Control: The Subtle Art of Managing and Motivating People in the Tech Industry

Control: The Subtle Art of Managing and Motivating People in the Tech Industry!

As a manager or business owner in the tech industry, possibly your biggest challenge is to positively influence the behaviour of your employees so that they work wholeheartedly towards the achievement of your business goals. According to the Management literature, this is possible if people’s individual goals are somehow aligned with the goals of the business. This concept is known as ‘goal congruence’ and apart from being intuitively difficult to accept, it is even harder to achieve.

The discipline which addresses the problem of goal congruence is called Management Control. In 21st Century organisations, the very term conjures up unpleasant images. ‘Management’ suggests hierarchies and the bureaucracies associated with them, whereas ‘Control’……well, no one loves a control freak, do they?

Jack Welch, renowned CEO of General Electric during the final decades of the 20th century, clearly expresses the current control dilemma: “The world is moving at such a pace that control has become a limitation. It slows you down. You’ve got to balance freedom with some control, but you’ve got to have more freedom than you ever dreamed of.”

In searching for this challenging balance between freedom and control, we need first to consider the options. 21st Century academics such as Alvesson and Kärreman, have pointed out that management control exerts its influence by focusing on worker behaviour, output, and/or the minds of employees.

Output controls worked well in 20th Century organisations, which were devoted largely to the production of physical products. Budgets, targets, goal setting, standards, variances, incentives, management by exception, and key performance indicators (KPIs) – all of these dominated the control language of the 20th century organisation.

Contrast that scenario with the economy of the 21st century. Now, manufacturing industries make up a much smaller percentage of the USA’s and UK’s GDP, with their economies being dominated by ‘knowledge-intensive firms’ (KIFs) in the areas of Finance, Banking, and Information Technology. The problem, from a control point of view, is that KIFs are ‘high ambiguity’ firms, where the relationship between inputs and outputs is not well understood. Take the example of Tech industry firms; they know what they want to achieve, but the means of achieving it are often unclear. A solution often requires clever, highly educated individuals to work together co-operatively in teams, with success depending more on joint effort than the brilliance of any individual.

Worker attitudes have also changed, so that employees are increasingly expecting work that fulfils them and gives more meaning to their lives. How then can employers meet their own business needs as well as those of their employees? How can they provide satisfying work, while simultaneously controlling the behaviour of the people making up their work teams; people with different personalities, values, goals and beliefs?

The control methods of the 20th century have been enlisted, such as targets, budgets and KPIs. However, organisation-based research has shown that these methods don’t work and can even demotivate employees. Employees in KIFs found output forms of control most offensive, i.e. where superiors imposed targets then measured performance against those targets. However, where people were trusted to employ self-control in doing their jobs, role conflict was reduced and individual job satisfaction and overall sub-unit performance were improved.

With output controls being ineffective in tech firms, managers need to influence the minds and behaviour of employees. In this way they can be persuaded to work together harmoniously and creatively, in the pursuit of organisational goals.

This seems like a big ask. But, amazingly, back in 1983 William Ouchi and Alan Wilkins developed a control method that, based on current research, still addresses the needs of knowledge-intensive firms almost forty years later. They called their method ‘Clan control’, with clans being high-ambiguity organisations (such as high-tech firms) with a very specific form of organisational culture.

Businesses often bandy the word ‘culture’ around rather freely, unaware perhaps of the powerful control effect that organisational culture can exert. In fact, academics Merchant and Van der Stede note that a firm with an effective culture needs no other form of control.

Organisational culture guru Edgar Schein explains that cultures are based on the shared values of the members. He distinguishes between ‘espoused values’, which are the values the organisation claims to uphold, but doesn’t, and ‘shared basic assumptions’, which are the unconsciously held beliefs which actually underpin an organisation’s culture. Schein emphasises that shared basic assumptions are manifested in the behaviour of employees; values are therefore only relevant if they drive behaviour.

This is how Ouchi and Wilkins describe the issues around clan formation, as well as the underlying values and beliefs required to bring about a clan culture:
– A clan requires (i) the sharing of a general belief system that helps participants to determine collective interest, and (ii) relatively high levels of goal congruence.
– The general belief system requires an acceptance by participants that (i) joint effort is the best way to achieve individual self-interest, and (ii) in the long, run both honest and dishonest people will be discovered and dealt with appropriately.
– ‘Goal congruence’ in the context of a clan does not mean that clan members and the organisation must have specific goals in common; it means instead that clan members come to believe that in the long run they will be treated fairly. This belief allows for short-term ‘unfairness’ without destroying the clan relationship (e.g. working long hours to complete a project, knowing that fair compensation will follow later).

Wilkins and Ouchi suggest a number of other conditions conducive to clan formation:
– Carefully screening applicants, so that new members are more likely to possess the values and beliefs promoted by the organisation.
– A strong and shared claim of uniqueness, so that participants feel that their firm is significantly better than, and different from, any other company in the industry.
– An atmosphere where all clan members are encouraged to offer opinions on decisions, rather than having decision-making dominated by particular individuals. ‘Different but equal’ applies to clan members, expressing the right of any member to contribute when they wish to.

Schein emphasises the fact that the values and beliefs of the organisational founder or leader, play a big part in the establishment of an organisation’s culture. For a clan culture to succeed, founders and leaders have to buy into the clan philosophy.

Types of rewards must also be considered; some employees are likely to be extrinsically motivated, and may prefer monetary rewards, promotions etc., whereas others might be intrinsically motivated. Such employees might prefer rewards such as free training, or even to attend a meditation retreat. Group rewards can reinforce culture, but only if they address the particular needs of all members.

Creating a clan culture is not necessarily easy, but research shows that it is the most effective way for tech industry companies to exercise control and keep employees happy and motivated. For, as Ouchi points out, if managers can’t trust their employees, they are doomed to constantly monitor them. And that can’t be good for anyone.

This article was brought to you by Source Coders staff member, AJ Cilliers.