1356
n
Myths in management
Next, however, Professors Trevor and Nyberg examined who
could get away with a downsizing program or, put differently,
what sort of companies did not suffer from such an unexpected
surge in voluntary turnover after their downsizing program.
And the answer was pretty clear. Companies that had a history
of harboring HR practices that were aimed at ensuring proced-
ural fairness and justice – such as having an ombudsman to
address employee complaints, condential hotlines for problem
resolution, the existence of grievance or appeal processes for
non-union employees, etc. – did not see their turnover increase
after a downsizing effort. Apparently, remaining employees were
condent that, in such a company, the downsizing effort had
been fair and unavoidable.
Similarly, Trevor and Nyberg found that companies with paid
sabbaticals, on-site childcare, dened benet plans, and exible
or non-standard arrival and departure times did much better in
limiting the detrimental effects of a downsizing program. The
surviving employees were more understanding of the company’s
efforts, had higher commitment, or simply found the rm too
good a place to desert!
In general, it shows downsizing can work, but only if you have
always taken commitment to your people seriously. Instead,
if your employees sense that you may be
taking the issue lightly, they will vote with
their feet. And you may end up losing rather
more people than you had bargained for. Or
as Fortune magazine once observed, most
rms that downsize, “rather than becoming
lean and mean, often end up lean and
lame”.
What management bandwagons bring
Let’s consider some other (slightly dubious) management
practices: management by objectives, zero-based budgeting, T
groups, theory Y, theory Z, diversication, matrix organization,
‘‘
downsizing can
work, but only if you
have always taken
commitment to your
people seriously
’’
Business Exposed136
participative management, management by walking around,
job enlargement, quality circles, re-engineering, total quality
management, teams, Six Sigma, ISO 9000, and empowerment
for starters.
Surely you must have been subjected to some of those? Most of
them have fallen out of favor again. We call them management
fads. But do they do anything? Well . . . the answer is “yes”, but
perhaps not what you’d expect them to do, or what they are
intended to do.
Professors Barry Staw and Lisa Epstein, both from University
of California in Berkeley, through careful statistical analysis,
examined some of the consequences of organizations adopting
such techniques on a variety of factors. They collected data on
exactly 100 Fortune 500 companies, including their adoption of
quality techniques (such as total quality management), teams
and empowerment, the company’s reputation (through Fortune’s
“Most Admired Companies” survey), their nancial performance
and, of course, CEOs’ compensation. This is what they found.
Firms adopting popular management techniques (such as TQM,
etc.) did subsequently not perform any better than rms not
adopting them. Actually, if Barry and Lisa did nd an effect of
any of the techniques, it was negative. Usually, though, the stuff
didn’t have any effect at all.
Then they examined the effect of adopting such techniques on
the companies’ reputation, measured through their position
and ascent on Fortune magazine’s “Most Admired Companies”
list. The analysis revealed clearly that adoption of the popular
management techniques signicantly increased rms’ position
on the “Most Admired Companies” list, irrespective of their
performance. To be precise, those rms were rated as being
more innovative and as having higher quality management.
Apparently, the stuff doesn’t actually have to work for it to
enhance your reputation in the outside world.
Finally the pièce de résistance: the inuence of the adoption
of popular management techniques on a CEO’s compensation
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