Chapter-1
Social Change and the Study of Management
It is impossible to speak of the premier role of the American corporation in the world economy without speaking of American management systems. Institutionalized and professionalized when the large corporation gained hold after World War II, the American management system has been trusted and admired by the national and international business community. Indeed, many believe that American corporate management was responsible for the dominant economic position held by the United States in the postwar period.
But just as that dominant corporate role has been severely shaken over the past two decades, so too has the function of management itself. U.S. corporations have struggled to maintain profitability, restructuring themselves organizationally to survive in a globally competitive era. And in an unprecedented fashion, corporate leaders and management experts have attacked middle management for its role in blocking and even actively undermining these corporate survival strategies. Middle management became in the 1980s what labor was in the 1970s: a convenient scapegoat for economic decline. While business leaders furiously disinvested, merged, acquired, and "downsized" business operations, they frequently used a stinging critique of middle management to justify these actions.
Others now question the future of middle management in U.S. business because of the growing perception that strict hierarchies have a debilitating effect on the corporation and that empowered workers can play a positive and productive role in new systems of working and producing. As never before, business researchers and observers, industrial relations experts, and managers themselves are reflecting on corporate authority relations, asking hard questions about the institutional reinforcements of traditional hierarchies and privileges and debating whether these historically constructed relationships should endure.
Clear linkages exist between the restructuring of corporations to regain competitiveness and the fundamental critique of American management. Yet social scientists and the millions of people who work in our largest corporations lack systematic sociological evidence about the relationship between the two. The implications of corporate and managerial change are largely delimited by descriptive accounts in the press, popular management books that obscure structural changes in the organization of management work, and a managerial literature that diagnoses the human costs of corporate restructuring as inevitable "human resources predicaments," taking for granted business leaders' mission to "downsize" the American corporation.[1] Drawing on an in-depth case study, this book analyzes the consequences of industrial restructuring for American middle management.[2] Why study middle management? One answer is empirical: despite extensive commentary on the changing face of corporate life, we know little about the transformation of power, authority relations, and work of middle managers. This book asks whether retrenchment and restructuring transform managerial work processes and the division of labor between managerial and nonmanagerial employees. It also investigates the political processes caused by restructuring. How do middle managers respond to change and how can we explain those responses?
The limited scholarly data available on this topic come from researchers studying organizational decline, who have only just begun to analyze the consequences of restructuring for middle managers. The decline perspective argues that the new competitive environment (scarcer resources, shrinking markets) forces organizational leaders to take the unavoidable steps of downgrading and scaling back operations. In turn, these researchers nearly unanimously claim (Whetton 1988), restructuring and retrenchment create "dysfunctional" dynamics that top-level organization leaders must manage. Lower-level managers, for example, subsequently respond to decline with denial (Krantz 1988); conflict, secrecy, scapegoating (Cameron, Kim, and Whetton 1987); avoidance of innovation (Whetton 1988); concealment behind psychological and organizational "exit barriers" (Harrigan 1988); and other conservative and irrational resistance strategies that top managers must overcome.
The decline literature, however, fails to question the standpoint from which rational action is defined or the politics involved in defining rational behavior. They assume that current restructuring policies are inevitable and that only organization leaders can define the best interests of the corporate organization, as well as the appropriate actions for achieving those interests. Like earlier research on bureaucracies that identifies different logics of rational action within the organization (Blau 1955; Crozier 1964; Gouldner 1954), the research presented here empirically investigates and criticizes this one-sided conception of rational action, corporate interests, and organizational change. Unlike those earlier studies, which tended to focus solely on internal organizational forces, this study also analyzes managerial action in relation to external structural, cultural, and economic forces; specifically, it links managerial action to macro-level changes in the political economy.
A second reason for this study is analytic: middle managers have a pivotal and contradictory role in corporate restructuring processes. More to the point, middle management may be at the center of industrial restructuring. This book explores that role, using one case study to understand the processes that have fundamentally reshaped American middle management in the 1980s. On the one hand, a constant stream of reports and studies suggests a significant and unprecedented decline in the employment conditions and status of middle levels of management in large, historically oligopolistic firms. On the other, we live in an era that devotes considerable attention to the critical role middle managers play in improving American industrial competitiveness. Insofar as these two tendencies appear as separate processes, they seem extremely contradictory. Yet they actually reflect the same process: an agenda for transforming the function of management by targeting corporate middle managers simultaneously as objects and agents of corporate decline and reconstruction.
