The Age Of Unreason

by Charles Handy

  Life in the core of more and more organizations is going to resemble that of consultancy firms, advertising agencies, and professional partnerships. The organizations are flat, seldom with more than four layers of rank, the top one being the assembly of partners, professors or directors. Promotion through the ranks comes quickly if you are any good (anyone of ability expects to be a partner before 40). Promotion, therefore, soon becomes an inadequate way of rewarding and recognizing people; success for those in the top rank can only mean doing the same job better and, presumably, for more money. At this level, therefore, much of the employee’s pay is based on the results of the organization, the employee is in fact if not in law a ‘partner’. The Japanese core will commonly take 40 per cent of their total pay in performance-related bonuses. It is the same for all top businessmen. It will soon be the same for most people in the core. It has to be.

  This is because no organization can any longer guarantee that this year’s pay rise can be next year’s base line, not in a time of discontinuity. Therefore, this year’s money has to be partly conditioned on this year’s results, and next year’s on next year’s. With smaller cores it will no longer be possible to go in for the five-yearly cull of staff which was for many British organizations the way of reducing labour costs and counteracting the ratchet effect of the annual increment for everyone. Economic necessity, therefore, will force more organizations to re-think the way they reward their senior core people, turning them in the process into partners rather than employees, colleagues rather than bosses and subordinates, names not roles.

  The contractual fringe

  This is made up of both individuals and organizations. These organizations, although often smaller than the main organization, will have their own shamrocks, their own cores and their own subcontractors. It is a Chinese box type of world. The individuals will be self-employed professionals or technicians, many of them past employees of the central organization who ran out of roles in the core or who preferred the freedom of self-employment.

  Whether it be organizations or individuals, however, the organizational principle remains the same – they are paid for results not for time, in fees not wages. The implications of this are important – it means that the central organization can exercise control only by specifying the results, not by overseeing the methods. If that sounds obvious and elementary it also marks a revolution in the way most managers are used to managing. ‘Control the means and the methods,’ the maxim used to be, ‘and the results will be as they should be’, or ‘If they do what they should, you’ll get what you want.’ Of course, a proper specification of the results required does involve some investigation of the method proposed but in the end the purchaser can only accept or reject the proffered goods or services.

  The management of subcontracting is well-understood in certain industries, particularly those of construction and manufacturing consumer goods. It is less well-understood elsewhere but it needs to be better appreciated.

  An organization negotiated to buy back half of the work of one of their staff officers who had decided to go independent. He was their public relations adviser when they decided that they could not afford someone full-time in this role. What they meant but did not say was that they wanted to buy half his time, what they said was half his work. They could not control his time since he now worked from his own office and they failed, and did not try, to specify the results they expected. They felt he was now unmanageable, he felt unappreciated. They ended the contract and engaged a different full-time adviser. We often find it easier to manage someone’s time than their results, but the contractual fringe does not allow us that luxury.

  There are, however, opportunities as well as challenges in the contractual fringe. Fees, for example, make boring work more tolerable, and let us not deceive ourselves, much of the work in organizations is boring. I remember how, as a young student, I earned my extra money by printing Christmas cards and stationery on a hand-operated printing machine. There is, I can assure anyone, nothing more monotonous than taking a piece of paper, placing it in the press, pushing down the handle, taking out the paper and placing it on a pile of completed cards, and then repeating the operation 500 times in an hour. Were I doing it for a wage I would have found any excuse to break the routine; a strike, even if doomed to failure, would at least have been a change. But because each printed page placed on the pile represented another few cents of riches I found it a most tolerable form of labour. The result of my effort was immediately visible, and directly rewarded.

  The shamrock organization, if it is wise, puts boring work out on contract, paying fees for results. It is piecework re-discovered, but piecework more effective than it used to be because it is no longer a dubious substitute for wages. It is also piecework made more tolerable by better equipment; one man or one woman with good machinery can now do what it once needed a group to do, making the reward more directly proportionate to the individual effort. My printing press today would be automatic, the tedium less and the quality better.

  The temptation is to exploit the monopoly power of the organization, to pay minimal fees for maximum output. The challenge is to resist that temptation and to pay good fees for good work. The shamrock organization has to remember that in the contractual fringe it is money paid for work done. There is no longer a residual loyalty to be relied on, no longer any implied promise of security in return for obedient labour. Good work must, in the long run, receive good rewards or it will cease to be good work. The contract is now more explicit, and in many respects more healthy for that.

