Managing Understanding in Organizations

Jorgen Sandberg, Axel Targama

• Publisher: SAGE Publications Ltd
• Year: 2007
• ISBN:
  9781446232217
• Edition: 1
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

?An excellent and much needed contribution to the management literature?

- Gareth Morgan

?Trough accurate examples and instructive accounts of what constitutes understanding at work, the Author leads us to the core link between understanding and managerial practicing. It is deeply informative, often witty and always elegant!?

- Silvia Gherardi Research Unit on Communication, Organizational Learning, and Aesthetics dipartimento di sociologia e ricerca sociale

?The book provides an interesting, accessible and important contribution to the interpretive understanding of management and leadership and clearly shows its relevance also for practitioners?

- Mats Alvesson

Bringing a fresh perspective to the evaluation of management problems, this book draws upon interpretative research and builds upon existing interpretative studies to scrutinise the influence managers have on employees? understanding.

It considers how managers use ideas and visions to frame their employees? internalised understanding of the external rules and instructions that govern their work. The book brings an interpretative perspective to the question of individual and group competence and look at how this is linked with understanding.

Throughout Managing Understanding in Organizations refers to international case studies and considers the cross-cultural impact on management and understanding at work.

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ONE Understanding becomes a key issue

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A paradigm shift is taking place in management

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During the last two decades, we have witnessed a substantial shift within both management practice and academic discussions concerning how human action can be managed effectively in an acceptable way. Some writers, like Beckérus et al. (1988), have described it as a doctrinal shift while other scholars, such as Clark and Clegg (2000) and Pearce and Conger (2003), have portrayed it as a paradigm shift in management. The central message is that a shift is taking place in management from using direct techniques, such as specific rules and instructions, to the development and use of more indirect techniques, such as vision, mission, culture and values, together with a leadership based more on dialogue rather than authority for managing human action. There are two main reasons for this shift.

The first is that since 1980 society has undergone a range of social and economic changes, such as rapid technological development, increasingly knowledge-intensive industry and intensified global competition. These changes have given rise to new organizational forms, where the degree of freedom has increased at every level and individuals have received more independence at work. A key consequence of employees’ greater autonomy is that management has lost its direct control over their behaviour. Managers must, to a much larger extent than previously, trust that their staff act and make judgements in accordance with the company’s strategic direction. To maintain some control over employees’ work performance, managers have become more dependent on being able to influence people’s understanding of their own and their companies’ task. The increased need to manage understanding has led to the development and use of more indirect management techniques (vision, values, culture, etc.) and a more dialogue-based leadership.

A second reason for the paradigm shift is that management by ideas and visions have received strong support from more recent research. During the last thirty years, a growing body of interpretative research shows that understanding of work forms the basis for human action in organizations. The findings demonstrate that people’s work performance is not primarily influenced by external conditions such as specific rules and instructions per se. Instead, work performance is first and foremost defined by people’s understanding of their work and how they understand the rules and instructions imposed upon them. This insight suggests that in order to create effective work performance managers need to develop and maintain a shared understanding among the employees about the company‘s task. Formulating the company’s task in a set of central ideas and values that the employees can themselves commit to has thus become a chief managerial task.

The difficult art of ‘understanding understanding’

Even if managers realize that the way people understand their work is fundamental to their performance, most companies still have difficulty influencing the way employees accomplish their work. Why? A central argument in this book is that the paradigm shift has only taken place at a rhetorical, but not at a practical, level. Managers have not been able to implement the change in practice because they have tried to do so by following the traditional leadership principles within the rationalistic management tradition. By following the rationalistic principles, they are unable to understand how employees’ understanding of their own and their company’s task forms the basis for their work performance and, thus, how understanding can be managed more effectively.

A capacity to influence understanding presupposes knowledge of how understanding operates. In this book, we propose an interpretative management perspective as an alternative to the prevalent rationalistic perspective on management. This shift in perspective makes it possible to ‘understand understanding’ and, thus, to develop practical ways of managing understanding that can enhance work performance in organizations.

Socio-economic forces behind the paradigm shift

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To manage employees so as to achieve a competitive advantage, managers need to know what to influence and how to influence. Throughout the twentieth century, a rationalistic perspective has characterized management research and management practice. In such a perspective, the top-down principle has been the dominant principle. To influence employees’ work performance, managers plan the work to be performed and how it is to be performed. With support from administrative specialists, managers formulate specific rules and instructions about work, which they impose on their staff through a hierarchy of authority and responsibilities. Two main managerial strategies can be distinguished: one emphasizing the process and the other emphasizing the outcome of employees’ work performance. When focusing on the process, managers try to influence employees’ work performance by imposing detailed instructions and rules about how staff should accomplish their work (the bureaucratic and the technocratic principles, respectively). When emphasizing outcome, managers specify details about the outcome of the work assigned to employees (management by objectives). The latter is, however, usually combined with a considerable amount of instructions and rules concerning work processes.

