Wednesday, February 25, 2015


[As I read management literature in Stanford, I also reflected on my stint in the ministry of finance in the early 1990s, which I had entered with high ideals and flying ambition and left in sadness after being thwarted by one of the minister's favourites. This column was published in Business Standard of 12 July 2000.]

Ambiguity and delinquency

Anyone who has worked in a large company is aware of the distance between formal hierarchy and rules on the other hand and working relations and practices on the other. The distance exhibits itself in the prevalence of cliques – informal groups of mutually obliging people. They help their members achieve goals, which may be those of the organization but often are not. Insofar as they are not, clique members hide the fact. In other words, the rules that are actually practised are different, often very different from the formal rules. The deviation sometimes helps achieve the goals of the organization, but sometimes makes it easier for the clique members to cope with pressures put on them by the organization. Not everyone can belong to a clique; nor can the entire company function as a clique. The rules of cooperation and mutual help apply only within the cliques. Between them there is warfare, generally covert, but which can break out in the open.
Almost invariably, the staff employees – that is, the experts and advisers – are kept out of the line employees’ cliques; the latter work almost systematically to ensure that the former fail. This endemic conflict can be a perpetual source of frustration to the top management. It relies on staff to maintain standards and improve working methods; it sees the work of the staff as being sabotaged by the line employees. The frustrations make staff jobs less attractive than line jobs, and build inertia into the organization.
Conversely, managers and workers’ representatives are by definition in an adversarial relationship and must keep up an appearance of hostility, or distance at any rate. And yet, each will want things out of the other; cooperation and give-and-take arise between the two which often lead in time to the formation of cliques across hierarchies.
More generally, wherever people need the cooperation of others over whom they do not have authority, they will tend to use other weapons – give-and-take, social ties, go-betweens – which in time tie them together in cliques. Thus at any point of time, there is a covert organization chart which can often look very different from the formal one.
The cliques subsist on the mutual exchange of rewards and on the visitation of punishments on those outside. Many of these can be legal and proper – for instance, opportunities to travel. Some might be improper but legal; for instance, bigger daily allowances than required. But many are improper and illegal – for instance, opportunities to collect commissions and bribes. Where the latter are used as rewards, a conflict arises between the efficient functioning of the organization and its viability.
Amongst the rewards and punishments, the most important are promotion and sidelining. Hence if the cliques have full sway, it will happen that the most efficient manipulators of the most powerful cliques will end up at the top, and that ability or merit will cease to be a criterion in promotion. When an organization riddled with favouritism faces competition or need for change, it will break out into wrangling, and fail to meet external challenges.
Melville Dalton described this picture forty years ago in his Men Who Manage. Many Indian managers will recognize it. Everywhere, the chief tends to select and reward people who agree with him and do his bidding. What he looks for is managers in his own image. What he gets is managers who appear to do his bidding, but are actually clique leaders good at both getting things done and sabotaging them. They shape what actually happens, while giving him the feeling that he is shaping them.
And many people in the government will recognize that this is more or less how it works. When a set of politicians with an agenda of its own – for instance, the BJP or Shiv Sena – takes over, it finds itself stymied by the existing cliques. They get rid of the current secretaries, and instead put in cronies. Sometimes they get cronies without cliques, who prove ineffective. Often they get cronies who are clique leaders, and who get things done for their political masters, but also for their cliques – for instance, capture posts like Customs Commissioners of Bombay and Delhi.
The remarkable thing is that if the organization inducts a “reformer” to revamp it, he will find himself strongly tempted to take the organization as given. He has limited freedom to change the people he has to work with. So he takes them for what they are, and uses what powers he has of reward and punishment to get performance out of them. If he stays long enough, he develops his own clique or cliques.
Is that the only way? Can the reforming executive be no more than a chameleon, changing his colours to suit the organization? I think the answer is that the effectiveness of the organization can be changed only by changing the geography of its cliques. So the first thing he has to do is to understand that map. It will nowhere be delineated; people will make greatest efforts to conceal it. But it must be uncovered step by step – by meeting employees, by bringing them together and observing their chemistry, by inducting individual rewards and punishments and observing their ripples.

Once he has got the geography right, the options open to the executive will follow. They are basically of three sorts. One is to reward the cliques that serve his purpose and punish those that do not. Another is to reshape the cliques – by moving people, changing their functions and powers, reorganizing departments. And the third and the most effective means is to introduce pressures on the cliques that are goal-oriented. Just which of the three the executive should do will depend on how long he expects to last and what his powers are. But generally speaking, he will need to do all three if he wants to maximize his impact.