success, the commitment and trust is reinforced.28
Fostering productive diversity The cultural base necessary for organisational learning and continuous innovation is different from the homogeneous culture of the village or the factory. Much of the current writing on organisational culture creation still reflects the ideology of the control-oriented Taylorist bureaucracies of the past. In this view, culture is seen as a management tool for control, which is designed synthetically at the top of the organisation and diffused throughout the organisation by an ‘internal marketing’ program. For the
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knowledge-based organisation to fulfil its potential, however, we need instead a culture that evolves out of what Cope and Kalantzis refer to as ‘productive diversity’.29 As Cope and Kalantzis portray the principles of productive diversity, it depends on pluralism, flexibility, multiplicity, devolution and negotiation. Pluralism implies that the organisation has a policy of actively valuing and building cultural diversity instead of a homogeneous sameness. So differences in ethnicity, gender and values are cherished as potential sources of creativity and contribution, particularly valuable in a global environment where the firm faces extreme diversity and must learn to manage diversity to succeed. Flexibility means openness to respond to differences on the basis of reciprocity and to change. Multiplicity means that the culture is based on the principle of diversity, and innovation emerges from the exchange of diffferent ideas and the challenge of differing viewpoints, not from a single-minded loyalty to a standardised ‘company line’. Devolution and negotiation represent a departure from the traditional view of top-down control, a notion redundant in the knowledge-based organisation. Instead, new directions emerge to shape the company’s overall strategies and repertoire of products and services by a process of ongoing coordination and negotiation. Management’s role is to stimulate and coordinate rather than to direct and control.
Building on human potential For decades, senior managers of companies have proclaimed that ‘people are our prime resource’ but then spread cynicism and disillusionment when, in the face of tougher economic conditions, they have cut people from the organisation before other resources. In the knowledge-based organisation, people are the prime resource, and slowly but surely this truth is being recognised. While there is an oversupply of unskilled and semi-skilled labour, there is a continuing shortage of highly skilled professionals for key jobs in a wide range of industries. The coining of the term ‘brain drain’ was the first public recognition of an emerging global competition for highly trained professionals and for high potential individuals. At the top of the list are experienced executives capable of managing global companies, and key scientists whose
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seminal work is vital to innovation or application in the leadingedge industries with a strong future, such as electronics, biotechnology and health. What are these professionals seeking? First, they assume that they will be well paid and receive generous work conditions. But beyond this they are seeking the opportunity to work at the leading edge of their profession, both for the excitement of it and to maintain and extend their intellectual capital. In this way they ensure their future relevance, marketability and earning capacity. Leading firms can no longer lock these professionals into the organisation: they are highly mobile, have knowledge and skills and will travel. They can only be retained in the organisation voluntarily and their commitment is won by the opportunities for learning offered by their work in the firm and by the challenge of continuing innovation. To attract and retain outstanding people the organisation must develop and build on the human potential of its workforce. A climate of continuous knowledge and skill development attracts high performers. Without these key professionals, the organisation is relegated to a reactive role at best; at worst, to takeover or extinction. It is easy to forget that the work of these professionals depends on the knowledge and skills of many others in the organisation. These too need to be upskilled to ensure that the flow of ideas in the organisation is unhindered and that the implementation of innovative approaches proceeds speedily and effectively. In addition, great companies do not become dependent on the knowledge and skills of a few individuals who may leave, taking their intellectual capital with them. Great companies create systems which incorporate the best knowledge available and which can continue to operate without the input of those who contributed to them. This brings us to our next step in building corporate capabilities that will contribute to sustainable success — communities of practice.
Creating communities of practice Central to learning in the knowledge-based organisation is the community of practice. A community of practice is a group of
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professionals who are focused on a particular range of problems, issues or opportunities and who network informally to exchange information, ideas and skills to build and extend their shared knowledge base. As Snyder notes: ‘These “soft structures” are designed both to accelerate the professional development of community members and to develop the overall capacity of the organisation in specific knowledge domains’30 Communities of practice are distinct from the formal units or work groups of the organisation. They are more flexible and fluid, and shift as the issues facing the organisation change. They cut across regular organisational boundaries, linking individuals anywhere in the organisation and at any level on the basis of shared interest. Examples can be found in large consultancy firms such as McKinsey & Company or Andersen Consulting, where members of various ‘practices’ such as a change management consultancy or an ecological environmental consultancy are linked to each other worldwide through an intranet-based knowledge network. Part of this network is a database where key documents and cases are stored, and this is progressively updated as experience accumulates. In addition members become involved in ongoing dialogue around their various consultancies, drawing on each other’s ideas and experience. Network members move globally to join each other for specific projects, where they acquire the more tacit ‘knowhow’ (skills) and ‘know-that’ (knowledge content) 31 which are vital to effective professional practice. One way of thinking about the building of corporate capabilities is to view it as dependent on a new organisational architecture that represents an overlay on the formal organisational structure. This architecture is designed to facilitate the ongoing development of the organisation’s knowledge and skill base. The architecture consists of a constellation of communities of practice, each of which is associated with a knowledge domain. Together the overall collection of knowledge domains represents the current definition of the intellectual capital needed for the organisation to pursue its strategic objectives. Communities of practice are not necessarily confined within the boundaries of a single organisation. They can, in fact, operate independently of any particular organisation, simply bringing
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together a networked community with a common intellectual and/or action-based focus. Communities of practice that arise independently of a particular organisation represent the basis for a new organisational phenomenon — the networked or virtual organisation. We are used to thinking of organisations as having relatively clear boundaries, planned and stable organisation structures, clear power structures and defined membership. An increasing number of organisations now no longer match this stereotype. The Internet itself is a metaphor for this new type of organisation. Its boundaries and membership are constantly changing; it is growing organically and in an undirected way; it is home to a wide variety of communities of practice. Those members of a virtual organisation seldom meet each other physically, but they are engaged in an ongoing exchange of ideas, knowledge and application of that knowledge. Modern communication technologies facilitate the development of such virtual organisations. Virtual organisations can make powerful contributions to the creation of the learning society in which learning organisations can flourish — a point we return to in chapter 7.
Developing the capability for continuing corporate renewal Critical to building corporate competencies for sustained organisational success are the knowledge and skills associated with the continual reshaping and renewing of the organisation. This is the meta-capability which underlies the successful use of all the other strategies we have outlined above. It involves codifying the collective experience in the organisation of successful strategies for organisational change and systematically building the skills of internal change agents. There is a developing professional discipline emerging around corporate change;32 a central task for the ORM in the future is to build the theoretical base of this emerging discipline and to develop effective training and development programs for the internal corporate change agents who will be responsible for establishing, maintaining and extending the reshaping capability in particular organisations. We have outlined the ways in which the competencies needed for sustained corporate success can be systematically developed. To
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summarise, this is accomplished by building a relevant corporate knowledge and skill base; adopting a strategic perspective; reinterpreting strategy to include collaboration as well as competition; fostering productive diversity; building on human potential; creating communities of practice; and developing the competencies for continuous corporate renewal. We now examine the two current competing models for pursuing corporate success — the market model and the human capability model — and look at the extent to which each of these models can embody these capability-building approaches. There is a critical choice facing us in the developed economies. There are two philosophies offering competing prescriptions for attaining sustained social and corporate success. Both are critical of traditional Taylorist bureaucracy, which they dismiss as too rigid and inefficient for a society undergoing rapid and often unpredictable change. We refer to these philosophies as the ‘market model’ and the ‘human sustainability model’.
THE MARKET MODEL The market model propounded by economic neo-liberals is, on the whole, the dominant philosophy as we approach the end of the 20th century. (In Australia this philosophy is widely referred to as ‘economic rationalism’). The market model centres on the costcompetitive provision and delivery of standardised or customised goods and services. Cost is its primary emphasis. Its prescription for reducing costs is to cut the labour force in organisations to minimum numbers and to externalise many functions previously performed internally. This is achieved through subcontracting ‘non-core’ business, subjecting it to market competition. Where functions are retained they are managed by creating semi-market contractual conditions within the organisation. In the market model, the issue of governance is handled by attempting to keep power firmly in the hands of the senior executive group and ultimately the board of management. This represents continuity with the ‘bureaucratic model’. However, in other respects economic neo-liberalism departs from the
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bureaucratic model. Hierarchy is reduced and the procedural control of bureaucratic regulations is increasingly replaced by contractual control, which specifies ‘deliverables’. The deliverables are defined in terms of quantity and quality. There is also an increasing separation of overall strategy formulation from its implementation. Management specialises in strategy and policy formulation, and contracts with other organisational members or outside suppliers to implement the strategy. In this model all relationships are contractual and trust is largely irrelevant. This provides radical short-term flexibility to change direction or to modify operations. The senior executive team can shift strategy or policy rapidly by specifying different outputs, negotiating new contracts with different subcontractors, or laying off and rehiring to change the workforce skill mix.
Advantages of the market model The advantage of this approach is that the whole system can be operated on the basis of rational short-term interest. Advantage is defined in terms of ensuring that a particular organisation’s own interests are maximised, particularly by increasing the power of the organisation relative to its suppliers and distributors. This power can then be used to ensure that the contracts written are favourable to the organisation initiating the contractual arrangements. Thus a large retail organisation such as Woolworths or Coles Myer can use its massive purchasing power to secure the highest quality produce for the lowest possible price. The market model is a radical rethinking of traditional bureaucracy. The system works efficiently under certain limited conditions. The conditions are not normally recognised by economic rationalists who view the market model as a universalistic prescription for success. Because the market model operates by specifying and monitoring outputs rather than procedures, it works best where the final product or service is clearly definable in advance and can be produced with minimal interaction between the purchaser and supplier. In addition, the purchaser must have sufficient independent power to set the output standards and to accept or reject
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the deliverables on delivery. Clearly also the output must be open to inspection, so that the purchaser can determine whether it meets the predetermined standards for delivery. The purchaser must also be in a position to make a ‘buy/no buy’ decision. All this implies that the parties have differing interests, will act in their own interests, and that the contract allows for sufficient satisfaction of the interests of both parties for them to be committed to enter into the contract and desire to see it fulfilled.
Limitations of the market model These conditions point to some important limitations of the market model for the operation of knowledge-based organisations and societies. The need to specify outcomes in advance means that the market model is not applicable to a whole range of situations that confront organisations in a dynamic and chaotic environment. For example, many governmental projects centre around developing public debate and negotiation to determine policies or to move toward community consensus. Similarly, the design of unique projects, like a space-tracking system or an urban complex, may need to arise out of the ongoing interaction between several contractors. In fact open-ended projects which require ongoing interdependency for their development and completion are not well served by the contractual nature of the market model. Projects that involve novelty, complexity and uncertainty can be operated only through a collaborative interaction between several parties, and often demand the cumulative development of mutual understandings that are not easily expressed in formal contracts. The market model treats exchanges as short-term, driven by competing interests, and contractual in nature. However, in the case of business coalitions and alliances, there may be considerable overlap in interests and long-term exchange relationships which depend on goodwill and trust for their accomplishment. Similarly, where relationships themselves are the key to making transactions, contractual terms may inhibit the development of such relationships. Basically the market model creates a low-trust rather than a high-trust system. By contrast, many firms are now investing in ‘preferred supplier’ relationships, where shared understandings are
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developed and collaborative relationships enhance reliability of on-time delivery and product quality. This does not fit the market model. Similarly, the market model implies that the organisation subcontracting out has a range of potential competing suppliers, and is in a powerful position to decide whether or not to accept the deliverables and to enforce sanctions in the event of failure to deliver to standard. But in the real world there may be no alternative supplier, time constraints may make it virtually impossible to reject the product or service, and the supplier may be in a more powerful position than the subcontracting organisation. For example, when an R&D organisation has developed a radically new and more efficient manufacturing process, a manufacturing organisation may have little alternative but to accept the terms offered or see the new technology acquired by a competitor. Finally, in situations that are ideal for its operation, the market model solves the problem of uncertainty by passing it off to a supplier. This solves the problem for the organisation that is subcontracting but it does so by simply passing on the problem to another organisation. Thus the market model often has a short-term profit advantage for the organisation contracting out. But it may also contribute to longer term problems in the larger economic system by increasing the rate of supplier bankruptcies and limiting the overall investment in human competencies needed in a knowledge-based society. As Block points out: ‘Production generally depends on some degree of stability in the relations among a group of people and it is this stability that is undermined by rapid recalculations of self-interest.’33
THE HUMAN SUSTAINABILITY MODEL We indicated that there is an alternative option to the market model. We refer to this option as the ‘human sustainability model’ because it is geared to developing an organisation marked by high performance which can be sustained over time. What are its characteristics? The human sustainability model represents another radical departure from the traditional bureaucratic organisation, but is one
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that contrasts strongly with the market model. Its goal is the production and timely delivery of innovative, high-quality customised or mass-customised goods and services. It is an organic form, which downplays traditional notions of office, hierarchy and functional role specifications in favour of overlapping temporary project groups, task forces and communities of practice. The human sustainability model attempts to capture what Klein has referred to as ‘dynamic flexibility’ — that is, the ability to increase productivity steadily through production process improvement and product innovation.34 The human sustainability model is an appropriate model to use when the development and application of intellectual capital is the prime focus of the organisation and where the knowledge work involved demands strong interdependency between the main players, considerable innovation, flexibility and discretionary decision-making. This is particularly the case where the organisation faces novel tasks that are initially not clearly defined and highly variable in nature, and where it is difficult or impossible to monitor processes or to predetermine or measure potential outputs. In such circumstances reciprocity, trust and commitment between parties is vital to producing synergies through interaction around the evolving definition of direction, process and output. In such circumstances the ill-defined nature of the task and the emergent nature of the strategy for knowledge creation make it difficult to assess costs in advance. There is the potential for substantial rewards from innovation, added value and customisation. Consequently, organisations working on the human sustainability model tend to pursue longer term profitability rather than the shorter term payoffs of the market model. High levels of uncertainty are managed by building mutual commitment to a shared future, creating trust and a collaborative approach to achieving innovation and flexibility. As the objectives and strategies cannot be specified clearly in advance, there has to be an iterative and interactive definition as these projects proceed. What is to be achieved and how it is to be achieved are defined through ongoing discussion, debate and negotiation taking place within longer term exchange relationships.
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This kind of process demands a professional workforce exercising high levels of personal discretion in decision-making and having a depth of knowledge in fields relevant to the task as well as effective backup through IT-supported knowledge bases and systems. While the organisation may have a formal administrative structure, it operates very much as a loosely integrated set of communities of practice. Power in the human sustainability model is a balance between alliance and reciprocity on the one hand and professional competition on the other. The main source of power is expertise (knowledge, experience and skills), which is not easily measured because much expertise is implicit and contextual rather than explicit and task-specific. The reputation of individuals and groups tends to be based on a cumulative record of achievement. Reputation tends to create nodes of attraction in the emerging and shifting network relationships. In these circumstances ‘social capital’ becomes important, along with intellectual capital: ‘Social Capital consists of information about relationships among people.’35 Who you know becomes as important as what you know, and networking is critical to effective knowledge development and application to specific problems. In the human sustainability model, leadership is shared around and is fluid, with different individuals assuming leadership in different areas and on different issues. Formal leaders tend to act more as strategists, coordinators and coaches. They lead by example and by acting as catalysts for an emerging consensus. A major task of formal leaders is to provide the environment and resources for competence building. They have a particular responsibility for developing reshaping competencies — that is, the capability of the organisation and its subunits to change direction and structure and to shift resources to where they are needed to take the next initiative. A key task of management is to create the institutional context which will help the workforce to cope with the uncertainty that necessarily accompanies high levels of innovation. Individual differences and diverse work styles are accepted, recognised and rewarded. The resulting culture of innovation is one that encourages a challenging of the basic assumptions underlying current practice and leads to innovation and change.
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The human sustainability model is based on the organisation continually repositioning itself in the pursuit of future opportunities. Like the market model organisation, the human sustainability model fosters flexibility. However, the speed of change is subject to the capability of professionals to retool. This is not easy, but some firms have developed this ability to a very high level. Hewlett-Packard, for example, has transformed itself many times, and produced product lines as diverse as medical equipment, oscillators, calculators and laser-jet printers. In a rapidly changing market, the company that fails to reinvent knowledge capital gets squeezed out.36 When the human sustainability model strategy is successful, it creates a highly committed and satisfied workforce, leads to high customer satisfaction derived from customisation, quality, service and speedy delivery, and provides substantial profits to investors through prime-mover advantages. It creates a highly expert, flexible and responsive workforce which can add significant value to products and services. If the strategy is not successful, the cost to all parties can be high. With such a strong commitment to a resource-based approach, making fundamental speedy strategic shifts poses problems. If existing corporate competencies prove irrelevant to changing industry definition or customer demands, it is difficult to divest people without destroying trust or to change systems in which the majority in the organisation have made heavy investments. Because of the high levels of professionalisation, investment in human resources can be lost when critical people exit. As Quinn has observed: ‘No organisational form is a panacea. In fact, many different forms often coexist successfully in the same company. Properly used, each helps the company attract, leverage, and deploy intellect for a quite different purpose.’37
THE WAY AHEAD FOR THE ORM: A NEW HERESY In Australia traditional bureaucratic structures still linger despite 30 years of radical criticism from the ORM and others. Far more potent than the ORM in dismantling these structures has been the
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political act of deregulation and the development of an interdependent, highly competitive global economy. The ideas propagated by the ORM have, however, been an important element in defining emergent forms of organisation, particularly in the 1980s. In the 1990s economic neo-liberalism has emerged as the dominant force defining a new, antibureaucratic alternative — the market model. This is proposed by many thinkers and practitioners as a universal solution, not only for corporations but for society as a whole. Economic neo-liberalism presents itself as a tough-minded, no-nonsense approach based on negotiated interests embodied in contractual relationships. Economic neo-liberalism represents a basic challenge to the successes achieved to date by the ORM and undermines the high value-adding road, which represents the only viable future for an economically successful Australia. The basic flaw of economic neo-liberalism is that it does not provide the climate of support for a systematic, cumulative building of the corporate and social competencies needed in a knowledgebased society. It is essentially a prescription for a low-skill economy at the very time that we need to be building a high-skill economy. Its short-term concentration on the immediate interests of contracting parties is not a recipe for long-term sustainable corporate or social productivity. Economic neo-liberalism had some early wins in massively reducing costs in organisations, particularly labour costs. This was vitally important for repositioning the Australian economy and its constituent corporations in a globally competitive environment. While minimising costs may have been a prerequisite for survival and growth in the future opening up of the Australian economy, it will not be sufficient to support a developed economy like Australia. Economic neo-liberalism has no real place for the resource-based view of strategy and the systematic building of corporate capabilities for long-term sustained performance. Economic neo-liberalism’s short-term focus locks the society into an overemphasis on current operational efficiencies within existing structures and systems, rather than taking us forward to a balanced emphasis on maintaining current performance while working for the changes needed for strategic repositioning for the future.
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What we need instead is sustainability based on the systematic building and continuous renewal of technological and human competencies throughout society. This means substantial national and corporate investment in the creation of expanding knowledge and skill bases in the leading-edge, dynamic industries of the future. An enhanced role for strategic human resource management in the corporation will be a key element in these developments: human resource managers need to become partners with other senior executives in a strategic reorientation of the corporation directed at establishing and maintaining the knowledge and skill base needed to operate effectively in the 21st century. Effective change agents will also be key players who are needed to reshape their organisations to create and sustain high performance by utilising the enhanced knowledge and skills of the workforce. The ORM has a major role to play in espousing the value of investing in people rather than divesting them, and in actively pursuing strategies of knowledge creation as the most viable path to sustaining the nation’s corporate and economic life. This role is one that grows naturally from the values, concerns and past history of the ORM and yet represents a major new challenge to ORM practitioners. At the end of chapter 7 we outline more specifically just how this role might be played out.
