[another post pertaining to a WAAGNFNP discussion.
One of the things that surprised me the most when I first began to have significant contact with people in the actual business world was how many of them were Marxists.
Not that they were hankering for the revolution, mind you, nor expecting the establishment of the "dictatorship of the proletariat." Indeed, they very much wanted to avoid having the "workers of the world unite." But they had bought into the entire theory of exploitation and class warfare. In fact, they thought it their jobs to exploit workers for the good of the company, or more accurately, for the good of themselves.
Once you get this sort of mindset going, you get all sorts of pernicious effects. Replacing high-wage workers with low wage workers or replacing a receptionist with a security badge lock on the door, those become the goal, whether or not it actually adds to profitability. Now I admit, often the accounting makes it look like you've saved money doing these things, but often you've just replaced a fully accounted cost with a hidden cost, such as the reduction in security and convenience that goes with getting rid of the receptionist, or the increased management overhead that happens when you outsource the job to Bangalore.
Investors and market analysts also hold to the Marxist theory. They look at a company, suggest that it has too many workers, and hold the price down until the firm lays off some large fraction of its work force. Often, this actually causes substantial loses to the firm, alibied by saying that the "write-offs" are "short term" and the "restructuring" will lead to long term profitability. Of course these are untestable theories; if the company instead goes into a death spiral because it lost the workers that were needed to continue the organization, the investment analysts instead blame the firm for not having laid off the workers soon enough.
But these action do have a more general effect: that of continuing the ongoing "commodification" of labor. Managers hate to be in the situation of selling commodities, but they love to be in the position of purchasing commodities, especially when the commodity is labor. It’s much easier to manage people who are afraid of losing their jobs, much easier to negotiate when you’ve got the threat of moving the factory to Mexico.
Yet I have seen, time after time, poor management decisions bailed out by the quality of labor expended, where a damn fool plan managed to scrape by because the people tasked with carrying out the plan were smart and flexible and managed to invent work-arounds and clever schemes for bailing the thing out. Of course it was still the managers who took the credit for success, and who blamed underlings when something failed. The phrase "kiss up, kick down" certainly rang the bell, didn't it?
I've also known quite a few good managers in my time. I respect the job enough to have tried to avoid managerial responsibility practically every time it has been offered to me. I don't have the temperment and dedication to be a good manager, and I don't have the stomach to be a bad one. I do know that the most important thing about good management is that it is not bad management, and that the class-war managers I've encountered have been among the very worst.
Showing posts with label control fraud. Show all posts
Showing posts with label control fraud. Show all posts
Wednesday, July 18, 2007
Friday, March 2, 2007
Fighting City Hall II
The police break into a room where an illegal poker game is taking place. Four men are sitting at the table, money is scattered about and one of the men is about to deal. The man to the dealer’s right explains, “I’m not gambling. I just came here to collect a debt that Ed here owes me.” With that, he scoops up the money in front of him and puts it in his pocket. The next two men insist that they are just friends who getting ready to order dinner from room service and the money is to take care of the tip.
The cops turn to the last guy. He has a big pile of money in front of him and he’s holding the deck of cards. “Well,” they say, “We’ve got you at least. You’re under arrest for gambling.” The man replies, “With who?”
In the fracas that broke out at WRPI in my last year at RPI, I was kicked off the air about 20 minutes into my shift, despite the fact that I was signed in as the on-air engineer; I was also on the programming committee. Nevertheless, the Station Manager shut me down; in fact, if memory serves, he dumped the transmitter and shut the station down, at least for a while.
He could do that because he was the Station Manager, the only person in the entire WRPI organization that was officially recognized by the FCC as having authority at the station. One can imagine any number of ways to organize a radio station, but FCC regulations require that ultimate authority about what goes out over the air resides with one guy.
Laws of incorporation work in similar ways, demanding that there be certain accountable (in theory, anyway) persons in the corporation, which means that there are strong tendencies to organize corporations in certain ways. If you want to try something else, you have to use different methods of legal organization, co-ops, unions, granges, political parties, proprietorships, limited partnerships, etc. Most of the really strong privileges, however, go to corporations, and corporations are almost always top down, command and control organizations.
In fact, if you look at the histories of corporations in the latter part of the 19th Century, most of them used the straight-ahead military model of organization. This makes sense, of course, since armies tended to be the largest organizations around (with the possible exception of the Catholic Church), and most people with managerial skills developed them in military service.
