The last two years have highlighted the importance of managers. It’s ever clearer that their jobs are not just about managing productivity, but about supporting sustained performance, wellbeing, and inclusion in the more complicated context of flexible work arrangements.  

So Nicolai J. Foss and Peter G. Klein’s new book Why Managers Matter, released this week, is timely. Foss and Klein, professors at Copenhagen Business School and Baylor’s Hankamer School of Business respectively, mount an extensive argument for the importance of managers in the new world of work.

But in doing so, they seem less set on providing an updated vision for the role of the manager and more obsessed with striking down the idea of the “bossless” company that was promulgated in some management books and media over the past few decades. “Hierarchy and managerial authority are here to stay,” they write. “Under the right conditions, they are the best ways to handle the coordination and cooperation problems that beset human interactions.” (p. 235)

With their focus on rebutting arguments for lean, flat, distributed leadership, Foss and Klein more or less entirely miss the current discussion about how much the management of people needs to change. (Telstra comes to mind as an example of a creative approach to such change, as it split manager jobs into “leaders of work” and “leaders of people” to separate responsibility for business outcomes and for the supply of the talent needed to achieve them.)

What they do instead is catalog different experiments with “bossless” structures, where companies have gotten rid of formal management roles in favor of more self-organizing, autonomous approaches. Foss and Klein impressively show how many of the poster children for such approaches—such as Valve, Zappos, Oticon, and Semco—either struggled after the glowing case studies on them were written or had actually retained or reinstated management hierarchies.

“It is possible to de-layer, cut management roles, and give workers more discretion, though doing so does not result, of course, in a bossless company,” the authors write. “Such organizations normally have very powerful bosses, cliques, and other sources of authority—and even the most bossless companies have bosses who set them up and make sure the model is working. Most important, this style of running a company can only work under special circumstances.” (p. 111)

They acknowledge that Mondragón, the Basque federation of worker-owned cooperatives with over 80,000 employees, is a possible exception to their critique, though question whether its approach is sustainable over time. They also discuss Morning Star, a California food-processing firm, which practices employee self-management. Morning Star workers  sign contracts with their peers—called Colleague Letters of Understanding, or CLOUs—which include personal mission statements, performance indicators, and time commitments. Foss and Klein conclude that most companies operate in more complex and dynamic conditions for which the CLOU approach is ill suited.

Hierarchy helps solve the problems of coordination and cooperation. “Coordination means figuring out what should be done, by whom, when, how, and in what quantities,” they write. “Cooperation is about getting them to do it, even when doing so is not in everyone’s self interest.” (p. 151)

So what exactly is the role of the modern manager? Toward the end of the book, Foss and Klein provide more detail. In most companies today, managers don’t need to micro-manage workers, telling them what to do and when. Rather “managers have to design the system in which empowered, autonomous, educated knowledge workers can flourish,” they explain. “The boss selects a target outcome, decides which workers are best suited to achieve it, chooses how much discretion to give those workers, and steps aside.” (p. 246) In this vein, they cite Haier Group CEO Zhang Ruimin, who compares himself to a ship’s architect rather than its captain.

Foss and Klein contend that managerial authority is more essential when unexpected conditions occur—such as a pandemic—because a clear hierarchy can speed decision making and deployment of disparate resources.

To be sure:

  • The authors’ explicit aim, stated in the final chapter, is to defend classic management thinkers from being ridden over “roughshod” by “the bossless company narrative.” (p. 271) It’s unclear that the bossless narrative has real momentum at the moment—if anything, recent surveys show that workers are looking for more from their bosses. So the war Foss and Klein are fighting doesn’t seem fully contemporary or relevant.
  • In their focus on authority and decision making, they miss the team captain dimensions of managing, the tactical feedback, goal-setting, psychological safety, and concern for overall wellbeing that research indicates are hallmarks of effective teams.
  • The authors don’t deeply address the implications of workplace flexibility, such as  hybrid and asynchronous work, for the job of the manager. Their argument for hierarchy in business also doesn’t acknowledge the ways in which hierarchies can perpetuate racial, gender, and class inequities or how to address that.

Choice quotes:

  • “The traditional hierarchy still plays an essential role in most companies and has continued to do so despite rapid technological change, the challenges of the information economy, and increased global competition, all of which supposedly have contributed to its demise.” (p. 4)
  • “Bosses matter, not just as figureheads but as designers, organizers, encouragers, and enforcers.” (p. 4)
  • “Companies and markets are different beasts, with different natures and purposes. Markets are (partly) self-organizing systems, while companies are based on (some measure of) direction and planning.” (p. 103)
  • “Flatter structures can work for companies where no significant amount of coordination is required of managers. But they don’t work for most companies.” (p. 110)
  • “Management is a generalist skill because the interdependencies among tasks are high.” (p. 122)
  • “You can talk to your manager’s manager without his permission, you can talk directly to a VP in another department, you can talk to me, you can talk to anyone without anyone else’s permission. Moreover, you should consider yourself obligated to do so until the right thing happens.” —Elon Musk, in an email to Tesla employees (p. 124)
  • “Hierarchies can even promote innovation and entrepreneurship. Much criticism of hierarchies, historical and contemporary, is misplaced.” (p. 129)
  • “A large part of corporate performance is driven by luck.” (p. 161)
  • “Strategies, no matter how carefully designed, are road maps to destinations we have never visited, over territory that has not been carefully explored.” (p. 226)

The bottom line is that Why Managers Matter falls short of providing a compelling vision for the role of the manager in the new world of work, while offering a thorough rebuttal to those who might argue that managers aren’t needed at all.

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