In a post-career world modern managers must quickstep from one job to another. But it is not just the individual who has cause for concern over the current reformatting of work, says Simon Caulkin.
Picture an industry which for as long as anyone can remember has been a byword for caution, stability and security. Now imagine the same staid industry convulsed with multidimensional change - regulatory, technological, new products, new entrants, new delivery channels - which utterly destabilizes not only its basis of competition but the entire value set that its managers have lived by. Keywords such as 'solidity' and 'endurance' have bewilderingly mutated into 'flexibility', 'responsiveness' and the ubiquitous 'change'. Suddenly managers must know, intimately, who their customers are and what they want so that they can devise products 'to delight them' - they've never even met a customer. The managers who are still around, that is. 'Every company that I'm involved with has plans to offload 40 or 50% of its people,' notes the senior change-management consultant at a big international consultancy. Many of them are middle and senior managers.
It gets worse. 'Let's face it, any industry which has stayed the same for 20 or 30 years isn't stable, it's moribund,' elaborates the same consultant. 'Most of these managers just aren't very good. They may never work again.' But don't think the prognosis is any more promising for survivors. They have few role models for the fluid behaviours and open-ended relationships demanded of them. So their panicking employers are beginning to draft in managers from other industries - from manufacturing, for instance - who know what re-engineering, delayering, downsizing, teamworking and Total Quality Management mean, because they have been through it already.
Welcome to the insurance industry. And welcome to local government, the National Health Service and the mandarinate itself, the Treasury. Welcome, indeed, to the nightmare of an entire generation of 45-plus middle-class middle managers who woke up one morning to find that the contract they thought they had signed up to - steady employment with regular promotions in a big organisation, the contract which guaranteed their identity and status - had been torn up overnight. For a lucky few, the unilateral ending of the old deal has been an unexpected liberation from corporate drudgery. At the other end of the scale, there are those whose age and lack of qualifications will make it hard to find employment again - of any sort. In between is a mass of disoriented managers who find themselves wandering in a looking-glass world where all the old landmarks have gone and none of the old loyalties count for anything. Comments Robin Linnecar, partner at KPMG Career Consultancy Services: 'There's no such thing as a career path any more. It's crazy paving - and you have to lay it yourself.'
Downsized, delayered, restructured, re-engineered, managers in every industry and all over the public sector all at once are discovering what it's like to be subject to discontinuous job changes, erratic earning patterns and difficult returns to employment - in short, what it has always been like to be a working woman or a blue-collar employee. It's bitter medicine. 'The pragmatist and activist supreme no longer has the means to act out his identity,' note Professor Peter Herriot and Carole Pemberton, researchers at Sundridge Park, who are publishing a book on the subject this year. 'This is the exact opposite of empowerment. In effect, managers have been proletarianised.' Not surprisingly, beneath the enthusiastic whitewash of the human resources specialists ('empowerment', 'teamwork', 'alignment') dysfunctionalities abound. If they were people, a number of leading organisations would be institutionalised. Herriot and Pemberton warn that many chief executives, usually happier communicating with investors than their own staff, are operating in increasing isolation from reality: while they savour plaudits from shareholders for the hard-nosed heroics that have kept the company afloat through recession, they are sitting atop a seething heap of managerial fear and loathing which threatens to nullify all their efforts at boosting productivity. 'There's a state of alarm in most organisations,' confirms Mike Haffenden, lately human resources director at Hewlett-Packard, now orchestrator of a Careers Research Forum for a consortium of 26 concerned companies. 'Ten years ago, there was still the prospect of an upwardly moving career. Now there's not only no career, there's no immediate job security either - oh, and by the way, here are your extra responsibilities in the meantime.' Not surprisingly, he finds managers unhealthily competing to arrive at the office first, stay later - and do nothing to call attention to themselves by speaking out.
As this suggests, it would be wrong to assume that the crisis is solely one of individual career paths. The ramifications of the current reformatting of work go much wider, affecting the health of the corporation, the competitiveness of the UK economy and the integrity of the political system as a whole. Even Chancellor Kenneth Clarke has dwelled uneasily in recent speeches on the growing discrepancy between the long-term nature of the middle-class's liabilities and its increasingly short-term job prospects. 'No individual will see any advantage in a flexible labour market unless he or she sees how career prospects and life-cycle finances can be enhanced by it,' he admitted in the Mais lecture last year.
