Prepared by

Thomas E. Clarke

October 1996
[A version of this paper was published in the January, 1997 issue of Research-Technology Management]

Beware of management consultants proclaiming the latest management fad. This statement should be imprinted on the foreheads of all Chief Technical Officers.

The danger with new management "solutions" that become overly popularized is that they generally work, but only for those situations for which they were developed. They are usually designed to solve specific management problems in a specific class of organization and are not generally applicable to all management problems in all types of organizations.

A drug designed to help a person with a liver condition will have little effect on improving their heart condition, and people are usually careful not to confuse the liver drug with a heart drug.

Such is not the case in management, where less than competent people are keen to apply the "silver bullet" approach to every problem they encounter. Management fads, like drugs, should also come with a prescription for their use.

We have all experienced MBO, Quality Circles, TQM, and reengineering or downsizing. Under the right conditions and circumstances they can, with intelligent application, benefit an organization. However, the blind widespread use of a particular management approach as a panacea for all ills will only cause serious problems, not the least of which is lowered morale, as the latest "management fad of the month" is rammed down the throats of the employees. It is only now that some of the delayed negative aspects of reengineering or downsizing are coming to light.

For example, journal articles are beginning to report that long-term productivity and creativity have been seriously impaired by the downsizing mania, and many firms are failing to reap the anticipated benefits to their bottom line. As Henry Mintzberg states in his "Musings on Management" in the July-August, 1996 issue of the Harvard Business Review, "Lean is mean and doesn't even improve long-term profits". He also comments that fads or what he calls the hot techniques dazzle us and then they fizzle.

A new fad being promoted is the "new employment contract" which in summary states that the employer will not offer long-term employment guarantees in the traditional sense, but will offer an opportunity to work on interesting, challenging projects that will provide workers with new skills and knowledge they can use to market themselves to another employer when the project for which they were hired ends. As before, this employment approach may be very acceptable in industries where there are many potential employers and the projects tend to be of a relatively short- term duration. This approach would also appeal to people who are always looking for something new, and are not concerned about the financial uncertainty associated with frequent changes of employment.

However, the "new employment contract" approach should not be used indiscriminately by research-intensive or knowledge-based organizations. First, it should not be used in the core technology areas of the organization where more permanent staff, who focus their mental efforts on longer-term research that under pins the organization's mandate or product lines, are required. According to Maslow's Needs Hierarchy, researchers or knowledge-based workers who worry about their employment prospects are not likely to be motivated to be very creative or productive. Their behaviour will be dominated by trying to ensure their safety and security needs which could result in hoarding information or a lack of commitment to team efforts, rather than their esteem/status and self- actualization needs which could be satisfied through exceptional creative or productive performance.

Thus, organizations should carefully classify their research and development or knowledge-based activities into those associated with what at the moment constitute their core areas of expertise, and those that are in non-core, but still valuable areas of investigation. As the non-core areas are most likely to be the most volatile in terms of changing importance, these are the ones where "new employment contract" employees could be more appropriately placed. However, this should not preclude using traditional temporary scientific employees, such as post-doctoral fellows and summer students working in the core technology areas, to provide intellectual stimulation to the more permanent scientific staff.

If firms are to attract the very best of the "new employment contract" employees, they must build up a reputation of providing challenging, interesting work, that allows the employee to grow professionally. Hiding dull uninteresting scientific or technical work under the banner of the new employment contract approach will tarnish the organization's image and result in attracting only second- or third-rate people.

The "new employment contract" approach can be applied in research or knowledge-based organizations as long as it is not used merely as a substitute for properly staffing core scientific areas, or as a means of avoiding employee benefits packages that are associated with more permanent employment.


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