  The flexible labour force

  The third leaf of the shamrock is too easily seen as the hired help division, people of whom little is expected and to whom little is given. In crude terms, these people are the labour market, a market into which employers dip as they like and when they need, for as little money as they have to pay. This is a shortsighted philosophy. These people are not all pining for core jobs, marking time on the fringe, having to eke out an existence from part-time earnings until something better turns up. A lot of them are women who do not always want a demanding full-time job, but do want access to money and people, a job to supplement and to complement their other work. Many others have two or more part-time jobs, officially declared, and are therefore more properly described as full-time self-employed with a portfolio of jobs. Some of them are young, who see work as a series of apprenticeships or as pocket money opportunities.

  Such people should be taken seriously because for them part-time or temporary work is a choice not just a necessity. They have skills which can be developed, commitment to give, talents and energies to offer if they are required. They do not necessarily hanker after careers or promotion, they have interests and concerns beyond the job and are not therefore susceptible to the same kinds of blandishment as the people of the core. Their commitment will be to a job and to a work group rather than to a career, or to the organization.

  Treated as casual labour such people respond casually. A department store that used part-timers to staff their store on Fridays and Saturdays found that their hallowed tradition of service and politeness was visibly dented. They had not invested enough time in training these new staff, nor in persuading them of their ways, because, as they saw it, there was no guarantee that these people would be around long enough to pay back the investment through improved behaviour or better work. That way lies a self-fulfilling prophecy of the worst sort.

  Organizations have to get used to the idea that not everyone wants to work for them all the time even if the jobs are available. The ways of the core cannot be and should not be the ways of the flexible labour force, for while some may hanker after full-time lifetime jobs, many will not. The new paradigm of work has begun to take hold of people’s minds.

  If the flexible labour force is seen to be a valuable part of the organization then the organization will be prepared to invest in them, to provide training, even training leading to qualifications, to give them some statu
s and some privileges (including paid holidays and sick leave entitlement). Then, and only then, will the organization get the temporary or part-time help that it needs to the standard it requires.

  The flexible labour force will never, however, have the commitment or the ambition of the core. Decent pay and decent conditions are what they want, fair treatment and good companions. They have jobs not careers and cannot be expected to rejoice in the organization’s triumphs any more than they can expect to share in the proceeds, nor will they put themselves out for the love of it; more work, in their culture, deserves and demands more money. It is contract labour but the contract should be fair and must be honoured.

  The Fourth Leaf?

  There is one other category of sub-contracting which needs to be mentioned. It is the growing practice of getting the customer to do the work. Customers, however, are not paid by the organization so this fourth leaf cannot exist as part of the formal structure of the shamrock (which is just as well for the imagery since no shamrock has four leaves), but it is real all the same.

  We now collect our own groceries from the shelves where my parents had shop assistants to do it for them. Our own private cars have replaced the delivery vans. Furniture makers persuade us that it is clever to assemble our own kitchens. Banks long ago worked out that if they could persuade customers to fill in their own deposit slips they, the banks not the customers, would save millions. Now we also draw out our own money from their holes in the wall and call it our convenience. We also pour our own petrol and print out our own tube tickets.

  Smart restaurants may one day charge customers for cooking their own food where now they only, in fast food outlets, ask them to clear their own litter, or preferably, take it away and provide their own eating space. ‘Help yourself in clothes stores, supermarkets’ pick and mix outlets, drug stores and wine shops has turned out to be a clever way of saving labour under the label of customer preference.

  What is clever is that having removed the service, one can then charge extra for providing it as an optional extra, with special delivery or special fitting, or with delicatessens offering the service my parents used to take for granted but now at a premium price. It is all a way of saving labour in the core of the shamrock and reintroducing it as part of the contractual fringe. Clever.

  An Interlude

  At this point let me pause. Some may well be thinking – yes, I see the sense of what you’re saying but is it really happening today? As one manager said to me last month, ‘Who are all these people you call the self-employed knowledge workers – I don’t see any of them on the 8.10 from Woking every morning.’ No, said I, you wouldn’t. These people don’t need to take your trains. They have their terminals and their telephones instead. Sometimes we are so absorbed in our own surroundings that we forget to look over the fence.

  This self-absorption happened to me not so long ago. When I need to compose my thoughts and write I go off to a small cottage set amid the fields of East Anglia, not a house in sight. There I can retreat to the peace of a world where nothing ever changes save the seasons. The farm in front is worked by Charlie and Jim, now into their eighties. They still pull the beet by hand for their cattle and slice off the leaves with a sickle as it used to be done 100 years ago. Jim passed by as I was writing.

  ‘Down here for a bit of a holiday, are you?’ he said.

  ‘No, I’m working,’ I replied, pointing to my papers.

  ‘I’d call that scribbling,’ he said with his gentle smile, ‘not working.’