7. BUILDING A SUSTAINABLE WORLD
Sitting down to write this chapter, my mind is preoccupied with two items of news on the same page in today’s newspaper. The first is headed ‘Forest minister offers to quit over smoke pall’, and it discusses the ‘deadly smoke haze blanketing South-East Asia’ caused by large-scale rainforest clearing combined with a widespread drought. Already Sumatra, Malaysia, Singapore, Sarawak and Borneo are heavily affected, with 800 000 hectares ablaze in Indonesia alone, and new fires reported out of control in Lombok, Sulawesi and Irian Jaya. There is heavy political and economic fallout as the incidence of deaths and widespread respiratory problems grows and as industries, particularly tourism, are strongly affected. The Indonesian Environment Minister announces: ‘If we do not change our ways, we may not survive as a nation.’1 The other article is headed ‘The kiwi is a bird at risk in a fool’s paradise’, and outlines the content of a new ‘damning report’ on New Zealand’s environment. The report states that the nation’s symbol, the kiwi, is threatened with extinction, and that, among other environmental problems, only 54 per cent of the population has safe water supplies, more than 7000 sites could be polluted with dangerous chemicals, and a fifth of all hazardous waste is dumped into public tips with no controls.2
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Today is not an unusual day. Almost any day will turn up similar examples of environmental degradation.3 Such articles set the scene for this chapter — a chapter dealing with the intensifying world ecological crisis which is also a crisis for capitalism and its constituent corporations. As we look to the next century, the ORM can no longer concern itself solely with how to make our existing organisations more efficient and effective. If some corporations are plundering the planet, despoiling the natural environment, polluting our water sources and making the air unfit to breathe, those of us who are change agents must pause and ask whether we want to help them to do that more efficiently. Rather we must attempt to influence organisations to contribute to a sustainable economy and to renewing the viability of the world’s threatened ecosystems. In this chapter we argue for a redefinition of business strategy around the concept of sustainability. Here we accept the point of view advanced by Crosbie and Knight, who have written: Sustainable business strategy means taking the goal of sustainability — living and working in such a way that human society will be possible for generations to come — and translating that into the changes required of an individual organisation — changes which maintain the organisation’s capacity for producing human benefits, including the profitability needed for survival, while optimising the environmental balance of its operations.4
But is there genuine cause for concern that we may be destroying the viability of the natural world that our descendants will inherit and depend on? Or are we being alarmist? If there is a real crisis, what are its dimensions and how critical are they for the future of humanity and other species? And is it the role of those in the ORM to address these issues? These are questions we try to answer in this chapter.
WHY SOCIAL AND ECONOMIC TRANSFORMATION? THE ECOLOGICAL CRISIS Consider the following statements from highly knowledgeable and competent professionals with relevant expertise. Richard Leakey is
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one of the world’s most famous paleo-anthropologists and an expert in biological evolution. In his recent book with Roger Lewin, he outlines five occasions in the world’s history when nearly two-thirds of living species disappeared from the face of the earth. He argues that we are on the verge of a sixth extinction, one of our own making. If we continue to destroy the natural environment as we have done and are still doing, particularly the rainforests, half of the world’s species will become extinct early in the 21st century. He believes that, in this case, we will follow them: Through the continued destruction of biodiversity in the wake of economic development, we could push the natural world over a threshold beyond which it might be unable to sustain, first, itself and ultimately, us. Unrestrained, homo sapiens might not only be the agent of the sixth extinction, but also risks being one of its victims.5
Apart from their intrinsic value, the disappearing kiwi in New Zealand and orang-utan of the Indonesian rainforests are symbols of the widespread threat to the species diversity of the planet. Paul Hawken is a world-renowned scientific nature writer who is concerned at our failure to acknowledge our dependence on the natural world. He writes: The (natural) laws we’re ignoring determine how life sustains itself. Commerce requires living systems for its welfare — it is emblematic of the times that this even needs to be said. Because of our industrial prowess, we emphasise what people can do but tend to ignore what nature does. Commercial institutions, proud of their achievements, do not see that healthy living systems — clean air and water, healthy soil, stable climates — are integral to a functioning economy. As our living systems deteriorate, traditional forecasting and business economics become the equivalents of house rules on a sinking ship.6
A growing number of thoughtful and well-informed experts from a variety of fields are seriously discussing whether the earth’s biosphere can survive the current depredations of the human race. In their view, civilisation’s current activities on the global ecosystem may have disastrous and potentially irreversible effects. In 1992, for example, over 1600 scientists, including a majority
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of the living Nobel laureates in the sciences, signed a document stating that: ‘Human beings and the natural world are on a collision course . . . that may so alter the living world that it will be unable to sustain life in the manner that we know.’ They concluded with a warning: We, the undersigned senior members of the world’s scientific community, hereby warn all humanity of what lies ahead. A great change in our stewardship of the earth and the life on it is required, if vast human misery is to be avoided and our global home on this planet is not to be irretrievably mutilated.7
We consider here some of the major factors that cumulative crises which threaten the survival of the and other species on the planet.
are creating human race
THE POPULATION EXPLOSION A medium estimate by the United Nations predicts that the world’s population will reach 10 billion by the year 2050 (it is currently between 5 and 6 billion). Thus this massive doubling will occur within one lifetime.8 Most of the population growth is in developing countries, where basic resources, such as water, food and shelter, are already extremely limited for the majority of inhabitants. This kind of uncontrolled population growth will place enormous pressure on food chains, will further threaten the integrity of the biosphere, already under heavy threat, unless there is a very significant change in the way we extract, process and conserve resources. It will also create more competition for land and use of basic resources and therefore raises the probability of internecine conflict and international warfare. These are destructive of human life and add to environmental waste and deterioration.
THE NATURAL LIMITS TO NON-RENEWABLE RESOURCES There are some resources for which there are clear limits to ongoing use. Oil and phosphate are examples. These resources are the residues of historical periods which have left reservoirs of
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energy or high concentrations of minerals. Once they are utilised and dispersed, they cannot be re-created in any time frame relevant to human civilisation. In the case of oil, it is unlikely that major new discoveries will now be made of large-scale economically viable reserves which would allow continued consumption at current rates. In Australia, for example, the Bass Strait wells are already drying up, and Esso (Exxon) is redefining itself as a natural gas producer. Similarly our major source of phosphate, Nauru island, has been exhausted. The world’s economies are extremely vulnerable to the progressive depletion of these reserves. To quote a recent statement by General Motors’ Executive Vice President, Louis Hughes: ‘The fact is that in America we consume the most energy per capita in the world. That’s got to change. We’ve got to change our habits.’9 The transition to alternative renewable energy sources has hardly begun; we are living on borrowed time given that the world’s total oil production is close to peaking and will begin to decline in a few decades. This will drive up transport costs, for example, and taxes for those countries which, like Australia, have depended heavily on revenue from the sale of oil to finance government programs. In Australia transport currently accounts for about 40 per cent of our total energy use.10 As a large part of the problem, it will have to be part of the solution. In addition, the way in which we currently use these resources has serious negative consequences for the environment — consequences such as global warming. Global warming threatens to erase a number of island nations in the Pacific Ocean by raising sea levels, and to change the climate and agricultural patterns of many countries. It is estimated that to prevent this we will have to progressively eliminate the use of fossil fuels and switch to renewable energy sources. To achieve this goal, resource use efficiency will have to grow at twice the rate of the improvement in the Japanese economy at the height of the OPEC oil price rises in the 1970s.11
OVEREXPLOITATION OF RENEWABLE RESOURCES There are and soil,
other resources, such as forests, fisheries, fresh water which are potentially renewable. However, we are
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currently using many of these in ways that deplete rather than renew them. Industrial society was formed when there were fewer people on earth and when resources such as fresh air, water and healthy soil were readily available. The British Empire, for example, annexed large areas of the world’s surface such as Australia, and it seemed that an endless supply of raw materials was available at low cost. Modern economists have coined the term ‘natural capital’ for the aspects of the natural world that have been largely taken for granted in economics and traditionally been assigned little or no value. What is the value of a rainforest? It is easily calculated — the cost and time of growing a new one. For the first time historically, growing prosperity is being threatened by the lack of natural capital rather than by financial capital. As the stocks of fish species diminish or disappear, as forests are felled and burned, as oil reserves are depleted, no amount of capital can extract significantly more where there is little left to extract. Renewable species are renewable only when we actively cultivate them rather than exploit them to extinction. To date we have largely failed to do this, mostly preferring to take without renewing. Whaling is an example of an industry where a renewable resource was almost brought to extinction. It is also an example of how world opinion can be mobilised to reverse destructive environmental trends. However, it also exemplifies how difficult it is to deal with a minority of nations who flout the international consensus when effective sanctions are not available. To this we can add the incalculable waste of resources that occurs, particularly in advanced societies. It has been estimated that about one-third of what advanced societies ‘consume’ is in fact wasted. Think of the cost (in cars and petrol) spent running around to collect groceries and other goods from supermarkets in a local area. Alternatively imagine what it would cost to have one or two delivery services to deliver orders transmitted electronically from a computer-based buying system. (Such a system is already being set up on the Internet for Woolworths in New Zealand. 12) Or think of the cost of disposing of the enormous quantities of packaging materials that come with purchased goods of many
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kinds. If this ‘waste’ were either eliminated or reprocessed in some productive (i.e. wealth-producing) way, it would represent a significant saving. We could in fact raise our standard of living substantially if we could find ways to eliminate or reduce waste of these kinds. Potentially, therefore, many resources are renewable, but we are exploiting and dispersing rather than renewing them.
GROWING ECOTOXICITY Many of our attempts to raise productivity have unintended consequences in terms of poisoning the environment and so reducing productivity and health. For example, Australia’s waterways are facing massive pollution through eutrophication. Phosphates and nitrates have transformed many of our river systems and lakes, the excess of nutrients creating toxic algal growth exacerbated by the introduction of exotic fish species such as carp. As a result native fish have died in huge numbers and in some cases entirely disappeared from habitats where they were once plentiful. Similarly, large-scale irrigation projects have raised water table levels and brought salts to the surface, making formerly cultivable areas unproductive. Oil spills like the Exxon Valdez disaster and the more recent collision of two oil tankers in the Singapore Strait threaten marine and bird life in huge areas.
REDUCED SPECIES DIVERSITY Edmund Wilson, one of the world’s most respected biologists and winner of two Pulitzer Prizes, has tried to estimate the loss of species of plants, insects and animals due to current rates of destruction of the world’s rainforests. Making what he regards as very conservative assumptions based on current knowledge, he estimates that the number of species doomed each year is 27 000. This rate of extinction, caused by human actions, has raised the historical rate of species reduction by 1000 to 10 000 by intervention in rainforests alone.13 Wilson points out that every country has three forms of wealth: material, cultural and biological, but that biological wealth is hardly taken seriously. Diversity of species
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is, however, a potential source for immense untapped material wealth in the form of food, medicine and amenities.14 He refers to the population explosion as ‘the human juggernaut’ which is placing diversity at great risk. Australian research scientist and author Tim Flannery has written an insightful ecological history of the Australasian lands and peoples, The Future Eaters. The book outlines how waves of humans entering the South Pacific, beginning with the Aborigines and Maori people, have dramatically reduced the biodiversity of these lands and therefore their sustainability. He refers to the human occupation of these lands as ‘future eating’ because of the severely limiting future it is creating by eliminating species.15 The human capacity to occupy vastly different physical terrains and to consume an enormous range of food types is an unprecedented adaptability. This adaptability has allowed us to occupy the entire planet, multiply exponentially and place extreme pressure on the world’s resources. Paradoxically, our very adaptability may well be the source of our final demise if we fail to appreciate our dependence on a diverse ecology.
INCENTIVE SYSTEMS ENCOURAGING WASTE AND DESTRUCTION In Australia, as in the USA and the EU, there has been a history of subsidising wasteful agricultural production. We have mountains of wool which we cannot sell, while Europe has mountains of butter. Through much of Australia’s history, settlers have been encouraged by governmental land grants and agricultural subsidies to ‘develop the outback’, often establishing non-viable farms and overstocking in good seasons. Governments of all political persuasions have subsidised sheep farming on marginal lands, subsidised clearing of these lands leading to soil erosion, subsidised fertiliser which has further destroyed native vegetation and led to poisoned rivers, subsidised overproduction of wool leading to massive stockpiles which cannot be sold, and then subsidised storage of the surplus woolclip and provided relief for the impoverished farmers. This has devastated the fragile and limited topsoil, with the result that much has been eroded, blown out to sea, and the remainder compacted under the hard hooves of sheep and cattle.
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In the manufacturing industry the same kind of wasteful production predominates. It is estimated that 94 per cent of materials extracted for use in manufacturing durable products becomes waste before the product is even manufactured. Similarly, for every 100 gallons of petrol used in cars, only one gallon is actually used to move passengers. Only 8-10 per cent of the energy used in heating an incandescent light bulb actually becomes visible light.16 If we can find ways to reduce or eliminate these kinds of waste (and we have many of the technologies right now that will do this), we can add substantially to our standard of living. Mostly, however, we don’t think about it because of our transmitted cultural assumption that it simply does not matter. Perhaps the greatest waste of all is the massive expenditure worldwide on armaments and their destructive use in wars. If a fraction of this expenditure could be diverted to positive programs for enhancing the prosperity of impoverished nations or supplying the needs of an increasingly desperate underclass in affluent societies, there would be far less need to manufacture, deploy and use these weapons. The waste of human life and potential talent in wars is horrifying. John Ralston Saul gives a conservative estimate of the number of people killed by war since ‘peace’ was declared in 1945 as 50 million.17 According to the International Institute for Strategic Studies, the world weapons market grew by 8 per cent in real terms in 1996, to $A54 billion.18
EXTREME DIFFERENCES IN INCOME Differences between the haves and have-nots are growing, both within and between societies. For example, a recent issue of the British Medical Journal argues that the increasing disparity in incomes is the most important influence on health worldwide — far more significant than smoking.19 Income disparity not only affects health directly, it encourages wasteful patterns of consumption on the part of the rich and environmental destruction among the world’s poor. As the poor in many countries become poorer in a continuing cycle of war, famine and disease, they are destroying wildlife and cutting down vegetation, extending the areas of desert and in turn further increasing poverty.
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The Harvard economist John Kenneth Galbraith has written an incisive book, The Culture of Contentment. In it he outlines the growing income gap between rich and poor in the USA. For example, in 1980 the CEOs of the largest 300 US companies had incomes 29 times that of the average manufacturing worker; 10 years later their incomes were 93 times greater. He argues that the rich have constructed a ‘culture of contentment’ designed to preserve their increasingly privileged and affluent lifestyle at the expense of others in society.20 The inequality of incomes and lifestyles also carries great cost. There are, for example, more private security guards in the USA than there are publicly employed police.21 And the desperation of the poor is rising as more support programs are removed to finance ‘law and order’. In his book The Unconscious Civilization John Ralston Saul also points out that since 1969 the income gap has been widening in the USA and the UK. In the UK, for example, the income gap between the highest and lowest paid workers is the widest it has been since 1880, when the compilation of statistics first began.22 Saul argues that the market, particularly the free market as defined by economic neo-liberals, has been attributed the status once accorded to God — that is, its operations must be revered and never questioned. Saul attacks the widely held view that the industrial revolution, through unhindered market forces, brought widespread economic wellbeing. Rather, economic wellbeing for the mass of people in industrialised societies was the outcome of the action of compassionate individuals and groups, who spoke out against the poverty and degradation that were endemic to the industrial revolution and who fought for a more equal distribution of income and the universal vote. He argues that we must redefine our concept of economic growth and take responsibility for creating a sane and compassionate society rather than relying on the invisible hand of market forces to sort things out.
LACK OF A HOLISTIC VIEW These problems laregly arise from our failure to see our relationship with the environment as critical to our future survival and to view
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that relationship in systemic terms. In taking the natural environment for granted, we assume it has a resilience that will absorb our intensifying impact forever. And we repeatedly fail to anticipate how our intervention in one aspect of the ecosystem has repercussions for other aspects. Partly this is due to: ! ignorance: it is often difficult to anticipate consequences in complex interconnected systems. But ignorance is only one factor detracting from the development of a responsible holistic view of our relationship to nature. Two other important factors are: ! short-termism: modern corporations are being pressured by investors, funds managers and boards to produce high levels of financial return in the short run. In democracies, most politicians are also operating on short-term perspectives out of a concern to be returned at the next election. This makes it difficult to make decisions on the basis of potential longer term impacts; ! materialism: We have developed an ethic that has enthroned personal gain (once known simply as greed) as an admirable personal trait. We make heroes of those who amass huge fortunes which they consume selfishly and conspicuously, and we write off as ‘dole bludgers’ those unfortunate enough not to have work. Our major measure of standard of living is the GDP (gross domestic product). The GDP is a summary measure of the money market system that, as Dobson writes: . . . not only leaves out all those who cannot participate because they have no money, it also leaves out all of that which cannot be expressed as money demand in the market, such as basic essential health of the eco-systems which support us, and whose ecological realities dictate the form which our economic and social life must take.23
CONCLUSION There is an impending ecological crisis of significant proportions which threatens the viability of the natural world and of human life itself. This crisis arises out of the economic system and out of
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the actions of its component corporations and governmental institutions. We are all implicated. So what is ecological sustainability? And how can we achieve it?
ACHIEVING ECOLOGICAL SUSTAINABILITY WHAT IS SUSTAINABILITY? The most publicised definition of sustainability is that of the World Commission on Environment and Development (WCED). Sustainable development is defined as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’.24 The inclusion of the word ‘development’ indicates that sustainability does not imply stopping economic activity or returning to some idyllic past state. But significant in the definition is a consideration of the needs of future generations — what is increasingly being referred to as ‘intergenerational equity’.25 Critical to sustainability is a resilient ecosystem, and a major aim of a sane economic system is to ensure that the biosphere on which we depend is sustained in a state of good health — that is, that its systems of recycling and renewing air, water, sustenance and so on are maintained in such a way that they will continuously support healthy life, human and non-human, now and for future generations. In this book we do not deal with intergovernmental global strategies or governmental national strategies for sustainability. The focus is rather on positive roles that corporations can play.
STEPS TO SUSTAINABILITY Leading energy efficiency experts, Amory and Hunter Lovins of the Rocky Mountains Institute and Ernst von Weiszäcker of the Wupperthar Institute, published a path-breaking book in 1997 entitled Factor 4: Doubling Wealth — Halving Resource Use.26 In it, the authors diagnose the institutional causes of our chronic energy inefficiencies and present workable and existing reforms to reduce our incentives to abuse energy. More immediately, the book
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documents 50 examples of quadrupling resource productivity, demonstrating that gains of this order are in fact feasible. One example is the hypercar, a partial version of which is now in production, which combines an ultralight body construction of carbon fibre and a hybrid gasolene/electric engine. The hypercar has 70-90 per cent greater fuel efficiency than a regular car and produces virtually no smog.27 The cost of purchase of a hypercar is equivalent to a regular car. Fundamentally rethinking the basis of products and services around the principles of sustainability is already producing major breakthroughs in efficiency and effectiveness, and these breakthroughs are becoming the nuclei of the new industries of the future. These industries will transform, bypass or supplant our wasteful and dangerous smokestack industries and modify our impact on the environment. In this process some corporations will play a major transformative role; those which seize the opportunities of the major breakpoints between old and new industries will survive and grow; those which remain anchored to the past will disappear. We turn now to this issue of corporate leadership of the coming transformation.
CORPORATE LEADERSHIP OF THE SUSTAINABILITY MOVEMENT WHY CORPORATE LEADERSHIP? There is a widespread view that governments must solve environmental problems. However, the major multinationals outstrip many of the world’s national economies in terms of wealth and power, and their global coverage allows them to escape the requirements of particular governments seeking to place severe environmental restrictions on them. They can simply move their operations across national borders. The world’s major multinationals are in fact more powerful than most national governments, and can exercise more direct international influence through their global operations than most governments. Corporations are also integral components of the world’s economy; therefore, if the economy is to change its
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impact on the environment, this must come through changes in corporate behaviour. The power of these companies makes them a potentially useful instrument for instituting environmentally sustainable policies. They can set environmentally sustainable standards for their suppliers as well as themselves and, in some circumstances, this business pressure is likely to be more effective than governmental regulation. There is an important place for governments in initiating international agreements around aspects of sustainability such as greenhouse gas emission. These agreements have high visibility, are symbolically powerful, and are particularly likely to affect the emerging practices of multinationals who will increasingly want to be seen to be in the vanguard of sustainable development. When governments, consumers and businesses get together, genuine and sustainable environmental action will happen. While governmental action of this kind will be an important component of a successful move to the sustainable society, in our view corporations will provide the spearhead of the movement. Business overall has in the past been a major contributing factor in environmental destruction, but society must have organisations to produce the goods and services needed to sustain life. So we could not do without organisations even if we wanted to. We will need the expertise of the managers of large organisations if we are to accomplish the transformation of economic life involved in creating a sustainable society. But can we gain their commitment to initiate change of this kind? There is more corporate support for sustainability policies than is currently appreciated. For instance, a recent survey carried out for the Australian Institute of Company Directors showed that 70 per cent of the 630 directors who responded support legally binding targets for greenhouse gas emissions.28 In the USA a 1996 survey of the Standard and Poore’s list of 500 companies showed that, in the manufacturing sector, 94 per cent had documented environmental policies, 65 per cent indicated that environmental performance was a factor in senior executive compensation, 72 per cent a factor in operating manager compensation, and 56 per cent
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of companies were applying TQM approaches to environmental issues.29 More companies are moving to institute environmental audits and seeking outside help in doing this. They will come under increasing public pressure to do so but will act also because it is simply good business practice to move in this direction. Three factors will impel the move to widespread industry support for sustainability measures. The first is the growing environmental crisis. The forest fires in Indonesia and Borneo are examples: this has been a disaster for the economies concerned and has precipitated the devaluation of their currencies. Also, the tourism industry can be expected to mobilise support for an end to practices of this kind which destroy the financial viability of the industry. Most importantly, the potential opportunities inherent in a widespread move to a sustainable economy will drive those firms that are seeking profit growth. A range of new industries are emerging to develop and utilise clean technologies, to reduce waste, recycle, and process what cannot be eliminated into useful products. These industries represent major potential profit-earners for large corporations, and many businesses are realising this and beginning to act on it. As the new technologies that will drive sustainability become available, there will be massive reorganisation of traditional industries such as energy production, manufacturing and service provision. We discuss some of these imminent transformations below. Proactive businesses will seize these new technologies and use them to reposition themselves to take advantage of the cost reductions and value adding provided by the emerging market and community demand for moves to increased sustainability. In addition, there are the values of a new generation of executives who are much more environmentally conscious. Most were exposed in childhood to wildlife television series stressing environmental values and to units on the environment in school. They have reached adulthood in a world in which environmental issues are featured daily in newspapers and television. Some will make efforts to ensure that their organisations contribute to a more sustainable economy.
