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To: corporate managers, re: bureaucracy; don't send memos!

To: Corporate Managers

Re: Bureaucracy


Moaning about bureaucracy is a time-honored management prerogative. Now, however, bureaucracy is beyond moaning about; it is a block to survival. The campaign against bureaucracy must become a priority of the first order. I cannot provide you with the will to do it. I can simply tell you that it can be done, that it must be done if we are no move faster and liberate people--managers and nonmanagers alike--to perform up to their potential.

Fortunately, there are people and firms that have beaten back bureaucracy's seemingly inevitable encroachment:

A division general manager in a large high-technology firm raised from $25 to $200 the amount his engineers could spend without getting approval. The accountants screamed. Following imposition of the new standard, spending plummeted 60 percent. He explained: "That wasn't the point, cutting costs. It was to quit treating them like kids. But you know what happened, of course. With the $25 limit, it was "Let's see how many $24.99s we can tack together without authorization.' It was a time-consuming game--"We can out-Mickey Mouse you, boss.' Now, with the $200, people say, in effect, "Hey, that's a lot of money I'm responsible for.' They look at it as theirs.'

In The Intuitive Manager, journalist Roy Rowan reports: "[Ross] Perot claims he operated a memo-less company. Like Napoleon, who reputedly tossed out all written reports from his generals, figuring he'd already heard the important news, Perot prefers to conduct all of his business by personal contact. "Written reports stifle creativity,' he says.'

The New York Times recently reported that antibureaucrat Ken Iverson of Nucor Corporation, a steel manufacturer, maintains an "executive dining room': "[He] has designated as the executive dining room the Chinese restaurant and delicatessen--usually the deli--in the shopping center across the street from Nucor's headquarters in Charlotte, N.C.'

Nordstrom, a $1.9 billion retailer, gets by with a one-sentence policy manual: "Use your best judgment at all times.'

Everyone talks about cutting red tape. A few do it. Why not the rest of us? How do you reduce the policy manual to a sentence? Or raise engineers' spending limits, in one step, by a factor of almost ten? Or stop sending memos?

Mars bars

Start with the voluminous rules. Betsy Sanders, vice-president of Nordstrom, acknowledges that the one-line "policy manual' drives Nordstrom's lawyers crazy. So be it, she adds. It liberates Nordstrom employees from an astonishing amount of Mickey Mouse. Sad to say, rule books are referred to only to slow action, defend turf, and assign blame. Have you ever heard of anyone going to a rule book to figure out how to speed things up?

The absence of rules manuals at Nordstrom has been anything but an invitation to chaos. Sanders says the supervisors' chief duty is to coach salespersons on "exactly what it means to "use your own best judgment.'' Hardly a design for madness. In fact, the absence of childish rules shifts the employees' focus of innovation from how to evade toilet break rules to precisely where the firm wishes it to be: in pursuit of serving the customer better.

At a Mars, Inc. subsidiary as well, fewer rules have meant less fuss--and more focus on the business task at hand. A labor contract was up for renewal. A rookie management negotiator set an objective about which most of his peers were highly skeptical--to replace the inch-thick document with one of five pages or less. He was successful, and grievances were cut to a trickle. There are simply no nitpicking details--"subparagraph 7.13b.2ii'--for either side to get hot and bothered about. Dayton Power & Light followed a similar path. After a year and a half of negotiations, they reduced the contract from 200 pages to 14, the first page being a statement of shared philosophy. In short order a profound change in attitude ensued, with people working together to confront problems.

Consider Worthington Industries, a steel and plastics manufacturer, which also has no rules manual. No union has been able to organize any of the company's field operations, but Worthington has acquired several unionized companies. Though top management strongly discourages applying pressure to decertify, five of the operations have done so. Worthington senior managers observe that employees have had little problem living without the protection of a union contract. Their supervisors, however, have had a devil of a time adjusting. One executive notes: "You just took away their reason for being. They were there, as they saw it, to administer the contract on management's behalf. They were there to catch guys goofing off. Now, suddenly, no rule book, no time clocks, no scheduled breaks [you take a break when you conveniently can], no locks on the tool-room door, no forms to be signed to check out a tool or a spare part. What's left for them to do? Very little, by the old standards. Some don't make the transition.'

Here's how managers could encourage nonbureaucratic behavior: Demand that reports be reduced to, say, three pages or less. Prune the number of reports they receive by 50 to 80 percent in the next 6 to 12 months. Refuse to send memos; use the phone or personal contact instead. After getting a memo from the boss, managers should pop into his or her office with an answer, not retire to an office for three days to write a treatise in response. Send back without comment all "information copies' of memos. (Unfortunately, the conventional wisdom is true. More than 90 percent of several hundred memos I analyzed were of the "cover your ass' variety--designed only to clear the writer of any kind of blame should anything subsequently go awry.)

