Thursday, February 27, 2020

When is Flexible Work Time Inflexible?

Most readers of this blog have private offices with doors that can close when we want to work without noise or interruptions. Colleagues understand the difference between a closed door and one that is slightly or fully opened, and they adjust accordingly. The same doors also give privacy, which is highly valued. Some readers of this blog also work for an organization that has a policy of flexible work time, and I am willing to bet that they value this flexibility.

Many employees, in many organizations, work in cubicles, which is an entirely different situation. As a research paper by Leroy Gonsalves in Administrative Science Quarterly shows, flexible work time is often much less flexible than people think. As he discovered, the cubicles are one reason for the inflexibility.

What is the connection between cubicles and inflexible flexible work time? Visibility. Flexible work time means that people can arrive and depart from work at times they select, provided they spend enough time working. But workers in cubicles are seen by others, so the early riser can’t come too early because it means leaving before the others, and the late riser can’t come too late because that means arriving after the others. When people gather, there can be informal norms. Norms can become toxic if they are connected to ideas of effort and productivity, and norms guide people’s visible behavior.

Many small behaviors demonstrate visibility and make the work time inflexible. The morning greeting is an acknowledgment of arrival, less formal than stamping a time card but nearly as controlling. Walking past an empty desk in a cubicle raises the question of where the occupant is, and also serves as a reminder of the question others will consider when walking past one’s own empty cubicle. The effect is to remind everyone of the need to arrive exactly at the normative time.

How did Gonsalves discover this source of inflexible flexible work time? He studied an organization that reorganized its office to save space, eliminating cubicles assigned to specific people and replacing them with dynamic workspaces. In the new office, work stations were classified by activity, and employees would move around during the day depending on the type of work they did. These were professional workers who carried a laptop around that contained everything they needed for their work.

The big surprise was that the new, smaller, and flexible-use office also triggered much greater use of flexible time. The workers quickly realized that the visibility was gone. An empty desk said nothing because it was not assigned to a person. Greeting someone in the morning, or not greeting them, also said nothing because it was unclear what part of the office someone would be in and what time of the day that person would have started work.

With the visibility gone, workers immediately started using the flexible work time policy the way it was intended. Flexible work time lets workers adapt to their circadian rhythm, improve their commute, and adapt to temporary work requirements. Arrive late if you are a late riser, avoid the worst morning rush hour, and work longer hours when needed and shorter hours to even out the worktime. All of these are possible as long as the visibility does not impose a norm that creates an inflexible flexible work time.

Organizational theory is often about unintended consequences. An employer saves office rental fees through using cubicles and unintendedly ruins its flexible work time policy that is supposed to improve the workers’ lives and the work. An employer saves even more office rental fees by replacing cubicles with flexible work spaces and inadvertently converting its workers from surface ships to submarines, who take full advantage of their stealth. I am sure the submarine workers are happier with their flexible work time, and maybe they are also more productive, so this was a good unintended consequence.

Gonsalves, L. 2020. From Face Time to Flex Time: The Role of Physical Space in Worker Temporal Flexibility. Administrative Science Quarterly, forthcoming.

Tuesday, February 25, 2020

How to Get Paid More at Work? Extend your Turf!

The title is not clickbait – research on organizations can be very practical. One thing that organizations often do is to create specialized jobs. The reason is obvious – specialization means repetition and regularity, which builds skills and routines and reduces irregularities. When done well, specialization creates efficiency. The “when done well” part is important to keep in mind, because specialized jobs naturally do a smaller proportion of the organizational tasks, which means that more specialization could mean more kinds of jobs, or some jobs that are general and cover the gaps between the specialized jobs, or a combination of the two. All of this is well known to those who design and operate organizations.

But what does specialization do to worker pay? That’s the topic of research by Nathan Wilmers, a professor at MIT Sloan School of Management, published in Administrative Science Quarterly. The question is very interesting because it is commonly assumed that wages are determined in some labor market that rewards workers first by observable skills, such as training and education, and later through performance on the job. The problem with this conception is that it assumes that observable skills map cleanly onto organizational tasks. This assumption is never quite correct, and it gets worse in organizations with highly designed jobs.

Instead, consider jobs organized by the degree of task specialization, and consider wages not as set in a market but as an implicit negotiation between worker and employer. A highly specialized job usually means that there are many potential occupants and that the post-hire training to do the task is easy. Probably the specialist isn’t pre-trained before hiring, but that does not matter because the training is inexpensive. That means lower wages, because a worker occupying a specialized job is expendable. In organizations, narrow job turf means low pay.

A general job that covers the gap between specialized jobs is exactly the opposite. First, efficient job design requires having many specialists and few generalists covering the gaps, so the generalist is necessarily rare. Second, the generalist work is complex and specific to the job design of the employer. Again, the generalist isn’t pre-trained, and it takes a while for a newly hired generalist to be efficient. In the implicit wage negotiation, the generalist has a strong position. In organizations, broad turf means high pay.

Wilmers found sizable effects when analyzing the data. Workers who equally split time between tasks would lose 11 percent of their pay if they were split into groups that specialized in one task. A worker who moved from having the average level of generalization to the 95th percentile of generalization would gain more than 8 percent pay. These differences in pay levels mean that increases in job turf are well worth fighting for.

Two additional notes are worth considering. The estimates I cited above are among the more conservative estimates of how big the differences were in those organizations. Moreover, the data analyzed come from a single type of organization, which means that the effects could be bigger or smaller depending on the employer analyzed. In fact, chances are that in most firms, the advantages to having a job with broader turf are greater than in this analysis. You see, Wilmers analyzed labor union employees, and unions are known to favor pay equality.

