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Productivity, but at What Cost

July 29, 2008
Related Topics: Career Development, Employee Career Development, Featured Article, HR & Business Administration
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Back in 2006, business scholar Henry Mintzberg prophesied the economic slowdown of 2008. But the roots of the crisis, in his view, have more to do with a misguided management philosophy than with subprime mortgages gone sour or risky investments. Mintzberg, a professor at McGill University in Montreal, says an obsession with productivity and short-term profits has undermined the long-term prospects of U.S. businesses. He recently spoke with Workforce Management staff writer Ed Frauenheim.

    Workforce Management: How should companies today deal with a possible recession?

    Henry Mintzberg: People have to rethink how they’re managing companies. They’ve just lost it. Everything has become too superficial. I see a lot of short-term angst instead of some thoughtful sanity. We need more thoughtful people in organizations. My main advice to leaders today is, "Think, don’t copy." The managers we most respect, like Jack Welch or Kofi Annan, are very thoughtful people. The companies that come to mind are the companies that have kept their heads, like Ikea. They are going to continue to sell furniture.

    WM: Should companies lay off employees as they face lean times?

    Mintzberg: We ought to recognize that the real heart and soul of an organization is largely in its middle managers. If a company’s got its back against the wall, like General Motors, sure, you may have to lay people off. But that’s not what’s happened. Companies that remain quite profitable are laying off employees. It’s a slippery slope, that one.

    WM: But haven’t CEOs come to see talent as critical to their businesses?

    Mintzberg: I’m not so sure. Have you read an essay by Malcolm Gladwell called The Talent Myth? He argues that maybe this whole emphasis on talent is overrated. The idea of "high-fliers"—it takes attention away from regular performers.

    WM: You’ve made the case that companies ought to treat their employees as members of a team rather than as "free agents." But haven’t workers already come to see themselves as individuals out for themselves?

    Mintzberg: It’s not the primary perspective in Japan or in Germany or France. I’m not sure people take great pride in jumping around. They want security. To some extent, it’s in the American character to want to move around. It’s especially true among highly educated Americans who are more mobile. But people still want some stability.

    WM: Which is better prepared to bounce back from a recession: the United States or Europe?

    Mintzberg: Europe is better prepared. Much better. The soul of the enterprise is much more intact in Europe. There’s much more respect for the idea of collective effort there. You haven’t seen that much downsizing in Europe, partly because it’s not their style, and partly because there are laws that slow that down. America is the land of quick-quick, rush-rush. Europeans tend to have a longer-term perspective. They tend to be much less bandwagon-ish.

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