Managerialism: the Emergence of a New Ideology

Citation

Glover, I. (2000), "Managerialism: the Emergence of a New Ideology", Journal of Management Development, Vol. 19 No. 7, pp. 654-664. https://doi.org/10.1108/jmd.2000.19.7.654.3

All readers of this journal will have varied experience of American management, if not as employees of US organizations, certainly as users of some of its ideas and techniques, as consumers of its products and services and certainly as acquaintances, friends and relatives of American managers. What educators, managers and policy makers in other countries can learn from American management is probably more open to debate in the late 1990s than it has been at any time since the 1920s. The USA’s relative, and relatively recent, economic – and perhaps moral – decline is the most obvious and probably the most important reason why. Three recent books shed important light on numerous features of American management and will greatly advance expert and lay understanding of it. In different ways, also, they will all help everyone involved with American management to understand why it cannot be understood properly in isolation.

In The Collapse of the American Management Mystique, Robert Locke focuses on his own country and presents a powerful attack on American management and management education of the post‐1945 era. He is not interested so much in America’s economic, industrial or management problems as such, as in the rise and fall of the mystique of management associated with its relative success and failure. He distances himself from the views of conventional writers, such as management scientists and researchers, on US management, who had taken for granted the notion of US management practice as the best, and which had diverted attention from the general problem of American managerialism. Locke argues that managerialism is like militarism. Thus it has a self‐defeating quality. Both militarism and managerialism had “qualities of caste and cult, authority and belief” (Vagts, 1937, p. 11).

Locke accounts for the development of the US management system through four phases. The first of these had begun around 1800 and belonged to the factory. Its main contribution was to build processes for making products, not just, as in Europe, products. This had culminated in F.W. Taylor’s separation of management thought from labour’s doing. It involved the development of high volume production using largely unskilled labour with unprecedented efficiency.

The above phase had lasted until the 1930s. It was followed by the second, which belonged to the corporation, and was associated with Alfred P. Sloan at General Motors and its multidivisional organization. Power and talent began to centre on head offices and to move away from factories. Skill in marketing, financial manipulation and industrial relations, rather than engineering, began to be regarded as the major component of management.

The third phase belonged to higher education. Beginning in the Second World War and continuing through the Cold War, management and business education began to be informed by and imbued with a scientific approach and scientific methods. By 1950 there were more than twice as many business and management students in the USA as engineering ones. By 1960 there were nearly 5,000 MBA students, by 1980 ten times this, and about 200,000 by the mid‐1990s. There was an apparently happy match between post‐1945 US corporations which were hierarchical, formal, rational, standardized and centralized, and the analytical, systemic, problem‐solving, top‐down, rather arm’s‐length forms of management and control engendered by higher education. The graduate business school’s agenda was to professionalize American management by producing a qualified élite of experts. In this way “Americans [had] invented management and with it the American way of doing business” (p. 29). This appeared to be incredibly efficient, sophisticated and successful. Unions were excluded from any involvement in management, and management and labour became separated in almost all respects. Management, increasingly a product of business and management education, was the “fourth production factor” (pp. 29, 36) which had brought the other three together to create plenty.

The final, fourth, phase consisted of the internationalization of US management. With the productive and logistical achievements of the Second World War as living proof of US capabilities, this was almost inevitable even if it was often resisted. It had three overlapping phases. The first, the “Marshall Plan” phase, involved a two‐way flow of managers, technicians and workers across the Atlantic and a one‐way flow of financial support, eastwards from the USA. The second was “the NATO phase, a Cold‐War intensified military‐backed transfer of American management know‐how during the 1950s and 1960s.” Finally, from the 1960s, there was “the education phase, when Europeans … renovated their institutions of higher education in order to make management studies an integral part of the system”. However, there was little to suggest that what was taught in business schools was of much practical use in business and industry. The post‐war triumph of US managerialism was that of a mystique which had “promised the average man a society free from want through ‘managed’ productivity”. The mystique’s international power and appeal faded from the 1970s onwards along with the fortunes of US manufacturing.

Locke then explains how and why Germany and Japan successfully resisted US blandishments after 1945. Germans focused on work, not on the arm’s‐length language of communication, decision making, coordination, control and so on. They had great faith in the combined institutions and practice of Technik (literally engineering, more accurately technical excellence, in English) and co‐determination, underpinned by a very powerful and effective system of technical and other vocational education and training and proactive regional and national government. While the Japanese copied the West on a massive scale, their imitativeness had taken the form, in a general sense, of very selective and judicious tinkering.

