When you book an airline ticket, you trust that the pilot assigned to this flight is sufficiently knowledgeable and competent to fly the aircraft. In fact, you expect the pilot to be a professional that has gone through many hours of flight training and theoretical study. How different is this when we turn to the case of ‘flying’ companies and other organizations. Have you ever checked the credentials of your boss, to assess whether (s)he is the professional ‘pilot’ one can entrust with leading (this part of) the organization to its next destination? Perhaps you assume such an assessment was done by those who appointed your boss at the time? Regardless of the various answers possible to these questions, there’s a striking difference between the level of professionalism naturally expected from an aircraft pilot and the more ambiguous and unclear expectations many of us have with regard to managers.
Historically, Mary Parker Follett, Henri Fayol, Peter Drucker and other pioneers in the management discipline conceived of management as a science-based professional activity that serves the ‘greater good.’ In the beginning of the 21st century, however, the nature and level of professionalism of management is under close public scrutiny. For instance, many large banks at Wall Street that failed so badly in 2008 were managed by people demonstrating anything but professionalism, resulting in mismanagement of risks and a one-dimensional focus on short-term profitability. The CEOs of these organizations “strayed from their strategies and took unwise and unsustainable risks, thus ignoring potential long-term consequences”, as Michael Beer observed.
Not only managers of financial institutions suffer from amateurism where professionals are highly needed. Enron, ICI, Worldcom, Global Crossing, Tyco International, Bristol-Myers Squibb, Kmart, Xerox, Volkswagen and many other companies appear to have suffered from mismanagement and lack of direction. Other recent cases include the mismanagement of megaprojects such as the Berlin Brandenburg airport, San Francisco Transbay Terminal, the 2014 Soccer World Cup in Brazil, and the 2014 Winter Olympics in Russia. Many supervisory boards, or boards of directors, also suffer from non-professionalism. A recent example is the supervisory board of Vestia, the largest public housing association in the Netherlands. When Vestia’s CEO mismanaged the organization for many years, its supervisory board failed to effectively monitor the CEO’s performance and later also failed to properly manage his exit.
These cases of dramatic mismanagement raise the question whether they are perhaps exceptions, that is, incidental failures in an otherwise quite healthy profession. The academic evidence suggests the answer to this question is a straightforward ‘no.’ For example, Paul Nutt demonstrated that about half of all managerial decisions made in organizations fail. And Bloom et al. collected data on core management practices in over 10,000 firms to observe there are many very badly managed firms, compared to a very small population of well-managed ones. Of course, any professional discipline will have to accept the fact that low levels of professionalism will occur. The key challenge here is not to erase all forms of amateurism, but to make high levels of professionalism the norm rather than the exception.
The quest for more professional management is not only the ‘right’ thing to do on moral grounds. Throughout the world, young people are increasingly better educated and demanding more professional management practices from their employers. For example, a large study among 40 thousand employees and managers at PricewaterhouseCoopers (PwC) observed that employees under the age of 30 perceive present management practices in PwC as highly dysfunctional, causing most of them to resign within two years. Moreover, the study by Bloom et al. demonstrates that the level and quality of management practice, or what they call management as a technology, has a strong effect on firm performance. Investing in the professionalism of the management discipline is thus not only in the interest of many employees and managers, but is also of great importance for investors, customers, and society at large.
In this respect, circular management practices ― also known as sociocracy and holacracy ― illustrate the notion of management as technology, that is, a body of instrumental knowledge. These new forms of management perhaps offer the best hope of easing top managers’ stranglehold on companies and, by extension, on innovation in these companies, as well as the revitalization of the management discipline itself. These circular forms of management distribute power and leadership throughout the organization, while maintaining an unambiguous hierarchy. This type of management practice implies that people take on roles as needed, rather than anyone becoming exclusively and (almost) permanently assigned to a managerial or any other role.