Nation states also tended to be organized along military lines; for one thing, it was military action (conquest and defense against conquest) that organized nation states in the first place. City states, the predecessor to the nation state, tended to organize around two things: a marketplace (plus the things that assist a market, such as transport systems like roads and rivers) and a defensive structure (city walls and/or the protecting army).
Individual ambition, when embedded in a large organization, tends to be about climbing the organization. One really interesting variation on this theme is the ambitious individual who takes control of a small organization and builds it into a large organization. In the latter case, the personal identification with the good of the organization is often much stronger, for good or ill (many is the small but growing organization that foundered because the guy at the top couldn’t relinquish day-to-day control once the organization got too big for him). In the former case, it’s quite common to see dog-in-the-manger, stab-in-the-back, or even scorched earth tactics from a climber who is willing to see the organization harmed, so long as they themselves advance.
In extreme cases, you get what is known as “control fraud:”
“Control fraud occurs when conspirators are able to take control of an institution in order to exploit the trust and authority of the institution to convert its assets to personal use.”
The grand scandals of the past few years, Enron, WorldCom, Tyco, Global Crossing, Amaranth, (well, the list just goes on and on doesn’t it?) should be viewed as just the tip of the iceberg. More subtle and insidious are the cases where the companies still exist, but are left debt bloated, stripped of goodwill and a loyal workforce. They are hollowed out, in other words, assets converted to cash that is then used to buy back their own stock so that the stock options will stay above water, at least until the lads at the top can parachute back to their gated communities.
It’s one sort of individualism, I suppose.
“Money’s just the way you keep score.” – The Wheeler Dealers
The cops turn to the last guy. He has a big pile of money in front of him and he’s holding the deck of cards. “Well,” they say, “We’ve got you at least. You’re under arrest for gambling.” The man replies, “With who?”
In the fracas that broke out at WRPI in my last year at RPI, I was kicked off the air about 20 minutes into my shift, despite the fact that I was signed in as the on-air engineer; I was also on the programming committee. Nevertheless, the Station Manager shut me down; in fact, if memory serves, he dumped the transmitter and shut the station down, at least for a while.
He could do that because he was the Station Manager, the only person in the entire WRPI organization that was officially recognized by the FCC as having authority at the station. One can imagine any number of ways to organize a radio station, but FCC regulations require that ultimate authority about what goes out over the air resides with one guy.
Laws of incorporation work in similar ways, demanding that there be certain accountable (in theory, anyway) persons in the corporation, which means that there are strong tendencies to organize corporations in certain ways. If you want to try something else, you have to use different methods of legal organization, co-ops, unions, granges, political parties, proprietorships, limited partnerships, etc. Most of the really strong privileges, however, go to corporations, and corporations are almost always top down, command and control organizations.
In fact, if you look at the histories of corporations in the latter part of the 19th Century, most of them used the straight-ahead military model of organization. This makes sense, of course, since armies tended to be the largest organizations around (with the possible exception of the Catholic Church), and most people with managerial skills developed them in military service.
Nation states also tended to be organized along military lines; for one thing, it was military action (conquest and defense against conquest) that organized nation states in the first place. City states, the predecessor to the nation state, tended to organize around two things: a marketplace (plus the things that assist a market, such as transport systems like roads and rivers) and a defensive structure (city walls and/or the protecting army).
Individual ambition, when embedded in a large organization, tends to be about climbing the organization. One really interesting variation on this theme is the ambitious individual who takes control of a small organization and builds it into a large organization. In the latter case, the personal identification with the good of the organization is often much stronger, for good or ill (many is the small but growing organization that foundered because the guy at the top couldn’t relinquish day-to-day control once the organization got too big for him). In the former case, it’s quite common to see dog-in-the-manger, stab-in-the-back, or even scorched earth tactics from a climber who is willing to see the organization harmed, so long as they themselves advance.
In extreme cases, you get what is known as “control fraud:”
“Control fraud occurs when conspirators are able to take control of an institution in order to exploit the trust and authority of the institution to convert its assets to personal use.”
The grand scandals of the past few years, Enron, WorldCom, Tyco, Global Crossing, Amaranth, (well, the list just goes on and on doesn’t it?) should be viewed as just the tip of the iceberg. More subtle and insidious are the cases where the companies still exist, but are left debt bloated, stripped of goodwill and a loyal workforce. They are hollowed out, in other words, assets converted to cash that is then used to buy back their own stock so that the stock options will stay above water, at least until the lads at the top can parachute back to their gated communities.
It’s one sort of individualism, I suppose.
“Money’s just the way you keep score.” – The Wheeler Dealers
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