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CORPORATE LEADERSHIP IN WHAT? What is corporate leadership in this new area? It involves leading the organisation through the four phases of ecological strategy development we now outline. The first phase is the development of compliance strategies to address environmental issues: these strategies tend to be aimed at ensuring that the firm is complying with environmental laws and minimising the firm’s potential liabilities from actions that might have negative environmental consequences. This is an important first step in which the firm puts environmental sustainability on the agenda and attempts to ‘clean up its act’. It results in elimination of the most obvious environmental abuses, which could lead to litigation or to strong community action directed against the firm. It is a largely self-protective measure but it can have real gains for the community as well as the firm. These days most firms are embarking on initiatives of this kind. Recently, for example, Pasminco EZ, a Tasmanian zinc-maker, made the world’s last legal industrial dumping into the ocean. Pasminco made altogether 9089 dumps of waste, which included heavy metals such as arsenic and lead, into the sea off Tasmania. The firm has now developed an alternative smelting process which eliminates the toxic waste. This clears the way for the Australian government, which licensed the dumping, to sign the 79-nation 1990 London Convention prohibiting dumping at sea.30 Pasminco EZ had been a major target for Greenpeace protests. Clearly it is an advantage to initiate the cleaning up of environmentally damaging processes before environmental activists and government regulations force the issue. Firms now face a much more informed and environmentally conscious public. Awareness that we face an ecological crisis is growing and attitudes are changing to support sustainability measures. This is indicated by the largest environmental poll ever taken — the Gallup Health of the Planet Survey conducted in 1993. Undertaken in 24 nations, the survey shows that environmental concerns are important to a sizable majority of the world’s people. Residents of both wealthy and poorer nations expressed almost equal concern about the health of the planet. A particularly
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interesting finding was that, in most countries, a majority of respondents gave environmental protection a higher priority than economic growth, and said that they were willing to pay for that protection.31 There is strong and widespread concern about the environmental issues we have discussed — a concern that will only grow as environmental problems proliferate. Already this support is being galvanised into political action. There are, for example, more paid-up members of environmental groups in Australia than there are paid-up members of political parties. The second phase involves the initiation of attempts to develop ecological efficiencies — that is, reducing costs by eliminating waste and by reviewing the procurement, production and distribution process to create an overall positive environmental effect. For many firms this includes active involvement in some systematic approach to developing an overall set of policies and procedures such as ‘Total Quality Environmental Management’. There is a wellestablished worldwide movement associated with the implementation of the ISO 14001 standard — that is, the international standard specification for an environmental management system. (ISO — the International Standards Organisation — is a non-governmental organisation established in 1947 for the purpose of developing worldwide standards to improve international communication and collaboration and to promote the smooth and equitable growth of international trade. Action to create environmental standards was initiated by ISO in 1993 and ISO 14001 standards were formally introduced in 1996.) The ISO system has been strongly endorsed by business and widely put into practice. For example, in 1995 the electronics manufacturer Canon achieved certification of all of its sites in Japan, and since then many other leading Japanese organisations in electronics, machinery and office equipment, chemicals, steel automobile manufacture, pharmaceuticals, oil refining, construction and retail have become actively involved.32 A review of the worldwide use of this system appears in editor Christopher Sheldon’s book ISO 14001 and Beyond: Environmental Management Systems in the Real World.33 Many leading companies worldwide have already moved actively into this second stage — a stage usually accompanied
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by the development of a positive environmental ethic rather than a defensive self-protective one. One major area of cost savings in phase two is the elimination or reduction of energy waste through re-engineering production processes. That this is achievable, with often dramatic results, is shown by a range of studies.34 Another typical second-stage activity centres around product redesign to reduce material throughput and to use materials that can be recycled. This can extend through the total supply, production and distribution chain. Critical to this process is the development of collaborative alliances up and down the chain to ensure that the greatest overall efficiencies are achieved, that new integrated products and services are developed, and that the output of one segment becomes the input of another. For example, Interface, a multinational company operating in 110 countries, has saved $US20 million by waste elimination and is using the resulting savings to pay for research projects designed to make the company ‘the first name in ecology, worldwide, through substance, not words’. Early on in this process, one project came up with the idea of leasing carpet to commercial customers rather than selling it. Customers rent the carpet; Interface owns it, maintains it, and recycles it when it is worn.35 Part of the solution to environmental degradation lies in this kind of ‘dematerialisation’ of much of current production by delivering service benefits which substitute for or reduce the demand for material goods. For example, the US office furniture manufacturer Herman Miller’s Phoenix Program includes a plant to recycle and ‘remanufacture’ indefinitely every kind of furniture it has ever made, thus lowering its demand for raw materials, enhancing customer service through replacement of worn or outdated furniture, and dramatically cutting down on waste materials. In the service economy, material goods are only one aspect of our standard of living and quality of life. The environment places few limits on information transmission, the enjoyment of the arts and most sports, social interaction, learning and education. The information industry is today the biggest source of growth, and education is one of Australia’s leading ‘exports’.
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The third phase is initiating proactive environmental strategies that use the need for ecological sustainability as a source of strategic business opportunities to provide competitive advantage.36 This approach actively initiates new products or processes. These substitute for or displace existing environmentally damaging products and processes, or satisfy emerging community needs around ecological issues (such as reafforestation of degraded lands, or treatment of toxic waste). As more companies move into this stage of innovation, the sustainability movement will acquire a momentum that will put pressure on other companies to follow. As a result, we can expect major ‘breakpoints’ to occur as industries are reformulated or merge or entirely new industries emerge. This stage is usually accompanied by a strong commitment to sustainability and the development of sustainability alliances to step up the pace of change. As businesses become more directly linked to sustainability, it is in their interest in this stage to move the pace of change faster. This improves their competitive position relative to others using traditional processes or marketing traditional products. The number of firms entering this stage is now growing and we can expect them to become the spearhead of environmental change in the next century. This represents a transformation of the nature of the sustainability movement as its leadership moves from fringe volunteer activists to corporations at the leading edge of technological and economic change. This is the kind of change familiar to us from our discussion of the history of the ORM. The fourth phase goes beyond the third in that the firm seeks proactively to facilitate the restructuring of the market to ensure that the appropriate conditions exist for more widespread moves to sustainability. Thus the organisation becomes an active promoter of sustainability. A current example of this is Anita Roddick’s organisation, The Body Shop, which actively promotes an environmental ethic and devotes a proportion of profits to environmental renewal. In chapter 6 we talk of the need to develop the learning organisation. That point is essentially a prelude to our discussion of phase three and four leadership. The learning organisation has the corporate capability for organisational reshaping; this includes
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the rapid product innovation and organisational restructuring needed to take advantage of new technologies and market opportunities arising from a widespread move to sustainability. Those companies that lead the way in this new wave of ecological products will survive and thrive. Their profits will be enhanced directly through innovative products and processes and also through their genuine contribution to improving our collective quality of life. Those firms that provide this leadership will reap the benefits of a positive public image and active choice of their products and services by increasingly well-organised consumer groups committed to fostering sustainability. The phases we have outlined are often pursued sequentially: that is, companies tend to move through the phases in the order we have outlined. However, there is a growing need in areas of critical impact on the environment to develop the capability to move straight to the last two stages. Such a shift will require, in many instances, transformational change for the organisation.
TRANSFORMATIVE TECHNOLOGIES Many people believe that the move to ecological sustainability means a massive rise in costs and a fall in their standard of living. The irony is that many of the solutions to our environmental problems are already available and are potentially highly profitable. For example, the amount of solar energy falling on the Australian continent is over 12 000 times the annual demand for major fossil fuels in the country. Solar roof panels on every rooftop in the country, absorbing a small proportion of this, would supply more electricity than is at present used in Australia.37 The technology for achieving some part of this transition is currently available, cheap, and easy to install. Solar panels can be used economically to heat water for household use. Other technology is still in the developmental stage, but Australia is in a lead position as far as the R&D is concerned. Use of solar energy would dramatically reduce air pollution and allow many domestic consumers to make a profit by selling the energy in excess of their own needs back to the electricity grid. A combination of industry initiatives plus upfront loans to
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domestic users who install solar collectors would see a reorganisation of the industry and a reduction in pollution from coal-burning plants. Where will these transformations take place? The nature of such change is not entirely predictable. Nevertheless, some potential areas of transformative change can be clearly discerned. One area will centre around the marketing of the hypercar, which is already underway. At least US$2 billion has been invested in the hypercar already: versions are currently being developed by GM, Toyota, Honda and Ford. Toyota’s partial version, the Prius, was available in Japan from December 1997 and priced at less than US$25 000. Other more fully developed models are expected to come on to the market by 2000. The widespread introduction of these cars will lead to significant changes in vehicle manufacture and reorganisation of gas station retail outlets. Similarly there is a move from commercial ‘hunting’-style fishing to large-scale fish farming. This is already well underway in countries such as Taiwan, China and Japan, and to some extent in Australia (e.g. Atlantic salmon in Tasmania and tuna in South Australia). The switch will be speeded up by falling free-ranging fishstocks and rising fish prices. The water industry is moving from the expensive and ecologically damaging approach of damming rivers and flooding valleys to recycling water. New membrane technologies, such as those developed by the previously Australian company MEMTEC, are supporting these developments. More effective photovoltaic cells will also revolutionise the energy production industry. Pacific Power is already collaborating with the world’s leading research centre in this new technology, which is at UNSW in Sydney. But this is only one of the new technologies that will revolutionise energy use; there are many others, some of which are converging.38 There are also technological developments that will have major impact across a range of industries. For example, the market is moving to the Internet. A publication of the Australian Coalition of Service Industries39 features an article on the ‘online economy’, which it says is ‘turning the service sector on its head’. The writer goes on to say that:
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With this change will come unprecedented opportunities for Australia to achieve high growth, create wealth and reduce costs. The change will also expose the nation and its businesses to a major new threat — in the form of new and potentially devastating offshore competition. Either way, the online revolution is too significant for Australia to ignore. It will result in new rules that require business and government to radically rethink how they develop, trade and deliver services. And, in the transition to the new game, it will redistribute wealth, resulting in new winners and new losers at both the national and corporate levels.
These are that will lifestyle.
only a few sweep away
of the transformative technologies industries and revolutionise our
RESTRAINING FORCES But to imply that these changes will take place without opposition and resistance from some entrenched commercial interests would be naive. For example, as new energy sources and alternative technologies progressively replace existing fossil fuels and standard forms of energy production, there will be losers as well as winners. Clearly the losers will be the multinationals and nationals that are providing traditional fuels and using traditional technologies. This will of course only be true if they do not have the strategic foresight to invest in the new, smaller scale and decentralised renewable energy technologies, and to redefine themselves as being in the energy services business rather than in the coal or oil business. Lack of strategic foresight is apparent in some of the proposals for reductions in greenhouse gas emissions brought to the 1997 Kyoto Greenhouse Summit meeting. In Australia and in the USA traditional energy producers and manufacturers combined to subvert the growing but tentative international governmental support for substantial reductions of emissions in the relatively near future. Given such attempts to hold on to non-sustainable practices, there is a need for those companies that stand to gain most from the greening of the economy to form strong political alliances to
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protect their interests. These will be those firms with a stake in alternative energy technologies and service firms generally. There will also be fears that, if their efforts are successful, it could have a major negative effect on the economy. However, notions that the resource-extraction industries such as the coal industry are the mainspring of the Australian economy are erroneous. Mining contributes only 5 per cent of GDP as against a massive 76 per cent contribution by services.40 As carbon fibres and plastics replace metals and alternative energy sources and conservation strategies replace coal and oil, the contribution of the mining industry to GDP will be substantially reduced. (And so will its contribution to greenhouse gases.) While mining still makes a significant contribution to our export earnings, it is a declining contribution that will reduce further as nations seek to cut greenhouse gas emissions. To develop government policies that attempt to lock us into the smokestack industries of the industrial age when we are moving rapidly into the postindustrial era is economic madness, and is directly opposed to the interests of firms in the mainstream economy. Instead we need governmental initiatives to encourage the development of the industries of the future. Japan has taken this initiative already with its Action Plan for Economic Structure Reform approved by the Cabinet in December 1996. The plan targets 15 industries of the future with high growth potential. Of those 15 industries, at least five are related to conservation and the ecological environment.41 So another key area of corporate leadership is the support of macroeconomic reform directed to removing subsidies (often hidden) for maintaining environmentally destructive and wasteful processes and products. A review of renewable energy initiatives, for example, concludes that: In many cases the major barriers to adoption of renewable energy are not technical. They are political and institutional, or arise from distorted markets and the inappropriate signals they produce . . . the challenge is mostly in the political sphere.42
Corporate leaders can exercise these barriers and to move directions.
leadership in the economy
lobbying to remove in new, sustainable
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Another key area is in lobbying powerfully for policies to support the R&D needed to make Australia a front-runner in new sustainability industries, which will become major sources of export income in the future. There is also a need to heighten awareness in the leaders of financial institutions of the economic potential of sustainable industries. It is hard to overestimate the critical role of capital, which is needed by large and small institutions alike. We often talk about ‘market responsiveness’, but in fact most private sector organisations are more responsive to the attitudes of leaders in the financial institutions on which they depend for capital, such as banks and superannuation funds. The representatives of financial institutions are more powerful in the short term than markets because they have direct access to boards and senior executives, and have the power to withdraw or provide funds that are often urgently critically needed for investment in the firm’s future. There is, however, a growing awareness in financial institutions of the importance of firms having sound environmental policies: insurance companies, for example, realise the cost that can be involved in such disasters as the chemical plant explosion at Bhopal or the Valdez oil-spill disaster. This is still phase one thinking; the potential of proactive environmental policies have yet to be appreciated by most financial institutions.
THE ROLE OF THE ORM This book deals with the past history and future prospects of the Organisational Renewal Movement. As the world faces a significant environmental crisis, we argue that the movement needs a fundamental reorientation. To date, the ORM has been mainly concerned with improving organisational processes to make them both more efficient and more fulfilling for organisational members. As we have shown, the ORM’s past focus was more on reorganising the means of production than on the ends to which that production was directed, and more on intraorganisational relationships than with relationships outside the organisation (e.g. with suppliers and customers).
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These emphases have changed in the past decade as the ORM has been integrated with the strategic management approach. The movement has now shifted to focus more on strategic direction and external relationships. Nevertheless, the ORM has shared the general myopia of the management field in not recognising the importance of the ecological basis of the business environment. ORM members now need to work towards a heightened awareness of the growing ecological crisis and the opportunities and threats that it presents, and to develop strategies to work with organisations to ensure that they are redesigning processes, products and services that make a positive contribution to sustainability. But how will this be achieved? First, we need a new theoretical base for change — a new paradigm — to provide the movement with a direction and set of strategies for future change. At this point therefore we return to the theoretical model of change that we have used throughout the book to summarise successive paradigm shifts in the movement. As we indicated in the introduction to part 3, a key lesson from the movement’s past is that it is important to continue to challenge and re-examine the basic paradigm and operating philosophies if the movement is to continue to contribute to creative social change. If there is to be a fundamental reorientation in the movement now, how will this be reflected in the character of the movement?
THE SUSTAINABILITY APPROACH TO CHANGE ! !
basic metaphor: an organic, self-renewing biological system (such as a rainforest or a coral reef); diagnostic system: a strategic analysis of the organisation’s total environment, including the relevant ecological systems, focusing on environmental renewal and regeneration that will support continuous organisational development; analysis of the technological and human capabilities needed for a synergistic relationship with the future environment of the organisation; ideal model: an organisation actively building its capability to use environmental resources to contribute to economic prosperity, ecological renewal and human fulfilment;
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intervention strategies: environmental scanning (economic, political, technological and ecological); development of sustainability strategies; selection and development of strategically relevant corporate capabilities; development of communities of practice around these capabilities, particularly the capabilities for effectively implementing corporate change; ! change agent role: three main roles: (i) executive role — responsibility for managing overall strategic change, including stewardship of human capabilities and ecological resources; (ii) human resource manager role — responsibility for building and maintaining corporate capabilities and sustaining communities of practice; (iii) change practitioner role — ‘hands-on’ responsibility for working with managers and employees at all levels to facilitate the implementation of strategic change. (For your convenience, the comparable paradigms for other stages of the ORM’s historical development are gathered together in the Appendix, and you may want to pause here to review these and compare the change in the basic definitions that has occurred as new approaches developed.) A simple shift in basic metaphor can have profound consequences for action in any sphere of life. What we are suggesting here is that we need such a shift away from bureaucracy’s machine metaphor and corporate strategy’s military metaphor. Arie de Geus, who coined the term ‘learning organisation’, has published a stimulating book entitled The Living Company.43 He makes a strong distinction between an ‘economic’ company and a ‘living’ company, to indicate that organisations must pursue a broader set of goals than the purely financial and economic if they are to develop in a sustained way. This shift to a ‘living system’ metaphor is of profound importance if we are to begin to think of organisations as an integral part of the biosphere. So, having covered so much ground in this book, what should be the future strategies of the ORM?
Developing a broader view of strategy In outlining these strategies, we will be drawing on the lessons from the movement’s history outlined in the introduction to part 3.
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It is ironic that corporate strategists have focused on the environment but until very, recently ignored the existence of the natural environment. A marked change in this attitude was signalled by the publication in 1995 of a special issue of the Academy of Management Review devoted to the topic of ecologically sustainable organisations.44 Gladwin, Kennedy and Krause write in this issue: The task ahead for management theorists is one of reintegration. Will management scholars reconceive their domain as one of organisationin-full community, both social and ecological? This integration may be the primary transformational challenge for management theorists as they strive for relevance in the new millenium.45
So working to broaden the concept of strategy to include ecological sustainability is a key task for the ORM in the future — an opportunity for the development of a new synthesis and retooling to develop strategies more suitable to environmental conditions. In addition to extending the focus of corporate strategy to include the ecological environment, we argue for extending the concept to include a broader set of stakeholders. Over the history of the ORM there has been a progressive redefinition of the range of stakeholders whose interests managers must consider in the process of arriving at a strategic plan. Traditionally, and by law, public companies must consider the needs of shareholders as paramount. The ORM influenced an extension of the shareholder concept to the stakeholder concept: arguing strongly that the interests of employees and their representative unions must also be taken into account. Shareholders were investing capital but the workforce members were investing their lives. Both had a stake in the business. The debate around industrial democracy and worker participation was an attempt to define how their stake in the organisation would be recognised. Since then the concept of stakeholder has been extended to other key groups with an interest in the firm’s future — groups such as consumers and suppliers. The key change needed now is to add future generations to the list of stakeholders so that each strategic decision is evaluated in terms of its potential effect on the lives of succeeding generations. We know of one organisation where
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the senior executive group keeps an empty chair at the boardroom table as a reminder of the interests of generations yet unborn.
Perfecting strategies for building corporate capabilities We now know how important it is to build corporate capabilities and we have a much clearer idea of which are the most critical for sustained performance (see chapter 6). We need to review the range of intervention strategies developed by the ORM in the past to determine their relevance in achieving this. We must also determine whether there are any gaps in the full range of strategies needed for corporate competency building. Intervention strategies tend to have developed in an ad hoc manner, and ORM practitioners have tended to be expert in and to favour one or two. What we need is a systematically integrated set of intervention strategies and professional training for change agents in their use. Universities, professional associations such as AHRI (the Australian Human Resources Institute) and consulting companies can play an important role in this. Strategies are needed at the societal level as well as at the organisational. This is not the subject of this book but is an issue that will need to be addressed by the ORM in the future. A challenge for the ORM is to develop differentiated change strategies for incremental and transformational change that can be applied to creating ecologically sustainable organisations. While these strategies have been refined for other kinds of organisational changes, they now need to be adapted specifically for programs focused on ecological sustainability. Given the need for the rapid adoption of such programs in many organisations which have lagged in this area, it is particularly important to create clear guidelines for transformational strategies.
Exercising stewardship of resources We must work to challenge the assumption that natural resources can be simply exploited, and replace it with a conscious policy of active stewardship of resources. The notion of stewardship applies not only to resources used directly by the firm in its ‘production’ process but includes the full life cycle of the product or service.