  Of course, I reflected, the sons of toil have never respected the lily-white hands of the knowledge worker nor known many of them but they say that half the cottages down the lane are now owned by journalists. Perhaps things are changing even here. Then I reflected that until two years ago Jim used to clear his ditches with a scythe. Now young Stephen does it for him, for a fee, with his £20,000 Caterpillar digger, wearing ear muffs with walkman earphones stuffed inside – music while you work in the contractual fringe! Quite a skilled contractual fringe, too. Stephen does his own repair work and is starting a business in spare parts on the side.

  Charlie grumbles about farm prices. The land is fen land, they can’t grow much on it – ‘I guess one day it will just go back to fen,’ he says. Yet right next door, on land that 40 years ago was sold as gentlemen’s rough shooting, is the biggest plant and conifer farm in Britain, indeed in Europe, plants which only need an inch or two of damp soil. Ironically they employ 200 people on 200 acres where Jim and Charlie employ no one, but then those 200 people are quite knowledgeable, at least about their plants and their cultivation. They’ve done what British manufacturing needs to do everywhere, change the product to a high value-added one that is knowledge-intensive and backed by research and development and in the leisure market, supporting Jonathan Gershuny’s point that one person’s free time is another person’s job. ‘That’s not farming,’ says Jim, ‘that’s gardening,’ and, indeed, I would much prefer to look out at a field of ripening corn than on rows and rows of little conifers, but you don’t grow rich on nostalgia.

  I tell this little parable to make one point. Until we look around us with fresh eyes we often don’t notice what should be obvious. There were the knowledge workers, the highly capitalized contractual workers, the move to a knowledge industry in a spot which I thought was the unchanging heart of rural England. Open your eyes and ye shall see!

  Telecommuting

  F International in Britain is an electronic shamrock. Francis Kinsman describes it well in his book The Telecommuters. It was started by Stephanie (Steve) Shirley in 1962 as a tiny business called Freelance Programmers to be run by her from her own home, writing computer programs for companies. By 1964 it was F International with four other workers and by 1988 it was the F.I. Group plc with 1,100 workers and a turnover of nearly £20 million.

  The point about F International, however, is that 70 per cent of those workers work from home or from a local work centre and that over 90 per cent of them are women. F International believes that the performance of their people is 30 per cent higher than their counterparts working in offices where coffee breaks, lunches, corridor gossiping and personal phone calls tend to cut into the working day.

  These women are mostly self-employed although, if they can guarantee to commit enough time to the company, they can go on the part-time or even full-time payroll; less than 200 were on salary in 1988. There is a small core staff in the Head Office, a number of small branch offices and, lately, a growing network of work centres where people can take their work if they need to meet with colleagues or to use more specialist equipment. The individual worker is linked into the organization by an electronic mail service, by a newsletter and by free-speaks, in which senior members of the core travel around the country to hold open question and answer sessions.

  The women, and some men, in F International are a network built around a core, connected by telephones and computers, working from home rather than at home. They do not work alone but in shifting teams and groups built around specific projects and assignments. It is all designed, as FI’s Charter puts it, ‘to develop, through modern telecommunications, the unutilized intellectual energy of individuals and groups unable to work in a conventional environment’.

  F International is unusual because of Steve Shirley’s deliberate plan to create a culture built around the status and talents of independent people. The core grew out of the contractual fringe rather than the other way around. As a result F International invests a lot of time and energy in training its self-employed workers and in keeping in contact with them. It also pays them well.

  There aren’t many F Internationals around but they are an extreme example of a growing trend. Rank Xerox in Britain has its ‘networkers’, a group of some 60 or so specialists in marketing, finance, personnel and management services who were peeled off from the central organization and were encouraged to set up their own businesses and sell back some of their services to the parent company.
ICL has two groups of high-grade part-timers (as opposed to self-employed) who are software planners and analysts and, as in F International, mainly women with young families.

  These, again, are the biggest and most formal examples. It need not, however, be that organized for it to happen. There will hardly be an organization which does not get some of its typing done by someone at home, hardly an executive who has not stayed at home to work on a critical report and called in by telephone to the office. Alvin Toffler in The Third Wave quoted a number of eminent Company Presidents in the USA who maintain that between 25 and 75 per cent of what they do could be done at home or from home once the necessary communications are in place. Francis Kinsman quotes examples from the American companies of organized homeworker schemes, of which Freight Data systems in California is the most interesting. They let their small staff work at home when they were not needed in the office, but encouraged them to work ahead of time by means of a bonus system. They increased productivity so much that it paid for the capital cost of a terminal in each home inside five months, and the rapid growth of the company caused them no space problems and no need to move to bigger and more costly premises.