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The quest for professional management

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.

Man adjusting tie by Unsplash. Public domain via Pixabay.

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.

Recent Comments

  1. JC Spender

    Hi Georges,

    Not sure this kind of thing helps. Surely it is a distracting palliative at best.

    The implication of Nutt’s study was either to suggest academics are better at managing than those interviewed, or that the ‘fruition rate’ of their choices should be higher. Really? How high? When we get to ‘real science’ how many projects and experiments are successful? How many VC investments cash out? How many of Picasso’s paintings are winners?

    The dream of professionalization is indeed ancient, and much has been written about its meaning and to whom – such as Rakesh’s 2007 book. Surely we realize by now (after almost two centuries of academic laboring) that the modernist dream of a science of management that would/could underpin management as either a technology (Bloom’s curious ideas) or as a profession is clearly rubbish.

    You point to the fact, widely and complicitly ignored, that we have no substantive idea (‘theory’) of what managers actually do – beyond the Carnegie notion of rational decision-making – which is fine when the data is available but irrelevant when it is not – which is surely the managerial condition. In fact we do not even have a viable theory of the firm, as Coase noted. Even if we talk about ‘satisficing’ and doing as well as we can with the data available, Knight’s puzzle lurks in the background: no uncertainties engaged, no possibility of value creation and profit.

    All of which is reinforced by the absence of a ‘theory’ of entrepreneurship – in spite of academics’ enthusiasm for teaching this much-demanded topic. But what do they know? If real managers could model this stuff – as the business model literature suggests academics can – there would be no profit or competitive advantage in it beyond minimizing waste, the old 19th century project which Scientific Management sought to address.

  2. Georges

    Dear JC,
    Okay, a “distracting palliative at best”. But how would you suggest we get out of the “intellectual stasis” (Khurana & Spender) that characterizes our discipline? From your argument, I infer you would put you money on building better (validated) theories. However, it’s not so much the theories that drive any professional work and performance, but the “methods” used by practioners and scholars alike – as you also seem to argue in your recent working paper “An essay on method”. Having worked with many managers and entrepreneurs (especially those with engineering backgrounds), I therefore put my money on developing management technologies/methods that distribute leadership, power and authority throughout the organization.

  3. JC Spender

    Hi Georges,

    Thanks for responding – and for pointing to some of my writings! I agree with you! Hang him with his own words!

    After 45 years I am still struggling with trying to make sense of ‘managing’ the firm – and would say that a great deal, if not most, of what I have written on this is rubbish (though not including the history of management education and BSchools).

    I am now absolutely convinced the kernel has to be the creation of economic value, versus its redistribution. There can, of course, be no ‘theory’ of this, since, following Knight, we know it has to be about active engagement with uncertainty.

    So the intellectual stasis is methodological first, theoretical second. But it all depends on the project in which we are engaged. So long as we worship in the Temple of Positivism we revere rigor and dismiss relevance – and the notion of value-creation. That is not a problem for academics for their rewards are not those of ‘managing’.

    However I feel our discipline (as part of the university system) has an obligation to society generally, not just to our academic institutional apparatus. I believe ‘managing’ an issue of enormous social, political, and economic importance to those beyond those inhabiting the groves of academe (whose existence is probably parasitic).

    We have known about our failure/s to address the really important issues for three centuries, and especially since Coase (1937). It is surely time to get serious about this and divert some of the huge effort into narcissistic and irrelevant ‘research’.

  4. JC Spender

    Hi Geoges,

    I forgot to pick up your point about ‘distribution of leadership, power and authority’.

    I do not see this as a virtue in and of itself – especially when we cannot link these notions to the creation of economic value.

    In the background is our inability to distinguish the context of private-sector business practice – where the objective is the creation of economic value – and other social and ethical contexts where the objectives might be democracy, justice, and political rights. Those who imagine there are no Luhmann-esque distinctions to be made here surely misunderstand our society and the place of property – and the efforts to create, seize, and apply it in the pursuit of more.

  5. Ruth Peer

    Professional management is something that can be possible if and when the only person who manages itself. Or rather if management was carried out in front of the robots.

    Companies, or organizations, there is no point to pursue and seek the professional manager, because there is no such thing. I think this is a dream that is not obtainable.

    The management work is carried out in front of people, in front of professionals, front and technological forecasting future goals
    And all these can not be estimated accurately. Therefore, management is a role that depends on the variables.

    And if anyone thinks that professional Litzor”mnhl formula “, he finds out very quickly VA professional” today, there will not be a professional director is “tomorrow. So what’s the point.

    A managerial role, is like a coin.
    It has two sides, on the one hand there are the workers, on the other hand there are the bosses, each side sees something else:
    Employees who are under the manager can see – Manager
    Bosses are above the see-employee director.

    Hence, the administrator can perhaps be called “professional work”, but can never be called “professional manager”. Because it is not really a manager, he only works under which most people are. and that’s all.

    As long as there are two aspects, management system, will never be possible to aspire to professionalism. Unless you find a way, organizations, governance make “unilateral currency”.

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