How have companies - and managers - arrived at this pass? The key to the transformation lies in the cost-cutting ethos that dominated big corporations on both sides of the Atlantic in the 1980s. First in manufacturing, then in financial and other services, loss of competitiveness and confidence led to the adoption of successive waves of management initiatives that, whatever their avowed purpose, in practice had just one outcome: head-count reduction. Swathes of middle managers lost their jobs, and with them their careers, as organisations were delayered and flattened, and for traumatised survivors the task was inflicting more of the same. In big organisations the process became grimly known as 'bohica': 'bend over, here it comes again.' For corporations, self-flagellation is indeed the modern Anglo-American vice. 'Anglo-Saxon managers are world champions at improving performance by cost-cutting,' points out C K Prahalad, author with Gary Hamel of Competing for the Future. 'We have produced a generation of "denominator" managers who only know how to increase profits by hacking at the asset base, not by growing the top line.' In both the US and UK the cost-cutting emphasis was certainly reinforced by the operation of financial markets, either as a cause (the Heriot/Pemberton line) or as an entirely logical effect (Hamel/Prahalad). Either way, the road leads to the same sterile destination. 'There's only a finite amount you can cut, and all the low-hanging fruit has been picked,' says Prahalad. 'Corporations are certainly thinner now. The trouble is, many of them are becoming anorexic.' Unfortunately, cost-cutting isn't enough to ensure survival. Only innovation and growth can do that. Now that they are trying to kick the slimming habit, however, companies are discovering the destructive side-effects that the rewriting of the careers contract has wrought. The air is thick with chickens flapping home to roost. 'The current rhetoric alleges that the right people are in place "and ready for lift-off". This is nonsense. The wrong people are in place, and what they are ready for is a holiday,' is the assessment of Herriot and Pemberton. For the switch of corporate emphasis to innovation and creativity makes three things become crystal clear. The first is that management for growth requires qualitatively different employment relations from management for asset ratios. The second is that having destroyed the old career contract, most companies currently have no basis for the creation of that relationship. The third is that they need to construct a new one, fast.
Management for innovation requires more from employees than a reluctant presence. Innovation requires both employee and employer to 'go the extra mile' to deliver something beyond the letter of the employment contract: initiative, commitment and willingness to take risks on the part of the employee, trust, support and tolerance of mistakes from the employer. 'How can an enterprise build capabilities, forge empowered teams, develop a deep understanding of customers, and - most important - create a sense of community and common purpose unless it has a relationship with its employees based on mutual trust and caring?' asked Robert Waterman in a recent article in Harvard Business Review. Sums up KPMG's Linnecar: companies 'still need the hearts and minds of the people who work for them' - indeed perhaps more than ever before.
Unfortunately, hearts and minds are just what most organisations have ignored. Some companies just sacked too many people. One clearing bank downsized its IT department - and then had to hire back the sacked managers at consultancy rates when it couldn't cope with the upturn. Even Marks & Spencer suffered a hiccup, say observers, when it took out the experience of a layer of headquarters management a few years back. More insidiously, although the corporate fitness regime of the 1980s broke no law, it scuppered the psychological contract on which the whole idea of career rests.
To be sure, the old career deal had outlived its time. From the corporation's viewpoint, massed phalanxes of permanent managers expecting predictable career moves and steadily rising pay no longer mapped easily on to its needs for variable amounts of work to be done 'just-in-time', the shift from continuous tasks to projects, and a structure with no hierarchy to move up in. ('In our delayered structures you'll be lucky to get a promotion every 10 years,' says one banker. 'That carrot has gone. We have to invent a new one.') On the other side the old idea of career entailed surrender of responsibility and dependence on a paternalistic employer (the word 'spoon-feeding' comes to mind) which looks out of place today.