In discussing “the actual collapse of the American management mystique” (p. 158), Locke starts by dismissing three perspectives. Marxism is dismissed for defining the problem of the US management mystique out of existence by lumping it in with all forms of capitalist mystification. Then he excludes managers who try to divert attention from their problems and failures by blaming them on government interference. Finally, he excludes most economists who, when writing “about American decline, generally overlook management” (p. 158). From the late 1970s onwards “Japanese”, although originally US, management practices such as total quality management, just‐in‐time, human resource management and so on, had increasingly been “copied” in the USA. Germany, while it had started to fall behind a little, nonetheless remained a fair and wealthy society with great economic resilience and potential.

Locke’s final chapter, “Quo vadis?” argues for US managements to build trust and flexibilility and, above all, the moral order. Also, US management education was self‐aggrandizing and arm’s‐length, and failed to articulate fully with other branches of education and knowledge, and its cross‐cultural elements and industrial and commercial links were superficial. Changes were also needed within companies. American firms needed to be more like Japanese by managing their staff and coordinating activities in less hierarchical ways and by being less free with promotion and pay rises. However, it would be difficult, probably impossible for cultural reasons, for them to copy Japanese informality in management. The USA might more usefully follow Germany and give workers and unions a formal role and voice in company management. Locke’s final verdict is that US managerialism is aggressively self‐seeking, exploitative, oppressive, conservative and profoundly incompetent, and that its failure will probably result in the majority of US citizens destroying it.

This is a very challenging, very well‐researched, wide‐ranging, coherent, fascinating and in some ways profound thesis. Locke is exceptionally, even unusually, well‐informed. The chapters contain much fascinating detail and Locke, more than ever, writes with exceptional clarity and forthrightness, demonstrating to great effect the inverse relationship between academic pretence and the humility and erudition of a great teacher. While he has not produced a complete explanation of the origins of the US management mystique, because he is not directly concerned with the origins of the USA itself, he has written much of one while using international comparisons to highlight its main deficiencies.

Many clues and keys to what such an explanation would look like are in Peter Lawrence’s book. Lawrence’s UK origins, something that he has in common with the USA, perhaps help him to be a little more detached and paradoxical about US management thought than Locke. The main paradox that concerns Lawrence is the USA’s “excellence in management and relative economic decline”.

Chapter 1, called “Stars and strands”, sets the scene. Clarity and directness of expression allied to self‐awareness were strong features of US management. This was not surprising because the USA had invented management as a subject and American technology and management had made the USA the world’s dominant economic force in and after the Second World War. US resources, organization, apparent classlessness and freedom from trade union power were all attractive to non‐US managers and management educators. So too was the all‐encompassing idea of freedom, translated into assertiveness and decisiveness. Freedom from constraint was expressed very forcefully, with industrial democracy regarded as a major threat to free and fast decision making and as virtually synonymous with communism. On the other hand, there was a great passion for useful, factual, explicit and detailed information, for controlling activities and structuring decision making.

Chapter 2 addresses the US economy, emphasizing its great size and resources, along with its shortage of labour and reliance on immigrants as it grew in the nineteenth century, which made the development of know‐how and system so important. The USA had a multi‐capable economy with millions of all sorts of jobs, and with all sorts of systems for doing things across virtually every kind of sector. However, there were now many doubts about the American economy, about capital investment and R&D spending, about managerialism, about mergers and acquisitions, about workers not being involved in management, and about management inhibiting innovation, but it was nonetheless a very great power, still the world’s largest economy, and too big and powerful a society not to be one of the most powerful countries in the world for the foreseeable future.

The third chapter is about individualism. Individuals were seen as pivotal. Managers tended to be very mobile and careerism was very powerful and accompanied a strong ethic of success and a view that ends were much more important than the means of achieving them. Chapter 4 focuses on business strategy, an American invention, and chapter 5 is called “Proactivity”, and is about the activist, “can‐do” belief that the future will be shaped. The concern of chapter 6 is “Systems”, the formalized, standardized way in which US managers do things. Qualifications, plans and procedures, tangible and upfront measures and so on were seen as crucial. Systems existed to make things work, replacing craft, intuition and trust, choice and difference. But the approach was very open and egalitarian, making everything capable of being followed by the least educated employees.

