Where Credit Is Due:
Reorganizing Production in the Card Center
Strategic management's failure to invest in technology was grimly
apparent in the production areas of American Security Bank's credit card center. The card
center was located in an enormous urban building that was both unattractive and
uninspiring. It was divided into two functional parts, one devoted to handling all
merchant transactions and the other to handling individual cardholder transactions. In a
white-collar production setting, the center's different work units fielded customer and
merchant inquiries about accounts, approved card numbers and transaction amounts, handled
merchant and customer chargebacks, developed new credit products, and "batch
processed" all transaction paperwork.
As various managers guided me through their work areas, explaining the
organization of work flow and the larger production process of which their units were
part, I was profoundly struck by the contrast between popular images of automated,
postindustrial, information-based work environments and what lay before me. Work areas
throughout the center, although their individual functions were different, contained the
same rows of desks, all stacked with mountains of paper. Workers sat in enormous, noisy,
and distracting rooms surrounded by file cabinets and storage boxes. Not even simple
sound-absorbing partitions were used to divide workers from one another.
In only a few cases had computer terminals been introduced to retrieve
information. It was as though this production area were frozen in a period of
rationalization that more closely approximated Mills's (1951) paper-intensive and
factory-like office settings (the "enormous file") than any ideal vision of
information handling in a postindustrial economy. (See Howard  for a discussion of
American corporate management's vision of the computerized "brave new
When I first began my research, strategic management had just turned its
attention to the card center as a profit center. To be sure, the credit card division had
always been an important source of revenue (recall from Chapter 2 that, nationwide,
American Security had had a very successful credit card program for many years).
Historically, credit was one of the bank's "commodities"; but the new economic
and industrial conditions heightened its importance as a source of profit. Thus, as the
bank experienced simultaneous profit crises and struggles to maintain market share, the
credit card division took on new significance in the overall performance of the bank.
Gradually, these labor-intensive production sites were transformed by
computerized systems, which contained all cardholder, merchant, and bank information,
storing it electronically and making it readily accessible to those who had to retrieve,
report on, and summarize it. But the new systems provided more than easy access to
information: they also provided new means of centralized control. New technologies could
monitor workers better, using centralized telephone systems to audit phone calls in order
to evaluate service representatives' ability to solve problems. The new systems could time
calls, keep track of how long customers were on hold and how many hung up before being
answered, and measure the number and accuracy of the keystrokes made by those who entered
data for customer accounts.
Automating the production processes was one prong of strategic
management's effort to restructure the card center. In contrast to their policies toward
management in other divisions in the bank, strategic management brought a new level of
management to the card center. The new section heads were given carte blanche, as one of
the ten card center managers I interviewed described it to me, to rectify the enormous
organizational and management problems of the center. Their mission was thus quite
specifically to facilitate change. They were to rationalize the currently unautomated
production processes and to assist in ushering in new automated information management
systems and work stations to rationalize the diverse labor processes of the card center
and subject them to centralized forms of control.
One reason that the division head and members of strategic management
installed new management to design new work processes, instead of simply relying on
engineers, was that the engineering "experts" had met with significant
resistance from supervisors while trying to rationalize and reorganize their work areas.
Len Cordova, who worked as a section head on the merchant side of the card center,
explained supervisors' resistance to industrial engineers:
The staff [engineers] had to look to the line supervisors to teach
them everything. They couldn't really learn the process; they had their own timelines
restricting them. They [staff] had to have everything checked off by the line managers and
then the staff could only pass on their recommendations. And, on top of it, their
recommendations often weren't that great.
The specialists had failed to make an enduring dent in the
organization of the card center's labor processes. As outsiders, they had not gained the
support of line managers and made only a minimal impression with their recommendations. In
part, then, the installation of a new level of management was an attempt to gain
supervisors' trust and overcome their resistances to reorganizing different production
On their own, the line supervisors themselves had very little time to
"innovate," as Len put it. They were under tremendous pressure to begin
increasing productivity; the center was swarming with efficiency groups and external
consultants who were hired to evaluate the card center work and management processes. It
was in this context that a new level of middle management was put in place. New section
managers were to manage a "quick turnaround" of the center, to make sure new
systems would meet specific production demands. Divisional-level management made this
commitment in the belief that the new managers, located in work units on a quasi-permanent
basis, stood a greater chance of being integrated into the management structure and
therefore would possess greater legitimacy to act as agents for the larger restructuring
Thus the new level of middle management had a very explicit role in the
transition to a newly organized credit card division. Not only would they monitor
supervisors and workers under them and communicate between higher divisional management
and the line; they would actively seek ways to reorganize the labor process, both in its
current unautomated and its future automated versions. This mission lent them a
significant degree of autonomy with which to shape the course of a new productivity
regime. It especially gave them a basis on which to reject more coercive aspects of that
regime. Their rejection was strengthened significantly because the negative side of past
growth strategies-the total neglect of technology and organization in the
card center-limited strategic management's credibility in gaining managers'
consent to applying coercive norms.