Yet asymmetrical as it was, the old deal at least implied that both parties were agents, and that they had reciprocal responsibilities. This was the implicit, psychological understanding that was unilaterally abrogated by the restructurings of the 1980s; it is the consequence of this abrogation which companies are now scrambling to undo with offerings such as teamwork and empowerment, more ambitiously with the concept of 'employability' - the promise, as yet more honoured in the breach, of personal development for future employment prospects in return for commitment to the project as long as it lasts. 'The old deal was a parent-child relationship,' says Steven Taylor of consultancy Kinsley Lord. 'The new deal is adult to adult, with the individual taking responsibility for his or her own development, and that requires different behaviour on both sides. That's the transition that companies are wrestling with.' That the transition is proving difficult is easy to understand. Companies which breathed a sigh of relief at having managed their downsizing without overt mishap are now struggling with the realisation that the survivors are the real problem. Post-redundancy surveys show that, without exception, managers at all levels below the very top identify with their 'let go' colleagues and fear that they will suffer the same fate. 'When you sack 50% of your staff, the concept of employability provokes hoots of derision among the rest,' says an insurance company manager. Prahalad calls it the 'Pharaoh's tomb' syndrome: how can you expect people to go the extra mile when they know they will be taken out and executed when the pyramid is finished? 'Managers have been mugged once; they are not inclined to let themselves be conned again,' says Herriot. Feelings of resentment are exacerbated by daily revelations of the largesse that complacent directors have been awarding themselves in pay rises, bonuses and 'incentive' share options which, it transpires, come pleasantly unencumbered by performance targets. Very few top managers have made even a pretence of sharing the pain. Kinsley Lord's Taylor confirms that levels of cynicism - and anger - are running high. 'Company speak with forked tongue: it says that people are its most important assets, but its actions indicate that they are the most expendable.' The upshot of this situation - the old deal gone, with nothing in its place - is that a frightening discrepancy has opened up between rhetoric and reality. Below the chief executive and his cheerleading human resources department, a number of companies resemble nothing so much as buildings blasted by a neutron bomb. The processes and structures are all there, but no human life to make them productive. These collapsed stars litter the corporate firmament, but they may be most densely congregated in the City, where a report earlier this year argued that the financial centre was in danger of losing its European pre-eminence unless its newly re-engineered financial houses found something to replace the shattered career structure as a means of energising its footloose and cynical knowledge workers. 'You want loyalty? Get a dog,' one bond dealer reportedly snarled as he skipped from one high-status job to another after a matter of weeks. The report emphasised that no fewer than one-quarter of all City employees were considering changing jobs - often in teams, leveraging the effect on the institution. The potential for disruption, concluded the report, was huge. As the City example shows, as well as the individual and company aspect there are serious systems implications in the collapse of traditional career structures. Consider first the near certainty (as surveys show) that companies will continue to reduce their cadre of permanent, full-time career managers. Now ask yourself what the prospect is that they will devote training and development efforts to those managers who are not part of the core. Not very likely? You're damn right.
In a thoughtful and provocative speech for the Careers Research Advisory Council last year, CBI director general Howard Davies offered this analysis of the situation. Driven by the need for corporate survival, he argued, the labour market will continue to become more flexible. But there is a downside for individuals and the economy as a whole, since short job tenure is correlated with less training, which in turn is correlated with a less competitive economy. There is a further tension between employers who may want to train fewer employees and then in company-specific techniques, and employees who for the purposes of employability want the broadest possible learning. If this tension is not resolved, the result will be lower-than-optimal training and skills acquisition. 'Flexibility' is usually a euphemism for the ability to get rid of people. But it works both ways. 'If corporations define core competencies too narrowly and assume they can fish in a pool replenished by others, they may find it empty just when markets are growing.' In that case there would be a market failure of training which enlightened employers would be unable to stave off.Without the old career, how can the individual's need for development and identity be matched with the needs of the corporation, the economy and society as a whole? Undeniably, the prize - the age-old promise of filling the gulf between the potential and actual performance of people at work - is huge. An Observer/Gallup questionnaire published last autumn revealing high levels of management stress and powerlessness also showed intense individual involvement with community causes ranging from politics to local health authorities - a salutary reminder, observes Taylor, of the gap between private and working productivity, empowerment and its opposite. For Prahalad, the 'new contract' is precisely about unlocking the institutional impediments to empowerment which exist on different levels in most companies. 'There's enormous potential in organisations if we can get organisations to allow it to happen and individuals to want it to happen. We need to create a strategic architecture in which everyone can contribute.' Herriot and Pemberton believe that the way forward lies through rebuilding some of the links which were broken in the 1980s through what they call 'explicit contracting'. Explicit contracts would not be a return to the paternalistic old deal but enshrine the recognition that both individuals and organisations have different kinds of career needs which can be met by a flexible contract offer. 'Part-time', 'project' and 'core' contracts would embody these differences. Unlike the present imposed contract based on ownership ('human capital'), all these contracts have a psychological element, in that they go beyond what is written on paper. They assume a relationship in which both sides are dependent on the other, have legitimate interests to match and negotiate, and involve reciprocal promises. Contracting restores agency and dignity to the individual, argue Herriot and Pemberton, and at the same time gives the organisation a basis for both its cost-control (in part-time and project contracts) and innovation needs (in core contracts which require commitment to learning and development for organisational change in return for some security and 'employability').