The seventh chapter, on free speech and self‐interest, discusses the clarity and directness of US management. Communication is very clear and open between managers and subordinates. The subject of the eighth chapter is industrial relations, including the non‐ideological character of US trade unionism and the lack of socialism in the USA.

In chapter 9, on “Personnel and people”, personnel is seen as the link between society, government and management. The very wide range of employee benefits given in the USA meant that there was a strong concern with value for money on all sides. US managers tended to feel that if employees were properly treated they would not join unions. Lawrence makes several points about how Europeans and US citizens are different. US citizens were insular yet understood the great diversity of their own society. Systems made space for initiative. Thus rules were followed conscientiously, yet people would also take risks. Life was a challenge. Striving was normal.

In the tenth chapter, called “Audit”, the main features of US management areconsidered. Individualism was one. Regionalism was another: big differences between US states in levels of income and qualification were common. Yet management was very similar across the USA, a homogenizing force in a very mobile society. Professionalism, system, strategy, down to earth communication, idealism, achievement and mobility were other major leitmotifs of US management. The dominant style was “professional”, systemic and strategic, but there was also a minority strand, much more homespun, old‐fashioned and down‐to‐earth, that opposed short‐termism, that was very simple, honest, and concerned with craft rather than science.

The final, 11th, chapter, “An American paradox”, confronts the issue of the USA’s decline in relation to its own past and to other countries. Lawrence joins Locke in arguing that the USA needs literate and intelligent workers, not merely graduates with managerial aspirations. Finally, Lawrence points out how, although US companies internationalised decades before most of their foreign counterparts, there had been little if any cultural or managerial adaptation to other countries on their part. US economic might had ensured that this had worked in the past but the growth of major challenger companies in the EU, the Far East and elsewhere meant that it was working no longer. Unless US citizens became more aware of and responsive to cultural diversity they would advance no longer. There the book ends, on what is actually a cheerful and optimistic note!It is so, not only because of Lawrence’s manifestly upbeat personality and style, but because he had already emphasized, at length, the tremendous power of US “can‐do” attributes.

These two books are complementary and they are both likely to be read widely in the USA. Locke’s is likely to be more controversial there, and some US managers and business and management educators, at least, are likely to demonise him. However, unlike Willard Enteman (1993), a US philosophy professor, neither author discusses managerialism as a varied worldwide phenomenon or social movement. Indeed, for Enteman, managerialism is the new and current “dominant world ideology”.

Enteman argues that in the recent world context managerialism is the ideological principle on which the economic, social and political order of advanced industrial societies is actually based. These societies or nations have become no more than the sums of the decisions made by those who manage corporations, associations, government and other organizations. The directions which human societies take result from the interactions of managers, rather than the needs of workers, the demands of consumers or the will of their peoples. Enteman explores the three previously dominant ideologies, capitalism, socialism, and democracy, and finds them subverted and in many aspects ineffectual. Capitalism and socialism were not genuine opposites because each proclaimed its advantages for all, while socially and politically excluding its “opponents”. The focus on them had helped people to neglect the possibility of an ideology which was “neither capitalist nor socialist, neither democratic nor totalitarian” (p. 151). This ideology was managerialism.

According to Enteman, managerialism assumes that societies consist of such sub‐units as corporations, organizations, associations, and so on. Society is not made up simply of individuals; nor is it more than the sum of its parts. Decisions are made whenever the above sub‐units, or rather their managements, interact and conduct transactions with each other. Individuals, as such, have little or no influence on decision making unless they work through the groups which may represent their interests. Like the individual and the state, government is an abstraction which has no independent or powerful existence as such. It is part of the managerial process which consists of the interaction of and transactions between (managers of) the legislative, executive, judicial and other sub‐units which make it up, and their interaction with and transactions between (managers of) other sub‐units like corporations and associations. Managers have virtually no legal or moral restrictions. The social units to which managers belong vary greatly. Managerialism is an ideology created by managers, generally for managers, which has evolved in a vacuum following the breakdown of capitalism, socialism and democracy and it sees society neither as a collection of individuals nor as a unified whole.

