CREAM Charter

Followers of radical management journalist Simon Caulkin, who was recently sacked by The Observer ‘for cost cutting reasons’, met at the RSA last week to plan the launch of CREAM  – The Campaign for Real Management (provisional motto: ‘if you want to keep control, you have to give it away’). You are invited to comment on the first draft of the…

CHARTER FOR REAL MANAGEMENT

“This Charter is an attempt to define the principles of effective management, of universal application across all types of organisation, based on evidence and experience as the key elements that create effective, profitable and socially responsible organisations.

 The Charter has been drafted by a coalition of interested parties whose shared perspective is that the monetary and social cost of poor management is on a huge scale, with ramifications across societies and the global economy, and that this scale is insufficiently recognised by leading politicians, many senior executives, investor groups and other representative bodies.

 It has been prompted in part by the near-collapse of the Western banking industry in 2007/08; by frequently high levels of inefficiency in many public sector institutions, and by high levels of failure in many corporate initiatives, especially mergers & acquisitions. It argues that such systemic failures are not inevitable, and are indicative of conceptual errors in management thinking, which can be significantly improved by a more pragmatic, coherent approach to governance.

 While promoting the principles of strong management, the Charter is also a critique of some of the damaging models, based on flawed assumptions and methodologies that have become popular despite a lack of a body of evidence.

 The Charter sets out the willingness of the signatories to seek to shape and define a coherent philosophy to underpin the principles set out, and be prepared to promote and debate this approach in a public and democratic fashion.

 The Principles

1. Governance and management issues are fundamental drivers of long-term organisational success. These so-called “soft” management issues including corporate culture, operating assumptions, and personal management styles are key to an organisation’s success. So long as they are wrongly treated as a “side issue” by commentators, academics, economists, and others, there will be too much focus on questions of ownership and organisational structures. We believe this is fundamentally the wrong approach, which explains many of the problems that exist in private and public organisations today
2. Our views are not drawn out of air. They are based on hard evidence built up by the experience of organisations since the 1930s, which shows the link between treating employees as partners and organisational effectiveness, based on a number of criteria including financial ones
3.  In spite of this evidence, we regret that most management practices are not been modelled on the evidence of what works.  Instead of running organisations in partnership with employees based on trust, too many have opted for short-termist, macho working cultures which put an emphasis on the “appearance” of good financial results every quarter. This approach brought Enron crashing down in 2001. Today, we have seen some investment banks go the same way
4. We disagree with the prevailing view that organisations are “structures” which employ “human resources”. There is no evidence to support this view and we believe it has caused great damage to public and private organisations. We believe that it is the people who create and maintain organisations, not the other way around. The way they are managed and treated will always have the greatest impact
5. Teamwork and co-operation are fundamental pre-requisites for all high-performing and resilient organisations over the long-term. Common business models, however, understate the importance of the inter-dependency within different constituencies inside an organisation. We would like to see more recognition of the importance of co-operation
6. We dismiss the mechanistic modelling of management culture which treats people as if they are inanimate objects. The current wisdom assumes that people can be organised like objects in a physical science. We agree that certain common measures help an organisation manage its processes and people. But every organisation, and the people within it, is unique and one mechanistic system cannot be right for every individual organisation
7. We believe that every individual is unique and that attempts by professionals (much favoured by politicians and auditors in the public sector) to prescribe uniform “outcomes” from professional interventions is conceptually flawed. It is especially inappropriate in highly sensitive areas such as social care, or in the operation of quasi-judicial powers such as planning decisions
8. Professional capability and autonomy should be the driving forces in the public sector. The monstrous and expensive machinery of monitoring, auditing, and target-setting needs to be reduced. There is no evidence that this centralised and control-based approach works. The money that is spent on this can be better directed towards the professional development of the people working in the public services. They, in turn, should be accountable to people with sufficient professional knowledge and experience to be able to hold them to account in a transparent manner, and to make a distinction between an honest mistake and culpable performance
9. We believe that quarterly reporting in the private sector should be abolished. It underpins bad management by setting short-term yardsticks and by giving the illusory impression that the old accountancy measures are capable of providing an accurate picture of current and future organisational performance. Quarterly reporting distorts the management focus away from the underlying causes of strong organisational performance such as corporate culture, management styles, and operating assumptions.”