Card Center Managers and Managing Change
Like other middle managers, managers in the card center were critical
of strategic management's role in shaping the current disarray of their division. They had
a very clear view of how the turnaround task before them was adversely affected by the
inadequate investment strategies of the past. But managers in the credit card unit had a
different position in the new corporate agenda. Recruited by strategic management to
participate in the overhaul of the center, these managers had an autonomy from which they
could set limits on certain demands emerging from the restructuring process. When card
center managers were pressured to raise the productivity bar and to use higher production
levels as a justification for managing out, they responded by wielding their discretion to
their own ends-to increase productivity within a different set of parameters.
Because they believed that productivity problems originated in labor-process conditions
rather than in workers themselves, they used their knowledge about the work process of
their units, past management practices, and strategic management's decision making to fend
off intense speedups.
When Ralph Holstein began managing the customer-inquiry-filing unit on
the cardholder side of the center, his manager recommended that Ralph push the supervisor
below him to manage out several file clerks in low-grade positions. Ralph's filing unit
created files, kept track of files, and retrieved them in response to customer inquiries
about credit card accounts. File-tracking was separate from the actual work of answering
phones to handle the inquiries; file clerks' work was set in motion by requests from
customer representatives. The area was extremely paper-intensive, and access to the files
was far from routinized.
When Ralph first took this managing assignment his employees could find
only 70 percent of the files they needed at any given time. To give a sense of the
proportion of this operation, in the three months before our interview, 140,000 files had
been created, all of which were kept in metal file cabinets and cardboard boxes. Because
of minimal organization in this unit, there was no system to indicate where a file had
gone once it was removed, and employees could not effectively track the file and ensure
its replacement. Several of the clerks in the unit had received low rankings and were
perceived as slow and inefficient, an impediment to intensified productivity goals.
In Ralph's perception, the chaos of the existing labor process imposed
insurmountable limitations on the productivity of the clerks. A high level of employee
anxiety worsened this chaos. Many of Ralph's employees were worried about the effects of
what he called the "aggressive more toward automation" on their jobs. He blamed
the way the unit had been managed in the past for much of this chaos. Employees had been
unwillingly subjected to the disorganized character of the card center, he argued; a
manager was justified in working to manage them up to higher productivity levels.
In his position of reorganizing the labor process without computerized
systems to handle the file documentation and retrieval electronically, Ralph's first major
project had been to systematize the filing procedures so that clerks would have ready
access to any given file or, if the file had been drawn, would know precisely where it
Ralph's innovation was at once a dramatic improvement with respect to
the existing system and startlingly simple with respect to organizational sophistication.
Under the new system, clerks replaced files with one-page forms on which the name and
account number of the file, the name of the clerk withdrawing it, and the date of
withdrawal would all be recorded. These forms thus provided information about the location
of the file; under the old system the whereabouts of a file had remained a mystery until
it was replaced.
The new system raised the accuracy of retrieval from 70 to 90 percent
and simultaneously increased the productivity of the clerks. Ralph was also generating
productivity statistics that had never before been maintained. These statistics were used
to manage up employees. He was gradually transferring all information on work flow and
output-information on numbers of inquiries, the types of files being pulled,
the number of files different departments were bringing in per day, week, and
month-to a small computer; tallies of the information would be made available
to employees. He called the old system, under which no one had up-to-date information on
production activities, a hit-or-miss system inadequate to the rapidly changing production
That managers use statistics on employee work activities to monitor,
control, and manage employees may seem a most obvious and even insidious truth to students
of the labor process. Typically, workplace observers consider primarily the negative
implications of such detailed monitoring procedures for workers. Under the conditions
described in this study, however, in which middle managers were challenged to raise
productivity levels and maintain some degree of consent to ongoing productivity objectives
in the context of restructuring, I would argue that managers used such statistics to set
limits on the degree to which workers could be pushed, from higher up in the corporation,
to achieve new productivity levels. Ralph was devising a system for ultimately managing up
the production employees over whom he held responsibility; but he maneuvered this system
in opposition to more extreme demands, from higher divisional-level management, for
increasing productivity and getting rid of employees who could not reach greatly increased
While Ralph turned his attention to innovating the existing organization
of work in the file unit, he simultaneously protected his own prerogative for managing his
employees. The lack of a viable way to measure productivity under the old file system
further strengthened Ralph's ability to generate new productivity statistics that
conformed to the changing labor process and the relevant constraints on productivity. He
simultaneously opposed demands from higher levels of the division for productivity and
Diane Timbers was a "master" at manipulating numbers and
variables to maintain control over her unit of customer service representatives. The
seventy representatives, whom she managed through five managers, spent their time plugged
into IBM PCs and headphones, answering questions about credit card accounts. A firm
believer in the idea that numbers enabled workers to define and participate in achieving
productivity goals, Diane's weapon of management was a massive statistical volume in which
she documented multiple bases of productivity. She had systematically generated numbers on
all aspects of staffing, such as number of full- and part-time employees, classified by
hours worked, productivity, grades, ranks, and salaries; customer inquiries, stratified by
credit products, type of credit inquiry, number of complaints, and marketing costs; and
productivity measures such as the number of incoming and outgoing telephone calls, their
length, and resolution time frames.