This study portrays middle managers in the transition to a new competitive era. It documents the attempts of the top managers of a large, traditionally paternalistic banking firm to position middle managers as objects and agents of corporate restructuring. Specifically, it shows how top management transformed the traditional organizational bases of managerial authority while relying on middle managers to legitimate and accelerate a downsizing process. By examining the degradation of the managerial position at the heart of one major corporate transformation, as well as the intramanagement politics of degradation, the study demonstrates the struggle over who will take what responsibility for restructuring American corporations. After summarizing, in the next section, the numerous and diverse indicators of fundamental change in the work, organization, and ideology of management, I briefly discuss the in-depth case I use to analyze these changes and then summarize the overall argument of the book.
Restructuring Management and Managing Restructuring
Proposals for new ways of organizing work and management have acquired an urgent tone in the wake of two decades of corporate restructuring. Since the late 1960s the American political economy has faced many challenges to its international dominance; by now most commentators agree that the United States has entered a qualitatively new and different era of economic competition.
Many agree that the increasingly competitive pressures of the late 1960s and the 1970s triggered this transition. Profitability crises resulting from greater international competition, contracting markets, and deregulation caused significant plant mobility and closures, job loss, high merger and acquisition activity, and disinvestment of productive capacity (Bluestone and Harrison 1982; Bowles, Gordon, and Weisskopf 1984; LeGrande 1983; Corrigan and Stanfield 1984; Fallows 1985; Wallace and Rothschild 1988). Furthermore, in the absence of real and sustained economic growth, top U.S. corporate management decreased its investment in productive activity and enterprises, instead promoting the illusion of prosperity in a form of profit gains on paper-what Reich (1983) calls "paper entrepreneurialism" and Bluestone and Harrison (1982) call "new managerialism": the "thoroughly legal, aboveboard conglomerate strategies . . . that emphasize cash management over a commitment to any particular product line" (p. 150). Disinvestment, mergers, and acquisitions-the principal means of building assets on paper-are driving forces behind job loss, corporate recentralization, technological unemployment, and regional shifts of industry.[3]
The devastation inflicted on manufacturing and other blue-collar workers as a result of these processes has been extensively studied, but the unprecedented, often dire consequences for managerial workers are less well known. Bluestone and Harrison (1982), for example, suggest that disinvestment and deindustrialization "unemployed" large numbers of managerial and other workers. Professional and managerial workers experienced the greatest downward mobility of the displaced workers they studied (p. 55), indicating that deindustrialization reconfigures the managerial as well as the manufacturing portion of the American occupational structure. In other words, managers were not immune from the displacement processes affecting workers.
A study of the reemployment outcomes for 5 million workers displaced by plant closures, layoffs, and cutbacks between 1979 and 1984 provides further evidence that industrial changes adversely affect managers. Among the 3.1 million workers who were reemployed by January 1984, 525,000 were in managerial and professional occupations in their previous job. Only one-half were reemployed in such jobs, however, a reintegration rate similar, for example, to that of precision production, craft, and repair workers (Flaim and Sehgal 1987, table 9-13).
Increased international competition has wreaked havoc on historically secure corporations and their strategies to achieve profitability. Firms across a spectrum of activities and locations abruptly changed their product market orientations and subjected employees across the board to radical alterations of organizational structure and employment conditions. Corporate leaders streamlined their firms to become more competitive and profitable; in basic manufacturing, telecommunications, and financial services industries, top managers aggressively attacked their corporate staffs and operations managers in the effort to reduce administrative overhead. Indeed, it seems that the decline and restructuring processes affecting managers, as well as other workers, knew few market or sectoral bounds in the economic climate of the 1980s (Cameron, Sutton, and Whetton 1988, introduction). Even in so-called growth industries, major firms responded to greater competition by paring down corporate size and centralizing functions (Wall Street Journal , 26 October 1984).