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So the organisation needs to work with suppliers, distributors and consumers to ensure that the process has a positive rather than negative impact on the environment. The recycling of aluminium cans through a remelt operation is an example of this: it reduces the environmental pollution of scattered discarded cans; it also reduces the demand for aluminium mining and processing, and recycling turns out to be cheaper than mining, shipping and processing the raw materials. Pilot projects will be important in demonstrating the viability of good stewardship, both for its own sake and for the contributions it can make to improved and sustainable organisational performance.
Valuing and promoting diversity The way ahead for modern corporations is to add value to products and services, to anticipate changing consumer needs in a global market, and to move swiftly to supply these needs. This has to be achieved for segmented markets — that is, for specific limited sets of consumers with discrete preferences. So innovation and knowledge of specific consumer groups are vital to corporate success. These capacities are more likely to be realised where there is a diverse workforce. Cope and Kalantzis refer to this as the principle of productive diversity. They argue that: . . . there must be a shift away from the homogeneous corporate cultures of Post-Fordism towards a Productive Diversity model of organisational culture . . . The diversity of communities and workforces and the multiplicities of experiences and perspectives can be harnessed as a productive asset.46
One of Australia’s great potential advantages for operating crossculturally is the multiethnic origin of its workforce. Unfortunately we have not yet capitalised on this, preferring to see it as a problem rather than an asset. This is an area where the ORM can work to change public perception from seeing diversity as a problem to cherishing and using it as an asset. A diverse workplace can also contribute to developing change programs which explore a wide range of alternatives.
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Defining the leadership of the movement Reviewing the history of the ORM makes it clear that the conservatism of most Australian managers has made it difficult to achieve reforms in work organisation and practice, and that much of what was achieved has been lost through lack of ongoing managerial support. The ORM has attracted the support of some outstanding CEOs, such as Gordon Jackson of CSR, Rod Carnegie of CRA, John Paterson of the Hunter Valley Water Board and other government instrumentalities, James Strong of Australian Airlines and Qantas, Andy Small of Zurich, and Alison Crook, formerly of the State Library of New South Wales and currently of SERCO. Such people have been able to institute and sustain systematic competence building strategies in their organisations, but there have been too few of such leaders at the top of Australian organisations. However, a new generation of CEOs and senior executives are emerging who are more cosmopolitan in outlook, more open to innovation and more environmentally aware than most of their predecessors. As the ORM has found during its history, a few committed individuals can play a vital role in energising the movement in its early stages. But the base of the movement must be broadened and new energy found for sustained diffusion of ideas and practices. The new generation of managers represents a potential elite who reflect the emerging rather than the past values of society. Creating a network of such people, who are in influential positions within their own organisations and in the corporate community, is a major opportunity and challenge for the ORM.
Raising awareness and building skills It is in this area in particular that the Australian Human Resources Institute (AHRI) can continue to play a critical role as the major professional association of human resource practitioners and change agents in Australia. The AHRI is reinventing itself under the leadership of its board, management and president, Viv Read. A number of those involved, including Viv, have been contributors to the ORM since the mid-1970s. The vision is that the AHRI
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will play a more proactive role as a catalyst for professional and community debates around the kinds of issues discussed in this book. This is a major awareness-raising function as well as an opinion leadership role. The commitment to building corporate capabilities is a natural extension of the AHRI’s traditional concerns; the issue of creating ecologically sustainable organisations would be new. Other organisations and professional groups such as the Australian Institute of Management (AIM), the Australian Council of Trade Unions (ACTU), the Business Council of Australia (BCA) and the Australian Council of Service Industries (ACSI) could also adopt this agenda. While this agenda would be new, there is a natural link between creating social and ecological sustainability. As professional associations, all of these organisations have a major role to play in building professional skills in areas relevant to corporate capability building and change strategies. For example, the AHRI has been offering skills training courses for decades, so this represents a natural extension of what is currently being attempted. But such skill enhancement alone is not enough. As we learned in reviewing the history of the ORM, pilot projects and descriptions of best practice are vital to raising awareness. Not all of these projects will result in sustained change. However, the experience gained in these projects by change agents can be transferred to other change sites and is not necessarily lost.
Creating centres for research and diffusion, and communities of practice We have reviewed the significant role played by various centres, mainly situated in universities, in researching central issues and in diffusing new information about best practice. These centres need to be more fully supported by governments, corporations and their host institutions. This will occur, however, only when they undertake what is seen as relevant research, with practical implications for organisational innovation and performance. This will involve more applied action research, conducted collaboratively with the organisations and industry bodies, rather than the prevailing academic research model directed primarily to publication in international journals.
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These centres need to produce competent and imaginative researchers who are committed to the serious evaluation of innovative work practices and sustainability initiatives. The centres also need to be active in creating and maintaining communities of practice (professional networks) for change practitioners that will facilitate the exchange of ideas and information relevant to the development of sustainable organisations.
Building a political power base Our review of the ORM movement has pointed to the realities of power in the struggle to create a sustainable and human corporate world. If the movement is to be effective in the future in the huge task that we have outlined here, it needs to establish a strong power base within the corporate, community and governmental worlds. The current level of acceptance of the ORM represents a substantive base already achieved. The issue is how to extend that base. There is a tension here between gaining acceptance by those whose power derives from the status quo and standing for a future world which is markedly different. In chapter 3 we discussed the key roles of anchor, pragmatist and populariser. The anchor is the purist, arguing for the radical option and refusing to budge from its advocacy; the pragmatist is the compromiser, who is willing to negotiate and broker any change that moves in the direction of the ideal; the populariser takes the key ideas, and makes them appealing through images and a use of language that has emotive appeal in terms of the values of the audience. We need people to play all three roles and to respect each other’s relative contribution to shifting the world closer to the ideal.
Overall We can act as catalysts in developing and implementing transformational strategies that will move organisations into the emerging sustainable economy. The strength of the ORM and its potential contribution to the sustainability movement lies in the accumulated understanding of how to facilitate the processes of incremental and transformational change in contemporary organisations. As the pace
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of change towards sustainability-creating organisations quickens, our knowledge of how to make effective transformational change can make a vital contribution to the speed and effectiveness of the change process.
CONCLUSION Between the early 1400s and the late 19th century, European slave traders (predominantly British) shipped over 11 million black slaves across the Atlantic. The trade followed a ‘trade triangle’ which allowed each leg of the voyage to make a profit. In its simplest form the ‘triangle’ involved exporting finished goods, textiles, spirits, firearms, beads and mirrors to Africa to trade for slaves. The slaves were then taken across the Atlantic to the Caribbean or the Americas and exchanged for a homeward cargo of tropical products, such as sugar, cotton, tobacco, rum and molasses.47 Many in the 19th century believed slavery to be an essential element in the economic system. It took a long-running political battle in several countries, major international cooperation, and a bloody civil war in the USA to eliminate it. The world economy and national economies did not collapse despite the nostrums of slavery’s proponents. Similarly, there will be many who argue now that ecologically destructive policies are essential to the continuance of our standard of living and the operation of the economy as a whole. However, to continue as we are is to doom our descendants to a desperate and dangerous future. To do so also ignores the possibility we have of so redefining our relationship to the natural world supporting us that we achieve a new age of widespread prosperity and wellbeing. That would be the greatest heritage we could bequeath to future generations. In the movement to realise this vision of symbiosis between ourselves and the ecological matrix that supports us, the ORM can play a vital role. It can bring to the task of corporate, social and economic transformation a set of positive values favouring change, useful knowledge about effective organisational functioning, and change skills that have been developed and tested in corporate settings for over 30 years. ORM change agents and
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others committed to this task will need the courage to declare their position and the political sensitivity to identify where their participation can make a difference. As we move into the 21st century, environmental issues will become paramount. If we are to resolve these issues, we need to transform our world view and our action upon the world from an exploitative to a regenerative mode — both in relation to people and the planet. The new heresy for the ORM to espouse is that when we build organisations that act upon this world we must do so not with the intent to exploit, pollute and plunder but to renew the life of the planet and ourselves. If we devote ourselves to communicating this heresy, we may contribute towards making it the orthodoxy of the 21st century. To quote Tachi Kiuchi, Managing Director of Mitsubishi Electric Corporation and General Manager of Global Communications: ‘The mission of business — the mission of civilization — is to develop the human ecosystem, sustainably.’48
APPENDIX SUMMARY OF MAJOR HISTORIC APPROACHES TO CHANGE THE BUREAUCRATIC APPROACH TO CHANGE • basic metaphor: • diagnostic system:
• ideal model: • intervention strategies:
• change agent role:
organisations as machines; task-focused structural analysis (hierarchy, positions, status, delegation, rules, job descriptions); efficient, repetitive operations with predictable outcomes; expert analysis, task redesign to ensure efficiency, selection and basic technical training, all introduced by authoritative command; authoritative manage and/or technical expert.
HUMAN RELATIONS AND OD APPROACHES TO CHANGE • basic metaphor:
organisations as networks of interpersonal relationships and cohesive groups;
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• diagnostic model: • ideal model:
• intervention strategies:
• change agent role:
a person-focused analysis of the social system; a participative, organically evolving community of endeavour with high morale and job satisfaction; initiation of a process of participative selfdiagnosis, task redesign to ensure work motivation and satisfaction, team development, conflict resolution and interpersonal skills training; facilitator of the process of redesign of human relations and workplace organisation.
SOCIO-TECHNICAL SYSTEMS (INDUSTRIAL DEMOCRACY) APPROACH TO CHANGE • basic metaphor: • diagnostic model:
• ideal model:
• intervention strategies:
• change agent role:
organisations as organic open systems; Socio-Technical Systems analysis combined with participant redesign and work systems; a representative democratic community composed of semi-autonomous work groups with the ability to learn continuously through participative action research; participative action research and workplace redesign around socio-technical principles; technical expert, facilitator, negotiator.
THE TOTAL QUALITY APPROACH TO CHANGE • basic metaphor: • diagnostic model: • ideal model:
organisations as continuous process improvement systems; TQC/TQM methods of analysis; focus on continuous improvement in
• intervention strategies:
• change agent role:
order to reduce variations and enhance product reliability and customer satisfaction; the use of TQ circles or groups to harness employee knowledge and equip employees with the tools to make improvements. Change driven by management from the top down; expert and teacher of knowledge relating to techniques of quality improvement. The expert empowers others.
STRATEGIC APPROACH TO CHANGE • basic metaphor: • diagnostic model: • ideal model:
• intervention strategies:
• change agent role:
organisations as purposive competitors; strategic analysis of the environment and of other key contingent factors; a highly efficient organisation, meeting international productivity and profitability benchmarks for the industry, with a committed workforce supporting the organisation's strategic direction; environmental scanning, including competitor analysis, strategic redirection and repositioning, design and implementation of integrated organisational change and HRM programs; corporate strategist, technical expert in strategy implementation, integrator of varying strategic action programs.
THE SUSTAINABILITY APPROACH TO CHANGE • basic metaphor:
• diagnostic system:
an organic, self-renewing biological system (such as a rainforest or a coral reef); a strategic analysis of the organisation's
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• ideal model:
• intervention strategies:
• change agent role:
total environment, including the relevant ecological systems, focusing on environmental renewal and regeneration that will support continuous organisational development; analysis of the technological and human capabilities needed for a synergistic relationship with the future environment of the organisation; an organisation actively building its capability to use environmental resources to contribute to economic prosperity, ecological renewal and human fulfilment; environmental scanning (economic, political, technological and ecological); development of sustainability strategies; selection and development of strategically relevant corporate capabilities; development of communities of practice around these capabilities, particularly the capabilities for effectively implementing corporate change; three main roles: (i) executive role — responsibility for managing overall strategic change, including stewardship of human capabilities and ecological resources; (ii) human resource manager role — responsibility for building and maintaining corporate capabilities and sustaining communities of practice; (iii) change practitioner role — `hands-on' responsibility for working with managers and employees at all levels to facilitate the implementation of strategic change.
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CHAPTER 2 — THE HUMAN RELATIONS AND OD MOVEMENTS 1
See Herzberg, F. (1966) Work and the Nature of Man. World Publishing, Cleveland, OH. Maslow, A. (1954) Motivation and Personality. Harper & Row, New York. McGregor, D. (1960) The Human Side of Enterprise, McGraw Hill, New York. For an interesting account of Mayo’s life, see Richard Trahair (1984) The Humanist Temper: The Life and Work of Elton Mayo, Transaction Books, New Brunswick, USA. A critical approach to his work can be found in Carey, A. (1967) ‘The Hawthorne Studies: A Radical Criticism’. American Sociological Review 32, 3, pp. 404-16. For more information on social and issue movements see Burgmann, V. (1993) Power and Protest: Movements for Change in Australian Society, Allen & Unwin, Sydney. Jennett, C. and Stewart, R. (1989) Politics of the Future: The Role of Social Movements, MacMillan, Melbourne. Marsh, I. (1989) Issues Movements: Australian Writers and the Decline of Two Party Politics. Working Paper 89-016, Australian Graduate School of Management, University of New South Wales. Touraine, A. (1985) ‘An Introduction to the Study of Social Movements’. Social Research, 25, 4, pp. 749-87. For more information, particularly on the early rise of this movement in the USA, see Kleinger, A. (1995) The Age of Heretics, Doubleday, New York.
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14 15 16
USA Department of Health, Education and Welfare (1973) Work in America. Report of a special task force to the Secretary of Health, Education and Welfare, Cambridge, MA: MIT Press. Committee to Advise on Policies for Manufacturing Industry (1976) Policies for Development of Manufacturing Industry: A Green Paper, vols 1-4. AGPS, Canberra. A summary of some of the early job redesign initiatives to emerge from Europe and the USA during the 1950s and 1960s is given in Bucklow, M. (1967) ‘Research into the nature of work and job design’. Personnel Practices Bulletin, 23, 1, pp. 27-38. Epstein, G. and Schor, J. (1990) ‘Macropolicy in the Rise and Fall of the Golden Age’. In S. Marglin and J. Schor (eds) The Golden Age of Capitalism: Reinterpreting the Postwar Experience, Clarendon Press, Oxford. Piore, M. and Sabel, C. (1984) The Second Industrial Divide, Basic Books, New York. For a first-hand account of these authors see Lewin, K. (1935) A Dynamic Theory of Personality: Selected Papers, McGraw Hill, New York. Lippitt, R. and White, R. (1960) Autocracy and Democracy: An Experimental Inquiry, Harper & Brothers, New York. Likert, R. (1961) New Patterns of Management, McGraw Hill, New York. Some of the key figures who were influential in the OD movement were Argyris, Bradford, Schon, Bennis, Mirvis and Beer. They strongly influenced Australian OD practitioners and some were regular visitors to Australia. Bill Ford and Dexter Dunphy worked closely together throughout most of the 1970s, collaborating on several early articles and sharing early change experiences and lessons. Such as Doron Gunzburg, an industrial psychologist who headed up a research team investigating personnel and organisational issues in the Department of Labour. Hollis Peter (1975) pointed out the failings and inadequacies of traditional job design and management approaches to organisation and outlined criteria for improving QWL. Articles such as this were influential in disseminating information on alternative approaches to work design. Peter, H. (1975) ‘Designing human work: A challenge’. Work and People, 1, 1, pp. 1-7. The Australian Broadcasting Commission, Sydney 1972. Dunphy, D. (1972) The Challenge of Change. The Boyer Lectures, Australian Broadcasting Corporation, Sydney, p. 41. Emery, F. and Phillips, C. (1976) Living at Work. A 1973 study for
NOTES – CHAPTER 3
17 18 19
20 21 22
the Australian Minister for Labour and Immigration of the urban workforce, its attitudes to work and matters influencing those attitudes, AGPS, Canberra. Emery and Phillips (1976:53). Emery and Phillips (1976:32). Emery and Phillips (1976:ch. 6). Doron Gunzburg, one of the early ORM leaders, operating from within the government, supported the survey’s development and implementation. Pym, D. (1971) ‘Social Change in the Business Firm’. In D. Mills (ed.), Australian Management and Society. Penguin, Ringwood. Byrt, W. and Masters, P. (1974) The Australian Manager, Sun Books, Melbourne, p. 65. Lansbury, R. and Gilmour, P. (1977) Organisations: An Australian Perspective, Longman Cheshire, Melbourne. Note that Denis Pym undertook research in the early 70s investigating Australian managers, p. 12. Schon, D. (1971) Beyond the Stable State, Norton and Company, New York, p. 111. These workshops were run at resorts (such as Tangalooma Resort in Moreton Bay) and were designed to translate social science ideas into practical benefits for managers. The seminars were based on group work. The first five days of these 10-day seminars were encounter groups, the next five days focused on organisational change issues. MIM for instance undertook a lot of TA training and leadership development courses, while others such as ICI, ACI, the ATO and Sunbeam became involved in job redesign, survey diagnosis and group processes. For further information, refer to Smith, R. and Blackgrove, G. (1975) ‘Does TA training really work?’. Work and People, 1, 4 pp. 9-12; and Andreatta, H. and Rumbold, B. (1974a) ‘Organisation Development in action: Job design and development’. Personnel Practice Bulletin, 30, 4, pp. 342-56. Andreatta, H. and Rumbold, B. (1974b) Organisation Development: Organisation Development in Action, Human Relations Branch, Department of Employment and Industrial Relations, Productivity Promotion Council of Australia. Pretty, R. (1971) ‘Organisational Development at Shell’, Personnel Practice Bulletin, 27, 3, pp. 196-210. Andreatta, H. and Rumbold, B. (1974b) Organisation Development: Organisation Development in Action, Productivity Promotion Council. Pahlow, E. (1976) ‘Employee Participation — A Decision for Disaster
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31 32 33 34
or Development? Recent experience in ICI’. The Journal of the Institution of Engineers, Australia, Jan/Feb, p. 34. Also see: Peter, H. and Dick, R. (1977) ‘Changing Attitudes in a Mail Exchange’. Work and People, 3, 3/4, pp. 37-53; and Dick, R. and Peter, H. (1978) Changing Attitudes to Work: Participative Survey Feedback in the Brisbane Mail Exchange. A Report to the Joint Working Group, Brisbane Central Mail Exchange. Peter, H. (1975) ‘Learning from Australian Survey Feedback Programs’. In Gunzburg, D. (1975) Bringing Work to Life, Longman Cheshire, Melbourne. The extent of Philips’ work-structuring program and the breadth of ideas and concepts used can be seen in the following publications: Committee on Participation (1975) Participation: Various Ways of Involving People in their Work and Work Organisation. Philips Personnel and Industrial Relations Department, Eindhoven. Philips (1969) Work Structuring: A Summary of Experiments at Philips 1963 to 1968. Personnel and Industrial Relations Division and Technical Efficiency and Organisation Development, Eindhoven. van der Graaf, M. and Gispen, J. (1970) ‘Work structuring’. Progress, 4, pp. 116-121. Marks, A. (1973) ‘Work structuring at Philips’. Personnel Management, November, pp. 9-19. Dunphy, D., Andreatta, H. and Timms, L. (1976) ‘Redesigning the work at Philips’. Work and People, 2, 1, p. 5. Dunphy et al. (1976:8-11). ATO (1975) Group Dynamics, Job enrichment and methods improvement in the ATO. Selected Reports, February, pp. 13-14. Lanigan, P. (1975) Change from Within — the Australian Taxation Office. Royal Institute of Public Administration, Annual Conference, Canberra. Both of these documents note that the primary inititatives of the ATO had been in the area of executive training and in the development of informal, low-key experiments on a wide scale. Guy, B. (1975) A Review of Organisation Development Projects in Australian Government Departments and Statutory Authorities. Department of Psychology, ANU, Canberra, November p. 7. Lanigan (1975:13-14). However, with respect to the ATO, it is worthwhile noting that subsequent commissioners (i.e. Bill Godfrey, Trevor Boucher and Michael Carmody), continued to initiate innovative change programs in the ATO. See Wright (1995:129) who argues ‘. . . it is questionable whether the advocacy of employee participation had any widespread impact
NOTES – CHAPTER 3
on general management practice. As in earlier periods, the extent of enterprises involved in employee participation initiatives was quite small and generally represented a minority of larger firms’. Wright, C. (1995) The Management of Labour: A History of Australian Employers, Oxford University Press, Melbourne. Griffiths, A. (1995) ‘Sociotechnical Interventions and Teams in Australia: 1970s-1990s’. The Economic and Labour Relations Review, 6, 1, pp. 73-93. Peter, H. (1976) Work Design for Motivation and Productivity. Administration Development Centre, Department of the Public Services Board, Brisbane. Ford, B. (1975) ‘A study of human resources and industrial relations at the plant level in seven selected industries’. In Committee to Advise on Policies for Manufacturing Industry (1975) Policies for Development of Manufacturing Industry, AGPS, Canberra, pp. 49, 62, 71. In order to develop an understanding of the QWL issues in Australian industry, the Jackson Committee on Policies for the Development of Manufacturing Industry in Australia commissioned Bill Ford to undertake an analysis of the social conditions of manufacturing. To obtain a comprehensive view of the working life of Australians on the shop floor, the research team assembled by Bill Ford undertook studies at 32 factories in seven industries. This team included Viv Read, Darryl Hull, Peter Robson, Geoff Anderson, Gerry Phelan and Bruce Wingrove. John Mathews (1991) has given an excellent account of the troubles plaguing the Redfern Mail Exchange and how Australia Post learnt from these experiences to generate a nine-step model of participative organisational and technological change. Mathews, J. (1991) Australia Post: Introduction of Optical Character Recognition Mail Sorting Technology, UNSW Studies in Organisational Analysis and Innovation, Industrial Relations Research Centre, University of New South Wales. The Personnel Practices Section also released studies conducted overseas involving job redesign and job enrichment as an attempt to spark interest in the change agenda. The Personnel Practices Section and later the Working Environment Unit played a vital role in diffusing ideas and concepts and providing research grants. For further information on the types of studies that they promoted, see: Baker, C. (1973) ‘Job Enrichment and Job Satisfaction — Selected Overseas Studies. Part 1, American Studies’. Personnel Practices Bulletin, 29, 4, pp. 277-88; Baker, C. (1974) ‘Job enrichment and Job satisfaction —
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Selected Overseas Studies Part 3, European Studies’. Personnel Practices Bulletin, 30, 2, pp. 149-61; Australian Department of Labour (1974) Job Enrichment and Job Satisfaction: Selected Overseas Studies, AGPS, Canberra. 44 The film And how do you feel at the end of the week? focused on job satisfaction. It was developed by Doron Gunzburg and supported by the Productivity Promotion Council of Australia. 45 There was no tradition of enterprise level case studies in Australia and, until these early ORM social scientists began their work, the ‘coalface’ in industrial relations had amounted to observing the industrial tribunals.