Also send back, without comment, decision documents that aren't addressed to the right level. One senior political appointee in the Installations and Logistics secretariat of the Department of Defense arrived on the job to find that tiny architectural changes were sent from the field all the way to Washington for approval. He just returned them without comment. People quickly caught on, and the flow stopped.

Cut every procedure manual in half over the next 12 months. And cut it in half again the following year. Finally, urge the lawyers or contract department--none too gently--to experiment with handshake agreements or contracts of no more than two pages. It can be done.

Smashing the hidden cameras

I would be greatly remiss if I failed to note a caveat here. This business of eliminating rules and regulations is a big deal--a matter of replacing detailed, written "what if' strictures with trust. Take the last suggestion. The way to eliminate lengthy supplier contracts is to join in long-term partnerships with a small number of quality suppliers. The same thing applies to all the others. You won't reduce the rules and regulations until you remove the underlying causes for them-- mistrust and adversarial relations. This is why 9.9 out of 10 "paperwork reduction' committees fail to achieve enduring change. It's also why managers will never reduce bureaucracy until they stop treating people with contempt.

Ross Perot captured the spirit while he was at General Motors: "In Pontiac [Michigan], GM executives' parking garages are heated, while the poor guys who work in the plant freeze their tails off walking to work in the snow. It costs $140,000 a year to heat one parking garage. I'd shut that thing down.'

U.S. Steel ignominiously became USX in 1986; it has reduced its United Steel Workers population from 94,000 in 1974 to less than 30,000 today. Yet Business Week reported acidly in 1985: "On the 61st floor [of USX's headquarters] in Pittsburgh, uniformed stewards deliver coffee on silver trays to executive suites.'

During a visit to Columbus in 1986, a Worthington employee and I struck up a conversation about the American steel industry. It was right after LTV declared bankruptcy. The guy just couldn't fathom how the chairman of that company had the nerve to bring home a $700,000 salary, and pay himself a whopping bonus to boot, for driving a firm over the edge. Neither could I. In fact, the final break between Ross Perot and GM came when that firm's problematic performance in 1986 led it to refuse to pay $1,000 profit-sharing bonuses to hourly workers--while giving executives all they were "entitled' to by traditional practice. "You can't look the troops in the eye and say, "It's been a bad year; we can't do anything for you,' but then say, "By the way, we're going to pay ourselves a $1 million bonus,'' Perot said.

I suspect that Perot would have been equally peeved at Lee Iacocca. When asked how he reconciled his $20.6 million compensation in 1986 with cuts in merit pay for other Chrysler employees, Iacocca replied, "That's the American way. If little kids don't aspire to make money like I did, what the hell good is this country?'

Stop! I want to scream. I don't say this for humanitarian reasons, much as I believe in them. My point is pragmatic: How do you humiliate and demean someone and then expect him or her to care about product quality and constant improvement?

Other humiliations are more subtle. Psychological assessment tests and, certainly, urinalyses are demeaning. Boise Cascade recently suspended a worker for smashing a camera hidden in the ceiling of a locker room to detect theft; employees hadn't been consulted about its installation. Can you imagine what would have happened if the firm's security chief had secretly installed a hidden camera in the executive washroom?

The Mickey Mouse rules that reek of contempt and distrust are part of the negative signals we send. Much of our entry-testing makes clear that we assume the candidate is a misfit or a thief or a drug addict or all three. Then we confirm it daily after he or she comes aboard. For instance, say you want a dollar's worth of stamps in a hurry to get a customer letter out in a timely fashion. It is presumed you are a cheat and want them for personal use, so you have to fill out a 15-line form to get them. Need a spare part to fix a broken machine? Fill out a two-page form, get two supervisors to sign it (if the machine is worth more than $25), and then pass through the double-locked door to the supply room. And then we turn around and have the nerve to ask people to "do it right the first time.'

Nucor's Ken Iverson found multicolored hard hats when he arrived at the company: white for workers, blue for foremen, green for department heads. He replaced them with one color--green --for everyone.

At New United Motors Manufacturing Inc. (NUMMI), the auto company operated jointly by General Motors and Toyota, the separate entrances for managers and workers were eliminated, as was the executive lunchroom. The brother of the president of Toyota was the first NUMMI chief; many remarked that they were stunned to see him eating regularly with line workers in the common cafeteria.

The task is daunting, but the proper philosophy is now taking hold. Thousands of success stories, spurred by the development of a word-of-mouth network reflect an increasing efficiency and responsiveness. About nine-tenths of my suggestions cost little or nothing to implement. So what's holding everyone up?
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Author:Peters, Thomas J.
Publication:Washington Monthly
Date:Nov 1, 1987
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