Popular and euphemistic notions of "flattening the organizational hierarchy" or "removing layers of bureaucracy" aided the streamlining process. Corporate top managements, committed to doing away with overly bureaucratized systems, slashed away at middle managerial jobs, reducing overhead and the number of layers through which communications and decision making travel.[4] No one mentions what "paring down" means for managers who once occupied the abstract "layers of bureaucracy" or, indeed, what eliminating management levels means for those remaining in the corporation. But without a doubt American business has become firmly committed to cutting the administrative layers staffed principally by middle management (Osterman 1988, p. 81). By removing the intervening levels of bureaucratic management that characterized the large, growth-oriented corporation of the postâ“World War II era, these efforts additionally allow top managements to regain and maximize control over production processes.[5]
Corporate mergers and takeovers adversely affected middle management.[6] Although middle managers might have been retained to ensure the success of newly merged corporations, mergers more frequently caused managerial redundancy. New executives and boards of directors phased out entire divisions or functions and often dropped particular jobs or selected managers (New York Times , 17 October 1982a; Hartman and Hill 1983).[7] Managerial and nonmanagerial personnel both ended up paying, with their jobs or wage cuts, for the financial debt accumulated in the course of leveraged buyouts and takeovers. But management experts report that corporate raiders often first cut layers of management in order to raise cash, enhance shareholder value, and gain greater control over the firm. The estimates of the number of jobs cut in this process vary. Some claim that merger and acquisition activity forced nearly half a million "executive, administrative, and managerial" workers out of their jobs between 1981 and 1986 (Willis 1987; Fortune , 2 March 1987), while others speculate that more than two million corporate managers lost their jobs in the 1980s as a result of restructuring (New York Times , 24 January 1988).[8]
Deregulation, mergers, and acquisitions, and subsequent struggles for industrial competitiveness, can slow promotion rates for middle managers (as opportunities for upward mobility decrease, middle managers are stalled at position plateaus) (Hall and Isabella 1985; Hodgetts, Lawrence, and Schlesinger 1985), while cutbacks in vertical integration (or "disaggregation," in which firms shed all but core productive activities) lead to the excision of layers of management (Thackray 1986).
Reflecting a relatively new and noteworthy attempt to force white-collar managerial workers to pay for corporate hard times, firms faced with inescapable competitive pressures have extracted concessions in job regularity, security, and status from these employees. Corporations targeted the management employment contract: reports of wage freezes, salary cuts, newly instituted pay-for-merit systems, suspension of bonuses, and forced early retirement packages for staff and line managerial and professional employees emanated regularly from the corporate headquarters of restructuring firms such as Xerox, U.S. Steel (now USX), du Pont, American Telephone and Telegraph (AT & T), Hewlett-Packard, Ford, General Motors, and Texaco, to name but a few.[9]
Overall, cutbacks in the ranks and employment conditions of middle management are part of a larger, permanent shift in the American employment framework. Industrial relations and organizations specialists argue that American firms, now cognizant of an end to uninterrupted economic growth and of the need for greater control over costs, can no longer afford to sustain bureaucratic (Pfeffer and Baron 1988) or industrial (Kochan, Katz, and McKersie 1986; Osterman 1988) models of control over employees. Those models, in both unionized and nonunionized, blue- and white-collar settings, include implicit and explicit guarantees of job security, clear-cut career paths, stable internal labor markets, and the treatment of labor as a fixed cost. They emerged as a result of varied historical conditions including labor/management conflicts and the extraordinary prosperity of large American firms.
Given the greater uncertainty and struggle for profitability in the 1980s and beyond, these specialists argue, companies now seek to cut back on the practices and expectations associated with the old models. Whether by adopting a militant antilabor approach to extracting concessions, pursuing a cooperative approach to gaining labor's participation in new productivity schemes, or externalizing more of the firm's work force, American corporate management has been unraveling the stable employment relations framework that has been in place for many decades. The trend has only recently exploded at a level "perhaps unequaled since labor relations was transformed by the union movement and legislation associated with the Great Depression" (Osterman 1988, p. 61), an assessment shared by Kochan, Katz, and McKersie (1986).