During the last two decades the dominant rationalistic management perspective has been heavily criticized as being inadequate for the effective management of people’s work performance. One main reason derives from the socio-economic changes taking place in society today, such as rapid technological change, more knowledge-and service-based industry, intensified global competition, a more diverse workforce, an increased compression of time and space, and shifts in values.

Technological changes

Over the past three decades, we have witnessed an increasing rate of technological innovation in areas like biotechnology, microelectronics and telecommunications. The most profound technological advance is the development of information technologies such as the computer and the internet. The computer and, subsequently, the internet are themselves crucial vehicles in this technological development (Castells, 1996). Moreover, many of the new technologies are applicable to almost all aspects of the world economy. For example, computers and the internet have had an immense impact on national and international financial systems, creating radically new conditions for creating and producing goods and services in many industries. Flexibility in terms of products and the production process has increased dramatically, while the life cycles of both products and production process have been substantially reduced. Taken together, such technological changes have created new requirements for managing people’s work performance. In particular, to a much larger extent than previously, managers are now required to facilitate an ongoing development and renewal of staff competence as demand for new and varying competence at work arises. As Ellström (1992) argued, a difficulty employees often encounter when confronted with new technology is not learning to use it, but rather learning to use its potential to increase productivity. Orlikowski (1993) made a similar observation in her study of the implementation of new information technologies in European, Japanese and US firms. She found that most of the implementations failed because the companies had overlooked the most critical aspect of technology implementation, namely to prepare the employees to use the full potential of the new technology.

More knowledge-and service-based industries

Another important development is the structural changes occurring in the industrialized world as a result of a shift towards more knowledge-and service-based industries. Many current studies of economic development in the industrialized world, such as Ekstedt (1988), Eliasson et al. (1990) and Neef (1998), conclude that the production of services is increasing in relation to the production of goods, while both entities become increasingly knowledge-intensive. An expression of this change is the emergence of the so-called knowledge-intensive firms – conspicuously IT companies during the last two decades (Alvesson, 1993a, 1995, 2004; Starbuck, 1992). R&D based companies, various consultant companies, law firms, accountancy firms, universities and schools, and similar organizations also represent various forms of knowledge-intensive industries.

The growth of knowledge-intensive work creates an even greater need for a continuous development of employees’ competence for improving work performance. Moreover, Bäcklund (1994) also demonstrated that the increasing rationalization of capital, decentralization, customer orientation and technical renewal that take place in companies today have led to a need for the continuous development of new and more advanced competence in work that is usually regarded as uncomplicated and simple. In addition, the complex, dynamic and interactional nature of knowledge-intensive work (Alvesson, 2004; Newell et al., 2002) makes it particularly problematic to represent in a simple set of static rules and instructions imposed by hierarchical authority. Instead, because of the high degree of independence and discretion to use their own judgement, knowledge workers and other professionals often require a leadership based on informal peer interaction rather than hierarchical authority.

Intensified global competition

The rapid technological advances and a more knowledge-and service-intensive industry have led to increased globalization of the economy, in conjunction with intensified competition. The new information technology has made it possible to integrate companies and whole industries into large global economic systems. For example, we have witnessed an enormous increase in the globalization of financial capital, the rate of the global diffusion of new technological innovations and the importance of multinational corporations (Gilpin, 2000). These and other trends towards increased global economic integration have intensified competition. Such competition necessitates new ways of managing people that permit greater flexibility and speed in product development and production processes. For example, most problems are identified at the operative level by staff who deal with customers or work in production. But sending these problems several levels up the hierarchy to be solved, and then sending them back down to the people who are affected by them, would take too long. In the interest of speed, problems should be solved directly by the people who encounter them. But operations should then be organized in such a way that operative personnel are permitted more independence and extended autonomy in performing their tasks.

Increased competition has also brought about a stronger focus on customers’ interests and preferences. A greater consideration of customers’ interests means that companies have to be more flexible and spontaneous to satisfy customers’ varying preferences. To enable staff to develop such ability, managers must provide them with greater independence at work. As a further effect of increased customer orientation, quality has become a more important competitive factor. Quality is partly related to the design of products and production systems, but is also to a large extent an effect of the day-to-day actions of operative personnel. It is they who create quality, primarily through the sum total of their dealings with customers.

In the public sector, the deregulation that took place in the 1980s and 1990s has meant that most public organizations have been exposed to similar competition as global industrial companies. In addition, reduced financial support to the public sector has required public organizations such as hospitals, universities and schools to be more efficient and creative in developing new ways of delivering service to society. In particular, it has been argued that public organizations need to move from a bureaucratic to a more entrepreneurial governance, which embraces a decentralized authority and participatory management (Osborne and Gaebler, 1992).