CHAPTER 3 — STS AND ID APPROACHES 1
Trist, E. and Murray, H. (1993) ‘Historical Overview: The Foundation and Development of the Tavistock Institute’. In E. Trist and H. Murray (eds) The Social Engagement of Social Science, Vol. 2: The Socio-Technical Perspective, University of Pennsylvania Press, Philadelphia, PA. Pasmore, W. and Khalsa, G. (1993) ‘The Contributions of Eric Trist to the Social Engagement of Social Science’. Academy of Management Review, 18, 3, pp. 546-69. A detailed approach to understanding STSs can be found in Emery, F. (1993) ‘Characteristics of Socio-Technical Systems’. In Trist, E. and Murray, H. (1993) The Social Engagement of Social Science: The Socio-Technical Perspective, University of Pennsylvania Press, Philadelphia, PA. Trist, E. (1981) The Evolution of Socio-Technical Systems, Ontario QWL, Centre Occasional Paper no. 2, p. 24. 5 This project proved crucial in legitimising and showing the sustainability of STS methods and approaches. As Bill Ford noted, ‘it was critically important in relating theory to practice’. For further details on the project and corresponding debates see: Emery, F. and Thorsrud, E. (1969) Form and Content in Industrial Democracy: Some Experiences from Norway and Other European Countries, Tavistock, London. For critical debates see: Carey, A. (1979) ‘The Norwegian Experiments in Democracy at Work: A Critique and a Contribution to Reflexive Sociology’. Australian New Zealand Journal of Sociology, 15, 1, pp. 13-23; and Emery, F. (1979) ‘On the Reflexive Study of Work — A Response to Carey’. Australian New Zealand Journal of Sociology, 15, 1, pp. 89-95.
NOTES – CHAPTER 3 6 7
Pasmore and Khalsa (1993:557). Blackler and Brown (1978; 1980) demonstrate the frailty of many of these organisational change programs: their case studies (see note 2 above) were Shell, British Leyland and Volvo — supporters of sociotechnical redesigns. See Blackler, F. and Brown, C. (1980) Whatever Happened to Shell’s New Philosophy of Management?, Saxon House, Sydney; Blackler, F. and Brown, C. (1978) Job Redesign and Management Control: Studies in British Leyland and Volvo, Praeger, New York. Pava, C. (1986) ‘Redesigning Socio-technical Systems Design: Concepts and Methods for the 1990s’. Journal of Applied Behavioural Science, 22, 3, pp. 201-21. For a comprehensive evaluation of the Dutch approach and how it ‘fits’ with other national socio-technical approaches, see van Eijnatten, Frans (1993) The Paradigm that Changed the Workplace, Vol. 4, Swedish Centre for Working Life, Van Gorcum, Assen. Reg Cole is of particular interest, in that he developed friends and contacts in the ORM (particularly Bill Ford, Fred Emery and Dexter Dunphy) who were outside the IR club. Bill Ford attributes Reg’s ORM successes to ‘his understanding of the IR culture and his ability to overcome its limitations’. In order to implement these socio-technical practices, Reg Cole argued successfully to senior Alcan management that Alcan should break from the NSW Award for Brass, Copper and Aluminium and move to a federal award — an award by agreement. The NSW award reflected common standards across the industry and resistance to change from both employers and some unions was quite strong, making it difficult to implement new work practices. A more recent round of ‘innovations’ to take place at Granville also involved investment in new plant technology and the introduction of teams. For further information see Dunphy, D. and Berggren, C. (1992) ‘Industrial Renewal at Alcan Sheet Division, Granville’, Centre for Corporate Change Working Paper, Australian Graduate School of Management, UNSW. This program was also subsequently abandoned when a new CEO took over. Bentley provides a comprehensive review of the problems encountered by both management and unions in implementing work restructuring and acknowledges the difficulties of past Australian industrial relations practices. Bentley, P. (1976) ‘Towards a Worker
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19 20 21
Participation Strategy for Australia’. In Committee to Advise on Policies for Manufacturing Industry (1976) ‘Policies for Development of Manufacturing Industry: A Green Paper’, vol. 3, AGPS, Canberra. It was at this point that Fred Emery took over the project, along with Stephen Bochner, while Alf Clark went to the Tavistock Institute. Such dramatic improvements also attracted media publicity: ‘. . . the changes made in the running of the pet food factory were to have quite amazing results. Resignations dropped to practically nil, absenteeism ceased to be a problem and productivity increased more than 20 per cent . . . The staff were given the opportunity to be multi skilled — providing the group agreed. They were able to move from section to section within the factory. They became totally involved in their own quality control. They were involved in the design of new equipment to be introduced. They became involved in the company as a whole’. Lenore Nicklin (1974) ‘Putting Luv on the Line’, Sydney Morning Herald, Saturday, March 9, p. 9. The Centre for Continuing Education was part of the Research School for the Social Sciences, headed by Chris Duke. Some of the other change agents who drew on both STS and OD approaches were Viv Read, Neil Watson and Tony Briscomb. Centres working in these traditions included the Work Research Centre in Sydney; the Work Advisory Unit, NSW Department of Labour and Industry, Sydney; Australian Frontier Inc, Melbourne; and the OD Network in Melbourne. It appears from our review that much of the organisational renewal activity occurred in Queensland, New South Wales, the ACT and South Australia, with lesser activity occurring in Victoria, the Northern Territory and Western Australia. Crombie, A. (1978) Participative Design: An Educational Approach to Industrial Democracy, Canberra Papers in Continuing Education, New Series, 4. Emery, M. (1974) ‘Participative Design Seminars: A Description’. In Emery, F. and Emery, M. (1974) Participative Design: Work and Community Life, Occasional papers in Continuing Education no. 4. Centre for Continuing Education ANU, Canberra, p. 6. Andreatta, A. (1974) ‘Job Enrichment through Autonomous Groups’, Personnel Practice Bulletin 30, 1, p. 13. Robinson, A. and McCarroll, G. (1976) ‘A Work Group Approach at Welvic’. Work and People, 2, 2, pp. 32-36. Gibbons, A. and McCarroll, G. (1978) ‘Welvic revisited’. Work and People, 4, 1/2, p. 25.
NOTES – CHAPTER 3 22
Employees approached management to raise pay for increased productivity. But management/unions were restrained by wage indexation guidelines (practices and precedents of industrial relations systems) and were limited to raising pay through a performance award. This management declined to do and, in a climate of increased production, employee morale declined (Gibbons and McCarroll 1978). For further information on the Welvic experiment see: Robinson, A. and McCarroll, G. (1976) ‘A Workgroup Approach at Welvic’, Work and People, 2, 2. Gibbons, A. and McCarroll, G. (1978) ‘Welvic Revisited’, Work and People, 4, 1/2. Very different accounts of the early ICI Botany workplace change experiences have been published. Management’s perspective is given in Pahlow (1976) and McIntosh (1975), while a workforce perspective can be gleaned from O’Leary et al. (1977). See note 25. Pahlow, E. (1976) ‘Employee Participation: A Decision for Disaster or Development? Recent Experience in ICI’. The Journal of the Institution of Engineers, Australia, Jan/Feb, pp. 32-42. McIntosh, J. (1975) ‘Increasing Autonomy and Satisfaction of Process Workers’. In D. Gunzburg (ed.), Bringing Work to Life, Productivity Promotion Council, Melbourne. O’Leary, D., Thompson, V., Hull, D. and Robson, P. (1977) Worker Participation: Fact or Fallacy? Published by Federated Artificial Fertilizers and Chemical Workers Union; Work Research Centre and Centre for Urban Research and Action. First as Shadow Minister for Industrial Relations and later as Minister, Clyde Cameron had identified the primary objectives of Labor’s aims: ‘Australia must declare that every citizen has the right to individual equality and freedom from outmoded master and servant attitudes — the active pursuit of human values to ensure that the innate satisfactions and qualities of life never become secondary to productivity goals or ruthlessly sought after efficiency’. Cameron, C. (1972) ‘Modern Technology, Job Enrichment and the Quality of Life’. Personnel Management, November 1972, pp. 12-25. Dufty, F. (1978) ‘Industrial Democracy — Who is For it — Who Against — and for What Reasons?’ Human Resource Management Australia, 16, 1, p. 27. Bill Ford, for instance, was invited to be the reviewer of the Swedish Work Environment Fund’s ‘Development program for new technology, working life and management’ in the 1980s and the ‘Learning enterprise program’ in 1995. A book by Gunzburg (1978) also
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31 32 33 34 35 36 37 38
39 40 41 42
emerged from this overseas study, which drew out specific policy recommendations for industrial democracy in Australia based on the Swedish experiences. See Gunzburg, D. (1978) Industrial Democracy Approaches in Sweden: An Australian View, Productivity Promotion Council of Australia, Melbourne. Some of the members of this committee included Brian Noakes from the Confederation of Australian Industry and Bob Hawke from the ACTU. While the Committee was later to help set the framework for the Accord, its members still remained solidly in the Industrial Relations club. Gunzburg, D. (1975) Bringing Work to Life: The Australian Experience, Longman Cheshire in association with the Productivity Promotion Council of Australia, Melbourne. Gunzburg (1975:xiii-xiv). Pritchard, R. (ed.) (1976) Industrial Democracy in Australia, CCH, Sydney. Anderson, G. (1976) ‘The South Australian Initiative’. In R. Pritchard (ed.) Industrial Democracy in Australia, CCH, Sydney. For a critical evaluation of the Dunstan reforms see Baguenault, J. (1973) ‘Technocratic labor in office’. Arena 32-33, pp. 9-19. Robson, P. (1978) ‘Worker Participation in Australia’. Current Affairs Bulletin, March, pp. 22-30. Anderson (1976:165). Anderson (1976:165-6). Robson, P. (1978) ‘Worker Participation in Australia’. Current Affairs Bulletin, March, pp. 22-30. See Bowes, L. (1975) ‘Workers’ Participation in Management: The South Australian Developments’. Journal of Industrial Relations, 17, 2, pp. 119-35. In this article Bowes gives an account of the rise of the Industrial Democracy movement in South Australia. The account focuses in particular on the early part of the unit’s development and the early involvement in it of the Emerys and the CCE. Their view of Industrial Democracy had an impact on the unit’s initial directions — but it was also their unwillingness to follow a union line which resulted in the unit’s developing powerful enemies within the union and labour movements. Bentley, P. (1976) ‘Industrial Democracy: South Australian Developments’. Work and People, Spring, 2, 3, pp. 3-6. Anderson (1976:178). Hollis Peter interview. Wallace, J. (1977) ‘AMWSU Comment on ACTU Industrial Democracy Committee Report’. Amalgamated Metal Workers and ShipwrightsUnion Monthly Journal, April, pp. 1113.
NOTES – CHAPTER 4
Lansbury, R. (1980) ‘Industrial Democracy in Australia: Past Performance and Future Prospects’. In Ford, G. (ed.) Australian Labour Relations: Readings (3rd edn), Macmillan, Melbourne. 44 Clegg, S. (1979) ‘Employee Participation in Australia: The New Legitimacy’. Social Alternatives, 1, 4, pp. 59-65. 45 Lansbury, R. and Prideaux, G. (1978) Improving the Quality of Work Life, Longman Cheshire, Melbourne. 46 For a discussion on industrial democracy and employee participation in Australia see Lansbury, R. and Gilmour, P. (1977) Organisations: An Australian Perspective, Longman Cheshire, Melbourne; in particular see chapter 8: Worker Participation in Management. Lansbury, R. (1980) ‘Industrial Democracy in Australia: Past Performance and Future Prospects’. In G. Ford, J. Hearn and R. Lansbury (eds) Australian Labour Relations: Readings (3rd edn), Macmillan, Melbourne. 47 Voluntarism, as a government policy, forced the movement to work harder to demonstrate and promote the performance benefits of organisational renewal.
CHAPTER 4 — CHALLENGES, CONSOLIDATIONS AND NEW DIRECTIONS 1
These debates still continue: see the debates between Adler, P. and Cole, R. (1993) ‘Designed for Learning: A Tale of Two Auto Plants’. Sloan Management Review, 34, 3, pp. 85-94. And for the counterpoint see: Berggren, C. (1994) ‘NUMMI vs Uddevalla’. Sloan Management Review, 35, 2, pp. 37-45; Adler, P. and Cole, R. (1994) ‘Rejoinder’. Sloan Management Review, 35, 2, pp. 45-9. Ford identified two major barriers to a skilled and adaptable Australia. First, the educational system was based on elitist employment policies and practices; second, at the organisational level, the industrial relations system encouraged and protected skill demarcations between those employees with trade qualifications and process workers. See Ford, B. (1982) ‘Human Resource Development in Australia and the Balance of Skills’. Journal of Industrial Relations, September, pp. 443-53. The lead players in introducing systematic planned change were still mainly Australian subsidiaries of multinational firms. The changes were often introduced as part of the international business strategies of these firms. Firms such as IBM and Esso (Exxon), for example,
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placed a strong emphasis on hiring and retaining high-calibre staff and extending the skills of personnel through intensive in-company training programs. Given these substantial investments in the selection and development of their people, they were also committed to adopting and extending work conditions that would lead to the retention of staff. Consequently, they retained the emphasis on retraining staff longer than most, but even they downsized significantly as the recession deepened and global competition intensified. 4 Clarke, F.G. (1992) Australia: A Concise Political and Social History, Harcourt Brace Jovanovich, Sydney, p. 334. 5 See Baxter, R. (1982) ‘An innovation in QWL: an overview of the philosophy and development of GM’s team concept at the plastics plant at Elizabeth, South Australia’. Unpublished paper, General Motors Holden, Melbourne. This account tells of how a plant meant to be designed along STS lines ended up being designed on the basis of TQC teams. 6 The Australian Quality Council national conferences were very successful, attracting up to 1000 participants from a variety of levels in organisations. Regional programs and training programs were also run at this time. 7 Ezra Vogel (1979) Japan as Number One: Lessons for America, Harvard University Press, Cambridge, MA. 8 See Beechler, S. and Pucik, V. (1989) ‘The Diffusion of American Organizational Theory in Postwar Japan’. In Chimezie, A. and Osigweh, Y. (eds) Organizational Science Abroad: Constraints and Perspectives, Plenum Press, New York. Schonberger, R. (1992) ‘Total Quality Management cuts a broad swathe through manufacturing and beyond’. Organization Dynamics, Spring. 9 Schonberger, R. (1992:18). 10 Beechler and Pucik (1989). 11 Beechler and Pucik (1989:122). 12 John Mathews (personal memo) has stated how ‘in all the East Asian countries in the period after the Korean war, national productivity centres were established, as driving forces for the upgrading of the quality, productivity and skills profile of enterprises. These centres played absolutely critical roles in Taiwan, in Singapore, in Hong Kong, in Korea and of course initially in Japan. The national centres were federated through the Asian Productivity Organisation headquartered in Japan. Australia was repeatedly offered participation in this movement and would surely have benefited from it. But the
NOTES – CHAPTER 4
14 15 16 17 18
offers were never taken up. As a result, we never had an Australian national productivity centre, which would surely have provided a powerful institutional momentum for ORM interventions’. Ishikawa (1985). What is Total Quality Control? The Japanese Way (translated by David Wu), Prentice Hall, p. 22. Englewood Cliffs, NJ. Walton, M. (1986) The Deming Method, Dodd Mead & Co, New York, pp. 15. Deming, W.E. (1982) Quality, Productivity and Competitive Position, MIT Press, Cambridge, MA. Dawson, P. and Palmer, G. (1995) Quality Management: The Theory and the Practice of Implementing Change, Longman, Melbourne, p. 53. Dawson and Palmer (1995:20-21). Palmer, G. and Allan, C. (1992) ‘Yet another panacea? The Quality Management Movement in Australia’. In J. Marceau (1992) Reworking the World: Organisations, Technologies and Cultures in Comparative Perspective, Walter de Gruyter, Berlin, p. 280. Dawson and Palmer (1995:21). For an extensive account of the rise and diffusion of the quality movement in Australia, see chapter 2 of Dawson and Palmer (1995) and Allan, C. (1991) ‘The Role of Diffusion Agents in the Transfer of Quality Management in Australia’. Unpublished honours thesis, Griffith University, Brisbane. See Lever-Tracy, C. (1990) ‘Fordism Transformed? Employee Involvement and Workplace Industrial Relations at Ford’. Journal of Industrial Relations, 32, 2, pp. 179-96. Mathews, J. (1991) ‘Ford Australia Plastics Plant: Transition to Teamwork Through Quality Enhancement’, UNSW Studies in Organisational Analysis and Innovation, Industrial Relations Research Centre, UNSW, p. 10. Mathews (1991:12). Mathews, J., Griffiths, A. and Watson, N. (1993) ‘Socio-Technical Redesign: The Case of Cellular Manufacturing at Bendix Mintex’, UNSW Studies in Organisational Analysis and Innovation, Industrial Relations Research Centre, UNSW, pp. 8-11. Bendix Mintex experimented with a variety of change programs during the 1980s: it finally settled on an STS redesign, and was assisted with its implementation by a friend and colleague of Fred Emery, Neil Watson. Bendix Mintex executives regarded the STS redesign as highly successful.
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These approaches, which were variants on Japanese practices and also incorporated Organisation Development strategies, were promoted by the Technology Transfer Council, NIES and Triton Consulting Group. The Technology Transfer Council also promoted the introduction of STS. Kriegler, R. and Wooden, M. (1985) ‘Japanese Management Practices in Australia: The Case of Mitsubishi’. Work and People, 11, 1, pp. 3-8. NSW Science and Technology Council (1985) ‘Just in Time Manufacture — Opportunities for New South Wales Companies’, New South Wales government report undertaken by the Technology Transfer Council. Cole, R. (1989) Strategies for Learning: Small Group Activities in American, Japanese and Swedish Industry, University of California Press, Berkeley, p. 19. Ford, G.W. (1982) ‘Human Resource Development in Australia and the Balance of Skills’. Journal of Industrial Relations, September, pp. 443-53. Bill Ford: ‘I argued that quality circles in Japan could be seen as learning circles where Japanese supervisors and engineers move knowledge on a need to know basis’. Coffey, M. and Dunphy, D. (1982) ‘Towards the Paperless Office’. Work and People, 8, 2, pp. 3-11. Williams, T. (1983) ‘Technological Innovation and Futures of Work Organisation’. Technological Forecasting and Social Change, 24, pp. 79-90. In contrast to this situation, in the Netherlands, STS scholars were moving out of social science departments and were being located in engineering and management science departments. This meant that valuable links were forged between human systems and technical systems while engineers were undertaking their professional training. Doran, C. (1984) ‘An Historical Perspective on Mining and Economic Change’. In Cook, L. and Porter, M. (eds) The Mining Sector and the Australian Economy, Allen & Unwin, Sydney, p. 75. Hilmer, F. (1980) ‘From Operational to Strategic Management’. In Management in the Mining Industry, Australian Institute of Mining and Metallurgy, Melbourne. Dunphy, D. and Mills, J. (1982) ‘Human Resource Planning for Major Projects in Australia’. Transactions of the Institution of Engineers, Australia General Engineering, 6, 2, pp. 61-5.
