Management and the New Workplace

Over the past decade or so, the central theme being discussed in the field of management has been the pervasive changes. Rapid environmental shifts are causing fundamental  trans- formations that have a dramatic  impact  on the manager’s job. These transformations  are reflected in the transition to a new workplace, as illustrated  in Exhibit 1.5. The primary characteristic of the new workplace is that it centers on bits rather than atoms—information and ideas rather than machines and physical assets. Low-cost computing power means that ideas, documents, movies, music, and all sorts of other data can be zapped around  the world at the speed of light. The digitization of business has radically altered the nature of work, employees, and the workplace itself.34

The old workplace is characterized  by routine,  specialized tasks, and standardized control procedures. Employees typically perform their jobs in one company facility, such  as an automobile factory in Detroit or an insurance agency in Des Moines. The organization is coordinated and controlled through the vertical hierarchy, and decision-making authority resides with upper-level managers.

In the new workplace, by contrast, work is free-flowing and flexible. The shift is most obvi- ous in e-commerce and high-tech  organizations, which have to respond to changing markets and competition at a second’s notice. Numerous  other organizations, such as McKinsey & Company, Canada Life, and Nokia, are also incorporating  mechanisms to enhance speed and flexibility. Empowered employees are expected to seize opportunities and solve problems as they emerge. Structures  are flatter, and lower-level employees make decisions based on widespread information  and guided by the organization’s mission and values.35

Knowledge is shared widely rather than hoarded by managers, and people throughout the company keep in touch with a broader range of colleagues via advanced technology. Some organizations, such as Tenary Software, are trying these new models.

The workplace is organized  around  networks rather than rigid hierarchies,  and work is often virtual, with managers having to supervise and coordinate  people who never actually “come to work” in the traditional sense. Thanks  to modern informa- tion and communications  technology, employees can perform  their jobs from home or another remote location, at any time of the day or night.36 Flexible hours, tele- commuting, and virtual teams are increasingly  popular  ways of working that require new skills from managers. Using virtual teams allows organizations  to use the best peo- ple for specific jobs, no matter where they are located, which enables a fast, innovative response to competitive pressures. Teams also may include  outside contractors,  suppli- ers, customers, competitors, and interim managers who  are not affiliated with a specific organization but, instead, work on a project-by-project  basis. The valued worker is one who learns  quickly, shares knowledge,   and is comfortable  with  risk, change,  and ambiguity.


The most striking  change affecting organizations and management is technology. Consider that computing  power has roughly doubled every 18 months over the past 30 years while the cost has declined  by half or more every 18 months.37 In addition, the Internet, which was little more than a curiosity  to many  managers  as recently  as a decade ago, has trans- formed the way business is done. Many organizations  use digital networking technologies to tie together employees and company partners in far-flung operations. Organizations are increasingly shifting significant chunks of what once were considered core functions  to outsiders  via outsourcing,  joint ventures,  and other complex  alliances. Companies   are becoming interconnected, and managers have to learn how to coordinate relationships with other organizations and influence people who can’t be managed and commanded in tradi- tional ways.

The Internet and other new technologies   also  are  tied closely  to globalization. Although global interconnections  bring many opportunities,  they also  bring new threats, raise new risks, and accelerate complexity  and competitiveness. Think about the trend toward outsourcing to low-cost providers in other countries. To cut costs, U.S. companies have been sending manufacturing  work to other countries for years. Now, work involving high-level knowledge is also being outsourced to countries such as India, Malaysia, and South Africa. India’s Wipro Ltd., for example, writes software, performs consulting work,  integrates back-office solutions, undertakes   systems integration,  and handles technical support for some of the biggest corporations in the United States—and  does this for 40 percent less than comparable  U.S. companies can do the work.38

Diversity of the population and the workforce in the United States is another fact of life for organizations. The general population  of the United States, and thus of the workforce, is growing more ethnically and racially diverse. In addition,  generational diversity is a pow- erful force in today’s workplace, with employees of all ages working together on teams and projects in a way rarely seen in the past. In the face of these transformations,  organizations are learning to value change, innovation,  and speed over stability  and efficiency.

The fundamental paradigm during much of the twentieth century  was a belief that things  can be stable. In contrast, the new paradigm  recognizes change and chaos as the natural order of things.39  Events in today’s world are turbulent and unpredictable, with small and large crises occurring  frequently.  Rock star David Bowie has staked the newest phase of his career on that turbulence (see Bowie  Bonds  feature on next page).

