Can Business Beat Bureaucracy?

During the past twenty years, in a profound shift, the leaders of large businesses have turned against the models of bureaucracy that long served as corporate ideals. In rhetoric and practice, managers previously focused on establishing clear lines of authority and accountability. Now they often disparage older hierarchical forms of organization; James Houghton, chairman of Corning Glass, goes so far as to say that "the age of the hierarchy is over." Instead, the new language of management increasingly celebrates involvement, creativity, individual autonomy, participation, even "empowering" employees to use their own initiative.

For those who value participation and human development -- indeed, for all those who care about the extension of democratic ideals in the world of work -- this change in corporate thinking is a startling evolution. For two centuries the dream of worker involvement in management has been persistent but almost entirely futile. From Robert Owen's factories to the communes of the 1960s, reformers have sought to create workplaces with greater involvement, equality, and community. But few have had even temporary success, none in the mainstream economy.

Instead, steadily and inexorably, large-scale bureaucracy expanded into every sphere of human life, driving out or dominating familial or communal forms of organization. And the model of organization that prevailed in government and business alike seemed epitomized by the stopwatch-wielding Scientific Managers of Charlie Chaplin's Modern Times.

Social theorists and popular writers have lamented the trend, decrying the soul-deadening routine of bureaucratic work and raising alarms about the world being lost. Until recently, however, the critics of bureaucracy were rarely found in executive positions. The novelty now is that leaders of large organizations see themselves in the vanguard, attempting to create "post-bureaucratic" organizations based on teamwork and collegiality. And rather than viewing these alternatives as jeopardizing productivity, they see them as a way to make their corporations perform better.

This change has given rise to both new hopes and new discomforts. Those who have traditionally opposed big business in the name of participation suddenly find their old opponents insisting that now they are allies. Years ago, before accommodating themselves to the new industrial regime, many unions fought against the efforts to standardize and "deskill" the work performed by their members. Now the same unions are bewildered by managerial efforts to broaden skills and to demand more active involvement by workers.

The Debate
Are these changes real, or is the current ferment in business merely a new style of rhetoric? Is employee participation in the workplace actually increasing? If a new, "post-bureaucratic" form of work is genuinely emerging, is it robust and effective enough to become the successor to bureaucracy? These are the great questions that, in one way or another, much recent writing about the American corporation has been trying to answer.

In the past few years, optimism about change and enthusiasm for it have predominated among leading business writers, such as Tom Peters, whose new book Beyond Hierarchy is due in February, and who earlier wrote, with Robert Waterman, the best-selling In Search of Excellence; Rosabeth Moss Kanter, author of When Giants Learn to Dance and currently editor of the Harvard Business Review; and Alvin Toffler, the futurist widely known for Future Shock. Offering an attractive synthesis of tough- and tender-minded-ness, these observers and many others have argued that in a modern economy increased participation and increased productivity go hand in hand. "Managers of the world," they say, "free your workers from the shackles of hierarchy, and your business shall prosper."

The skeptics are, for the moment, more muted, but their views are nonetheless important. Some see severe problems of efficiency in organizations based on teams of employees working together ("team systems," in the current jargon). Elliott Jaques claims that the problems of American industry today arise, not so much from bureaucracy itself, as from irrationalities allowed to creep into bureaucratic organizations. Alfred Chandler, our leading historian of American business, adds plausibility to the skepticism -- though his own views are complex and qualified -- by demonstrating the past success of big, bureaucratic corporations that triumphed over smaller firms much like the "team systems" being recommended today. And many other writers, such as Henry Mintzberg, see team-based organizations as narrow solutions to particular business problems rather than as a full-blown alternative to the bureaucratic model.

Others see participatory companies as potentially effective, but worrisome. Many union activists, convinced that militant labor solidarity is the only reliable basis for genuine participation, are concerned about the blurring of lines associated with greater employee participation in management. Among academics, a Marxist strand similarly holds to the view that equality of rights can be attained only through class struggle. For both these groups, participatory reforms are a dangerous diversion, a smoke screen for increased management control.

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These differences in perspective have not, however, been debated with any clarity. Indeed, the issues have scarcely been debated at all, since writers with opposing views typically appeal to different audiences and rarely address each other. In addition, many basic terms, such as participation, bureaucracy, and teamwork, are used in widely differing ways. It will help, therefore, if we define a few key concepts and distinctions before proceeding.

Participation has historically occurred at two distinct levels: the boardroom and the immediate workplace. While boardroom participation involves policy-making, participation in the workplace focuses more on improving the organizing of tasks or "quality of work life." For the most part, these have been pursued separately, with employers often favoring participation in the workplace but almost never in the boardroom. But now the most enthusiastic proponents of "de-bureaucratiza-tion" tie these two levels more closely together, envisioning commitment to shared policies at all levels of the organization.

A second issue concerns the concept of bureaucracy. In popular use, bureaucracy is often synonymous with

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