UK: HELLER ON MANAGEMENT - DEVELOPING THE LIGHTER TOUCH. - The long-running signalmen's dispute has highlighted the follies of interventionist government and intransigent management. Robert Heller outlines the elements needed for Top Management Quality.

Last Updated: 31 Aug 2010

The long-running signalmen's dispute has highlighted the follies of interventionist government and intransigent management. Robert Heller outlines the elements needed for Top Management Quality.

No economic Jeremiah could miss the apparent signal sent out by the signalmen's strikes.

In spite of all the Thatcherite attacks on trades union privileges and power, here was a small group of unionists holding the nation to ransom - almost as if the national miracle in industrial relations had never taken place. The truth, of course, is that it has - but not for the reasons believed by the signalmen's critics.

The manufacturing workforce has been contracting all over the world, giving way to non-unionised services and self-employment, in the face of long-standing and irresistible forces - new technology, modern methods of manufacture and management, new sources of competition, changing patterns of consumption and investment.

Neanderthal unions might have tried to resist the tide, but it would have swept over them regardless. The strikes which disfigured Britain's economic record (and image),weren't the cause of the national relative decline in manufacturing; the proof being that the decline continued inexorably during and after the Thatcher years. The real failure lay in TMQ - top management quality: the strike record was a stain on managerial as well as union performance.

This isn't, naturally, an easy pill for managers to swallow. For years British managers have hidden behind statements such as 'Without question, non-competitive labour costs represent the single biggest disadvantage we must overcome'. However, those words came not from a Briton, but an American: Roger B Smith, the most disastrous chief executive in the long history of General Motors. He was speaking at the start of a decade in which GM poured billions of dollars into advanced and largely misconceived automation projects; it grievously neglected the self-financing advances in productivity which Smith's Japanese competitors were winning by managing more effectively.

One observer noted that 'There is nothing wrong with American labour, but there is something seriously wrong with American management'. Substitute British for American, and bear in mind the dictum of W Edwards Deming (that 85% of all failures of productivity lie at managements' door), and you have a picture of the reality described in this quotation (from Thomas A Kochan and Robert McKersie): 'Competitive strategies that stress low costs and low wages produce high levels of labour-management conflict, reinforce low trust, and inhibit innovation and improvement of quality.' Look no further for an explanation of the signal box impasse, whose roots obviously predate Railtrack and Robert Horton. Not that the latter are blameless. A J Liebling, the US reporter, noted long ago that there are always two sides to any strike, that Railtrack's top management might have been deliberately demonstrating how right Liebling was. The ignorance about the strikers' pay shown by Horton was as much a throw-back to the bad old days as the rolling sons-of-toil diapason of Jimmy Knapp.

The only excuse for Railtrack's mishandling of the dispute is the interventionist government looming over its shoulder. That intervention, too, is a throwback. Staying out of industrial relations was a shining achievement of the early Thatcher years. It actually tipped the balance of power towards the employers, since intervention aimed at achieving a compromise settlement. But free bargaining is an essential element in free markets, The corollary to the Kochan-McKersie quotation is: 'Competitive strategies that stress value added (eg, enhanced quality) and/or product innovation require high levels of motivation, commitment and trust in employment relations'. Where poor TMQ exists, both sides of that equation are defective. If management has a strategy, the targets are likely to be financial rather than value-driven or customer-oriented: and the strategy is liable to be imposed on a barely trusted workforce whose motivation and commitment are left to look after themselves.

In those circumstances, the strategy, however inspired, can hardly work. The lighter touch may mean self-managed work teams, TQM, or some other popular nostrum of the 1990s. They all involve these elements: carefully controlled numbers; good, progressive pay; good jobs; excellent training; promotion by assessed merit; continuous motivation programmes; constant communication; highly accessible management; social equality; growth and constant change in products and processes. That list was published in Management Today over a decade ago, in explaining successful Japanese man-management in Britain. What can be said of TMQ in the many companies where these commonsense essentials are still missing?

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