A more diverse workforce

During the last twenty years, we have witnessed the emergence of an increasingly diverse workforce. The employees in most organizations are becoming more diverse in terms of ethnicity, religious beliefs, gender, education, social background and age (Ashkanasy et al., 2002). An overarching force behind the increased diversity is the intensified globalization and the technological advances taking place in society. While the intensified globalization has encouraged a more mobile workforce, the technological advances have made it possible to connect work groups around the world. Following Ely and Thomas (2001), it is possible to identify three more specific forces behind the increase in diversity. First, a diverse workforce is seen as central because it provides organizations with different insights, knowledge and experience, which can form alternative views of work and how best to accomplish it. Secondly, it is argued that employees in organizations should reflect the diversity in markets to obtain access and legitimacy with those markets. Finally, there is a moral and political push for a more diverse workforce to ensure justice and fair treatment for all members in society.

A more diverse workforce creates pressure for finding new ways of managing people. A particular challenge is to coordinate all the experiences, knowledge and interests employees bring to work into a shared understanding about what the company is supposed to do. Creating a shared understanding within a diverse workforce by using specific rules and instructions from above will not suffice. Instead, it requires a more dialogue-based leadership that enables managers to access how employees understand their own and the company’s task.

An increased compression of time and space

Rapid technological advancement and an increased globalization have led to a greater compression of time and space that deeply affect the way we live, work and manage organizations (Harvey, 1989; Sennett, 1998). As Harvey noted: ‘As space appears to shrink to a “global village” of telecommunication’ and ‘time horizons shortens to the point where the present is all there is … so we have to learn how to cope with an overwhelming sense of compression of our spatial and temporal worlds’ (1989: 240). How the compression of space and time have affected work can be illustrated by the changes that have taken place in corporate law during the last twenty years (Sandberg and Pinnington, forthcoming). As one corporate lawyer expressed it: up to about mid-1980s corporate law was to a large extent seen as:

the old gentlemen’s profession of practising law. You could work civilized hours and do all that sort of thing because of course what happens, the secretary or yourself, would craft a letter and do whatever. … Then you send it, and then you think, great, that’s off my desk. Now it’s going to take a day to get there, and then it’s going to take them a day to have a look at it, and it’s going to take another day to come back again so how wonderfully civilized. With fax, that began to end. And then of course with email and all of the electronic communications flow, it’s gone. Because now it’s a matter of drafting [a document], very regularly on your own computer, rather than dictating, and having an assistant help you type it. Zing it down the line and then go out for lunch and then come back and it’s sitting there in your in box and you go ‘bloody hell that’s too fast, I didn’t even get to digest my lunch properly’, and that’s how it’s changed.

Such a compression of time and space at work has led to increased pressure for new ways of managing people. In particular, the compression has made work much more fluid and ephemeral. To be able to adopt and adjust quickly to market shifts employees need to a greater extent to be involved in continuous sense making of what their work is about and how to accomplish it. The need to be involved in an ongoing sense making demands a leadership based on dialogue rather than hierarchical authority.

Change in values

Pressure from the new market conditions and technological development demands new ways of managing and organizing businesses. This tendency is reinforced by the trend to consider freedom and independence as important features of a desirable job. Younger people especially tend to look for freedom and independence at work (Zemke et al., 2000). As noted by Sennett (1998), there is also an indication that younger generations today tend to regard high uncertainty and risk taking as central features for a challenging work. Consequently, to recruit attractive employees, companies have to offer jobs that include risk taking, independence and freedom to use your own judgement at work.

The magnitude and complexity of the socio-economic forces

While the above socio-economic changes occur in most of the industrialized world, caution needs to be exercised with respect to both the magnitude and complexity of the changes, in particular with regard to their impact on the management of organizations. As Thomson and Warhurst (1998) pointed out, while we can witness a rapid increase in the professionalization of the workforce, we can also witness a growth in less qualified service work such as telesales and call centres. This kind of service work is still primarily managed by strict standardization of the work process, which provides little individual freedom. Research also suggests that even those who are doing knowledge-intensive work may not always experience high work autonomy (Harley et al., 2005). For example, Felstead et al. (2002) showed that there has been a noticeable decline in work autonomy among technical and professional employees in the UK between 1986 and 2001. There has also been a considerable job loss together with an increased stress of the possibility of losing a job through the many mergers and acquisitions, restructuring and downsizing that have taken place during the last two decades (Cooper, 2002; Wheeler, 2002). Studies such as Littler and Innes (2003), using longitudinal firm-level data on organizational restructuring, suggest that the ongoing downsizing in the economy has also led to a ‘de-knowledging of the firm’. Moreover, research suggests that the changes may not only have a profound impact on our work but also on our character. According to Sennet (1998: 25), today’s, ‘short-term capitalism’ may corrode our character in fundamental ways. This is because ‘no long term’ means keep moving, don’t commit yourself, and don’t sacrifice’. As Cooper (2002) argued, this raises the question, among other things, to what extent individuals can commit to organizations that do not com...

Table of contents

• Cover Page
• Title
• Copyright
• Contents
• 1 Understanding becomes a key issue
• 2 The rise of an interpretative perspective on management
• 3 Human competence at work: a question of understanding
• 4 Understanding: the basis for competence development
• 5 Shared understanding: the basis for collective competence and its development
• 6 Understanding and its transformation
• 7 Methods and principles for managing understanding
• 8 Management: a question of managing understanding
• References
• Index