The fate of workers and managers is similarly, although not always equally, bound up in this trend. For whereas workers and managers both must make concessions in the terms of employment, managers face a wholly new demand: they must retool their social relations with those they manage and take on a unique role in pushing through new corporate conditions.
As corporations adopt drastic cutting measures in attempts to restore profitability to the firm and strive to sustain participation and legitimacy while stable employment patterns become strained and uncertain, top managements look to their middle managers to "manage organizational decline" by engineering layoffs, job cuts, and decreased opportunities for mobility in a sensitive and timely way (Gilmore and Hirschhorn 1983; Bunker and Williams 1986). Maintaining continuity and gaining employee consent to corporate restructuring processes present significant organizational and personnel challenges to those running the American corporation. This is especially difficult when firms regularly lay off employees and block once open career paths (Osterman 1988). As firms restructure, lower levels of managers become the crucial link between new earnings objectives and the ongoing reproduction of daily productive activities. In this domain of responsibility, top management has tried to position middle management as agents of restructuring, to get them to mediate corporate restructuring processes as they affect daily work relations.
New Corporate Ideologies: Scapegoating Middle Management
At the very time that corporate restructuring processes eliminate important conditions for exercising genuine entrepreneurialism, corporate top managements and management consultants fervently advocate the notion of entrepreneurial management to their middle managerial personnel. The popular antibureaucratic, pro-entrepreneurial ideology is especially ironic because this "progressive" framework neatly dovetails with the dismissal of middle management. Cultivated by the "experts"-management consultants, authors, pundits, and academics-the roots of the new ideology of entrepreneurial management are independent of the actual practices and beliefs of the managers who are its targets. Despite or perhaps because of this disjuncture, the ideology has acquired the status of corporate gospel.
Dominant corporate ideologies that specify how managers should act provide only limited insights into what managers actually do and think (Nichols 1980). At the same time, however, such corporate ideologies and their expression in managerial "success" books and speeches herald new expectations of managers as well as changes occurring inside the corporation. In this case, what appears to be a positive and sincere appeal to middle managerial professionalism is little more than a tool business leaders increasingly use to obscure and justify deep-rooted structural changes, many of which undermine an implicit contract middle managers have had with large corporations.
In this counterintuitive framework, the new entrepreneurial manager should act deftly and flexibly inside even the largest of the country's corporations.[10] Typical of the "progressive" management literature, In Search of Excellence , for example, urges the new entrepreneurial manager to eschew bureaucratic and centralized organizational structures and promote instead a "leaner," decentralized work environment in which managers can act rapidly and flexibly (Peters and Waterman 1984).
Entrepreneurial managers have, among other projects, the mission to identify and weed out unproductive, overmanagerialized areas within the corporation, even in their own work unit. Indeed, the sign of the true corporate entrepreneur is his or her willingness to subordinate individual interests to the good of the firm. Thus Kanter (1986) suggests that "the rising managerial entrepreneurs even work themselves out of jobs" when they see particular areas of the firm that have outlasted their value and are providing diminishing returns to the organization (p. 20). The new ideology also clouds the import of managers' role in getting rid of purportedly superfluous employees. Specifically, the "good" entrepreneurial manager should assume responsibility for managing out the jobs of others.
The allegedly progressive, antibureaucratic ideology of entrepreneurial management follows nearly a decade in which experts have consistently blamed American management for the contemporary decline in American productivity and competitiveness. Hayes and Abernathy (1980) precipitated this thinking by publishing, in the Harvard Business Review , a criticism that has engaged the attention of business and academic leaders alike. They see the contemporary management "gospel" of analytic detachment from real products and markets, shortsightedness in financial planning, and hyperabstraction as "playing a major role in undermining the vigor of American industry."