One way that managers are addressing the complexity  of today’s world is by renewing their emphasis on innovation. With the power of the Internet, for example, companies have lost much of their ability to control information to consumers and the public, so they are forced  to innovate with increasingly better products and services to remain competitive. The intense competition brought about by globalization also spurs compa- nies to keep pace with new technologies and innovative management practices.40 A re- port from a group  of leading scientists, executives, and educators points to the growing innovation strength of countries  such as China and India, which are poised  to usurp America’s  position as  an innovation leader. Between  the years  of 1991 and 2003, research and development  spending in China  exceeded that in the United States by bil- lions of dollars.41

Over the past few years, though,  an explosion of attention to innovation roared through U.S. firms. For example, Motorola, which seemed to be on the has-been list in the opening years of the twenty-first century, roared back to life with hot new products  such as the RAZR phone, the ROKR, the first combination cell phone and iPod, and the Q phone and e-mail device, designed to compete with the BlackBerry. Motorola CEO Ed Zander is implementing  management and cultural changes  that support an ongoing process  of innovation.42

Motorola’s  changes reflect a broader movement in U.S. firms, seen in companies from General Electric to IBM to Procter & Gamble, as managers are emphasizing creativity  and innovation to compete in a new era. General Electric  CEO Jeff Immelt,  for example, shifted from emphasizing growth through acquisition to pushing growth through technological in- novation and providing additional  resources for GE’s scientific  research labs. Procter  & Gamble collaborates widely with individual entrepreneurs and other firms, even competitors, to crank out innovative products.43


In the face of these transitions,  managers must rethink their approach to organizing, di- recting, and motivating  employees. Today’s best managers give up their command-and- control mind-set to focus on coaching and providing guidance, creating organizations that are fast, flexible, innovative, and relationship-oriented.  In many of today’s best companies, leadership is dispersed throughout the organization, and managers empower others to gain the benefit of their ideas and creativity.

Success in the new workplace depends on the strength and quality of collaborative relationships. Rather than a single- minded focus on profits,  today’s managers recognize the critical importance of staying connected to employees and customers. New ways of working  emphasize collaboration  across functions and hierarchical levels as well as with other companies. Team- building  skills are crucial. Instead of managing a department  of employees,  many  managers  act as team leaders of ever-shifting, temporary projects.

At  SEI Investments,  the work is distributed among  140 teams. Some are permanent,  such as those that  serve major  cus- tomers or focus on specific markets, but many are designed to work on short-term  projects or problems. Computer  linkups, called pythons, drop from the ceiling. As people change assign- ments, they just unplug their pythons, move their desks and chairs to a new location, plug into a new python, and get to work on the next project.44

An important  management challenge in the new workplace is to build a learning organization by creating an organiza- tional climate that values experimentation and risk taking, ap- plies current technology, tolerates mistakes and failure, and re- wards nontraditional  thinking and the sharing of knowledge.

Everyone in the organization participates in identifying and solving problems, which enables the organization to continu- ously experiment,  improve,  and increase its capability.  The role of managers is not to make decisions but, instead, to create learning capability, in which everyone is free to experiment and learn what works best.


Many managers dream of working in an organization  and a world in which life seems rela- tively calm, orderly, and predictable, but their reality is one of increasing turbulence and disorder. Today’s managers and organizations face various levels of crisis every day—from the loss of computer data, to charges of racial discrimination, to a factory fire, to workplace violence. These organizational crises are compounded  by crises on a more global level.

Consider  a few of the major events that affected U.S. companies within the last few years: the bursting  of the dot-com bubble, which led to the failure of thousands of compa- nies and the rapid decline of technology stocks; the crash of Enron as a result  of a complex series of unethical and illegal accounting gimmicks, the subsequent investigations  of nu- merous other corporations, and implementation of new corporate governance laws; terror- ist attacks in New York City and Washington, DC, that destroyed the World Trade Center, seriously damaged the Pentagon, killed thousands of people, and interrupted busi-ness around the world; the crash of the space shuttle  Columbia  and the ensuing investiga- tion that revealed serious cultural and management problems at NASA; Hurricane Katrina’s devastating impact on organizations in New Orleans and the Gulf Coast,  as well  as numer- ous companies  that do business with them; the removal of spinach from supermarkets because of e-coli; and continuing  terrorist threats against the United States and its allies— causing companies to hire experts to manage potential crises. Even the Hilton  family, Paris’s parents, hired a crisis manager after she got arrested and sent to jail.45 These and other events brought the uncertainty and turbulence of today’s world clearly to the fore- front of everyone’s mind and made crisis management a critical  skill for every manager.

Dealing with the unexpected has always been part of the manager’s job, but our world has become  so fast, interconnected, and complex that unexpected events happen more frequently and more often with greater and more painful consequences. All of the new management skills and competencies we discussed are important to managers in such an environment. Crisis management  places further demands on today’s managers. Some of the most recent thinking on crisis management  suggests the importance of five leadership skills.

  1. Stay calm.
  1. Be visible.
  1. Put people before business.
  1. Tell the truth.
  1. Know when to get back to business.

Stay calm. A leader’s emotions  are contagious,  so leaders have to stay calm, focused, and optimistic  about the future. Perhaps the most important part of a manager’s  job in a crisis situation is to absorb people’s fears and uncertainties.  Although managers acknowl- edge the difficulties, they remain rock-steady and hopeful, which gives comfort,  inspira- tion, and hope to others.