Diane had been brought in to do "systems enhancement": to find
better ways to organize this particular customer inquiry unit. Before Diane's arrival the
"reps" had worked two to a terminal. Now each rep had his or her own PC. (The
reps were predominantly, but not solely, women.) One of her pet projects was to help
design new screens for the inquiry process that would enable the reps to solve customer
The level of uncertainty in the work of these employees was staggering.
The rules and regulations pertaining to credit cards changed continually as new credit
products were introduced and chargeback time frames and procedures changed. Customer
service jobs had a six-month learning curve in which reps attended about ten hours of
training sessions a month to familiarize themselves with handling the 3,000 to 5,000 daily
Diane had hired two extra supervisors to juggle the demands of what she
described as a "fast-paced environment." In addition to managing the work flow,
supervisors were actively involved in handling calls that representatives could not
resolve. Thus Diane was plugging in staffing gaps, using supervisors to increase the
general productivity of the unit.
Despite the complex and increasing work load incurred as more
cardholders were brought into the bank's card program, divisional-level management made
several specific demands for higher productivity in Diane's unit. For example, one of the
objectives written into a recent PPCE was that Diane would manage an overall reduction in
the costs of the unit's phone calls and therefore in the amount of time it took her
representatives to resolve customer inquires. Ostensibly, that objective meant that she
and her supervisors would pressure their employees to speed up their telephone
transactions, with the ultimate goal of reducing the number of representatives needed to
staff the unit.
As it turned out, the costs of her unit's calls increased in that
period. It did so, however, because of the addition of a new phone system in the unit, a
fact that Diane was able to establish through detailed calculations of a variance
analysis. That system, an automatic call distributor, more efficiently and rapidly
forwarded phone calls to the numerous representatives. By factoring in the costs of the
new phone system, as well as giving the reasons for maintaining current staffing levels
(which she was able to justify with her stratified measures of incoming calls and types of
calls as a result of new credit products), Diane was able to justify the total telephone
costs incurred in the period. She used an elaborate set of equations because, in her
words, she refused to have her unit penalized for what she saw as an "arbitrary
intervention," wherein someone, somewhere higher in the division decided on a new
area of cost cutting.
In that particular case she used the numbers to argue on her own behalf
with her manager about what was and was not possible with regard to cutting both costs and
staff. More to the point, Diane used those production numbers to protect her unit against
the confusion surrounding the installation of new technology systems. Her statistical
manipulations allowed her to invalidate new demands by showing how her work area was
negatively affected by the new systems.
Diane viewed the new concept of managing out as similarly arbitrary. In
her view, employees who fell on the bottom 15 percent of the ranked curves performed their
jobs quite adequately. She also insisted that "managers want to manage up. It's in
our interests to get people to perform better. Managing out is only a solution if managing
up doesn't work."
Diane claimed that it was critical to set boundaries on what
higher-level management could squeeze from those production areas. Their attention was
only focused on profitability, without considering the negative and undermining
implications of heavy-handed approaches to achieving profitability. "Top management
now sees the card center as very profitable. But in terms of the care they're taking for
our long-run success in pushing through new programs it's like we're living hand-to-mouth.
If the unit can make profits top management wants us to make even more profits."
Sarah Fleischman saw the entire card center as completely out of
control, a state stemming from past neglect of automation and productivity standards. As a
section head on the merchant side of the center, Sarah managed six supervisors and through
them seventy indirect reports. Her unit processed chargebacks: whenever a cardholder or
cardholder's bank disputed a charge made by American Security's participating merchants,
the amount was charged as a debit to American's account until proper liability had been
established and American Security had been cleared of the charge. It is worth looking at
this particular unit in some detail, for it reveals the pressure of processing information
in an environment in which every second funds are unaccounted for is a drain on company
For the period during which a chargeback was unresolved, the bank was
liable for the figure under dispute and lost the additional interest that would accumulate
on that amount. In this extremely labor-intensive production process the bank's risk of
high and uncontrolled losses ran higher the longer it took to account for these debits.
