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Word for Wednesday: managerialism (definition)

July 2nd, 2003

As with most terms ending in ‘ism’, and therefore imputing an ideological framework, ‘managerialism’ is more often used pejoratively than favorably. Where it is dominant,, ideology appears as common sense and requires no name. The standard assumption, backed up by the existence of university departments of management and business schools generating thousands of MBAs every year, is that management is a science on a par with physics, or at least with economics. As Thomas Frank observes in his One Market Under God‘the management literature as a whole serves primarily as a PR exercise to legitimate management.

Where managerialism needs a name, the choice is usually one that conceals or obfuscates the role and interests of managers as a class. The most important examples are ‘the New Public Administration’ in the public sector and ‘shareholder value’ in the private sector. ‘Shareholder value’ is of particular interest in the way it represents managers as the mere agents of the shareholder principals.

The central doctrine of managerialism is that the differences between such organisations as, for example, a university and a motor-vehicle company, are less important than the similarities, and that the performance of all organisations can be optimised by the application of generic management skills and theory. It follows that the crucial element of institutional reform is the removal of obstacles to ‘the right to manage’.

The rise of managerialism has gone hand in hand with that of the radical program of market-oriented reforms variously referred to as Thatcherism, economic rationalism and neoliberalism. (Despite very different histories, all these terms are now generally used in a pejorative sense). Managerialism may appear inconsistent with traditional free-market thinking in which the ideal form of organisation is that of competitive markets supplied by small firms, in which the manager is also the owner. However, managerialism is entirely consistent with the dominant strand in the neoliberal approach to public policy, which takes the corporation, rather than the small owner-managed firm, as the model for all forms of economic and social organisation.

In particular, managerialism and neoliberalism are at one in their rejection of notions of professionalism. Both managerialists and neoliberals reject as special pleading the idea that there is any fundamental difference between, say, the operations of a hospital and the manufacturing and marketing of soft drinks. In both cases, it is claimed the optimal policy is to design organisations that respond directly to consumer demand, and to operate such institutions using the generic management techniques applicable to corporations of all kind.
The main features of managerialist policy are incessant organisational restructuring,,sharpening of incentives, and expansion in the number, power and remuneration of senior managers, with a corresponding downgrading of the role of skilled workers, and particularly of professionals.

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  1. cs
    July 2nd, 2003 at 19:12 | #1

    I think it is fair to acknowledge that, unlike neo-liberalism and in a sense economic rationalism, managerialism has never been admitted as a legitimate descriptor by its adherents, at least as far as I’m aware. On the contrary in my experience, the fiercest adherents positivily hate the term. In which case, on first use, the quote marks seem compulsory.

  2. derrida derider
    July 2nd, 2003 at 21:51 | #2

    This description squares with my experience. The people who believe ‘a good manager can manage anything’ usually say that because they have no competence in the core business of the organisation they’re managing. And the constant reorganisations are an aid to hiding this.

    Now I believe a good manager can learn to manage anything – indeed, that learning ability is one of the marks of a good manager. But that is not at all the same thing.

  3. July 3rd, 2003 at 00:03 | #3

    A couple of comments. First, I think we should differentiate the sort of extreme/caricatured managerialism you describe from many of the fairly well-accepted theories and structures of program logic that have been the dominant mode of public sector administration since at least the early 1980s (the link is to an excellent short explanatory piece on Palmer’s Oz Politics site). Some of the latter are occasionally lumped in with the crude, neo-liberal approaches to the public sector that your definition of managerialism describes, but they’re really quite different animals.

    Secondly, although I agree management theory bears little or no resemblance to a physical science, I’d take quite a lot of persuading that economics is decisively any more “scientific” than management theory. Your own recent posts about market behaviour rather tend to undermine your tacit assumption IMO, as does the increasing resort to game theory to predict behaviour (after a fashion) not otherwise susceptible to effective analysis. Of course, I’m making provocative assertions in areas about which I have little detailed understanding, but que sera sera. It might provoke some responses from which I’ll learn something. I don’t think psychiatry is a science either (nor did Thomas Szasz).

    At best they’re all “social” sciences, which is to say not really sciences at all, but rather disciplines which try to apply analytical tools to human behaviour despite the fact that it involves so many unknown or unpredictable variables that any analysis at best yields a very rough approximation. Of course, in a post-Newtonian world, we’re forced to qualify propositions in physics in a not dissimilar way, but Newtonian physics principles still do mighty good imitations of iron laws except at the very large and very small scales of matter and energy. You can’t say the same about economics or psychiatry any more than you can about management theory.

