Monday, 21 November 2011

Crisis of the Corporation: 4

Dr Michael Black continues our series on the Corporate Relation and its implications for the theory of business management.

In the Spring of 2010 the investigation of the mid-Staffordshire hospital was published. Its findings were remarkable. It found that

– Overstretched and poorly trained nurses turned off life-supporting equipment because they did not know how to work it.
– Newly qualified doctors were inappropriately left to care for critically ill patients recovering from surgery.
– Patients were routinely left for hours in soiled bedclothes and with no real hygienic much less medical attention.
– Non-medical reception staff were expected to judge the seriousness of the condition of patients arriving at Accident and Emergency.
–Doctors were commonly diverted from seriously ill patients to treat ones with minor problems to make the trust look better because it was in danger of breaching the Government’s four-hour waiting-time target.

In summary, the report said, the Mid-Staffordshire Hospital Trust had “lost sight” of its
responsibilities for patient care. It is not clear how many patients died as a direct result of the failures, but the commission found that mortality rates in emergency care were between 27 per cent and 45 per cent higher than would be expected, equating to between 400 and 1,200 “excess” deaths.

This event, and so many others like it in the health service and other corporate organizations, was without doubt an enormous human tragedy. But it was also an equally enormous management triumph, at least according to current mainstream managerial theory. The core of this theory is that corporate organization requires “alignment” among its members in order to function effectively. In short everyone must be pulling in the same direction, or some equivalent euphemism. The job of the corporate executive, so the theory goes, is to ensure this alignment by first formulating a vision, strategic direction, and programme for the corporation, and then ensuring “buy-in” or acceptance of these throughout the corporate hierarchy, from the janitor in the toilets to the head of finance and all the levels in between.

The manager’s job, that is, is to manipulate the behaviour of his or her subordinates toward some overall goal – in the case of mid-Staffordshire the achievement of independent trust status. This can be a tough job, especially if there is any moral hesitation on the part of subordinates to either the vision or the actions they are required to take in order to realize the vision. But the overwhelming power of managerial theory and technique is shown clearly in mid-Staffordshire. There the stakes involved were not simply those of economics or finance – an extra percent or two return on assets – but of life and death. Nor were the members of the hospital corporation uneducated peasants who might find it difficult to connect the dots between their own actions and the outcomes for patients. Rather these were highly trained and, more crucially, highly professional people who had been persuaded to act against the basic principle of their profession: do no harm. Overcoming education, training, professional norms, awareness of consequences, and even the pervasive values of British culture is no mean feat, and demonstrates the cultural strength of management theory in the modern world. We may be literally sacrificing our grandmothers in its name.

How does an entire organization forget its principle mission of caring for human life? The answer is, perhaps surprisingly, by forgetting about the relationship that its members have with each other. This relationship is one of mutual submission – of the junior to the senior in the matter of direction, and the senior to the junior in the matter of benefit. This total relationship is the sine qua non of corporate existence. In a sense this relationship is the real purpose of the corporation, since all other objectives, goals, intentions, and achievements spring from it. Adherence to the first aspect of this relation only results in not just error, but enormous, and indeed fatal error. The entire organization is then driven by the limited perception and judgment of senior members alone – through management procedures which limit any real discussion; through compensation based on metrics which are precise but entirely mis-directed; and through a culture of managerial dominance which makes simply false claims about corporate responsibilities. Attempts to change this perception and judgment, or report unexpected consequences of subsequent action by those more junior, are treated as symptoms of disloyalty, of an unwillingness to work in the interests of the whole, and punished severely through the managerial techniques of manipulation. Eventually even the most profound distortion of the relationship appears normal, as a reality of modern life that we all must bear and share. Thus even the most professional and dedicated of staff can not only tolerate but commit inhumane acts of neglect and patient abuse, all in the interests of a “corporate good” which is no longer evaluated (subject to valuation) but takes on a life of its own regardless of any human dis-interest involved.

The managers of mid-Staffordshire were apparently highly adept in this theory. For them the corporate distinction between dominium (control) and usufructus (benefit) had effectively disappeared. They believed that the desirable outcomes of their effort and knowledge was determined from above in the hierarchy and passed downwards where it was to be interpreted but not disagreed with. Their failure – and it is their collective failure not just that of senior managers – was not to demand that the corporate relationship be recognized. In the corporate relationship, usufructus, value, benefit, is decided upon “from below” and passed upwards. The key function of management in this process is to synthesize and reconcile competing and inconsistent formulations of the corporate intention. No other conception of corporate management can prevent what mid-Staffordshire has meant: death both individual and corporate.

The corporate purpose is not that of any individual who participates in it. But the corporate purpose is not independent of individual purposes; it is constructed from them. Because management theorists misunderstand the history and the unique character of the corporation, they cannot distinguish between dictatorial direction and corporate management. The corporation is far too important an institution to be left to the theorists.

For corroboration see the following articles on the detrimental effects of management by targets in British Medical Journal, and Systems Thinking Review, on pursuit of profit in Forbes, and the need to move beyond outdated hierarchy and command-and-control organizational structures at Management Innovation eXchange

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