The employees in Sarah's unit adjusted claims as soon as a customer
disputed the account. Their role was to document and investigate each claim meticulously.
They obtained both the draft of the account from "file builders" in another unit
and documentation from the cardholder about why the charge was disputed. The adjuster was
to consider all aspects of the dispute and make a decision about proper bank action. Any
number of factors could cause a customer to initiate the chargeback process. A
cardholder's name might appear on a "Warning Bulletin" listing individuals
prohibited from using their credit cards: if the merchant did not refer to the bulletin
but nonetheless accepted a customer's card, the cardholder's bank could challenge American
Security's charge. Or a merchant might claim they had billed a cardholder for an order
placed over the phone, although the cardholder denied placing the order.
Whatever the nature of the dispute, it was the responsibility of the
file adjuster to provide accurate data for settling the case, optimally in favor of
American Security, by removing the charge from the liability column. When Sarah entered
this position in early 1985, the unit had an enormous backlog of chargebacks. The rows of
adjusters' desks stacked high with photocopies of documentation at every stage of every
account under investigation were vivid testimony to the lack of effective measures for
both "capturing money" and "capturing data."
Sarah had been promoted to section head to facilitate this chargeback
unit's transition to an automated environment. She noted that in some locations, on the
cardholder side of the center, employees were able to bring up customer accounts handily
onto a terminal screen for quick responses to inquiries; on her side, however, terminals
and PCs had not yet been introduced. She claimed that "Mr. 'X' [the past CEO]
wouldn't approve a budget for investing in new technologies in the card center. He also
wouldn't go outside American Security Bank for software. It was a situation where things
were left alone and management didn't deal with these issues." When she took on her
large chargeback unit she found it very difficult to get it to move: "When I first
came people didn't know quite how to measure things. Managers hadn't known how to do
budgets or any kind of staff forecasting. They didn't have time to step back and ask how
can this be done better. I inherited a very messy situation."
By eliminating some duplication of cross-referencing procedures and by
instituting measures that enabled the chargeback unit to reduce the error ratio from 20 to
5 percent, she felt that she could move the unit beyond the enormous backlog of accounts
to be resolved.
Nevertheless, she had been given new quotas for increasing volume and
decreasing staff that were, in her view, "no good." In response to these
projections she wrote a staffing and planning forecast that was more realistically aligned
with the current capacities of the chargeback unit, factoring in new productivity
potentials resulting from the preliminary reorganization strategies she and her
supervisors had introduced.
Sarah's role as a representative for corporate change was enacted within
parameters she developed about how to negotiate the existing inadequacies of the labor
process with new pressures for productivity. Her philosophy was in distinct opposition to
the philosophy of "opaque management," in which managers cajole workers to do
something on the basis of individualistic concepts such as achieving one's personal
potential through stretching, rather than because of the stark facts of pressures for
corporate change. One manager liked it, she said,
Because I tell them [workers and managers] what's going on, what the
rationale is for what they're doing. I don't just say "do this," or try to hide
from them the political and economic pressures on our work. You need to explain or people
don't get what's going on. Downward communication is very important. In this situation
there's lots of political pressure, there are a lot of people leaning on us; it's
especially bad when the bank is experiencing these bad losses.
Like Diane and Ralph, Sarah summoned the expertise she had gathered in
her unit and managed her supervisors and workers within a different set of standards from
those proposed by divisional-level management. She simultaneously used her leverage to
manage divisional-level demands and to press for cooperation from those in the chargeback
unit. In this sense, frank and open management was a form of persuasion and manipulation
that served Sarah's role in maneuvering the unit toward higher productivity levels. She
gained some degree of legitimacy from her oppositional position to top management, which
she used to further her own aims in the production unit.
These managers undertook their mission with the belief that it was the
organization of the labor process, rather than individuals themselves, that was
responsible for productivity deficiencies. In reorganizing the labor process they worked
to manage people up to new productivity levels. However, there were important limits to
their view that the organization of the labor process alone was to blame for the lack of
productivity. Managers in the card center felt strongly that workers and supervisors had
to understand and cooperate in the demands for reorganization that were pressuring
everyone. As the branch managers attempted to get branch employees to participate in
increasing productivity, the card center managers tried to use their numbers to buttress
their position vis-Ã -vis workers as well as divisional-level management. Ralph, for
example, summarized and organized, in a central terminal, the productivity figures for his
supervisor's filing unit so that workers themselves could develop a baseline standard for
Diane's adamant posture on having comprehensive and accurate figures
with which to guide her unit to new productivity levels was reflected as well in her
belief that workers must take more responsibility for meeting higher goals in the unit.