Other business observers echoed this criticism but redirected it toward middle management. Calling his claim an "awkward" one, Judson (1982) argues that "management ineffectiveness is by far the single greatest cause of declining productivity in the U.S." (p. 93). Monsen and Saxberg (1977) point to managers' values and attitudes as a key to America's declining productivity, rather than more common explanations such as low levels of capital investment. And Reich (1983) and Ginzberg and Vojta (1985), liberal policy analysts and human resources experts, similarly call for greater flexibility and innovation in the ranks of American middle management, claiming that the modern corporate enterprise has become overmanagerialized and rigid.[11]
The emergence of a new, presumably optimistic ideology of management does not signal the end of an era of blaming management for America's productivity ills. On the contrary, these are two versions of the same theme. The new corporate ideology, promulgated by experts and business leaders, turns management on itself, providing the philosophical underpinnings and organizational mechanisms by which middle managers can attack management bloat and bureaucratic management styles.
Situating Middle Management Historically
Merger and acquisition activities have forced hundreds of thousands of managerial and administrative workers out of American corporations; corporate leaders have excised innumerable layers of bureaucratic, managerial "fat" and are effectively undoing the prevailing bureaucratic model of employment in our largest firms; and a new corporate ideology aids the war on management bloat and bureaucracy by appealing to middle managers not only to manage but also to become enthusiastic leaders of restructuring processes. Worsened employment conditions indicate that middle managers themselves have become objects and agents: new targets in a well-known agenda in which the struggle to maintain corporate profitability leads to no-holds-barred strategies for maximizing earnings.
Surface impressions, however, fail to answer questions about the actual structure and organization of middle management. They tell us little about what happens inside the firm, as thousands of managers apparently disappear, and as corporations develop new organizational forms to carry out production objectives. They tell us little about the effect of "managerial restructuring" on the configuration of authority relations within firms, or about the intramanagerial politics that result from corporate and managerial restructuring. And finally, they relay little understanding of the intersection between structural and ideological change inside the large corporation.
The partial perspective available so far begs for a fuller and more fundamental analysis of changes in American management. These tendencies compel us to ask: do the surface changes indicate something structural and deep-rooted about the way firms and industries are reconstituting middle management? Historians of corporate structure and behavior have written thousands of pages on the origins of the large American corporation and its particular organization of middle management. Alfred Chandler's work provides perhaps the most impressive historical research on this corporate formation. Since the conclusions of Strategy and Structure (1962) form an important point of departure for understanding the possibility of a contemporary reconstitution of middle management, they must briefly be considered.
In Chandler's view, the centralized firm of the early twentieth century posed a historical challenge to corporate leaders and their administrative practices. He chronicles business leaders' increasing difficulties in coordinating output and distribution as firms moved from competitive, market-controlled institutions to oligopolistic and monopolistic ones. The centralized corporate form of earlier times became a stumbling block to maximizing new opportunities.
Top managements facing this situation attempted to contain global uncertainty while increasing the discretion of the lower levels of the firm. They internalized control over production and distribution through vertical integration and diversification. The consequences of these new administrative methods were paramount. The organization of production and distribution would critically determine whether American industry could move forward into this new stage of corporate growth.
Appropriate management structures could enable corporations to move into new product markets and profits. With the right organizational device, managers could achieve more effective communication between and coordination of diverse units within one firm, design planning procedures to maximize the use of all corporate resources (facilities, personnel, machinery, raw materials), and regularize operations and production processes. Using bureaucratic administrative systems, all aspects of production and distribution would be internalized within the corporation rather than subjected to relatively unpredictable market forces.
