Managers and managerialism in the post-privatised utilities: 'Throwing the baby out with the bath-water'.

Author:Mulholland, Kate
 
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Introduction

The concern of labour process theorists has been with the changing nature of managerial control and the ways in which the dynamics of the contradiction underpinning the waged labour relationship is played out between labour and management within the wider political economy. Edward's (1979) unilinear approach suggests that evolving control configurations are in response to the changes in the contours of capitalism, while Friedman's (1977) conceptualisation argues for multiple control strategies, and Burawoy's (1979) emphasis on 'game playing' shifts attention to the complexity in worker resistance. Further elaboration of the theme of control and resistance is the infusion of gender relations and the ways in which the politics of domesticity shape women's work experience (Cavendish, 1982; Pollert, 1981; Westwood, 1984), while Gollinson (1992) shows that male workers draw on humour and masculinities to reject managerialist ideologies. The concern for the changing nature of control is also reflected in O'Connell- Davidson (1993) study of the impact of privatisation on employment relations in the water industry, and Ferner and Colling's (1993) analysis of industrial relations in the electricity industry. However, there has been less interest in another feature of control, the relationship between management and capital or 'control from within', and the way power influences the interplay between capital and the managers within the different functions characterising the managerial hierarchy. As Armstrong (1991) argues 'management [is viewed] as a black box with the articulation of capital interests through managerial hierarchies as non-problematic' (Armstrong, 1991,6). However, inter-professional rivalries (Armstrong 1984, 1986, 1987) generated by the quest for power and influence, the cost of trust to ownership, and the imperfect alignment of some managers' interests with ownership characterise this problem, a trend that has been sharpened by privatisation. Illustrative of this is Walsh's (1995) critical examination of public sector management, which points to the limitations of commercialisation as the panacea to the managerial problem. In studying the management function, this paper examines the problematic character of control within the managerial hierarchy in a period of crisis and change, how it is regenerated and how managers grapple with relations of power, issues that should be of interest to readers of this journal, to socialists and to trade unionists.

The aims of the paper are, first, to focus on what managers do in the control function in two privatised companies and to relate managerial practice to corporate discourse about efficiency and business innovation. Secondly, to trace the pattern of staffing policies to privatisation, and to question the viability of such policies in the post-privatised era. Third, to focus on the changing composition of staff and the impact of the longer-term trend to reduce operational staff, particularly engineers. Fourthly, there will be a focus on training practices, skill repertoires and recruitment for managerial, technical and engineering groups. Finally, the paper will highlight the ways in which these issues become the centre-piece of organisational politics for the managerial groupings and will reveal the interplay between cleavages, fissures and realignments as managers vie for power.

Theoretical Overview

Insights from a number of different theories will be drawn upon to give meaning and coherence in the substantive sections. For instance, managerial action will be located within Armstrong's (1991) radical and reformulated agency concept, a departure from the narrow functionalism and utilitarianism of agency theory, when using the notion of contradiction, he argues that change driven by power and the cost of trust underpins the dynamic nature of the principal! agent relationship. The research suggests that corporate discourse about efficiency is one expression of how this contradiction is played out by managers in the agency role, when, depending on the nature of their function, they are often engaged in action that may be at variance with the principal's interests. In this sense, managers are asked to implement an irreconcilable strategy that requires them to both grow the business and to reduce cost. For instance, there is little room for growth in the utility markets, especially for water, thus, any new bus iness must be independent and can only occur outside of the core business (the regulated sector). The dilemma facing the managers is that new business growth rests on the transference of the core's engineering knowledge, which is being destroyed through change programmes (on-going efficiency drives), exemplified in the redundancy of the most experienced (most expensive) staff in the run-up to privatisation, and in the absence of training and the recruitment of engineers (control of cost) in the post-privatisation period. The way the managers make sense of this puzzle is best explained in the different economic models for company performance. Couched in the discourse of efficiency, different rationales are suggested for the management of labour. In this sense, static efficiency (Pollitt, 1999) and dynamic efficiency (Lipietz,A; 1997; Nolan, 1989; Streeck, 1989) confront managers with signals that invariably can be in conflict with the interests of ownership. Static efficiency driven by the rationale of Anglo/A merican capitalism, seeks short-term profits at the least cost, and therefore hinges on a standardised production process, numerical flexibility, low skilled, low waged and insecure employment, which the research suggests dominates corporate policy, and is exemplified in budget holding and performance targets. On the other hand, the sociologist Streeck's (1992) notion of diversified qualified production (DQP) is a reformulated version of the utilitarian principle, and is an exemplar of the dynamic model. It introduces a new kind of competitiveness, whereby producers through innovation and creativity in the production process are able to respond to the whims of consumer demand, while supplying a variety of new quality products onto niche markets. It relies on high performance technologically advanced production processes, characterised by a highly skilled workforce, which is' able to combine standardisation and customisation, while conforming to quality measurements. In the dynamic approach, assets are used to develop new resources such as skill repertories, innovative production processes and diversity in products. The manner in which labour are treated is one of the distinguishing features, because the static model views them as a cost (including the control function as suggested by managerial redundancy), whereas, the dynamic model sees them as an asset, that must be utilised effectively.

The relevance of these different rationales is that, when they are translated into corporate policy, they have a profound influence on the outcome of a manager's task depending also on the character of the task and the position of the manager within the hierarchy of the control function. However, the interviews with the managers strongly suggest that the static model is embodied in corporate practice, exemplified in performance targets, budget holding and cost cutting while a conflicting discourse promotes the dynamic model. Nevertheless, managers within the control hierarchy are influenced by this facade of choice. For instance, managers in corporate strategy draw on the dynamic discourse, whereas managers in pure monitoring functions such as finance and business systems find appeal in static efficiency. The following discussion will explore how these different rationales are sources of conflict and tension as managers grapple to protect their interests, which according to agency concept (Armstrong, 1991; 6) , are imperfectly aligned but not independent of ownership. Zafirovski's (1999) critique and elaboration of rational choice theory also provides a useful insight into managerial

action that appears to be at variance with the principals' interests. In questioning the rationality of utilitarianism, he argues for a theory of rationality that is embedded in multiple forms where power, prestige, identity and status may have more purchase than a pure money return, which public choice theory (Hill, 1997) argues is hardly a straightforward result of single-minded instrumentalism.

The study

The research for this paper is based on a case study of a water company and an electricity supply company. The water company is in the south of England and currently employs around 7,000 people, while the electricity supply company is in the Midlands and employs 4,500 people. The purpose of the research is to examine the managerial function post-privatisation. The data was collected by visiting the different company sites and interviewing managers over a six months period from June to December 1996. To this end sixty managers were interviewed. This included forty middle and twenty senior managers, six of whom hold directorships within the companies. The managers were spread across the companies in a range of functions, including core operations, customer services, finance, corporate strategy, business systems, research and development, public relations, personnel and industrial relations. Rather than directly asking managers about the impact of privatisation, questions encouraged managers to discuss their exp eriences of work. The advantage of this is that it inevitably meant that they discussed their jobs in terms of how they had been affected by change, and subsequently provide some sceptical insights on the impact of privatisation. What is interesting is that although many of those interviewed had survived restructuring and indeed many welcomed it, the interviews reveal that with hindsight many are now critical. Influenced by grounded theory the...

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