For this reason, she posted productivity figures, for the unit as well as for individuals,
on a wall for all to see. She used her aggressive position vis-Ã -vis strategic
management to strengthen her latitude with her employees. Her open-office policy and her
ability to summon the data necessary to command her unit were weapons in winning the
cooperation of her supervisors and their employees. Diane's opinion of employees'
responsibility for their fate in the future of the card center reflected her unwillingness
to bear the full brunt of responsibility:
I post the standards daily for the reps to see. The reps want to know
what they are being measured against. Performance shouldn't be a mystery! The employees
here have to make the choice about whether or not they want to be managed up. We give them
that choice but they have to run with it. And frankness is the only way to deal with it,
that's how we can decide if the employee is ultimately good for the job or not. It may be
that there is a skills mismatch and that some kind of lateral mobility is the answer.
Those examples in which managers used computerized reports to accumulate
statistics on output and productivity run counter to claims that computers inevitably
deskill managers. In the card center, managers generated reports for divisional-level
management and their employees to protect their units and their autonomy in decision
making. Whereas numbers and reports stood as weapons for the expropriation of expertise
from branch managers, numbers and reports were weapons of autonomous management in the
Because of the different position held by the card center in the bank's
restructuring agenda, higher-level management was limited in its ability to push or coerce
those managers. Compared with its treatment of the branch system, strategic management had
taken a hands-off approach to card center production sites, giving hands-on authority to
managers to control and to initiate changes. Thus middle managers were given the authority
to make restructuring decisions within their production sites. In the branch system, on
the other hand, authority for restructuring decisions was external to production sites and
was held, not by middle-level production managers, but by area management groups and the
strategic-management-level policy team that was uniformly and by fiat organizing the
reduction of branches.
Finally, this hands-off approach gave card center middle managers more
room to protect themselves with their criticisms of strategic management for past
strategies-specifically, the failure to update and automate the labor- and
paper-intensive work processes. Strategic management recognized its own past policy
deficiencies and sought the cooperation of middle managers to transform this large and
potentially very profitable production unit. Under these conditions, middle managers'
arena of discretion was actually enlarged, whereas in SystemsGroup discretion was
circumscribed and in the branch system it was expropriated.
The new level of management in American Security Bank's credit card
center was ushering in the corporate restructuring processes, but in a gradual way, so as
to increase productivity within the constraints of existing labor process conditions. We
could conjecture that strategic management's ultimate vision of the card center was of a
work site that, once automated, would operate with far fewer supervisors and middle-level
managers. The new technological systems, with their potential for centralized control,
could ideally minimize the need for direct supervision and higher-level coordination of
production groups. In this sense these managers might, in the long run, be managing
themselves out of positions by reorganizing and preparing different work sites for new
technologies. Indeed, Len Cordova speculated that the section head level of management was
transitional: "They [section head managers] are there to speed up the conversion
process. They make sure the controls are in place as new processes are instituted. Middle
management may then be phased out."
At the same time, there may be limits to such an ideal picture, insofar
as it underestimates the role of middle managers in coordinating workers and supervisors
to use materials, machines, and time. When I asked Diane whether and how managers were
necessary in her case, where workers were plugged into centrally controlled terminals, she
responded, "The monitor may give numbers but numbers achievement depends on people
and coordination. Also, you can have all the data in the world but you need someone to
make sense of them. And I spend a lot of time on the floor. I have to be there to fight
By 1987, middle managers had acquired an even larger role in negotiating
between the ongoing productivity of work sites and new technological systems. Len Cordova
had by that time been promoted to managing four "cost centers" on the merchant
side of the center and was indirectly managing sixty-five employees. He described how
strategic management's attempts to catch up rapidly to state-of-the-art systems and
rectify decades of neglect had had a whole new set of unforeseen costs. Major systems
glitches had occurred. The inability of units to assimilate all aspects of the new
technologies had led to significant losses of electronically captured data, and thus to
real monetary losses, and there was much uncertainty about the best strategies for setting
the center on a more stable and routine automated track. The
possibility of eliminating managers seemed remote at that point. Although strategic
management may have viewed the new level of management as transitional, middle managers
seemed to have been thrust into an even more critical role in staying a long course of
Labor-process theorists may find nothing remarkable about the
conclusions drawn in the last three chapters. Middle managers deploy their discretion to
achieve certain corporate ends. They attempt to draw workers and other managers into
intensified efforts to increase productivity. Those claims may provide ample proof of a
one-sided view in which middle managers willfully execute restructuring, possessing a
predictable set of interests by which they manage, in tandem with top management, in the
coercive corporate interest.
Examining middle managers working within different production contexts
and facing different sets of constraints demonstrates how, in fact, middle managers'
actions were shaped by an alternative sense of the corporate interest. American Security's
managers contested the ways that strategic management's new corporate policies would make
workers and managers pay the costs of both past and present policies. Middle managers
refused to execute important facets of the new managerial agenda, such as ranking,
arbitrarily raising productivity bars, and obscuring the import of centralization and
contraction, tools that would coercively cut the numbers of employees in the firm and
alter a historically paternalistic set of employment policies.