NOTES – CHAPTER 4
38 Dunphy and Mills (1982:63-4). 39 Interview with Reg Cole. 40 At a national level, the Royal Commission on Australian Government Administration was established by the Whitlam government in 1974 under the chair of H.C. Coombs; the Commission outlasted the government of the time, and reported in 1976 with wide-ranging recommendations relating to administrative reform, ministerial authority and responsibility, and the performance of public agencies. 41 ABS Foreign Investment Australia 1986-87, Catalogue no. 5304. ABS Foreign Investment Australia 1982, December, Catalogue no. 5304. 42 Review of New South Wales Government Administration (1977) Directions for Change, Interim Report, November, Sydney. 43 Review of New South Wales Government Administration (1982) Further Report: Unfinished Agenda, May, Sydney. 44 Wilenski (1982:11-12). 45 For instance, two authorities that were restructured and modified as a result of the reviews were the Sydney Water Board and the Hunter Water Board. Both became ‘stomping grounds’ for ORM practitioners such as Viv Read, Fred Emery, Bill Ford, Peter Crawford and Dr Rhonda McIver. For information relating to changes at the Hunter Water Board, see: Troy, P. and Lloyd, C. (1988) ‘Industrial Organisation: Work Practices and Rituals in the Hunter District Water Board’, Urban Research Unit Working Paper no. 8. Wilenski, P. (1986) Public Power and Public Administration, Hale & Iremonger, Melbourne. 46 Wilenski (1982:19). 47 Peter, H. (1983) ‘The Changing Roles of OD and IR Practitioners’, Managing Personal and Organisational Change, Seminar 83, Melbourne Organisation Development Network. 48 Hence, the importance of people such as Bill Ford and Reg Cole, who were able to bring together the two streams of intellectual thought and practice, particularly in organisations such as Alcan, ICI and, later, Woodlawn. 49 Dunphy, D. (1983) ‘Personal and Organisational Change — Status and Future Directions’, Managing Personal and Organisational Change, Seminar 83, Melbourne Organisation Development Network, p. 44. 50 Mitchell, J. (1989) ‘The Development of the Occupation of Personnel in Australia: A Sociological Perspective’, MA thesis, School of Sociology, University of New South Wales, Sydney. Wright, C. (1995) The Management of Labour: A History of Australian Employers, Oxford U.P., Melbourne.
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51 Mitchell (1989:60). 52 Mitchell (1989:72). 53 Dexter Dunphy and Bob Dick (1981) Organisational Change by Choice, McGraw Hill, Sydney. 54 In Australian enterprises, managers often drew their ideas from the USA and the UK and the unions from Sweden and Germany. This changed with the success of Japanese industry in international markets. 55 Harrison, R. (1983) ‘Strategies for a New Age’. Human Resource Management, 22, pp. 209-35. 56 Porras, J. and Robertson, P. (1987) ‘Organization Development Theory: A Typology and Evaluation’. In R. Woodman and W. Pasmore (eds) Research in Organization Change and Development vol. 1, pp. 1-57, JAI Press, Greenwich.
CHAPTER 5 — STRATEGIC ALIGNMENT 1
Pettigrew, A. (1985) The Awakening Giant: Continuity and Change in Imperial Chemical Industries, Oxford, Blackwell, p. 19. 2 Mintzberg, H. and Waters, J. (1985) ‘Of strategies deliberate and emergent’. Strategic Management Journal, 6, pp. 257-72. 3 Mintzberg, H. (1994) The Rise and Fall of Strategic Planning, Free Press, Macmillan, New York. 4 Prahalad, G. and Hamel, C. (1989) ‘Strategic intent’. Harvard Business Review, May-June, pp. 63-76. 5 Dawson, P. (1994) Organisational Change: A Processual Approach, Paul Chapman, London. 6 Trice, H. and Beyer, J. (1993) The Cultures of Work Organisations, Prentice Hall, New Jersey; see particularly chapters 9 & 10. 7 Kotter, J. and Heskett, J. (1992) Corporate Culture and Performance, Free Press, Macmillan, New York. 8 Beer, M., Eisenstadt, R. and Spector, B. (1990) The Critical Path to Corporate Renewal, Harvard Business School Press, Boston. 9 Hammer, M. and Champy, J. (1993) Reengineering the Corporation: A Manifesto for Business Revolution, Nicholas Brealey Publishing, London. 10 Champy, J. (1995) Reengineering Management, Harper Collins, New York. 11 Burnes, B. (1992) Managing Change: A Strategic Approach to Organisational Development and Renewal, Pitman, London, pp. 39-51. 12 Pettigrew, A. and Whipp, R. (1991) Managing Change for Competitive Success, Blackwell, Oxford.
NOTES – CHAPTER 5 13 14 15
Lawler, E. (1992) The Ultimate Advantage: Creating High Involvement Organisations, Jossey Bass, San Francisco. Dunphy, D. and Stace, D. (1990) Under New Management, McGraw Hill, Sydney. Hilmer, F. (1993) National Competition Policy Report, Independent Commission of Inquiry, AGPS, Canberra. For a detailed look at the policies for positive structure adjustment and in particular the industry plans, see Sheehan, P. (1994) ‘The Rebirth of Australian Industry’. In Pappas, N. & Chenge, E. (eds) First Report, New and Old Industries in Australia Project, Centre for Strategic Economic Studies, Victoria University. See also: Capling, A. and Galligan, B. (1992) Beyond the Protective State: The Political Economy of Australia’s Manufacturing Policy, Cambridge University Press, Melbourne. For examples of case studies covering more than 40 of the companies participating in the Australian Best Practice Demonstration Program, see The Best Practice Experience (1997) vols 1-3, Pitman Publishing, Melbourne. Rimmer, M. (1991) ‘Industrial Relations in 1990’. Asia Pacific Human Resource Management, Autumn. This decision resulted in a payment of $10 a week across the board, to be followed by 4 per cent on a decentralised basis for reforming aspects relating to work organisation and skills (Dabscheck 1995:51). Dabscheck, B. (1995) The Struggle for Australian Industrial Relations, Oxford University Press, Melbourne. For a quick review of award restructuring, see Rimmer (1991:op cit). In this paper (p. 8) he noted that the first stage of award restructuring had largely been completed; it was the second part, the more difficult task of bringing change into the workplace, that lay ahead for many organisations. See also Mealor, T. (1991) ICI Australia: The Botany Experience, UNSW Studies in Organisational Analysis and Innovation, Industrial Relations Research Centre, Sydney. See also Mealor, T. (1997) ICI Botany: A Decade of Change, Centre for Corporate Change, UNSW, Sydney. TUTA (1994) Issues in Workplace Bargaining: Negotiating Enterprise Agreements in the Federal Industrial Relations System, Australian Trade Union Training Authority, Melbourne. See chapter 2 and the early criticisms directed at Australian managers. The Report of the Industry Task Force on Leadership and Management Skills (1995), Enterprising Nation, sets out in chapter 3 characteristics of Australian managers. While the education level has risen over the past two decades, diversity has been slow to grow,
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with most managers being of Anglo descent, male, and having worked in the same organisation for about six years. 21 Cole, R., Crombie, A., Davies, A. and Davis, E. (1985) Industrial Democracy in Australia 1972-1992: Profiting from our Experience, Centre for Continuing Education, ANU, Canberra. 22 The Hawke government’s position on industrial democracy emerged out of the work undertaken by the National Labour Consultative Committee and, prior to that, the National Employee Participation Steering Committee established by Ian McPhee in 1978. 23 The Hawke government was opposed to a legislative approach to industrial democracy, preferring an approach based on voluntarism, cooperation and enlightened self-interest. (Hawke 1986:7-8). The government’s early support for industrial democracy was demonstrated through (Willis 1984:14):
! ! ! ! 24
the requirement for Industrial Democracy plans in government departments; initiatives of the Working Environment Branch of the Department of Labour; the creation of the Industrial Democracy Research Grant Scheme; the announcement and publication of a green paper on Industrial Democracy.
Hawke, B. (1984) ‘Industrial Democracy within the Context of National Economic and Social Planning’. Industrial Democracy and Employee Participation, Department of Employment and Industrial Relations, Seminar Proceedings, Melbourne. 25 Willis, R. (1984) ‘Industrial Democracy — The Federal Government’s Position and Programs’. Industrial Democracy and Employee Participation, Department of Employment and Industrial Relations, Seminar Proceedings, Melbourne. 26 Department of Employment and Industrial Relations (1986) Industrial Democracy and Employee Participation, Working Environment Branch, AGPS, Canberra. The commissioned background research to this paper can be found in Ford, B. and Tilley, L. (eds) (1986) Diversity, Change and Tradition: The Environment for Industrial Democracy in Australia, AGPS, Canberra. 27 Noakes, B. (1984) ‘An employer perspective of industrial democracy’. Industrial Democracy and Employee Participation, DEIR, Seminar Proceedings, Melbourne. Gardner, M., Palmer, G. and Quinlan, M. (1988) The Industrial Democracy debate’. In Palmer, G. (1988) Australian Personnel Management: A Reader, Macmillan, Melbourne.
NOTES – CHAPTER 5
32 33 34 35 36
Wallis, S. (1984) ‘The Employee Participation Debate’. In Business Council Bulletin, June 1987, 35. The reactions from the business community to the proposal were critical. For an account of business reactions see Wallis (1984); Gardner, Palmer and Quinlan (1988); and Noakes (1984). DEIR (1986:33-4). For instance see Mathews, J. (1989) Tools of Change, Pluto Press, Sydney; and ACTU/TDC (1987) Australia Reconstructed, AGPS, Canberra, and ACTU Congress (1987) Future Strategies for the Trade Union Movement. Each of these demonstrated how the unions could adopt a ‘strategic approach’ in order to intervene at the level of the firm (work organisations; OH&S; new technology), at the level of the industry (training; industrial adjustment; award restructuring), and at the level of the macroeconomy (industry plans; safety net; Medicare and superannuation). However, while many companies adopted this approach, many others did not. See Bragg, M. and Taylor, V. (1991) The Other Side of Flexibility: Unions and Marginal Workers in Australia, ACIRRT, Monograph no. 3. In order to qualify this comment, we must specify large Australian organisations. See the organisational change survey in Waldersee, R. and Blackstock, L. (1993) ‘Organisational Change in Australia: What’s Really happening?’, CCC Working Paper, AGSM, UNSW; and Waldersee, R. and Griffiths, A. (1996). ‘The Changing Face of Organisational Change’, CCC Working Paper, AGSM, UNSW. Pratt, D. (1994) Aspiring to Greatness: Above and Beyond Total Quality Management, Business and Professional Publishing, Sydney. Stace, D. and Dunphy, D. (1994) Beyond the Boundaries: Leading and Recreating the Successful Enterprise, McGraw Hill, Sydney, p. 11. Waldersee and Griffiths (1996). Waldersee and Blackstock (1993). Ford, B. (1984) ‘Australia at Risk: An Underskilled and Vulnerable Society’. In Eastwood, J. et al. (1984) Labor Essays, Drummond, Melbourne. Ford (1984) argued that Australia had neglected its skills base and risked falling further behind in competitive capability. He argued that Australia was becoming a comparatively underskilled and vulnerable nation. The business community was critical of the proposal. For an account of business reactions see Wallis (1984); Gardner, Palmer and Quinlan (1988); and Noakes (1984). Cordery, J. (1985) ‘Multi Skilling and its Implications for Work
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Design’. Human Resource Management Australia, 23, 3, August, pp. 55-8. Ford, B. (1987) Skill Formation: Challenges of Internationalisation, keynote paper for: Australian Education Conference, Perth, WA, September. Ford, B. (1991) ‘Integrating Technology, Work Organisation and Skill Formation: Lessons from Manufacturing for Ports’. In Costa, M. and Easson, M. (1991) Australian Industry: What Policy?, Pluto Press, Sydney. Curtain, R. and Mathews, J. (1990) Award Restructuring in Australia, National Key Centre in Industrial Relations, Monash University, Melbourne, Working Paper no. 7. TUTA (1994) Issues in Workplace Bargaining: Negotiating Industrial Agreements within the Federal Industrial Relations System, Australian Trade Union Training Authority, Melbourne. The award restructuring process was followed through most strongly in the metals and engineering sector of the economy. This process was driven by the metals union and the MTIA. In particular, one of the major successes of the award restructuring process was the negotiation and implementation of the new Metals and Engineering Award. This award reduced classifications from over 300 to 14 in 1990 (TUTA 1994:15). Ford, B. (1995) ‘Workplace Learning in Changing Environments: A Researchers/Practitioners Viewpoint’. In Hirsch, D. and Wagner, D. (1995) What Makes Workers Learn: The Role of Incentives in Workplace Education and Training, Hampton Press, New Jersey, p. 90. Bryant, B., Farhy, N. and Griffiths, A. (1994) Self Managing Teams and Changing Supervisory Roles, Centre for Corporate Change, Australian Graduate School of Management, the University of NSW, Sydney. Bryant, Farhy and Griffiths (1994); Mathews and Griffiths (1993); and Mathews, Griffiths and Watson (1993). Mathews, J., Griffiths, A. and Watson, N. (1993) Sociotechnical Redesign: The Case of Cellular Manufacturing at Bendix Mintex, UNSW Studies in Organisational Analysis and Innovation, Industrial Relations Research Centre, UNSW, Sydney, Mathews, J. and Griffiths, A. (1993) CIG Gas Cylinders: A Decade of Gainsharing through the Common Interest Model, UNSW Studies in Organisational Analysis and Innovation, Industrial Relations Research Centre, UNSW, Sydney. For evidence from the USA, see Appelbaum, E. and Batt, R. (1994) The New American Workplace: Transforming Work Systems in the United States, ILR Press, Ithaca, NY).
NOTES – CHAPTER 6
Mathews, Griffiths and Watson (1993). Mealor, T. (1992) ICI Australia: The Botany Experience, Studies in Organisational Analysis and Innovation, Industrial Relations Research Centre, UNSW, Sydney. 46 Bryant, Farhy and Griffiths (1994:xv). 47 Mathews, J. (1994) Catching the Wave: Workplace Reform in Australia, Allen & Unwin, Sydney. 48 For examples of the strategic unionism approach, see Ogden, M. (1993) Towards Best Practice Unionism: The Future of Unions in Australia, Pluto Press, Sydney; and ACTU/TDC (1987) Australia Reconstructed, AGPS, Canberra, ACTU/TDC Mission to Western Europe.
CHAPTER 6 — BUILDING CORPORATE CAPABILITIES 1
Hilmer, F. (1991) ‘Coming to Grips with Competitiveness and Productivity’, Economic Planning Advisory Council Paper 91/01, February. Mathews, J. and Cho, D.-S. (1997) ‘Combinative Capabilities and Organisational Learning — The Case of the Korean Semiconductor Industry’, unpublished paper submitted to the Journal of World Business, July. Waldersee, R. and Griffiths, A. (1997) ‘The Changing Face of Organisational Change’ Centre for Corporate Change Paper no. 065, Australian Graduate School of Management, University of NSW, Sydney, Feb. Sydney Morning Herald, Monday 20 October, 1997, p. 1. Wyatt Company survey, 1991, quoted in Bruton, G.D., Keels, J.K. and Shook, C.L. (1996) ‘Downsizing the Firm: Answering the Strategic Questions’, Academy of Management Executive, 10, 2, pp. 38-45 (this quote pp. 38-9). Quoted from Wayne Cascio (1993) ‘Downsizing: What Do We Know? Academy of Management Executive 7, 1, pp. 95-104. US Monitor Research, 1996. Dorfman, J.R. (1991) ‘Stocks of Companies Announcing Layoffs Fire Up Investors, But Prices Often Wilt’. Wall Street Journal, December 10, C1, C2. Bruton, G.D., Keels, J.K. and Shook, C.L. (1996) ‘Downsizing the firm; answering the strategic questions’. Academy of Management Executive, 10, 2, May, pp. 38-45. Bruton et al. op cit p. 39.
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11 12 13
15 16 17 18
20 21 22
Dunphy, D. and Stace, D. (1990) Under New Management: Australian Organisations in Transition, McGraw Hill, Sydney; Stace, D. and Dunphy, D. (1994) Beyond the Boundaries: Leading and Re-creating the Successful Enterprise, McGraw Hill, Sydney. Stace, D. and Dunphy, D. (1994) op cit pp. 113-16. Bruton, Keels and Shook op cit p. 43. Brockner, J. (1988) ‘The Effects of Work Layoffs on Survivors: Research Theory and Practice’. Research in Organizational Behaviour, 10: 213-55. Brockner, J., deWitt, R., Grover, S. and Reed, T. (1990a) ‘When it is Especially Important to Explain Why: Factors Affecting the Relationship between Managers’ Explanations of a Layoff and Survivors’ Reactions to the Layoff. Journal of Experimental Social Psychology, 26, pp. 389-407. Brockner, J., DeWitt, R., Grover, S. and Wiesenfield, B. (1990b) ‘The Effects of Layoffs on Survivors: A Social Influence Analysis. Unpublished manuscript, Columbia University, New York. Brockner, J., Wiesenfield, B., Reed, T. and Grover, S. (1990c) ‘Further Determinants of Layoff Survivors’ Reactions: The Interactive Effect of Perceived Job Complexity and Perceived Fairness of Organizational Commitment and Turnover Intention’. Unpublished manuscript, Columbia University, New York. Littler, C., Dunford, R., Bramble, T. and Hede, A. (1997) ‘The Dynamics of Downsizing in Australia and New Zealand’, Asia Pacific Journal of Human Resources, 35, 1, pp. 65-79. Littler, C. et al. (1997) op cit. Morehead, A. et al. (1997) Changes at Work: The 1995 Australian Workplace Industrial Relations Survey, Longman, Melbourne. Morehead, A. et al., ibid p. 295; add other survey material. For a somewhat different but very thoughtful treatment of this choice, see Australian Business Foundation Ltd (August 1997), The High Road or the Low Road? Alternatives for Australia’s Future. Snyder, W.M. (1996) ‘Organisation Learning and Performance: An Exploration of the Linkages between Organization Learning, Knowledge, and Performance’, PhD dissertation (Business Administration), University of Southern California, Los Angeles, August. de Geus, A.P. (1988) ‘Planning as Learning’, Harvard Business Review, March/April, pp. 70-4, this quote p. 74. Collins, J. and Porras, J. (1994) Built to last: Successful Habits of Visionary Companies, Century, London. Collins and Porras op cit p. 55.
NOTES – CHAPTER 6 23 24 25 26 27
28 29 30
35 36 37
Schuster, F.E. (1986) The Schuster Report: The Proven Connection between People and Profit, Wiley, New York. Dunphy and Stace; Stace and Dunphy op cit. Turner, D. and Crawford, M. (1998) Change Power: Capabilities that Drive Corporate Renewal, Woodslane, Sydney (in press). Symposium (1996) ‘Italian Districts in the 1990s’. Journal of Industry Studies, 3, 2, December, pp. 103-51. Berggren, C. and Nomura, M. (1997) The Resilience of Corporate Japan: New Competitive Strategies and Personnel Practices, Paul Chapman, London, p. 196. Lazonick, W. (1990) Competitive Advantage on the Shop Floor, Harvard University Press, Cambridge, MA. Cope, B. and Kalantzis, M. (1997) Productive Diversity: A New Australian Model for Work and Management, Pluto Press, Sydney. Snyder, W.M. (1996) ‘Organisational Learning and Performance: An Exploration of the Linkages between Organisation Learning, Knowledge and Performance, PhD dissertation, Faculty of the Graduate School, University of Southern California, Los Angeles, August, p. 206. Snyder, ibid, op cit p. 34. This is signified by the establishment of courses such as the Change Management Qualification at the Australian Graduate School of Management. Block, F. (1990) Postindustrial Possibilities: A Critique of Economic Discourse, University of California Press, Berkeley, p. 69. Klein, B. (1986) ‘Dynamic Competition and Productivity Advances’. In R. Landau and N. Rosenberg (eds) The Positive Sum Strategy: Harnessing Technology in Economic Growth, National Academy Press, Washington, DC, pp. 77-88. Lipnack, J. and Stamps, J. (1994) The Age of Network: Organising Principles for the Twenty-First Century, Wiley, New York, p. 196. ‘Silicon Valley’. The Economist, March 29-April 4, 1997, Special Supplement. Quinn, J.B., Anderson, P. and Finkelstein, S. (1996) ‘Managing Professional Intellect: Making the Most of the Best’, Harvard Business Review, March/April, pp. 71-80, this quote p. 80. Note that our discussion of the Market Model and Human Sustainability Model has been stimulated by the Front-line Worker research project at the Centre for Corporate Change, AGSM, University of NSW, headed by Dr Stephen Frenkel. The findings of this cross-national research
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project will appear in Frenkel, S.J., Korczynki, M., Tam, M., Shire, K., and Glure, M. Front-Line Work: A Comparative Analysis of Work Organization in Advanced Society (forthcoming), Cornell University Press, Ithaca, New York.