In his final chapter, Enteman goes on to propose “new objectives for ethics, economics and business” (p. 6). He criticises philosophers of business ethics for treating it trivially. Economists could help by admitting that economic institutions or actors developed in many different ways over time. In planning and exercising discretion managers should create and continually review the values and consciences of their organizations. To do this effectively they would need to listen to all concerned voices within their jurisdiction, not only to powerful ones. Beyond this, Enteman is apparently at something of a loss regarding the future of managerialism. He admits that democratic managerialism is at least potentially self‐contradictory and would prefer it to be controlled by “an aggressive form of democracy” (p. 223) which would be neither capitalistic nor socialist and which might use direct referendums to curb the excesses of managers. Locke, Lawrence and Enteman offer three different but overlapping perspectives on management and managerialism in the USA. All have clear and positive implications for education and management development.

Discussion

In the early 1980s Sorge and Fores (1981) linked what they called the Anglo‐American “management ethic” to specific features of US history. Reacting against the deceitfulness and arrogance of aristocracy and the mysteries of the crafts of the Old World, US citizens had developed rational, explicit and widely applicable systems of production, organization and management (Lawrence et al., 1992). Later they developed the identity of manager to help “Americanise” individuals from diverse ethnic and occupational backgrounds. In the UK the management ethic and identity have followed and been used alongside professional ones in helping to fill a historic vacuum in the education of senior job holders for industry, trade and local government which first became apparent in mid‐Victorian times (Glover, 1985; on local govemment, see Ackroyd, 1996). Since the 1950s, post‐experience and postgraduate management courses have served to add relevance to the knowledge and skill bases of UK generalists with gentlemanly educational backgrounds and have broadened out the narrow provincial backgrounds of many professional specialists like accountants, engineers and surveyors.

In essence, Locke argues that engineering and its systematic management made the USA great, but that the management became dysfunctionally grandiose while the importance of engineering was partly forgotten. Lawrence knows and accepts this and describes many of the results, while also reminding his readers of the considerable remaining and underlying strengths of US management and society. Enteman, writing in the USA, but about all of the developed and developing economies, depicts a generally affluent and sophisticated economic and political order in which those who manage organizations do so largely in their own interests, almost entirely by their own lights, and in a way which transcends the two major ideologies (capitalism and socialism) and the main vehicle for mass aspirations (democracy) now traditionally associated with industrialization. Both Locke and Lawrence, whose broad concerns are more pragmatic but not really less local than Enteman’s, are sympathetic to the ethos and institutions surrounding the German term Technik, which translates literally into the English word “engineering”, and which is most accurately described as technical excellence.

The historic context of the three books has been discussed in part by Hutton and Lawrence (1981). The first industrial countries, with the broad exception of the UK, produced graduate or equivalent engineers as they industrialised (see also Ahlstrom, 1982; Meiksins et al., 1996). In France, Germany and elsewhere in continental Europe, higher engineering education tended, and tends, to be both very broadly‐based and sector‐specific. It is also supported by strong systems of general and technical education and training for technicians, production supervisors, craftspeople and other skilled workers. It is extensive, producing flexible and sophisticated expertise on a large scale. Commercial and financial knowledge and understanding are present within it, and partly separate systems of commercial and financial education and training for all levels and types of employment also support it. The provision of this kind of vocational education and training was widespread on the Continent, and in some respects Japan and North America since long before 1939, and it constituted industrialization’s first wave of higher vocational education and training.

The second wave has been the development of higher and other forms of education and training in business and management and cognate non‐technical subjects. The USA led the field, especially with the MBA from the 1950s onwards, but the main general tendency in the industrial countries throughout the twentieth century was for expansion of technical education to decelerate and for that of business and management education to accelerate past it. The tendency has generally been more pronounced in the mainly English‐speaking “business management” countries like the UK and those of North America and Australia than in the continental European “Technik” ones and their Far Eastern associates like Japan. A full account of the main contrasts between these groups of countries is provided by Glover and Hughes (1996, p. 5). These authors argue that the former or what Albert (1993) called the Neo‐American version of capitalism “stresses consumption, outcome, the short term, management of specialist activities, and the more negative side of the state’s role”. The Technik version, however, valued “production, process, the long term, management in specialist activities, and, the more positive side of the state’s role in economic life” (for an earlier version of this comparison, see Fores et al., 1976).