Nor does the dispute over means constitute evidence of the irrationality
of middle managers, their self-interest in historically accumulated power, or their fear
of conflict, as many management theoreticians and consultants have been quick to claim. It
is, rather, evidence of a logical response to the constraints that different levels of
managers faced in the form of production politics and resources, for which no quick or
superficial turnaround solution exists. It is also evidence of a strong rationality,
insofar as middle managers perceived that their actions had the power, at the simplest
level, to keep operations running.
Managers rejected top management's particular definition of
entrepreneurial management-using their judgment to downsize the
firm-but they did use their judgment extensively to reshape their own
workplace. Whether innovating group work processes (as in the branch system), measurement
and evaluation (as in SystemsGroup), or the production process itself (as in the card
center), middle managers actively wielded their expertise in a set of oppositional
management practices, both to organize the consent and cooperation of employees in their
units to achieve long-term productivity objectives and to defend their units from the
coercive aspects of the new agenda.
A one-sided interpretation of middle management fails to consider the
autonomy and expertise lodged in the ranks of middle levels of managers and thus cannot
adequately comprehend the limitations of top management's control over middle managers.
Nor does it ask how managers organize production (specifically, within what constraints
middle managers must maneuver) or how managers organize cooperation and consent. This
study suggests that middle managers cannot be seen solely as agents of capital and top
management and that the terrain on which managers organize consent may become a terrain of
struggle within corporate management. It also suggests, contrary to the notion that
managers resist simply to protect their turf or to stave off any kind of change, that
managers undertake change, but it is not necessarily of the sort that top managers desire.
Further, managers may have substantial reasons for refusing to manage out their own
Middle managers' capacity to respond to the new agenda differed
according to "sectoral differentiation" (Baron and Bielby 1980), details of
which are summarized in Table 1. The branch sector was being dramatically transformed: as
production processes and the control over them were rationalized and externalized, the
domain of middle managers' responses was restricted to struggling within the branch to
organize existing resources and personnel. Because branch managers' control over ranking
processes had been centralized, the tool of ranking did not become an object of struggle
as it did in SystemsGroup. Branch managers' efforts were thus devoted almost exclusively
to organizing and mobilizing branch employees.
Card center managers similarly worked to reorganize and mobilize workers
to higher productivity. Card center
|Table 1. Summary of Management Restructuring
in Three Production
|Strategic importance of division
||Holding the line
|Status of middle management
||(-) Elimination of branch manager position. Removal of
operational, personnel, innovation management.
||(+/-) Standardizing and controlling decision-making process
of group systems managers.
||(+) New line of management inserted. Section heads given
greater authority (especially innovation and operational management).
|Status of production processes
||All levels of work in branch are being centralized; some
automation. Large cuts in branch system.
||Project/programming work not centralized, standardized. Wage
packages being contained.
||Production processes being automated, although not
|Sources of middle manager autonomy
||(-) Branch managers' knowledge. How to reorganize branch
workers to meet new constraints.
||(+/-) Critical function of research and development. Labor
market conditions, autonomy, skill.
||(+) Section heads possess superior knowledge of production
constraints and ability to generate and analyze numbers, production reports. Comparatively
|Forces of centralization/ rationalization
||Area management group. "Retail Action Team."
||Human resources group and organizational centralization.
|Domain of response
||Efforts focused on managing up, preserving branch; branch
managers lack ability to oppose criteria of divisional management (defensive).
||Efforts focused on protecting project managers' role in
managing project groups. Intensified vertical negotiation.
||Efforts focused on managing people up, but according to
criteria opposed to those of divisional-level management (offensive).
managers, however, resorted to offensive strategies, unlike the
defensive actions of branch managers; they protected their jurisdiction as managers and in
turn used their ability to maintain autonomous positions with respect to divisional-level
management as a weapon for eliciting cooperation from card center employees. These
managers controlled the productivity numbers and used them to forge an even more
autonomous vantage point for managing.
Part of that strategy revolved around one critical variable: discretion
over production-process innovation and production decisions had been moved from branch
managers' jurisdiction to area management, whereas it had been enlarged for card center
managers. Branch changes were imposed from outside the branch unit and were of a
comparatively unequivocal nature. In the card center, section managers dictated the course
of organizational change, acting on the autonomy of their new position and their knowledge
of production processes. The organizational space in which to defend autonomous management
practices was therefore different in these areas. Whereas branch managers' negotiations
were centered on their own work sites, card center managers' negotiations were vertical,
directed toward higher levels of management.