  4. John
    July 3rd, 2003 at 06:44 | #4

    Ken, as you say, there’s plenty to criticise about economics, psychology (psychiatry is something very different, about which I’m both ignorant and sceptical) sociology, political ‘science’ and so on. Any strong claims made for the scientific status of these disciplines should be viewed with a grain of salt. But ‘management’, considered as an independent discipline, rather than as a grab-bag of social science topics useful for managers comes nowhere near them.

  5. John
    July 3rd, 2003 at 06:51 | #5

    Ken, the link you mentioned was interesting. There were some sensible points though it started out on the wrong foot (for me) by plugging systems theory. I posted on this, with a mention of game theory, on my modern thought blog here. I’m planning to revive this blog soon, using the WFW posts as the raw material.

  6. Bon Scott
    July 3rd, 2003 at 10:38 | #6

    “Know Your Product” was not just a great Saints song.

  7. July 3rd, 2003 at 11:09 | #7

    Messrs Professors,

    In the dispute between the two academic titans of Ozblogistan I respectfully submit that Pr Q is closer to the truth although Pr P has a few good points – the link to the Oz politics site was useful.
    I like the distinction Pr Q makes between the:
    professional-internalist: conduct driven by self-motivated ethos to conform to code of service
    managerial-externalist: behaviour conditioned by world-factors ie appropriate org structure and economic incentives

    Economic theory has “a few issues” as they say, but at least there is an intellectual tradition of systematising theory and trying to confront said theory with evidence.
    Management theory is a wank, it is just a high-falutin form of intellectual fashion-victimism.
    Hence the central paradigms of management theory go through frequent revolutions (ie marketing gimmicks) based on the Next Big Thing (soviet, japanese, american etc).
    cf the Witchdoctors
    Economics is more conservative (typically the sign of a more mature discipline)
    Also the real economy is becoming more like the neo-liberal model which makes managerialism look good, but for the wrong reasons. Just as when the capitalist industrial relations system began to look more like the marxist class conflict model, through the vigourous efforts of certain Scotish shop stewards.

  8. July 3rd, 2003 at 11:55 | #8

    ãManagerialism is entirely consistent with the dominant strand in the neoliberal approach to public policy, which takes the corporation, rather than the small owner-managed firm, as the model for all forms of economic and social organizationä.

    If this dichotomy between (big) corporations and (small) firms was ever true in the last twenty-five years or so, I doubt it is now. Apart from the rather pedantic point that almost all forms and sizes of business organization are (and long have been) incorporated, there has actually been a resurrection of ãthe firmä at the corporate top end.

    By ãthe firmä here, I mean the gentlemanly* informality that characterised English business in the late 19th C. Such informality has been grafted on to the corporate form, with spectacular results, in the modern USA. Legally, it involved using multiple corporations, as well as other ãvehiclesä, so as to ensure that all who should be actually were in charge of something. (Enron and AOL were, of course, prime examples). Sociologically, it not so much inverted the traditionally hierarchical pyramid as sent it upside down and pear-shaped ö the curve of organization progress, between management and shitkicker, was never steeper than in the middle.

    * If anyone can think of a gender-neutral substitute here, I would be grateful. By using ãgentlemanlyä, of course, I do not mean to suggest that women were either excluded from, or voluntarily absented themselves from Enron-style excesses. In the mean time, an alternative word, to connote a mostly-understated, pseudo-meritocratic clubbiness in business eludes me.

  9. July 3rd, 2003 at 13:57 | #9

    Ken

    I agree that economics is a different sort of science from physics but your whole position smacks of obscurantism, as does your New Age gobbldegook about ‘post Newtonian’ physical science. The weather is also unpredictable but that doesn’t mean it isn’t worth looking scientifically at climate e.g. climatology. Economics is held back by a lot of its past – part of which lies in the moral sciences and sometimes it’s seen as a branch of logic but this is slowly changing esp. with applications such as game theory. If game theory can be usefully applied in biology (e,g John Maynard Smith) I don’t see why it can’t be applied to humans. Humans are just animnals with more complex cognitive functions and can be studied along with other animals and their mass behaviour – I see economics as eventually being enveloped into a science of complex pheonomena

  10. July 3rd, 2003 at 16:17 | #10

    Jason,

    I’m not entirely sure what you mean by “New Age gobbledegook”, except perhaps that your irritation seems to have led you into uncharacteristic and gratuitously patronising rudeness. My mention of “post-Newtonian” physics was simply a shorthand reference to things like quantum mechanics, chaos theory etc. It was just intended to negative pre-emptively a predictable observation (from someone like you) that economics is not disqualified from being labelled a “science” simply because of the large number of unknown/unpredictable variables and so on, because even physics can no longer be seen as a set of iron, universally correct, absolute principles.