Courtesy of a few forward-thinking companies (concentrated, significantly, in industries where competition is hottest) we already know a bit about what careers based on such novel contracts might look like. Take Rover. At the car group, some former headquarters middle managers now work on the production line. Others work in or with the 'extended enterprise' - dealers or suppliers. A few work with the community. Still others are moving abroad in one capacity or another as the group reduces its dependence on the UK.
All these managers have accepted Rover's explicit, psychological contract: no compulsory redundancies in return for personal mobility and the willingness to learn new skills and apply them wherever needed. 'We try to create a process where individual and business development can be looked at together,' says Rover personnel director David Bower. 'No company can give unconditional employment guarantees, but we believe that this (learning contract) lies at the heart of developing success, and in that case the question of compulsory redundancies doesn't arise.'
As for careers, in a delayered company in which there are few jobs consisting solely of managing other people and which is increasingly organised on process lines, success is no longer defined as moving through a bureaucratic grading structure (it doesn't exist) but by seeking out the best projects and products to work on. 'The multifunctional nature and broad base of the teams means that people are exposed to other disciplines and the understanding of their role and possibilities has broadened,' says Bower.
Consider also Manpower, another interesting yardstick of career change. Manpower used to be a temporary agency supplying a commodity, consisting overwhelmingly of students and casuals. Now the fast-growing employment-services company is overwhelmingly the long-term employer of short-assignment career professionals. As the proportion of core employees in other companies shrinks, Manpower's grows. On the demand side, instead of back-office clerks and labourers, it finds itself providing customer-care centres or whole production departments. In one sense the company is a broker, matching the flexing needs of employers with the growing cadre of professionals who accept that employment now comes in short bursts, not a steady stream. But there is a crucial extra element.
'Part of our responsibility and skill is assigning people to jobs which broaden their range of skills,' says Keith Faulkner, general manager for corporate support. 'We are often asked how our workers can deliver the quality that, say, Rover workers do. The answer is, in exactly the same way that Rover does: we provide the development and opportunities and motivation that makes people want to work for us.' As an accredited Investor in People, Manpower commits itself to training all employees, including part-time ones. It is the advance guard of the emerging work paradox: in a post-job world, the only viable long-term career is to be a temp.
There are a few success stories in other industries, although they are often cases of salvaging something from the wreckage - firms which have traded an orderly run-down of plants or departments against intensive training and learning programmes for employability, for example. Increasingly, however, the winners in any industry will be companies such as Rover and Manpower, which have faced up to the reality that the new conditions need a new deal, properly negotiated, with obligations and rights on both sides. 'The prize,' says Steven Taylor, 'is doing things faster, better and cheaper. If you don't get it right, someone else will steal your best employees. It's about getting there first. By definition, if you don't, someone else will.'
Simon Caulkin edits the Management page of the Observer.
EXPECTED UK EMPLOYMENT CHANGES
More (%) Same (%) Less (%) n/k(%)
Employees overall 26 24 47 2
Women 25 43 23 8
Men 14 41 37 8
Full-time staff 17 28 49 5
Part-time staff 40 43 10 7
Contract staff 35 41 11 12
Temporary staff 37 41 16 7
Older people (50+) 14 50 32 5
Source: IPD survey of companies' employment intentions for next 12 months
EUROPE'S CHANGING WORK PATTERNS *
% of companies in France Germany N'lands Spain UK
Increased 27 49 49 15 39
Decreased 5 6 2 5 8
Not used 12 2 9 43 8
Increased 28 24 40 29 39
Decreased 21 13 9 11 19
Not used 10 3 6 19 5
Increased 32 47 20 29 29
Decreased 19 12 20 8 6
Not used 5 5 0 11 34
Increased 1 3 2 0 9
Decreased 1 6 1 0 7
Not used 74 67 - 79 69
* 1989-1992 Source: Cranfield School of Management survey
WAYS OF WORKING: current company practice
Type of employment % of companies
Full-time work 100
Part-time work 94
Job share 65
Temporary work 93
Seasonal work 58
Annualised hours 29
Shift work 93
Fixed-term contract for individuals 76
Contract staff/ suppliers 86
Tele work 24
Stand-by/Supply employees 38
Use of external agencies/ consultants 91
Source: IPD survey, 1994.