Corporate Decentralization

A report on signs of the revolution of consciousness
in the corporate world

One of the articles in Economics In An Intellegent Universe (IC#2)
Originally published in Spring 1983 on page 41
Copyright (c)1983, 1996 by Context Institute

Cottage industries, village economies, small businesses – these are all part of the romantic image often associated with a sustainable culture, but are these enough? Who will make the communications satellites and the rockets needed to put them in orbit; who will make efficiently sized airplanes; who will mine the minerals? The reality of today is that most of the products and services we depend on are made by corporations with more than a handful of employees, usually much more. While we could comfortably do without some of these "goods and services", many of them are a valuable heritage – a genuinely intelligent and efficient way to do useful things. What role might these companies play in an effective sustainable economy and how might they change in the process?

Robert Schwartz, in the March 1983 issue of The Tarrytown Letter, comments,

"Major changes are coming in the world of business. Indeed, business – until recently the whipping boy for liberals and environmentalists – may quietly be shaping the best model of what future organizations will be like in all fields.

"Surprisingly, the model is very nearly Utopian, with a sense of shared purpose and community. Why? For business reasons: A new and intelligent workforce responds more productively to a new and better working environment. Even more important is the fundamental shift in the way business will be managed.

"Big Business, the crowning achievement of the industrial epoch, is in serious trouble. Probably fatal trouble. Norman Macrae, deputy editor of The Economist puts it bluntly: ‘The day of large businesses is drawing to an end. Probably all Big Business enterprises will pass from the scene by the mid 1990’s.’

"Next, Big Business will be replaced by small businesses that are more adaptable to local markets, more attuned to sophisticated consumer needs, and to the growing hunger, among employees, for greater challenge and greater rewards.

"Third, the central reality is that intelligence is fast moving to the forefront as a major corporate asset. Agricultural economies depended on land as their source of wealth; industrial economies depended on capital. But post-industrial businesses will depend on brains as their principal commodity.

"Thus, today’s innovative businesses are ignoring the industrial era’s emphasis on quantity and conformity and are instead creating workplaces where individual creativity can flourish."

While there are some significant limitations to these changes (as I’ll discuss in connection with the following article on the Mondragón cooperatives), there are also many hopeful aspects that we need to see with clear eyes.

In the following article, Wayne Roberts, who is the manager of Planning and Organization Redesign for one of Washington state’s largest corporations (as well as a member of the Sunbow community), describes the rather remarkable way his corporation is changing in response to the changing times.

AS MANY OF US are only too aware, the current economy is in a state of chaos. The number of people unemployed, and the rate of business failures are the highest since the depression of the thirties. The companies that are left are undergoing drastic adjustments to the way they do business. The booming growth of the past thirty years is over for many industries. The eighties are looked upon as a period of turbulence, uncertainty, and of great challenge. The only certainty now seems to be that whatever decisions they make will very likely be wrong. And, unlike the past, mistakes can be very costly, if not fatal. Most businesses have never experienced this kind of economic environment before.

But as painful as this situation is for business and many people, it is bringing about some very important changes in a large Washington based company. My feeling is that these changes will have impacts that will be felt far outside the boundaries of the company.

The changes that are occurring are the redesigning of jobs and the structure of the organization so people will have more influence and control over their worklives. This includes decentralizing authority and decision making, as well as "pushing" both "down" the organization as far as possible. The belief behind this is that employees have much more to contribute than the previous organization structure, climate and management style have allowed. And, by changing those characteristics, their increased contribution can greatly improve the company’s performance – the stated purpose of the change.

The "obvious" reason for the change is the need to regain lost profitability by increasing efficiency and effectiveness. However, I like to think that the current economic situation is only the catalyst for change, and that the real impulse to change comes from the revolution of consciousness that is now taking place. This article might be thought of as a report on the manifestation of that new consciousness in the corporate world.

In order to appreciate the significance of the changes that are underway a comparison to what other companies have done might be helpful. The kind of organizational climate envisioned has existed in Japan for many years. Several U.S. and European companies have made the kinds of changes I will be describing, and have had very favorable results, as measured by profitability and by the satisfaction of employees. However, these companies have usually ended up making the changes in only one plant, or location, because of the difficulty in transferring ideas to other units within the company.

Two things are unique about what this company is doing. One is that it is making the changes in every plant and support organization in the company – all at once. It is the largest change of this kind ever undertaken by an American corporation. Forty thousand people across the United States will be affected. The latter has important implications, which I will describe later.

Since a corporation is a collection of small "communities" of people gathered to channel resources into goods and services, what is learned from the new organizational forms should have application, with some modification, to small organizations, and communities as well. Also, what we already know about communities will have relevance, again with some modification, to the corporate form, as we will see.

Let’s review the problem facing most companies, some causes of the problem, and a part of the solution. The symptoms of the problem are reduced profits. The real problem is not responding appropriately, or quickly enough to changes in their environment. The ability to recognize and respond to needed change is dependent upon the type of organization structure a company has. The traditional organization in place in most companies today evolved through several forms over the last two hundred years. Each form was successful because it fit the needs of the market; the economic environment; and the education, skills, needs and expectations of the workers. As these changed, the organizational form changed. Each form had its strengths and its weaknesses. Ironically, the strength of the form existing in most companies today is its stability, or its ability to resist change! Unfortunately for these companies their world is currently in a rapid state of change.