One more critical variable is needed to explain the ability to protect
autonomous management: the functional importance of the different areas. Strategic
management targeted the credit card center as an increasingly significant profit center,
whereas it targeted the branch system as a less significant source of bank profitability.
Profitability considerations per se did not affect group systems managers in SystemsGroup.
SystemsGroup's functional role in the restructured bank was, like that of the card center,
a critical one. But even in SystemsGroup-a research and development division
that in noncrisis conditions may have been immune to cost cutting, rationalization, and
centralization-the autonomy and decision-making processes of middle managers
themselves were targeted for greater control. For SystemsGroup managers the evaluation and
compensation process became the domain of struggle.
Like the card center managers, SystemsGroup managers had a degree of
leverage for organizing consent and cooperation, but they did not have a role in
reorganizing production, and they lacked detailed productivity figures to fend off top
management and elicit consent from below. Measurements of actual SystemsGroup output were
minimal compared with the measurable work processes of the card center. But the main
target in SystemsGroup was the total wage bill of the division, and ranking was a primary
mechanism for slowing down wage increases and eliminating allegedly superfluous workers.
We can best understand group systems managers' interests in reranking as a response to
being targeted as the agent for cutting the wage bill.
In part, managers' resistance was based on efficiency considerations.
They were under scrutiny themselves, and their ability to achieve new productivity quotas
depended on whether they would be capable of gaining consent to new objectives. Their
concerns for increasing productivity, however, were tempered by a set of considerations
about consent and about past and present conditions of the workplace that strategic
management would have preferred to ignore.
In this regard, middle managers' resistance to the coercive aspects of
the new agenda even benefited workers in the restructuring process. Some may want to
argue, in contrast, that the ways in which managers managed, documented in the foregoing
three chapters, simply evidence coercion and not protection of workers. Inducing workers
to throw their weight behind middle managers' objectives obviously involved some
degree of manipulation, a manipulation made all the more inequitable by the fact the
relationship between managers and the managed was fundamentally inegalitarian. But
managers' oppositional practices, and their effects on workers, had a decidedly more
complex character. The point is not that managers were, or even necessarily perceived
themselves as, the humane arbiters of corporate change. Rather, in defending their own
domain of expertise, to further their particular vision of what best served the corporate
interest (a vision that included a unique interpretation of the social relations of the
workplace), managers also defended workers from the more extreme aspects of strategic
management's productivity and downsizing demands.
Strategic management's vision of middle managers as the agents of their
own demise and of the downgrading of their employees neglected a simple and real fact:
these managers played a critical role in organizing other managers and workers to achieve
productivity objectives, and top management faced severe constraints in turning that
relationship on its head. Middle managers do not simply collect and process information up
and down the management hierarchy; nor are they a mechanical apparatus of control that
simply and mysteriously makes employees conform to rules and regulations.
My research thus challenges another orthodoxy about American middle
management: the notion that middle managers can be automated out of existence as their
"information processing" function is absorbed into computerized systems. They
play a legitimating role, combining technical and social relational expertise; it is they
who must absorb the contradictions of restructuring, and they deploy their unique
knowledge about specific production sites to do so.
Managers' resistance was not only pragmatic. It was political, in that
managers were angry about strategic management's handing them a set of tasks that could
not compensate for the real and fundamental problems of the firm. Their belief that
layoffs should be initiated (even knowing their own positions could be in peril); that top
management's failure to modernize the firm and invest in certain technologies had hurt the
firm's prospects for profitability; that strategic management was adopting Band-Aid
policies by forcing all managers to attend "corporate culture" training, were
all ingredients of an anti-strategic-management politics. In that politics, although
middle and strategic managements may share a vision of corporate objectives, significant
differences exist over the appropriate means for achieving these ends.
The specific content of coercive autonomy revolved around the attempt to
deploy managerial discretion to the goal of corporate downsizing and restructuring and a
new regime of intensified productivity and savings. Strategic management could order
managers to manage out as a form of disguised cutbacks, but the micro-level execution of
techniques to achieve cutbacks resisted precise specification or rationalization. Middle
managers consequently were exhorted to take more aggressive action, to use their
managerial judgment in an autonomous fashion. Nevertheless, as we have seen, the exercise
of judgment, innovation, and entrepreneurial behavior were subjected to strict
In proffering the strategy of coercive autonomy, strategic management
was proposing a new solution to a historically variable problem: managing management, or
managing the domain of action that rests between the firm's need for centralized control
(necessary because of increased size and complexity) and its need to extend discretion
(necessary because of the imperative to delegate authority) (Bendix 1956, p. 336). Under
the particular conditions of profit squeeze, contraction, and restructuring, top
management both scrutinized and exploited discretion in a historically unprecedented way.