Be visible. When  the world  becomes ambiguous and frightening to people, they need to feel that someone is in control. After Hurricane Katrina hit New Orleans, Scott Cowen, president of Tulane University, stayed on campus until he was sure that everyone was evac- uated and everything that possibly could be done to control the damage was in place.47  In times of crisis, leadership cannot be delegated. When Russian president Vladimir Putin continued his holiday after the sinking of the submarine Kursk in August 2000, his reputa- tion diminished worldwide.48

By contrast, Melvin Wilson of Mississippi Power stayed visible and maintained  impor- tant networks to deal with a real catastrophe. Imagine  that you are a mid-level  marketing manager at a public utilities company. One day you’re reviewing  next year’s advertising campaign. A day later you’re responsible for coordinating the feeding, housing, and health care of 11,000 repair workers from around the country. That’s the situation that Melvin Wilson, a marketing  manager for Mississippi Power, found himself in when Hurricane Katrina hit the state in August 2005, wiping out 1,000 miles of power lines, destroying

65 percent of the company’s transmission and distribution  facilities, damaging 300 trans- mission towers, and knocking out power for all 195,000 customers. The company  had a disaster recovery plan in place, but managers were suddenly thrust into a situation  that was twice  as bad as the worst-case  scenario.

Mississippi  Power’s corporate headquarters was totally destroyed, its disaster response center flooded and useless. Early recovery work  had to be done without access to computers, phones, or basic sanitary facilities. Confusion and chaos reigned. “My day job didn’t prepare me for this,” Wilson told a reporter  in a choked  voice as he struggled  to find nurses, beds, tetanus shots, laundry  service, showers, security services, and food for repair workers.

Other managers, from all levels and divisions,  have dealt with similar predicaments. One manager compared the process to managing an Army division at war! Amazingly, Mississippi  Power employees got the job done smoothly and efficiently, restoring power in just 12 days, thus meeting the bold target of restoring power by the symbolic date of September 11. The tale of how this was done is one of the great crisis-management stories of modern  times,  and a lesson for managers in how much  can be accomplished quickly when it’s managed right.49

The managers at Mississippi Power illustrate many of these new management com- petencies, which enabled the company to execute  a swift, ambitious  disaster plan and restore power in only 12 days following Hurricane Katrina. Two decades ago, hurricane response was run from the top down, but managers learned that setting priorities from headquarters  was ineffective during times of chaos  and confusion. Today, decision making has been pushed  far down to the level of the substation, and employees are empowered to act within certain guidelines to accomplish  a basic mission:  “Get the power on.”

The corporate culture,  based on values of unquestionable trust, superior performance, and total commitment, supports individual initiative and the confidence of management that employees will respond with quick action and on-the-spot innovation. During the disaster  recovery,  even  out-of-state crews  working unsupervised  were empowered  to engineer their own solutions to problems in the field. Networking and team-building skills also are highly valued at Mississippi Power. Middle managers like Melvin Wilson forged networks of relationships throughout the company, with other organizations, and with power company managers in other states, which  enabled them to quickly gain access to critical  resources and build teams with the right combination of skills. Overall, Missis- sippi Power reflects the qualities of a learning organization  in which employees, from line workers to accountants,  are encouraged to experiment, innovate, share knowledge, and solve problems.

Melvin Wilson also illustrates some of the qualities needed for effective crisis manage- ment. When he took on the role of “director of storm logistics,” he suppressed his own emotions to present a calm and focused persona, which kept employees’ emotions directed in a positive way on the job to be done. At the same time,  he and other managers made sure that plans were in place to assist employees whose homes were damaged (fortunately, no employees were killed in the storm). Wilson was a highly visible leader throughout  the re- covery, working  20-hour  days and sleeping on the floor. Top leaders were visible  as well, meeting with storm directors every day and helping boost the morale of recovery workers.

Leadership  during  crises and unexpected events is becoming  important for all organiza- tions in today’s complex world. Managers in crisis situations should stay calm, be visible, put people before business, tell the truth, and know when to get back to business. Human skills become critical during times of turbulence and crisis.

Put people before  business. The companies that weather  a crisis  best, whether the crisis is large or small, are those in which managers make people and human feelings their top priority. Ray O’Rourke, managing director for global corporate affairs at Morgan Stanley, put it this way following  September 11: “Even though we are a financial services company, we didn’t have a financial  crisis on our hands; we had a human crisis. After that point, everything  was focused on our people.”50

Tell the truth. Managers should get as much information from as many  diverse sources as they can, do their best to determine the facts, and then be open and straightfor- ward about what’s going on. After a 17-year-old patient at Duke University Hospital died following a botched organ transplant,  hospital  managers compounded  the organizational crisis by failing to communicate with the media and community for nine full days after the tragedy was reported in the press.51

Know when to get back to business. Although managers should first deal with the physical and emotional  needs of people, they should get back to business  as soon as possible.  The company has to keep going, and a natural human tendency makes us want to rebuild and move forward. Rejuvenation of the business is a sign of hope and an inspiration to employees. Moments of crisis also present excellent opportunities for looking forward and using the emotional energy that has emerged to build a better company.

This is a challenging  time to be entering  the field of management. Throughout  this book, you will learn much more about the new workplace, about the new and dynamic roles that managers are playing in the twenty-first century, and about how you can be an effec- tive manager in a complex, ever-changing  world.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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