There is nothing in these trends to suggest that manufacturing industry is of less importance for the creation of wealth than in the past; in fact it is of growing importance (Barry et al., 1997; Delbridge and Lowe, 1998). Sophisticated lives are more dependent than ever on a plethora of machines and gadgets, and it is arguably only the fact that there is no longer much that is obviously or uniquely dark or satanic about their production that apparently helps many people to underestimate their growing importance. Paradoxically, ever higher proportions of jobs in manufacturing and elsewhere are of a services type, largely because of increased productivity in manufacturing, and this also helps to conceal the latter’s importance. However, a general change of emphasis in higher education from business and management subjects to engineering ones in the UK and the USA is unlikely to generate a situation in which they become economic exemplars for Germany and Japan, a reverse of the recent position. It would be useful, nonetheless, if “business” subjects were better integrated with technical ones in engineering degrees, if more business and management graduates were aware of the potential of manufacturing careers, and if further education in technical subjects was more prominent and prestigious and better integrated with higher education and a genuinely effective alternative to A‐levels and Scottish highers as the first step on the road between GCSE or SCE passes and careers eventuating in senior management.

The UK’s early industrial and commercial successes were possible because professional, technical, scientific and craft knowledge and skill were sufficiently available. However, there has been a long era of transition, starting in the 1950s and still in process, when knowledge, skill and motivational deficiencies, as judged by relevant international comparisons, were painfully real. Attempts to improve things have tended to be gradual, piecemeal, ad hoc and sometimes ineffectual. Changes encouraged since the 1970s have so far enjoyed relatively limited success.

Since the late 1950s it has been across higher education in general, and in its more vocational segments in particular, where much useful development has taken place. Many new kinds of course have been developed which reflect and encourage increasingly elaborate and fruitful divisions of labour in commerce, finance, industry and in the public sector. This has been accompanied by some broadening of secondary education and growth in the number, kind and content of postgraduate academic and professional qualifications and in the numbers of those obtaining them. The general weight of tertiary education has shifted from the academic towards the vocational. Also, greater focus on the requirements of students’ future careers and growing interaction between higher education, its students, its graduates and prospective employers have contributed to a situation in which relationships between the specialist technical and the more general and managerial aspects of work and employment are continually being reappraised and developed. While this still allows some elements of arm’s‐length stances towards crucial specialist technical detail to persist and even to grow in many areas, as with many, albeit not all, examples of the use of management fads and management consultancy, the master trend is for action and thinking about the specialist and the general, the technical and the managerial, and about the short and the long term, all to become completely intermingled. The main long‐term trend is towards a flexible and commercially and financially very sophisticated technocracy which respects and develops the specialist and the technical, in ways which draw to great effect on long‐standing expertise in international diplomacy, finance, project management and trade (Glover et al., 1998; Glover and Hughes, 1999; Glover, 1999).

This effectively constitutes a merger of the Technik and the business management approaches, involving the construction of a sophisticated professional (specialist)‐cum‐managerial (generalist) class or stratum of senior job holders for employment across most activity sectors.The UK appears to have been drawing on its old strengths to help construct new ones in ways which may equip its economy to leapfrog, or at least to challenge, those of recently more successful competitors.

While the above discussion has many speculative elements, it may be helpful in emphasising the profoundly immanent and emergent character of human work and social organization. Meiksins et al. (1996) argued that, at any given time, work organization in a specific situation is a product of the inherited system or economic mode of production, the surrounding historical and societal institutions, and of the “dominance effects” which emanate from the society or societies thought to exemplify the “best practices” in the world economy. This argument probably exaggerates the extent to which competition between nations occurs and underestimates that to which nations develop in parallel or independently on the basis of their deeper strengths (Glover and Tracey, 1997). Nonetheless, it helps us to understand how adaptable managements are inevitably locked, to some extent, into existing habits and structures, but that they can borrow judiciously from respected examples of more successful work organization and from their own accumulated experiences, to develop to face and challenge the future. And in a world in which communication and learning are often very rapid and increasingly international, a humble version of managerialism may be a useful “ideology”, in Enteman’s language, for facilitating useful change.

Thus the main lesson of this review for management development is that it should both deepen and broaden the individuals upon whom it is focused. It should enhance performance partly by enhancing identity. It should do the latter by exploring and comparing the strengths and weaknesses of individuals and organizations, and those apparent in their origins and development, along with those of others.