Suppose there are two companies, operating on thin margins, Alpha Products and Bravo Services. The Bean Counters argue they should merge. The accounts clearly show that large savings could be made by having just one Head Quarters, one Administration Department, one Personnel Department, etc. Sounds like a good idea and the respective Boards are convinced. The merger goes ahead but how does it work out?
The question is " What happens to the entropy of the new organisation, does it remain the same, or does it increase?".The most likely answer is that it increases and the success or failure of the merger depends on whether the sacrificial cost of dealing with the extra entropy is less or more than the money saved in operating on a larger scale. So what happens at Alpha and Bravo?
The two chief executives keep their jobs but loose some of their freedom of action. A new Group Chief Executive is appointed The two Head Quarters offices are merged into one building, but that turns out too small so a new Head Quarters Office building has to be constructed. The two Administration Departments are merged and a number of jobs lost so reducing the wages bill, that is until it is realised that the two companies had widely different requirements. Alpha bought in large quantities of raw materials which involved multiple contracts, they exported their products abroad and needed specialist officers to arrange transport, customs clearance, obtain Government Licences etc. Bravo operated in the UK sending out engineers and craftsmen to help out other companies as required. For this they had special working hours, payment by results schemes, additional allowences for travelling etc. To cope with these differences the new group, now knows as A&B Enterprises, had to re-organise the whole of its Administration policy and to do so increase its staffing level. A new computor had to be installed, together with some specialist staff to programme and operate it. The operational staff had more paperwork to complete and their freedom to operate became more curtailed as strict systems were introduced to meet the needs of the Group rather than the original individual companies. Industrial disputes developed as the craftsmen in Alpha realised that their take home pay was less than craftsmen in Bravo. The Cleaners working for Bravo, who were maily women, considered that their work was more than equivalent to the Painters, mainly men, working for Alpha. They took their case to the Equalities Commission. The Group now introduce a job eveluation scheme. For this Management Consultants were employed and the Personnel Department recruited a Job Evaluation officer. And so it went on!!!
As the organisation grows, in order to cope with the wider range of employees and products, so the requirement for rules and regulations grows. This means that employees at all levels have less and less oportunity to use their own inititive and make decisons, instead of these being made at working level, they now have to be reffered up the line of command in order to maintain uniformity. This destroys the value of human work which is the ability to use discretion. The situation is well illustrated with the European Union. Since it formed over 100,000 regulations have been introduced!!!!
After the end of WW2 the Government set up a research project to study industrial organisation. It was based on the Glacier Metal Company and became known as the Glacier Project. The study was led by Elliott Jaques. A lynch pin of their study was the definition of Human Work. They argued that the difference between a machine and a person at work was that the value of human work lay in the ability of the human to exercise discretion. However the more prescriptive the organisation becomes, the less discretion the employee exercises, this means that a valuable human resource is being wasted. I quote the following anecdote by way of illustration.
In the 1970's I was working at Sizewell Nuclear Power Station as Health Physicist. Amongst other matters I was responsible for the radiological safety of the Station and its work force. Part of my Department had trained Health Physics Monitors to carry out radiation measurments around the plant. At that time the Minister of Power had decreed that any event involving radioactivity which might be of public interest, must be reported to the Nuclear Inspectorate. At much the same time, under pressure from the Government, the CEGB had to introduce a work study based pay system. For this
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