But discretion is not an autonomous capacity that workers or managers
carry around with them to exercise uniformly in any production context. Rather, discretion
is shaped and developed within specific work contexts; it is valuable because it is
developed as a "way of knowing" over time. Thus discretion cannot be codified.
Furthermore, production processes and relations at the lower levels of the firm cannot be
arbitrarily and abstractly manipulated without regard to prior organizational practices.
In American Security Bank, middle managers toiled not merely to preserve traditional
practices but to build on established practices to create the conditions for a renewed
corporation. This is certainly one dimension of the corporate interest that remains
In the corporate agendas that emerged in the 1970s and the 1980s,
corporate leaders would ideally use middle managers to transform the employment and
production structures of contemporary American industry. In the current international
context of competition and contraction, however, many of the real solutions to
profitability rest in more fundamental and enduring restructuring policies. In an
important way, strategic managements are facing the consequences of decades of specific
Whether or not top managers will accept the responsibility for these
consequences remains open. American Security's strategic managers attempted to
decentralize and obscure the responsibility for remedying one of the major problems of the
bank. But middle managers' criticism of strategic management ultimately forced top
management to adopt more direct, visible means for downsizing and cutting back. Strategic
management's failure to gain managers' compliance to absorb the costs of restructuring was
evidenced in the progression of events over 1986 and early 1987.
By 1986 there had been little significant reduction in the ranks of
American Security Bank's employees. Reductions proceeded very slowly; reports indicated
that only 8,000 employees left the bank over a fourâ“five-year period as a
result of the combined forces of redeployment, normal attrition rates, the sale of company
assets, and retirement. Much speculation circulated about strategic management's failure
to scale down American's operations dramatically. Some commentators even suggested that
Wedgewood was constitutionally incapable of taking deep cuts in the corporation.
In fact, Wedgewood attempted something quite bold by banking on the
thousands of managers below him to get rid of allegedly superfluous employees. Wedgewood
and his top committee threw their weight behind the "managing up or out"
strategy, behind culturally reforming the managerial style to be more productive and
Those broad reform efforts were overshadowed by the bank's mounting
loan losses. Strategic management was forced to bolster American Security's loan loss
reserves, thus lessening profits. Even the sale of properties and entire subsidiaries to
reduce the effect of profit loss through one-time capital gains failed to halt declining
American Security's situation was further complicated when the Federal
Reserve Board and the Comptroller of the Currency stepped up their intervention in
American's affairs. As a result of pressure from federal
agencies, American Security was unable to use lending as a growth tool. The regulators
refused to allow American Security Bank to expand loans on its equity base, ordering
strategic management instead to redirect capital into building the equity base and loan
loss reserves to a higher level, protecting the bank and bank depositors against
Even more significant, the Comptroller pressured American Security Bank
to reclassify many more loans as "nonperforming," resulting in increasing loan
write-offs. Spurred by earlier bank collapses, federal authorities targeted American
Security early on as potentially troubled. Its basic core of deposits and good loans were
viewed as solid, but the breadth of American Security's financial influence meant that all
authorities were on alert for damaging economic effects of the loan losses.
Finally, after months of public and private skepticism about the quality
of American's management, the board of directors came under intense pressure to make a
change in strategic management, whether the effect was symbolic or real. Wedgewood left
the bank in the mid-1980s.
After his departure, strategic management was forced to announce that
they would quickly undertake widespread layoffs of up to 5,000 employees. Regional
newspapers carried front-page headlines about the future layoffs, and less than a year
later, strategic management reported that they had in fact exceeded the originally
anticipated reductions. They had aimed, in that one-year period, to cut staff by 5,000 and
had eliminated over 6,000.
There is evidence, although unofficial, that even here American
Security's strategic management did not directly cut thousands of workers from its
payroll. Projections of future cuts notwithstanding, actual large layoffs apparently never
materialized. According to the banking correspondent for the regional newspaper, much of
the attrition at American Security Bank resulted from the combined effects of the fear of
layoffs and the active promotion by the bank of a severance package. Significant numbers
of employees had been driven to take advantage of the package rather than wait for notice
that their position would be eliminated.
Managers' resistance to managing out did not cause this eventual
outcome. In other words, just as middle managers' practices cannot be blamed for American
Security Bank's decline in the early 1980s (despite strategic management's attempts to
scapegoat middle management as the major impediment to productivity and competitiveness),
neither can their responses to the corporate restructuring processes be blamed for the
more recent dramatic events of the bank: asset sales, vast scaleback of its operations,
large profit losses. Their reactions did, however, have an important constraining effect
on the domain of top management action. By refusing to accept responsibility for what they
perceived as an unjust and inviable agenda, American Security's middle managers eventually
forced strategic management to take greater and more direct responsibility for the painful
task of restructuring its own labor force.