Business 21C - Published by UTS Business

Modern management has always relied on hierarchies, but some leaders have learned to use power in more productive ways, says Professor Stewart Clegg, of the Centre for Management and Organisation Studies.

‘Power is everywhere in daily life’, says Professor Stewart Clegg. ‘We are all governed by rules and routines, and every one of us operates within a sort of circuitry of persuasion, influencing others and in turn being influenced.’

Professor Clegg has been studying power for more than thirty years, and is one of the world’s leading authorities on management and organisation theory. He sees power both as a personal thing – a tool used by individuals to get what they want – and also as a force of management and control in organisations.

‘Many people find power hard to grasp’, he says. ‘Many managers don’t like to think about the kind of power they may be exercising or be under.’ A lot of business books shy away from the topic, preferring to leave it to social scientists.

But according to Professor Clegg, whose initial studies were in behavioural sciences – and who continues to bring a sociological perspective to his work – ‘Management is entirely about power, and every organisation is an organisation of power relations. All organisation is based upon getting people to be somewhere for up to eight hours a day, doing things that in many instances they’d probably prefer not to be doing, and doing them as efficiently and effectively as they can.’

Networks of power in the workplace range from contractual agreements to hierarchies of management and reporting, to the sort of gossip that happens around the water filter. Power can be used to make things happen and also to prevent things from happening. It can be more or less productive, depending on how it is deployed.

Professor Clegg is interested in the way leaders constitute themselves in relation to their followers. ‘Some leaders manage to do this in ways that are more productive of power relations and less restrictive.’

One example is Gerard Fairtlough, the British businessman who spent 25 years working for Shell before founding Celltech, a pioneering UK biotech company, in 1980.

Gerard Fairtlough and ‘responsible autonomy’

A biochemist by training, Fairtlough developed the idea of ‘creative compartments’: enclaves of skilled knowledge workers with the minimal amount of structuring and authority relations between them, and minimal barriers to communication.

‘Fairtlough combined his experience as a practical manager with his readings of organisation theory and with knowledge he drew from biochemistry. He used this to produce organisations in which the power relations were much more positive, in which innovation and creativity were endemic.’

He did this by minimising forms of hierarchy, reporting and differentiation, by giving researchers the time and the space to do what they do best – which is to think and create.

In the book Three Ways of Getting Things Done, Fairtlough argued against hierarchy as a default position for organisational structures. He suggested that ‘heterarchy’ or ‘responsible autonomy’ were infinitely preferable.

With ‘heterarchy’, control is shifting and shared, depending on the project and people involved – the sort of collaborative structure now commonly favoured in large technology companies such as Google. ‘Responsible autonomy’ is a purer form of self-organisation where individuals are responsible for the outcomes of their decisions.

A well-known example of organisational re-engineering, which the book also discusses, is Ricardo Semler’s work with Semco, known as ‘democratic management’.

‘Fairtlough created organisations that were counter to what many people would think were rational, well-run organisations’, says Professor Clegg. ‘The assumption was that you were employing very smart people to do very creative things and you gave them autonomy and responsibility to do it.’

Celltech was a great success, and Fairtlough was its CEO until 1990. In 2004, the company was acquired by Belgian biopharmaceuticals firm UCB.

Collaborative alliances: the Northside Storage Tunnel project

In the late 1990s, Sydney Water and several private sector partners worked together to build a 20km storage tunnel to hold detritus that would normally block sewers and overflow into Sydney Harbour. Professor Clegg and fellow academics followed the project as part of their research into power relations and control in projects.

‘What was remarkable about the contractual documents was that they were only 28 pages long, they didn’t stipulate a price, there were no royalty agreements written into them, and most of them were photographs’. The photos were indicative images of the Harbour looking pristine and sparkling, or polluted by the overflow of sewage.

The project was an example of collaborative alliances, in which partners to a contract work together towards mutually-agreed aims. In this case, key performance indicators were set up relating to impact on ecology, community and workforce, as well as cost and schedule.

With a rule that no individual indicator could be sacrificed to others, and a bonus if contractors exceeded expectations on all five KPIs, the project came in on time and within a few percent of budget. In this case, the dynamics of power in the contract led to beneficial outcomes for all.

Sydney Water and their collaborators went on to ask Professor Clegg and his colleagues to work with them on a subsequent project. They found that the concepts the academics developed to describe their work were helpful, and also that the power relations had shifted in a positive way.

Academics and practitioners

‘People from the business community often anticipate that business academics will provide them with solutions and answers’, says Professor Clegg. ‘Sometimes we do, but I think it’s far more important to ask questions and prod in places where people haven’t gone before. It’s that ability to raise critical questions that marks out the academic from the practitioner.’

His research continues to propose new ways of understanding and using power relations.

‘The practitioner wants to manage what she or he is doing. The academic wants to see how and why they do things, and how it might be done otherwise.’