CHAPTER 7 — BUILDING A SUSTAINABLE WORLD 1 2 3
4 5 6 7
9 10 11 12 13 14 15 16 17
Quoted in the Sydney Morning Herald, 7 October 1997, p. 8. Reference to both articles, Sydney Morning Herald, 2 October 1997, p. 8. For instance, some days after writing the above, a small article in the Sydney Morning Herald reported that 16 000 square kilometers of Amazon rainforest were burning, again lit by loggers, ranchers and peasants. Sydney Morning Herald, 7 October 1997, p. 8. Crosbie, L. and Knight, K. (1995) Strategy for Sustainable Business: Environmental Opportunity and Strategic Choice. McGraw Hill, London, p. 15. Leakey, R. and Lewin, R. (1995) The Sixth Extinction — Biodiversity and its Survival. Phoenix Books, London, p. 249. Hawken, P. (1997) ‘Natural Capitalism’. Mother Jones Magazine, San Francisco, the MoJo Wire, www.motherhones.com. Quoted in (1996) ‘An Overview Report to the State of the World Forum, Global Paradigm Change: Is a Shift Underway?’, October 2-6, San Francisco, CA: a collaborative inquiry by: the Fetzer Institute, the Institute of Noetic Sciences, the Brande Foundation and the California Institute of Integral Studies, D. Elgin (project director). von Weiszäcker, E., Lovins, A. and Lovins, L.H. (1997) Factor 4: Doubling Wealth — Halving Resource Use. Allen & Unwin, Sydney, p. 263. Reuters, 21 October 1997. Dovers, S. (1994) Sustainable Energy Systems: Pathways for Australian Energy Reform. Cambridge University Press, Cambridge, MA, p. 59. Sutton, P. Tapping the Sustainability Market. Greener Management International, vol. 18, UK Quoted in Sydney Morning Herald, 31 October 1997. Wilson, E.O. (1992) The Diversity of Life. Harvard University Press, Cambridge, MA, p. 280. Wilson, E.O. (1992) op cit p. 311. Flannery, T. (1994) The Future Eaters. Reed Books, Sydney. Hawken, P. (1997) Natural Capitalism. Mother Jones Magazine, San Francisco, the MoJo Wire, www.motherhones.com. Saul, J.R. (1997) The Unconscious Civilization. Penguin, London, p. 11.
NOTES – CHAPTER 7
18 Institute of International Studies Annual Report, ‘The Military Balance’, quoted in the Sydney Morning Herald, 15 October 1997, World News p. 14. 19 Quoted in the Sydney Morning Herald, 24 February 1997. 20 Galbraith, J.K. (1992) The Culture of Contentment. Penguin, London, p. 55. 21 Galbraith (1992) ibid. 22 Saul, J.R. (1997) The Unconscious Civilization. Penguin, London. 23 Dobson, R.V.G. (1993), Bringing the Economy Home from the Market. Black Rose Books, Montreal, p. 10. 24 WCED (1987) Our Common Future. Oxford University Press, p. 43. 25 Note that the Business Council of Australian supports this notion: see McLaughlin, P. (1991) Business and Sustainable Development. Business Council Bulletin no. 81, November, pp. 10-18. 26 von Weiszäcker, E., Lovins, A. and Lovins, L.H. (1997). Factor 4: Doubling Wealth — Halving Resource Use. Allen & Unwin, Sydney. 27 von Weiszäcker, ibid. 28 KPMG Boardroom Report quoted in the Sydney Morning Herald, Business Section p. 33, 10 October 1997, Company directors ‘green at heart’. 29 Christopher Bell (1997) ‘The ISO 14001 Environmental Management Systems Standard: One American’s View’. In Christopher Sheldon (ed.), ISO14001 and Beyond: Environmental Systems Management in the Real World. Greenleaf Publishing, Sheffield, UK, ch. 3, p. 67. 30 Quoted in the Sydney Morning Herald, 31 October 1997, p. 6. 31 ‘An Overview Report to the State of the World Forum October 2-6, 1996 Global Paradigm Change: Is a Shift Underway?’ op cit p. 19. 32 See Kurasaka, T. (1997) ‘Attitudes and Experiences of the Japanese Business Community vis-a-vis EMS Standards’. In Sheldon, C. (ed.), ISO 14001 and Beyond: Environmental Management Systems in the Real World, Greenleaf Publishing, Sheffield, ch. 8 pp. 155-68. 33 Sheldon, C., ibid. 34 See, for instance, an excellent and optimistic summary: Alan Pears (1997) ‘Sustainable Energy Solutions for Growing the Economy while Cutting Greenhouse Gas Emissions’. Unpublished paper, Bridge to the Future Forum, Canberra, November Fax: (03) 9593 1580. 35 Meadows, D. (1986) ‘ACED Responds Through the Heart’. The Global Citizen (a syndicated column), November 28. 36 See for example Hall S. and Roome N. (1996) ‘Strategic Choices
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38 39 40 41
42 43 44 45
and Sustainable Strategies’. In Groenewegan, P., Fisher, K., Jenkins E.G. and Schot, J. (eds) The Greening of Industry: Resource Guide and Bibliography, Island Press, Washington, DC, ch. 1, p. 11. Quoted in Dovers, S. (ed.) (1994). Sustainable Energy Systems: Pathways for Australian Energy Reform. Cambridge University Press, Cambridge, MA, p. 35. Others are discussed in Dovers, S. (ed.) (1994) op cit. p. 65. Service Industries Bulletin, 3, 1, July 1997, p. 1. Annual Report (1997) Australian Coalition of Service Industries. Melbourne. Ministry of International Trade and Industry, Japan, May 1997, The Action Plan for Economic Structure Reform — Summary, http://www.miti.go.jp/topic-e/e110001e.htmi. The report notes that ‘Ecology should not be perceived as a restrictive condition against economic activities but as an important factor that determines the international competitiveness of our nation’s industry’. Dovers, S., ibid, p. 167. de Geus, A. (1997) The Living Company: Growth, Learning and Longevity in Business. Nicholas Brealey, London. The Academy of Management Review (1995) ‘Special Topic Forum on Ecologically Sustainable Organisations’, vol. 20, no. 4, October. Gladwin, T.N., Kennedy, J.J. and Krause, T.S. (1995) ‘Shifting Paradigms for Sustainable Development: Implications for Management Theory and Research’. Academy of Management Review, 20, 4, pp. 874-907, this quote p. 896. See also Elkington, J. (1997) ‘The Future of Corporate Environmental Reporting’, (unpublished) paper for the Business Council of Australia Roundtable, 19 November, Australian National University, Canberra. Cope, B. and Kalantzis, M. (1997) Productive Diversity: A New Australian Model for Work and Management. Pluto Press, p. 244. Bramsted, E.K., Oddie, G.A., Macnab, K.K., Meaney, N.K. and Rose, R.B. (1997) The West and the World 1789-1914. Science Press, Sydney, p. 17; Winds of Revolution, (1990) Time-Life Books, Amsterdam; Thomas, H. (1997) The Slave Trade: The History of the Atlantic Slave Trade, 1440-1870, Picador, Simon & Schuster, London. Kiuchi, T. (1997). ‘What I Learned in the Rainforest’. Keynote address to the World Future Society, 19 July, available from the Future 500, Sacramento, CA, email: [email protected] Note that this talk came to our attention only after the manuscript of this book had been written. The rainforest analogy is clearly a metaphor whose time has come.
SELECTED READING LIST
The Academy of Management Review (1995) ‘Special Topic Forum on Ecologically Sustainable Organisations’, vol. 20, no. 4, October. ACTU/TDC (1987) Australia Reconstructed, AGPS, Canberra. Bryant, B., Farhy, N. and Griffiths, A. (1994) Self Managing Teams and Changing Supervisory Roles, Centre for Corporate Change, Australian Graduate School of Management, UNSW, Sydney. Cole, R., Crombie, A., Davies, A. and Davis, E. (1985) Industrial Democracy in Australia 1972-1992: Profiting from our Experience, Centre for Continuing Education, ANU, Canberra. Cope, B. and Kalantzis, M. (1997) Productive Diversity: A New Australian Model for Work and Management, Pluto Press, Sydney. Dawson, P. and Palmer, G. (1995) Quality Management: The Theory and the Practice of Implementing Change, Longman, Melbourne. Dunphy, D. and Dick, B. (1981) Organisational Change by Choice, McGraw Hill, Sydney. Emery, F. (1993) ‘Characteristics of Socio-Technical Systems’. In Trist, E. and Murray, H. (1993) The Social Engagement of Social Science: The Socio-Technical Perspective, University of Pennsylvania Press, Philadelphia, PA. Emery, M. (1974) ‘Participative Design Seminars: A Description’. In Emery, F. and Emery, M. (1974) Participative Design: Work and Community Life, Occasional papers in Continuing Education no. 4. Centre for Continuing Education ANU, Canberra, p. 6.
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Ford, B. (1975) ‘A study of human resources and industrial relations at the plant level in seven selected industries’. In Committee to Advise on Policies for Manufacturing Industry (1975) Policies for Development of Manufacturing Industry, AGPS, Canberra, pp. 49, 62, 71. ——— (1982) ‘Human Resource Development in Australia and the Balance of Skills’. Journal of Industrial Relations, September, pp. 443-53. Griffiths, A. (1995) ‘Sociotechnical Interventions and Teams in Australia: 1970s-1990s’. The Economic and Labour Relations Review, 6, 1, pp. 73-93. Gunzburg, D. (1975) Bringing Work to Life: The Australian Experience, Longman Cheshire in association with the Productivity Promotion Council of Australia, Melbourne. Hilmer, F. (1980) ‘From Operational to Strategic Management’. In Management in the Mining Industry, Australian Institute of Mining and Metallurgy, Melbourne. Lansbury, R. (1980) ‘Industrial Democracy in Australia: Past Performance and Future Prospects’. In Ford, G., Hearn, J. and Lansbury, R. (eds) Australian Labour Relations: Readings (3rd edn), Macmillan Melbourne. Littler, C., Dunford, R., Bramble, T. and Helde, A. (1997) ‘The Dynamics of Downsizing in Australia and New Zealand’. Asia Pacific Journal of Human Resources, 35, 1, pp. 65-79. Mathews, J. (1989) Tools of Change, Pluto Press, Sydney. Mealor, T. (1997) ICI Botany: A Decade of Change, Centre for Corporate Change, Australian Graduate School of Management, UNSW, Sydney. Pava, C. (1986) ‘Redesigning Sociotechnical Systems Design: Concepts and Methods for the 1990s’. Journal of Applied Behavioural Science, 22, 3, pp. 201-21. Pritchard, R. (ed.) (1976) Industrial Democracy in Australia, CCH, Sydney. Saul, J.R. (1997) The Unconscious Civilisation. Penguin, London. Stace, D. and Dunphy, D. (1994) Beyond the Boundaries: Leading and Recreating the Successful Enterprise, McGraw Hill, Sydney. Turner, D. and Crawford, M. (1998) Change Power: Capabilities that Drive Corporate Renewal, Woodslane, Sydney (in press). von Weiszäcker, E., Lovins, A. and Lovins, L.H. (1997) Factor 4: Doubling Wealth — Halving Resource Use. Allen & Unwin, Sydney. Waldersee, R. and Griffiths, A. (1997) ‘The Changing Face of Organisational Change’. Centre for Corporate Change Paper no. 065, Australian Graduate School of Management, UNSW, Sydney. Wright, C. (1995) The Management of Labour: A History of Australian Employers, Oxford University Press, Melbourne
absenteeism, 26, 36, 57 acquisitions, 111 Action Plan for Economic Structure Reform (Japan), 193 activists: 73 see also anchors; popularisers; pragmatists ACTU (Australian Council of Trade Unions), 70, 72, 134, 201 Agnew Nickel Mine, 32, 97 Alcan Australia: 53-6, 57, 58; Sheet Metal Plant reorganisation, 53 Alcoa, 58 alienation, 21 alliance capitalism, 157 ALP conference (1977), 67 Amalgamated Metal Workers and Shipwrights Union, 69-70 anchors, 73, 106, 139, 202 Andersen Consulting, 107, 123, 160 Anderson, Geoff, 65, 68 Andreatta, Helen, 31 Andrews, Kenneth, 111 Ansoff, H. Igor, 111 APTECH, 86 architecture, organisational, 160 Argyle Diamond Mine, 99 Australia: multi-ethnic workforce, 199; organisational change options, 122; STS approach, 53-7 Australian Airlines, 127 Australian Best Practices: Demonstration Program, 118, 124 Australian Broadcasting Commission
(ABC), 34 Australian Centre for Industrial Relations Research and Training, 123 Australian Centre for Strategic Management, 123 Australian Coalition of Service Industries, 191 Australian Conciliation and Arbitration Commission, 119, 120 Australian Council of Service Industries, 201 Australian Graduate School of Management (UNSW), 99 Australian Human Resources Institute, 122, 133, 198, 200, 201 Australian Institute of Company Directors, 184 Australian Institute of Management, 123, 201 Australian Institute of Training and Development, 31, 73, 103, 122 Australian Organisation for Quality Control, 86 Australian Quality Council, 87 Australian Taxation Office, 33, 59, 93 work reorganisation, 37-8 award restructuring, 98, 120, 128, 130 Beer, M., 114 Bell Laboratories, 83 benchmarking, 111, 116 Bendix Mintex, 88-9, 131
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Bentley, Phil, 67 best practice, 85, 97, 130, 201 Beyer, J., 113 BHP 80 biosphere protection, 13, 138, 173, 174, 182, 187, 196 Blackgrove, George, 32 Blackwell, Mike, 55, 97, 98 Body Shop, The, 189 Boston Consulting Group, 9, 111 brain drain, 158 Bringing Work to Life, 64-5 BTR Engineering, 132 Bucklow, Maxine, 53 Bunning, Cliff, 31 bureaucracy, 1-2, 4, 19, 27-8, 108, 141, 168 Burnes, B., 114 Business Council of Australia, 121, 201 Business Process Reengineering (BPR), 10, 114 business technology, 153 Byrt, W., 29 Cameron, Clyde, 62 Campbell Committee Report (1978), 118 Canon, 187 capitalism, 12 career paths, 98, 128 Carnegie, Rod, 64, 98-9, 200 cases, of organisational renewal, 65 cell manufacturing, 35-6, 131 Centre for Applied Behavioural Science, 31-2, 73 Centre for Continuing Education: (ANU) 31, 38, 57, 68; HR workshops, 58 Centre for Corporate Change, 123 Centre for Corporate Strategy and Change (Warwick University), 112 Centre for Social Research (University of Michigan), 25 change: 74, 116; effectiveness, 153; in corporate culture, 25, 113; incremental see incremental change; transformational see transformational change change agenda, 44, 48 change agents: 1, 3, 57, 69, 71, 81; 102, 105, 122, 170; as facilitators, 26-7, 52; bureaucratic, 5, 7; charismatic, 106; external, 38; OD approach, 26,
105-6; role, 7, 62, 117, 196; skills/training, 32, 52, 72, 78, 91, 107, 161, 198, 201; technical experts, 7, 52 change management courses, 123 change models: bureaucratic approach, 7, 25, 205; HR/OD model, 25-6, 205-6; strategic approach, 111-12, 116-17; 126, 207; STS/ID model, 52, 206; sustainability approach, 195-203; 207-8; TQM approach, 91, 101, 206-7 change programs, top-down, 114 change theory see theories of change changeover times, 89 China, capitalist notions, 2, 12 Chrysler, 89 CIG Gas Cylinders, 132 civil rights movement, 22, 30 Clark, Alf, 53, 56 Clegg, S., 70 coal industry, 193 Cole, Reg: Alcan reorganisation, 53-6; Woodlawn, 97, 98 Coles Myer, 163 collective bargaining, 69 Collins, Roger, 126 commercialisation, 119 commitment: executive, 184; workforce, 13, 20, 26, 57, 157, 166, 168 Committee of Inquiry into Technological Change, 92 communism, 12 communities of practice, 13, 159-61, 167, 196, 202 community relations, 97 competition: 111, 129; global, 82-3, 106, 121, 127, 133, 141, 144, 148, 169; see also cost competition competitive advantage, 9-10, 104, 143, 189 competitiveness, 78-9, 125 competitor analysis, 116-17 conciliation and arbitration, 70, 119, 120 conflict, industrial, 20, 34, 105 consultants, 63, 122, 123, 160 consumers, 197 contingency theory: 114-15; contextualist approach, 115 continuous improvement, 78, 88-9, 91, 128, 130 Control Data, 58 Cope, B., 199
core process improvement, 85 corporate capabilities: 11, 140, 159, 196, 201; strategies for building, 151, 152-3, 154, 198 corporate competencies, 153, 161 corporate culture: 25, 39, 113, 115; change, 113; creation, 157 corporate renewal, 117, 161-2 corporatisation, 99, 119 cost competition, 142, 144-8, 149 cost reduction, 87, 128, 142, 143, 162, 169 CRA, 97, 98 Crawford, M., 152-3 Crombie, Alistair, 57, 64, 65, 124 Crook, Alison, 200 Crosbie, L., 172 CSR, 58, 64 customer satisfaction, 91, 168 customers: 10, 85, 91; relationships with, 88-9, 156 customisation, 141, 150, 166, 168 Customs Service, 33, 59 Damm, John, 31, 32 Davies, Alan, 57 Dawson, P., 113 decentralisation, 127 demarcation, 36, 54, 55, 66-7, 72, 98, 129 dematerialisation, 188 Deming Prize, 85 demotivation, 21, 26 Department of Management: University of Queensland, 31, 38 Department of Organisational Behaviour (UNSW), 31, 32, 35, 38, 73 deregulation: 127, 149, 169; financial, 108, 118, 121 deskilling, 20, 21, 148 devaluation, 118 development (competency), 153 devolution, 158 Dick, Bob: 31, 32; Organisational Change by Choice, 104-5 diffusion: 77, 86; centres of, 65, 72, 86-7, 104, 138, 201-2 distrust, 61, 72 diversity, 199 divestments, 111
Dobson, R.V.G., 181 downsizing: 81, 92, 127, 128, 141, 144-8; impact on morale, 147-8; research studies, 145-6, 147; survivor syndrome, 147 Dunphy, Dexter: 27, 31, 42, 57, 59, 65, 73, 126, 145-6; Boyer lectures, 28; consultancy, 32, 95, 97; Labour Department reorganisation, 62; Organisational Change by Choice, 1045; performance studies, 152; strategic change contingency model, 116; transformational change, 127; UNSW workshops, 32; work redesign (Philips), 35 Dunstan, Don, 65, 67 Dunstan Labor government: 68, 81; ID policy, 65-8 East Asian industrialisation, 78 ecological crisis, 172-4, 181-2, 186, 195 ecological sustainability, 14, 182 economic neo-liberalism: 11, 13, 162-3, 169, 180; and traditional strategic management, 12 economic rationalism: 11, 156, 162, 163; see also economic neo-liberalism economy, structural adjustment, 107 ecosystem, 173, 181, 182, 204 ecotoxicity, 177, 186 education, 188 Edwards Deming, W., 84, 85 efficiency, 36, 44, 52, 125, 128, 183, 188 Eisenstadt, R., 114 elites, 74, 106, 110, 133, 134, 138 emergent strategies, 112, 113 Emery, Fred: 27, 31, 64, 66, 68, 73, 97; at ANU, 57; ICI Botany, 60; Luv Pet Foods, 56, 57; Norwegian Industrial Democracy Project, 50, 53, 55; participant design, 51, 58; Shell survey, 33-4; STS/ID approach, 49, 55-6; work life survey, 28 Emery, Merrelyn, 57, 58, 64 employee competencies, 85 employee councils, 67 employee participation: 29, 40, 65, 66, 81, 124, 197; in quality improvement, 84-5, 87, 128
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employee relations, 97 employee surveys, 115 employer associations, 66, 70 empowerment, 90, 125 encounter groups, 23, 46 energy use, 175, 179, 182, 188, 191, 192 engagement (competency), 153 English language skills, 121, 128 Enterprise Australia, 86 enterprise bargaining, 119, 120 environmental audit, 185 environmental degradation, 171-4, 178, 179, 184, 185, 188 environmental scanning, 111, 116-17 Esso, Rundle project, 95 Esso (Exxon), 175, 177 eutrophication, 177 expertise: 155, 167; centres of, 30, 31, 45 export enhancement schemes, 118 factory layout, 36 Feigenbaum, A., 84, 85 feminism, 22 films, on workplace reform, 42-3 financial services: and sustainable industries, 194; deregulation/restructuring, 118 fish farming, 191 Flannery, Tim, 178 flexibility, 143, 149, 158, 166, 168 Ford, 191 Ford Australia, quality improvement, 87 Ford, Bill: 27, 31, 39-40, 42, 64, 65, 73, 97; adviser to Clyde Cameron, 62, 63; humanising work programs, 62; skills formation, 79, 129, 130; technology, 92-3; UNSW workshops, 32; work redesign (Philips), 35 Ford, Henry, 4, 5 Fordism, 4-5, 7 Foundation for Research in Human Behaviour (University of Michigan), 27 Fraser Liberal/National Party coalition, 63, 70, 80, 95 gainsharing, 115 Galbraith, John Kenneth, 180 Gallup Health of the Planet Survey, 1867 General Motors (GM), 191 General Motors-Holden (GMH), 33, 80