The decentralized multidivisional corporate structure, the elements of which were so ingeniously explored by Pierre du Pont and others, freed owners and top managers from daily tactical decisions so that they could concentrate on strategic decision making about diversification and international ex
pansion. Divisional- and operations-level managers were given the authority, facilities, and guidelines to make daily tactical decisions.[12] In The Visible Hand , Chandler describes how growth was predicated on hiring "dozens and then hundreds" of lower- and middle-level managers whose work and positions inside operating units "didn't vary a lot from those men who owned and managed a single independent factory or office" (Chandler 1977, p. 411). For Chandler, the bureaucratic corporate structure centralized strategic authority at the top of the firm but contained an organizational basis for decentralized, semi-autonomous action at lower levels of the firm.13][ Such administrative systems gave corporate enterprises the means to grow into global multi-industrial empires because they coordinated and expanded output. Thus as corporate leaders built a multidivisional decentralized organizational structure, they laid the groundwork for the rise of new ranks of managers. Jacoby (1984) notes a steady increase in the ratio of administrative to production employees between 1880 and 1920 as a result of the creation of a new structure of management, including engineers, personnel and middle managers (pp. 24â“25), a trend that continued as the numbers of managerial and supervisory employees increased disproportionately throughout the twentieth century (Melman 1951; Bendix 1956, pp. 211â“226).[14]
As Melman (1983, chap. 4) points out, the spread of the multiunit decentralized corporation played a "strategic" part in the growth of administrative and managerial employees. Managers in divisions were given considerable authority in a context of economic growth and the internationalization of markets. As strategic managements multiplied their managerial control systems to cope with corporate growth (between central headquarters and divisions), the intensity and scope of decision making broadened and multiplied within divisions. This change leads Melman to note that the ratio of administrative to production workers, which doubled between 1899 and 1947, doubled again in the postwar period: between 1947 and 1977 the ratio grew to 43 administrative employees for every 100 production employees (Melman 1983, p. 71). As the size of central administrative offices grew, so too did the administrative ratio within units.
Others confirm these conclusions. Researchers have conflicting hypotheses about the relationship between corporate size and administrative ratios but tend to agree about the relationship between corporate form-multiunit or multidivisional decentralized organization-and the growth of administrative, managerial ranks. Delehanty (1968, chaps. 3, 4) summarizes the research, arguing that certain corporate forms call for greater numbers of nonproduction employees and, conversely, that higher administrative ratios allow oligopolistic firms to handle possible expansion (Delehanty 1968, p. 100). In other words, the multilayered bureaucratic structure of management has enabled employers to increase profitability in a context of expansion and capital consolidation.
For the better part of the twentieth century, middle-level managers in decentralized bureaucratic structures have had a unique role in the firm. Not solely constrained by shop floor production politics, they possessed greater managerial latitude than the foreman of the nineteenth-century drive system of management. But neither were they constrained by top management. Rather, they had organizational room to judge how best to manage production and consent to production objectives.
Organization theorists and corporate observers must now determine whether this form of management, so characteristic of twentieth-century industry, will survive. The United States has entered a new era of capital accumulation, one in which previously stable markets are now uncertain, in which corporations cannot count on continued economic growth and prosperity. Both conditions were vital to the spread of the multidivisional, decentralized corporation. As corporations adopt new profitability strategies, reorganizing their "bases
of accumulation" (Henderson and Castells 1987), the semi-autonomous management apparatus may become part of the corporate past. Top managements are striving to gain more control over costs and operations and reduce the autonomy and discretion of different production divisions; in so doing they are centralizing historically decentralized corporate forms. Dismantling or, at the very least, restructuring the management hierarchy is a logical corollary, one that I explore in depth in this book.
A secondary organizational concern of this book is whether or not America's middle managers are the principle source of corporate size, rigidity, and lack of competitiveness, as many currently claim. This concern follows the tradition of Bowles, Gordon, and Weisskopf (1984, chap. 6), who ask a similar question about American workers. Using impressive quantitative measures, these authors argue that "the social costs of corporate power" more adequately explain declining productivity than the familiar claim that "labor's wage gains have outstripped productivity growth" (p. 35). Understanding the sources of America's competitive dilemma will take us a long way toward understanding the solutions to our current economic and organizational problems.[15]
Research in a Restructuring Corporation
These visible institutional and ideological developments indicate important changes in the work and authority relations of management within large U.S. corporations. As life in corporate America undergoes powerful transformations after decades of economic growth and dominance, we must identify and explain in greater depth the reorganization of management, as well as managers' responses to the organizational changes surrounding them. Should we assume that middle managers compliantly tend the aftershocks of restructuring in their daily management practices? Do they turn into efficient entrepreneurial managers who, when they have fulfilled their mission for the corporation, manage themselves out of jobs? Has the large corporation found the appropriate organizational responses to adapt to the absence of bureaucratic layers?