    Your point about climatology is well taken, but I still say there are matters of degree involved here. Our understanding of the human organism and complex social and economic behaviours may one day reach a point of relative certainty where it’s meaningful to describe it as a science (dismal or otherwise), but I suggest we’re still a long way from that point at the moment. I accept that economic theory, at least some branches of it, is closer to a “science” than at least some of the wankier forms of management theory (to adopt a Strocchi-ism). However, there are also some pretty wanky economic ideas: – Coase Theorem, for instance. A lot of the public sector program logic stuff mentioned in my first comment is fairly “mature” social science theory, and is IMO just as entitled to the label “science” as most branches of economics.

  11. cs
    July 3rd, 2003 at 18:54 | #11

    This thread is tangling two ideas, methinks. On the one hand, there is the longstanding Drucker-type, ‘CEO-how-to-do-it’, Harvard-MBA school of managerialism (with respect to which, I tend to agree with John that it “serves primarily as a PR exercise to legitimate management”). On the other, we have the more recent rise of the so-called ‘new managerialism’ or, as the new-managerialists themselves prefer to call it, the ‘New Public Management’. The NPM rests on a range of economic theories, which are as more-or-less scientific than most economic theries, but particularly the long neglected 1930s work of Ronald Coase on the firm and the Buchanan public choice school.

    With respect to the latter managerialism, as an illustration of the conflict NPM always has with professionals, one of the many savage attacks on it by NSW Chief Justice Spigelman is here.

  12. cs
    July 3rd, 2003 at 18:55 | #12

    Well no it’s not, so perhaps it is here

  13. John
    July 3rd, 2003 at 21:12 | #13

    Chris, I think the confusion you refer to is in fact embodied in NPM. It’s a set of neoliberal ideas with managerialism as an implicit assumption. As I observed in the longer piece from which I took this entry “Management theorists do not even perform the basic function of developing their own ideology. As Haigh notes, the most significant theoretical contributions to the cult of the CEO came from economists such as Jensen and Rosen rather than from schools of management.’” This is private sector reference, but the same mix is present in NPM

  14. cs
    July 4th, 2003 at 10:45 | #14

    I guess your right John, but it strikes me that there is a useful division of sorts to be drawn between, on the one side, the cult-of-ceo + bits of other disciplines (microeconomics + law + psych + sociology + accounting etc) + some case studies + leggo block games and interview technique stream of management training; and, on the other side, the more recent construction and rise of systematic managerial models based on neoliberal ideas which have been applied on a large scale, as in the case of coproratisation input/output measurement etc.

    Where is the longer piece, incidentally?

  15. July 7th, 2003 at 16:50 | #15

    An aside first – words ending “ism” etc. are more usually ideological in French (we have “hypnotist”, they have “hypnotiseur”).

    Looking at managerialism, I was struck by a number of common features in various subjects when I was doing my MBA at Monash some ten years ago. One was the built in mistake in things like economics (I knew the “right” answer to give to get marks when analysing a “horse story” about what happened to horses when machine transport came along; so I never told them what I really knew in the area, which would have failed me).

    But the most important thing was how, of all the main broad brush areas my own experience told me mattered in business, they only ever covered two of the main three. The broad categories are: marketing; finance (from economics to accounting); and operations – which can be anything from furniture making to running a railway, depending on the business. I came to think that the last was being left out for a number of reasons:-

    - Many of us already had specific operational knowledge, and only wanted to turbocharge our careers (I was the other sort, who wanted to make a career change – and like many, couldn’t use an MBA for that after all).

    - Operations varied too much to be handled that formally, and leaving that out was a conscious decision, just like the way economists leave out the stuff that ought to be netted off to make GDP a net figure (the better ones know their figures are merely preliminary, the worse sort are in denial).

    - Over the years operational issues have ceased to be the bottleneck (this was actually reinforced by a message from the marketing syllabus!). Nowadays we don’t find we need a technical type to invent (say) a biro in the first place, we need marketing types to get ours ahead in the market and finance types to let us do that without going broke doing it. Dilbertesque engineers have worked themselves out of a job, or at any rate a primacy, as much as any Ned Ludd era weavers ever did. Engineers are now “always on tap, never on top” – at least since the great days of Isambard Kingdom Brunel (there’s some interesting history to just how the marketers displaced the engineers in the last days of British Rail).