Germany: humanisation of work programs, 23, 62; legislative support, 68; skilled workforce, 93; STS approach, 105 Geus, Arie de, 196 Gibbons, A., 59 Gilmour, P., 29 Global Communications, 204 global warming, 175 globalisation, 9, 19, 118, 128 Gorton Liberal government, 42 greenhouse gas emission, 184, 192, 193 Greenpeace, 186 group dynamics, 24 Gunzburg, Doron: 31, 41, 42, 57, 62, 63; Bringing Work to Life, 64-5 Haighmoor mines, 48 Hanford, Phil, 32, 73 Harley-Davidson, 142 Harvard Business School, 8, 9, 25, 27 Hawke Labor government, 108, 118, 124 Hawken, Paul, 173 health, 177, 179 heresy, 22, 168-70, 204 heretics: 2, 4, 19, 20, 23, 30, 40; challenge to Taylorism, 7-9 Herman Miller, 188 Hertzberg, F., 24 Heskett, J., 113 Hewlett-Packard, 168 high-involvement management, 116 high-performance organisations, 140-1, 144, 165 high-skill economy, 148-50, 169 Hilmer, Fred, 96, 121, 142, 143 Holt Liberal government, 42 Homans, G., 21 Honda, 142, 191 Hughes, Louis, 175 Hull, Daryll, 64 human capital, 151, 152, 158-9 Human Relations Branch, Department of Labour, 62 Human Relations school: 8, 9, 21, 23, 50; change agents, 22; theorists, 24 human resource development, 125 human resource management: 96, 103, 123; practitioners, 1, 3, 8, 103, 126, 196; strategic, 10, 96-7, 99, 104, 170 human sustainability model, 11, 162, 165-8 humanisation, of work programs: 62, 105; West Germany, 23
humanism, 25, 33, 61, 78, 87 humanists, 38-40 Hunt, John, 27, 31, 37 hypercar, 183, 191 Hyundai, 144 IBM, 150 ICI: 33, 58, 59; ICI Botany, 60-1, 120, 131-2; ICI Welvic, 59-60; Osborne plant (SA), 34 income disparity, 179-80 incremental change: 10, 86, 94, 110, 133, 141, 146, 198; new initiatives, 12832; OD interventions, 25 incremental humanism, 19-20, 78 industrial democracy: 9, 40, 66, 70, 71, 81, 108, 124-6, 197; conference (1978), 68; employee involvement, 124; in Australia, 68-71; Norwegian project, 23, 50, 53, 55; see also SocioTechnical Systems (STS) analysis Industrial Democracy and Employee Participation, 125 Industrial Democracy in Australia 19721992, 65, 124 industrial disputes, 26, 92 industrial engineering: 4; practitioners, 4, 20, 52, 91 industrial relations: 55, 69, 89, 96, 98, 103; changing role of IR specialist, 102; conflictual style, 34, 36, 72; reform, 108, 119-20, 121, 125 Industrial Relations Act 1988, 120 Industrial Relations Commission, 120 Industrial Relations Research Centre, 123 inflation, 81 information industry, 188 information technology (IT), 10, 19 innovation, 19, 128, 132, 143, 166, 167, 189 Institute of Personnel Management: Australia, 73, 103, 122, 133 intellectual capital, 166 Interface, 188 intergenerational equity, 182 International Institute for Strategic Studies, 179 intervention strategies: 6, 35, 78, 110, 122 OD, 25; perfecting, 198; STS, 50 inventory reduction, 89 investment regulations, 118 Ishikawa, Kaoru, 85
ISO 14001 standard, 187 Jackson, Gordon, 55, 64, 97, 200 Jackson Inquiry into Manufacturing Industry, 23, 39, 43, 97-8 Jacques, Elliot, 98 Japan: 2, 93, 106; Action Plan for Economic Structure Reform, 193; alliance capitalism, 157; management practices, 78, 82-3, 101; quality movement, 84 Japan Productivity Centre, 84 Jarvis, Wilf, 27, 31, 37, 64, 73 job classification, 63 job demarcation see demarcation job enlargement, 35 job enrichment, 22, 29, 35, 38, 67, 115 job redesign: 29, 62, 63, 68, 69, 102; barriers to, 39; participative, 38 job rotation, 22, 35, 37 job satisfaction: 25, 28, 33-4, 41, 49, 69; see also work satisfaction job variety, 20 joint management councils, 67, 70 joint optimisation, 49 Juran, J.M., 84, 85 Just in Time (JIT), 88, 89 Kalantzis, M., 199 Keating Labor government, 118 Kellogg, 132 Khalsa, G., 51 Kiuchi, Tachi, 204 Knight, K., 172 knowledge-based organisations, 150-1, 157, 158, 159 knowledge capital, 150 knowledge/skill base, 155, 160, 170 Kotter, J., 113 Kyoto Greenhouse Summit, 192 labour, specialisation of, 21 labour costs, 148, 149, 169 labour market deregulation, 121 labour turnover, 20, 36, 44, 57, 89 Lanigan, Pat, 37, 38 Lansbury, R., 29, 70 Lawler, E., 115-16 leadership, 45, 167 Leakey, Richard, 172-3 learning organisation, 20, 150-1, 161, 189-90, 196 legal issues, 48, 65, 67, 68
THE SUSTAINABLE CORPORATION
Lewin, Kurt, 5, 24 Leyland, 58 LG Semicon, 144 Likert, R., 24 Lippitt, R., 24 Living at Work, 28 London Convention (1990), 186 Lovins, Amory, 181 Lovins, Hunter, 181 low-skill economy, 148-50, 169 Luv Pet Foods, 56-7 machine model, 5, 20 macroeconomic reform, 108, 118 Maley, Barry, 32 management prerogative, 44, 57, 61, 83 managerial grid, 34 managers, Australian, 29-30 manpower planning, 96 market deregulation, 108 market model, 162-5, 169 market responsiveness, 153 market share, 155 Maslow, A., 24 mass production, 4 Masters, P., 29 materialism, 181 Mayo, Elton, 20-1 McCarroll, G., 59 McGregor, D., 24 McKinsey & Company, 9, 107, 123, 160 McMahon Liberal government, 42 McPhee, Ian, 63 MEMTEC, 191 Menzies Liberal government, 41, 42 mergers, 111 microeconomic reform, 121 Microsoft, 150 MIM, 32, 97 mining industry: 97-9, 193; boom, 79, 95-6, 99, 107 Mitchell, J., 103 Mitsubishi Electric Corporation: 204; JIT systems, 89 MLC Life, 127 Monash Key Centre in Industrial Relations, 123 morale: 20, 21, 25, 60; and downsizing, 147-8 motivation: 21, 28, 60; Shell survey, 33-4 theory, 20 Motorola, 143-4: multinational
companies, 82, 184, 192; open to new approaches, 30, 33, 39, 45, 123 power, 183-4 strategic approach, 111 multiplicity, 158 multiskilling: 37, 48, 89, 98, 125, 128, 130; Alcan, 53, 54, 55 National Australia Bank, 127 National Competition Policy, 118, 121 National Employee Participation Steering Committee, 63 National Industry Extension Service (NIES), 86 National Institute of Labour Studies, 123 national wage case, 119-20 natural capital, 176 nature, relationship with, 180-1, 203 negotiation, 158 Netherlands, STS approach, 47, 51, 105 networking, 138, 156, 160, 161, 167, 200 new plant design, 115 niche marketing, 150 Norway: Industrial Democracy project, 23, 50, 53, 55; STS approach, 47, 50, 105 oil production, 175, 177, 192, 193 oil shocks, 95 OPEC (Organisation of PetroleumExporting Countries), 23, 175 open systems approach, 49 organisation design, 96 Organisation Development (OD): 8, 10, 24-6, 71, 97, 98, 106; centres of expertise, 30, 31; early interventions, 32-8; model of change, 26; network, 102; OD/STS redesign approach, 35-6; OD/STS theory, 104-5; practitioners, 8, 25, 64, 102; survey research, 34 Organisational Change by Choice, 104-5 Organisational Renewal Movement: (ORM), 1-3, 22, 29, 43-6, 71, 1324; accommodation/realignment, 77; and mining industry, 97-9; and technological change, 94; attacks on Taylorism, 8-9; change programs, 124; changes in socio-political environment, 61-4; core philosophy, 138; heretics, 4; 20, 23, 30; human potential, 170
Human Sustainability Approach, 11-12; ideology, 77-8, 81; industry support, 48; influence on CEOs, 64; influential books, 64-5; move to orthodoxy, 104-5, 110; move to strategic change management, 1013; origins, 4-5; overview, 14-15; pilot projects, 8, 39, 138; political support, 41-3, 72, 74, 101; Productivity Promotion Council, 42-3; role in sustainable development, 194-5; strategic mindset, 109-10; values, 110 Organisational Transformation, 10, 106 organisations: bureaucratic, 1-2, 4, 19, 27-8, 93, 108, 141, 168; climate, 39; culture, 25, 39, 113, 115; ecologically destructive, 13; highperformance, 140-1, 144; knowledge-based, 150-1, 157, 158, 159; learning, 88, 144, 150-1, 161, 189-90, 196; power structures, 74; survival, 80-1, 110, 127, 141, 146; team-based, 131-2; virtual, 161 outsourcing, 55 Overseas Trade Department, 59 overtime, 56 PA Management, 107 Pacific Power, 127, 146, 191 Pahlow, E., 34 participant design, 51, 52, 58 participation, by employees see employee participation participative action research, 50, 52 participative design workshop, 66 participative management, 115-16 participative practices, 80 Pasminco EZ, 186 Pasmore, W., 51 Paterson, John, 200 pay systems, 63 performance: 11, 34, 38, 44, 89, 132, 153, 154; and corporate culture, 113; and human capital, 152; defined, 141-4; sustained, 151 performance management, 153-4 Personnel Practice Bulletin, 65 Personnel Practices Section, federal Department of Labour, 31, 41, 62
Peter, Hollis: 27, 31, 32, 57, 59, 64; ICI Botany, 60; IR/OD practitioners, 102; management education, 31; on industrial democracy, 68-9; pragmatist, 73; Shell survey, 33-4 Peters, Garth, 32 Pettigrew, A., 112, 113, 115 Philips Industries: 33, 35, 42; work redesign, 35-6 Phillips, Chris: 57; work life survey, 28 pilot projects: 33, 39, 138, 199, 201; OD/STS, 35 pluralism, 158 ‘Policies for the Development of Manufacturing Industries in Australia’ (Jackson Report), 43 political issues, 65, 112 political process, 10-11, 105, 113 political support, 41-3, 72, 74, 101 pollution, 177 popularisers, 73, 139, 202 population explosion, 174 poverty, 179, 180 power, 65, 167 power-sharing, 50 power structures: in organisations, 50, 52, 74, 105, 155, 162; in society, 46, 139 pragmatism, 77 pragmatists, 73, 106, 139, 202 preferred supplier relationships, 164-5 Prideaux, G., 70 Pritchard, Robert, 65 privatisation, 99, 119 process interventions, 104-5 product innovation, 190 product redesign, 188 product reliability, 91 productive diversity, 157-8, 199 productivity: 41, 69; and job satisfaction, 25; HR approach, 21, 22, 38; reduced, 57, 177; STS approach, 48-9, 51; teamwork, 25, 59, 87, 132 Productivity Promotion Council of Australia, 42-3 professional associations, 73, 102, 122, 198, 201 professionals, 158-9 profitability, 36, 152, 166, 190
THE SUSTAINABLE CORPORATION
project management, 38 Prowse, Linden, 56, 66 public sector: downsizing, 145; organisational changes, 99-100; restructuring, 119 puritanism, 77 quality assurance, 44, 87, 128 quality circles: 82, 84, 87, 90, 130; at Bendix Mintex, 88 quality control, 36, 56, 57, 60, 83-4 quality improvement, 85-6, 87 quality movement, 83-7 quality of life, 13 quality of work life: 13, 28, 64, 69, 115; programs, 23, 44; QWL movement, 8, 24 Quality Society of Australia, 86-7 quality teams, 131 re-engineering, 128 Read, Viv, 64, 97, 99, 200 recession, 77, 80, 81, 127 recycling, 185, 188, 199 Redfern Mail Exchange, 40 relationships, 164, 165, 167 remuneration, 96 renewal, corporate, 120-4 research centres, 123, 138, 201-2 researchers: 63; resources; nonrenewable, 174-5; renewable, 175-8, 193; stewardship of, 198-9; waste, 176-7 restructuring, 95, 108, 120-1, 127, 144, 147, 190 retrenchment, 80, 127, 144-5 rework, 89 Rockefeller Foundation, 21 Rocky Mountains Institute, 182 Roddick, Anita, 189 Roethlisberger, Fritz J., 21 Royal Australian Air Force, 58 Rumbold, Bronwyn, 31 sabotage, 20 SAMCOR (South Australian Meat Corporation), 58 Samsung, 144 satisfaction see job satisfaction Saul, John Ralston, 179, 180 scale of change, 116 Schon, D., 30 search conferences, 50 self-managed teams, 132 Selznick, Philip, 111 semi-autonomous work groups, 35, 38,
48, 50, 52, 72, 90 sensitivity training, 23, 46 shareholders, 10, 197 Sheldon, Christopher, 187 Shell: 27, 33, 58; employee motivation survey, 33-4 Simpson Pope, 33 skills development, 34, 79, 120, 128, 130, 200-1 slavery, 203 Small, Andy, 200 social capital, 167 social justice, 125 social scientists, 2, 8, 24, 27, 28, 29, 48 Social Security Department, 59 Social Systems of Shell Australia (employee survey), 33 social values, 46, 138 Socio-Technical Systems (STS): analysis, 9, 27, 47, 49, 50-1, 56; approach to change, 52, 71; diffusion of ideas, 57; in Australia, 53-7; origins, 48-50; overseas, 47, 50, 105 solar energy, 190-1 South Australian Industrial Democracy Unit, 68, 69 species reduction, 171, 173, 177-8 Spector, B., 114 Stace, Doug: 116, 126, 127, 145-6; performance studies, 152 staff training see training staff turnover see labour turnover stakeholders, 13, 74, 85, 113, 156, 197 State Electricity Commission of Victoria, 59 State Library of NSW, 127 stewardship, by senior managers, 55, 60, 79, 107, 196 strategic approach: 110-12, 117, 134; change model, 116-17; new developments, 113-16; problems, 112 strategic human resource management, 10, 96-7, 107, 170 strategic human resource planning, 79 strategic management, 110-11 strategic management approach: 9, 10, 195; dominant paradigm today, 11; ORM’s contribution, 11; redefinition, 12-13 strategic planning: 79, 96, 107; courses, 123 strategic redirection, 117 strategic reorientation, 146 strategic unionism, 134
strategy: 79, 155-6; formulation, 117; implementation, 113, 117 Stroebel, Chris, 55, 97, 98 Strong, James, 200 structural efficiency principle, 120 subcontracting, 162, 165 supervision, 21, 48, 56 supervisor-led teams, 131, 132 supervisors: 50, 56, 61, 68; development, 22; humanistic, 25 suppliers: 165, 184, 197; and quality improvement, 85; preferred, 164-5; relationships with, 88-9, 156 survey research, 24, 34 survivor syndrome, 147 sustainability: 170, 172, 186, 190; building capabilities for sustained corporate success, 137, 154-62; change model, 195-203; corporate, 11-12; ecological, 11-12, 13, 138, 182-90, 198; strategy, 155-6, 172; sustainable productivity, 137; see also sustainable development sustainable development: 13, 138, 182, 183; alliances, 189, 192-3; awareness raising, 200-1; compliance strategies, 186; corporate leadership, 183-5, 196, 200; creation of power base, 202; ecological efficiencies, 187-8; ecological strategy, 186-90; ORM’s role, 194-5; proactive environmental strategies, 189; stewardship of resources, 198-9; sustainable organisations, 197, 201 Sweden: 23; humanisation of work programs, 62; legislative support, 68; STS/ID approach, 9, 47, 50, 105; Swedish Employers Association, 50 tariff barriers, 118 tariff protection, 77, 140 tariff reduction, 108 Tavistock Institute of Human Relations, 8-9, 27, 48, 49, 53 Taylor, F.W.: 4; change theory, 5 Taylorism: 4-5, 7, 91, 108, 148-9, 162; emphasis on technical, 8; in retreat, 10; weaknesses, 20 team building, 22, 24, 117
teams: 88, 90; Alcan, 53, 54, 55; at ICI Welvic, 59, 60; Luv Pet Foods, 56; production teams, 82; quality teams, 131; self-managed, 132; supervisor-led, 78, 131, 132 teamwork: 29, 35-6, 37, 38, 98, 125; need for extra skills, 130; overview, 131-2; participative management, 115, 128 technologies: 19; challenge to ORM, 789, 101; clean, 185; IT, 19, 141; new, 72, 92-4, 125, 144, 165; transformative, 190-2 Technology Transfer Council, 89 The Culture of Contentment, 180 The Future Eaters, 178 The Living Company, 196 The Unconscious Civilization, 180 theories of change: 5-7; basic metaphor, 6, 7, 26, 52, 91, 116, 195; change agent role, 7, 26, 52, 91, 117, 196; diagnostic model, 6, 7, 26, 52, 91, 116, 195; ideal model, 6, 7, 26, 52, 91, 116, 195; intervention strategies, 6, 7, 26, 52, 91, 116, 196 theory, 5-6 Thorsrud, Einar, 50 Total Quality Circles, 83 Total Quality Environmental Management, 187 Total Quality Management Institute, 86 Total Quality Management (TQM), 10, 50, 83, 86 Total Quality Movement, 82, 91 Toyota, 191 Trade Union Training Authority, 63, 123 trade unions see union movement training: 88, 90, 97, 125, 151; for management, 29-30 transformation: 183; charismatic, 127 transformational change, 79, 107, 110, 133, 146, 152, 198, 202-3; new approaches, 126-8 Trice, H., 113 tripartite steering committee, 63 Trist, Eric, 49, 53 trust, 11, 61, 157, 164, 166 turnaround, 127, 146 Turner, D., 152-3
THE SUSTAINABLE CORPORATION
UCLA, 27 Uhrig, John, 33 Uncle Ben’s, 57 unemployment, 81, 148, 181 union movement: 72, 120, 134; accord, 108; enterprise bargaining, 119; in service sector, 93; new technology, 92; position on ID, 66-7, 69, 70, 71, 125; TUTA, 63 Union of Soviet Socialist Republics (USSR), 2 Unit for Industrial Democracy (SA), 67 Unit for Quality of Work Life, SA Department of Labour and Industry, 66-7 United Kingdom: 62; income disparity, 180; STS/ID approach, 47, 50, 105 United States: 62; corporate support for environment, 184-5; income disparity, 180; OD/OT approaches, 105; quality movement, 84; STS/ID approach, 47 universities: Australian National University (ANU), 31, 38, 57, 58; Flinders, 123; Harvard, 8; Illinois, 27; Michigan, 25, 27; New South Wales (UNSW), 27, 31, 32, 38, 53, 56, 57, 123, 191; Queensland, 31, 38, 57; Queensland University of Technology, 123; Sydney, 53, 123; Warwick, 112; upskilling, 72, 121, 128, 129-30, 159 Value Added Manufacturing (VAM), 88 value adding, 142-3, 149, 166, 199 values, corporate, 156 virtual organisation, 161 Volvo, 50, 81, 105 Von Bertalanffy, L., 49 Wages and Income Accord, 119, 124 warfare, 179 waste: 185, 187; elimination, 188; of resources, 176-7, 178-9 Watson, Ian, 32 Watson, Neil, 32, 57, 73 Weber, Max, 4 Weiszäcker, Ernst von, 182 Western Electric Company, 21
Westpac Bank, 127 whaling, 176 Whipp, R., 115 White, Tony, 32 Whitlam Labor government: 43, 64, 65; change initiatives, 61-4; Jackson Inquiry, 23 Wild, Ian, 55 Wilenski, Peter, 99, 108 Wilenski reports, 99-100 Williams, T., 93-4 Wilson, Edmund, 177-8 Woodlawn copper mine, 55, 97 Woolworths, 163, 176 work: dehumanised, 20, 22; democratisation, 40 Work and People, 65 work groups see work teams Work in America, 23 work in progress, 89 work organisation, 62, 63, 120 work practices: 63, 72; flexible, 93 work programs, humanisation of, 62 work redesign: 49, 52, 71, 117; at ATO, 37-8; at Philips, 35-7; Japanese approach, 78; opposition to, 61 work satisfaction: 48, 49, 57, 104; see also job satisfaction work structuring, 35 work teams: 25, 50; semi-autonomous, 35, 38, 48, 50, 52, 72, 90 worker control, 69 worker participation see employee participation workforce: 21-2; imperfect adjuncts, 20; investment in, 12; participation, 49, 54; skilled, 19, 20, 26; turnover, 20, 36, 44 Working Environment Unit, 62 workplace democratisation, 105 workplace redesign, 49, 52, 72, 107 workplace reform: 23, 80; films, 42-3 workshops, 58-9, 65, 67, 88 World Class Manufacturing (WCM), 88 Wran Labor government, 99 Wright, C., 103 Wupperthar Institute, 182 Yamaha, 142