To answer these questions I conducted an in-depth case study of a large banking firm that began restructuring its operations and personnel in the early 1980s. American Security Bank's story contains important lessons about the rise and decline of U.S. economic enterprises and the consequences of this transformation for the structure and organization of middle management.[16] American Security Bank is a multidivisional financial services institution that represents perhaps the quintessential location of the postindustrial managerial or professional employee working in a large, paternalistic, white-collar firm. Renowned for its profitability and rapid growth, this California bank seemed an excellent place to study the impact of corporate restructuring on management. American Security's organizational past mirrored, to a significant degree, the organizational histories of major industrial concerns throughout the twentieth century (see Chandler 1962). Moreover, in the early 1980s American entered a phase of financial and organizational contraction and centralization shared by many other historically oligopolistic firms.
In 1985, midway through my research, American Security Bank was hit by profit losses of a staggering magnitude, a crisis that served to intensify the processes unfolding before me. But although American Security's crisis was severe, it did not negate the conditions that the bank shared with other restructuring corporations. The extreme corporate profitability crisis only hastened processes already set in motion several years earlier by a general profitability crisis. The causes of American Security Bank's struggle for survival in the 1980s were at once unique, rooted in the bank's particular business history, and representative, rooted in the same economic-industrial context and set of growth strategies as other large U.S. firms.
In 1985 and 1986, I conducted sixty in-depth, open-ended interviews with bank employees and used a survey to collect demographic and occupational data. I interviewed thirty-five middle managers and supervisors in three production sites in the bank (in the branch system, the computer development division, and the credit card center); ten management development personnel, including three employees who ran the management seminars ("trainers"); and fifteen middle managers in assorted other functional areas, including six working in loan centers. In 1987, I conducted follow-up interviews with five key managers to cross-check and update my understanding of the structural changes and managerial behaviors in American Security Bank.[17] Interviews took place at each individual's work site. Many interviewees took me on extensive tours of their offices, allowing me to observe the details of their production process and to speak with nonmanagerial employees about their job tasks.
I was an involved observer at two week-long management retraining seminars in 1985 and a noninvolved observer at two human resources staff meetings, each lasting between two and three hours.[18] Finally, I spent dozens of hours in the bank library, poring over documentary sources such as in-house management newsletters, management development train ing material, employee newspapers, annual reports, and numerous business and trade publications.
The middle managers who were the focus of this study worked in three major divisions of the bank. In all cases middle managers managed other managers or supervisors; they were located below divisional-level management, yet above other managers and supervisors in individual work sites. Responsible for coordinating the daily operations and personnel policies of the firm, these middle managers carried out directives formulated by the bank's top or "strategic" managers;those who determine corporate policies and direction. Thus, corresponding to Chandler's definition of operations middle managers (1962; see n. 12), I define middle managers as those within divisions, directly involved in planning and coordinating the production of services that are specific to their own units (see also Starbuck 1965, p. 512). Middle managers, in this conceptualization, do not have a formal, institutionalized role in determining investment or growth strategies; nevertheless, their actions can have a very decisive effect on the range of strategies available to top management.
The organization of this book is as follows: Chapter 2 provides the historical backdrop explaining why and how, in the 1980s, American Security Bank's top managers targeted middle managers as the agents and objects of corporate restructuring. This chapter documents how top, or strategic, management, pursuing an extensive agenda for growth and profitability for the better part of the twentieth century, developed a decentralized organizational apparatus by which the firm's middle level of managers could maximize expansion opportunities.
The decentralized bureaucracy, however, ultimately led to a crisis in accountability and control. In the dramatically changed market, technological, and regulatory environment of the late 1970s, top management of American Security Bank had to contract this organizational machinery by recentralizing and consolidating major parts of the bank's functions.
Much of that reorganization affected the bank's thousands of middle managers directly. Many of their units were reorganized, centralized, and automated. Not only were their own jobs ultimately in question but, in the initial stages of the reorganization effort, managers were singled out as the arbiters of organizational change within the multiple work sites throughout this massive corporation. Chapter 2 explores the dimensions of the new restructuring agenda for middle managers: the impact of corporate restructuring on different divisions in the corporation, the introduction of a strategy of coercive autonomy, and middle managers' new mission to increase productivity with fewer employees and to reduce the bank's personnel by managing out a new socially defined category of "poor performers."