    Now we get onto the term “professional”. As a noun, this is someone who carries his own career on his back as a snail does its house. But latterly this is often applied as a mere courtesy title. In Thoreau’s time, schoolteachers were this sort of independent teacher working alone in the world – he himself was one. When he was jailed for not paying tithes to support clerics he posited as an argument a hypothetical world in which teachers were similarly supported at the general expense; for him it was a counterfactual. Well, we have it now – and, to the extent we have it, it is only the adjective “professional” that applies to their ethos. In themselves, they are no longer professionals as such, for the simple reason that they can no longer function in themselves, not even as a college or group (though I noticed that, ontogeny recapitulating phylogeny, at Monash Peter Dixon’s mob had moved as a group in the old mediaeval scholars’ way, in their case as a roaming mob of itinerant economists moving from place to place peddling their wares). This process is far advanced among doctors, who notoriously were described as being caught in “chains of gold” by the architects of Britain’s NHS – but even so recently Mayne hospitals found themselves not running the show, when doctors directed patients away from Mayne.

    Part of this comes from true artists farming out their resourcing, until their panders became their captors. Da Vinci made his own paints; that’s what artists did then. But there is a tale that is told, that when the local paint shop ran out of certain paints a lazy artist in Paris worked around it, responded to it as a challenge – hence Picasso’s blue period. But artists lesser than him were in some ways less when they needed the help of others as midwives to their genius – and without a wider world of art, what could give rise to those greater artists anyway? Or think of what the Hollywood studio system took even as it gave.

    So also, more immediately of concern, of professionals teachers are absorbed and retain only the courtesy title “professional”, doctors are part way there, and so far only lawyers and accountants have kept themselves clear of capture. When these groups are captured, you find hospital administrators and school principals instead of headmasters and such, who taught a little every week even when they mostly ran schools, kept their feet wet and their hands dirty.

    So managerialism is at least in part a response to the abdication and unconscious surrender of the Dilberts of this world, and not simply something they are trapped into by the pointy haired managers – though it is a process working its way around and bringing in both of these. Dilbert has worked himself out of a role, if not always out of a job; the managers can indeed deliver, just as a dairy farmer can give milk – the cows are there, all dumb and all on tap. There is no bottleneck among those doing the work.

  16. July 11th, 2003 at 22:36 | #16

    This is an interesting thread: I think P.M. goes a bit far, as products and the design and engineering behind them are still sufficiently differentiated to make a significant difference to the business outcome. It should be the same for public sector specialists, but perhaps the reason for the success of mangerialism in the public sector is that its adverse operational effects are much less visible and difficult to measure, and don’t normally affect the viability of the institutions. It’s not easy to see why doctors should be losing their professional status as medical services increase in sophistication and specialisation, making me think the process is more akin to a power struggle than a role they have worked themselves out of.

    Politicians and NPM tend to see no reason why input/ output measurement approaches cannot be continually extended, restricting autonomy in the name of accountability. CEO-type market populism works in a different way by transferring risk and responsibility down the chain, thus enabling it to take the credit for any successes. I agree with Chris that these two trends are quite distinct.

  17. July 12th, 2003 at 19:48 | #17

    Yes, I also think P.M. goes much too far, neglecting the extent to which many (all ‘true’) professions, at least implicitly, embody criteria for effectiveness that lies beyond managerial access, and therefore in some senses can never be drawn in measurable quantities straight from the tap.

    Thinking again in terms of two streams, it seems to me that the one ‘managerial’ stream is reproduced by the academy (whether that be ENA, Harvard or the Carnegie Kornflakes Business College), afterwhich it is promolgated and disseminated by the students, texts and journals, plus the business press and CEO-how-to books etc; while the other has been produced by right-wing (as, here and there, amended by centre-left) thinktanks, afterwhich this applied managerialism has been promolgated and dissseminated by policy papers, statements, conferences, hierarchical control etc (and institutionalised in places like Treasuries and the Productivity Commission).

    While I accept all John’s points about the vacuity of managerialism as a ‘discipline’, these different home bases and routes to the coalface have introduced a dissonance to the concept’s meaning, particularly but not exclusively in the public sector, that calls for acknowledgement.

    To put this another way, I’ve noticed that when you bring practising managerialists and academic managerialists together, they rarely recognise each other. I will be interested to see the make-up of the courses at the new Greiner-associated Public Admin initiative at Sydney. Is this a reverse takeover move on the academic stream?

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