The market-place has changed, as a result of the new consciousness being manifested. As you have known for some time, people’s values are changing. People are changing to smaller, more fuel-efficient cars, smaller houses, less quantity, more quality. The baby boom has passed, and along with it the market boom, in which any company could not only survive, but grow rapidly.

There is a new breed of worker expressing a new consciousness. Their level of education is greater. Their work ethic, their values, and their needs are different. They expect more from their work than employees did twenty years ago.

What is needed is an organization form which matches the new market needs, and the changing needs of the employees. And in addition, it must be a form which is flexible and can change quickly, if necessary.

So, how is this large corporation going about creating such an organization form? Traditionally, top management people, and possibly consultants, would do the redesign and then pass it down from the top. This time, however, each department, or plant, is responsible for designing its own organization with some general guidelines which are expected to be followed. These guidelines are presented in an unexpected and enlightened way, through a "VISION" statement and a "PHILOSOPHY" statement.

The VISION statement is a description of how management expects the organization to look and function several years after the redesign is completed. Some of the changes are behavioral changes on the part of both managers and employees, which could take three to five years to become commonplace. The vision statement is not in the form of an unchangeable policy. Rather, it is a starting statement which the employees are expected to modify to fit their needs.

A PHILOSOPHY statement describing attitudes and beliefs about people is also expected. By making positive statements about people, and making them public, the pressure is to behave accordingly. If the behavior produces improved results, an actual change in beliefs is expected to take place in people who may not have held those beliefs to begin with. Another way of saying this is that normally we behave according to our beliefs. But, if we behave "as if" we believed something else, then with time and reinforcement, our beliefs can change. The philosophy statement includes the beliefs that people are responsible, trustworthy, creative, and willing and able to make responsible decisions related to their work. Philosophy statements are rarely published, or talked about, in a company. However, they can be deduced very easily by looking at how employees are treated.

The redesign is also being carried out in a most unorthodox way. Traditionally, management would select the people to do the redesign. In this case, the redesign is being done by employees who volunteered. In most companies, unions are rarely involved in organizational decisions. In this case, union employees are fully involved, looking at how work is done, with the objective of improving efficiency and quality of the products they produce.

Opportunities to create work teams are also being examined. These teams would be semi-autonomous, meaning that they would be given all the information, resources, skills, authority and decision making power needed to accomplish their function, or tasks. They would evaluate and control their own performance, and would have large say in selecting new team members. This is in contrast to the traditional style where resources and information are provided by the managers or supervisors, who also make the decisions, and measure and control performance. Some reasons for forming teams are to provide more flexibility to respond to changing requirements, and to give employees broader work assignments and responsibilities. Employees would be trained and skilled in, and perform, more than just the job they are primarily responsible for.

Traditionally, people are paid for the jobs they perform, which can be very narrow in scope. In the new organization, people would be paid according to the skills they have developed. The idea is that the more skills a person has, the more flexible and valuable that person is to the company.

The teams in operation now are making decisions by consensus, rather than by majority vote. This occurred easily and naturally after they weighed the advantages and disadvantages of both styles. In some cases majority vote is used. But, if the entire team is affected by the decision, consensus is arrived at. In addition to being a result of increased awareness, the use of it also increases awareness, or consciousness, as the team members begin to see, and think of, their teammates in a different way. It is no accident that teams, or small "communities," are being formed. The team concept is moving the organization from a hierarchical or "triangular" form to the "circle" form. The Japanese have a team problem solving system they call "Quality Circles."

Reward and benefit systems are also being looked at with the recognition that people’s needs are different and that a single system does not fit everyone’s needs. For example, as employees’ families grow up and leave home, the need for life and health insurance, and money changes. Some people might prefer to have time off rather than additional money. More flexible systems are being looked at.

The management style will change from being autocratic to being more participative. The role of management and supervision will shift from acting as the expert, assigning tasks, and enforcing rules to one of team builder and leader, coach, teacher, and goal setter. The former management roles will reside in the team members.

The expected results of the new organization structure, or form, will be a change in the work climate. This new climate will result in more cooperation and less destructive competition; improved management- union relations; sharing of power, authority, and decision making with the employees; and more open, two-way communications; and finally, increased efficiency and profitability. All of these changes I see as a direct response to, and a manifestation of, the new consciousness.

These are results expected to be seen inside the company. What about impacts outside the company? The results above are due primarily to an empowerment of the people as their creative potential is realized and they gain more control over their work lives. This is due to the new working environment where needs are satisfied to an extent that was not possible before. Work will be more productive, enjoyable, and rewarding. Work will be less energy draining. More energy and creativity will be available outside the work place. The impact on the quality of home life and on community activities can’t help but be positive.

If this company alone makes these kinds of changes, I feel the impact will be significant, but there is a high likelihood that the impacts will be multiplied. Smaller companies who have similar programs in place, and have had outstanding results, have had little influence on the larger business community. But, when a very large company does something of this significance, and scope, other companies will watch very closely. When the positive results begin to show, they will quickly follow the lead. If that happens, it won’t take very many years to have a whole new culture in place, inside, and outside, the corporate world.

In summary, the new consciousness is manifesting itself in the market-place, and, as companies change their internal structure in response to the market- place, the new consciousness is also manifesting itself inside the corporate world.

This is just the beginning – the first step into the new age for this company and those to follow. It will take time for these changes to be made and the results to be seen and felt. We must have patience. Yet change will probably come much faster than I hope, and that will be good because I have high hopes!

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