Strategic management attempted to galvanize managers ideologically to the new corporate agenda by requiring all middle managers to attend a series of "retraining" seminars. Chapter 3 analyzes those seminars. The chapter looks at the social processes and pedagogical discourse used to teach managers a new corporate culture, which would allegedly realign their behavior with the changing competitive environment. Specifically, the new cultural platform criticized American Security's middle managers for their unproductive bureaucratic management styles and called for the implementation of new innovative and entrepreneurial management. As rule-following bureaucrats, middle managers were informed, they had blocked the profitability of the firm. But as leaders and facilitators following their managerial instincts and using new management techniques, they could take risks and assume responsibility for improving the competitive position of the bank.
In the seminars, middle managers rejected the new agenda of coercive autonomy and its implications for the micropolitics of management in everyday work sites. They responded negatively to the ways the new techniques would undermine them rather than enable them to maintain or gain the consent of the employees they managed. Although they did not disagree with the need for effective practices to set the corporation back on the track of profitability, their vision of how that could be achieved diverged from the vision of strategic management.
After analyzing middle managers' responses to the training seminars, I move on, in Chapters 4, 5, and 6, to analyze managers' actions in their everyday work practices. Using interview and observational data, I compare the impact of corporate restructuring on middle managerial job tasks and social relations in three major functions in the bank (branch banking, credit, and computer systems development). By considering variables such as the functional importance of the division in the restructuring firm, the status of each division's production process, and the degree of managerial autonomy, I identify the organizational changes that opened up or constrained different managerial responses to the corporate transformation. Chart 1 presents a schematic framework for explaining middle managers' actions in the context of restructuring. The analysis in Chapters 4 through 6 will conclude by filling in this schema with concrete descriptions of managers' positional opportunities and constraints. In other words, these chapters trace ways in which restructuring shaped and created different domains of managerial action.
By contrasting three different work sites, Chapters 4 through 6 debunk the notions that managers acted irrationally in their opposition to the new corporate agenda or that they simply acted as the agents of capital and executed the tenets of the new agenda as a weapon against the bank's employees. If they carried out the restructuring agenda as formulated by top management, middle managers confronted a significant dilemma: the purportedly meritocratic but in fact coercive management methods would strip them of their ability to maintain consent to the ongoing reproduction of their production areas. I argue that these managers did extensively use their managerial judgment or "instincts" to manage, but that they did so to ward off the draconian aspects of the new corporate agenda. In different ways, middle managers circumvented strategic management's demands, their respective
Chart 1.
Corporate Restructuring and Management Action
organizational latitude shaping their ability to reinterpret or reject them.
Middle managers managed according to a different sense of the corporate interest. Whereas strategic management advocated arbitrary management methods and a new corporate culture to achieve a quick turnaround of the bank, middle management perceived high costs in this quick-fix perspective. Middle managers' sense of what best served the corporate interest emphasized practices that could achieve a more gradual turnaround; their goal was to preserve the existing framework of consent, using that framework to achieve new goals and maintain long-term corporate viability.
Finally, in addition to delineating the structural differences between managers and the subsequent variation in managerial responses, Chapters 4 through 6 also point to the emergence of a new arrangement of production that depended on centralized organizational and technological control. Despite differences in the pace and degree of restructuring managerial autonomy, all of these production centers were moving toward centrally controlled forms of production that, in top management's ideal vision, would operate without intervening levels of managers. This shift represented strategic management's intention to control semi-autonomous tactical management decisions more closely. Thus I locate middle managers' responses within the transition from a decentralized to a centralized corporate form.
The final chapter moves away from the case study of American Security Bank to consider the larger agenda to restructure work processes, the organization of management, and corporations in the United States. Using the case study material and other data, I look at the convergence of three levels of change in American corporations: changes in production processes (both physical organization and employment patterns), changes in management, and changes in the structure of the corporation. Changes in the position of management are inseparable from changes in the position of workers in the United States; in turn, the fate of both these groups is bound up in that of the American corporation. Understanding this convergence will allow students of business, labor, and corporate organization to generalize about the future of work, management, and industrial relations in the United States.