So organizations that pursue efficiency seek specialization, and workers who want high pay seek a broad turf. Clearly this is an area of work design that involves negotiation, because smart workers will not willingly accept a more specialized job. They will fight for their turf.

Monday, February 17, 2020

My Failure, Our Failure: When Do Firms Fire Suppliers?

Interorganizational networks can be many things, but one of the most consequential is made up of the exchange ties that follow components downstream to a firm that assembles the final product. These ties are consequential for many, because the component makers and final product assembler all rely on the cost and quality of the components, and so do the final users. Having a familiar component supplier is wonderful because “tried and true” testifies to quality, so any signs of failure in existing components is a small crisis for the assembler. This situation is also interesting to researchers because it shows how organizations make important choices.

What better place to study it than in Formula 1 racing car assembly, as David R. Clough and Henning Piezunka did in a paper published in Administrative Science Quarterly? Their study gives an interesting and surprising answer to how firms decide when to fire component makers. Firms look to the performance of their own product, which is expected, but also to the performance of competitors’ products using the same component. And here is where the research findings get surprising. If competitors using the same component are also doing poorly, the firm will stop using the “tried and true” component and switch to another supplier. Shared fate with the competitors does not make firms complacent but rather makes them more eager to improve.

Why does this happen, and especially in a race where the whole point is to do better than the competitor? If many cars slow down, your car is not slowing down more than many others. The key is that firms learn vicariously from each other, and they can be very objective in assessing their options when the stakes are high. A competitor’s car doing poorly when holding a shared component is already a warning sign that could lead a firm to drop the component from its own car, and if the firm’s own car is also doing poorly the warning gets louder. Firms learn from their own experience, learn vicariously from the experience of others, and put the two forms of learning together to make difficult choices such as replacing a key component made by a familiar supplier.

In business, interorganizational ties such as supplier–buyer relations are important because they help build trust and reputations for responsiveness when problems occur. In the end, however, what matters more is the actual quality, and then a different kind of tie may be just as effective: buyers compare themselves with each other and use the information to assess the supplier. Performance matters more than trust.

Wednesday, February 12, 2020

The Usual Choice: One More Reason Males Are Favored

We know several reasons that men get ahead of women as employees and entrepreneurs. There are cultural beliefs that men are better for work and more committed to it than to family life. Men in powerful positions tend to promote men because they are similar to them. And many occupations and forms of entrepreneurship are seen as archetypically male, suggesting that parents might consider advising their daughters against training to become a plumber or a computer programmer. Given all these biases, would it be possible for one more to exist?

Research by Mabel Abraham in Administrative Science Quarterly has uncovered one more form of discrimination in a sample of entrepreneurs. It is a subtle one, but the effect is strong. Suppose an entrepreneur wants to initiate a network connection with someone else in order to start resource exchange -- as a customer, supplier, or collaborator. Would it matter for a woman whether she initiates that contact directly or whether she does so by asking another entrepreneur to make a referral? The answer is yes. If the woman is engaged in a typically male activity, her contacts are much less likely to refer her to their contacts. Why? Because women would not be the usual choice for a transaction partner in that activity, and people worry about how their referrals are judged by others.

Importantly, this effect is specific to women. Men engaged in typically female activities are just as likely to be referred to contacts as women. Women and men in neutral activities are just as likely to be referred to contacts. It is only when referring women to their contacts in typically male activities that people stop and think: is she the usual choice, or is there something wrong about a woman doing this occupation or building this kind of venture? Abraham’s analysis showed that the difference in results was sizable. If an occupation was between 50 and 60 percent male, a man could expect to get about 5 more referrals than a woman would get each year, and this gap grew wider in occupations with higher percentages of men (see the graph)

This difference is important because selectivity in referrals occurs before any of the other biases. Once a woman has been referred to a contact, that contact might still hold beliefs against the suitability of women as entrepreneurs or might be a male who prefers to interact with other males. Biased referrals mean that the potential connection can’t even decide whether to discriminate (or not). The absence of a referral is already a form of discrimination.

Given these effects, no wonder women entrepreneurs have to build their own business networks: they are not getting help from others if their occupation has a majority of men – as most highly paid occupations do. Abraham’s research showed that when making direct contacts, rather than referrals, there was no difference between women and men. So contrary to one popular belief, women aren’t too shy to build networks. Instead, it is sometimes their male network contacts who are reluctant to refer them to others.

Saturday, February 8, 2020

Success Lies in Failure? How Social Movements Learn from Their Own and Others’ Experience

Firms are often targeted by social movements seeking to reform them or to get their help in changing society. The result can be a tug of war between a social movement with committed members and a clear cause but few resources, and a firm with resources and a broad agenda focused on profits. A key element of this tug of war is the people caught in between – firm employees who agree with the social movement.

Thanks to research by Rich DeJordy, Maureen Scully, Marc J. Ventresca, and W. E. Douglas Creed published in Administrative Science Quarterly, we now know more about who the likely winners are in such a situation. They looked at many dimensions of social movements, and the one that struck me most was the effect of early success versus early setback. They studied social movement organizations campaigning for domestic partner benefits to be offered by firms, an action that costs firms some money (not much) and can expose them to conservative counter-movements. Interestingly, they found that too much early success could be a bad thing.

Most people look at social movements as disconnected pieces and conclude that any social movement organization with early success is a good outcome. But this is not true. A social movement is usually an ecology of separate organizations, and these observe each other, learn from each other, and stimulate each other. The problem with early success is that it may have little to teach because the circumstances are special; it leads to stagnation if the successful movement organization has nothing left to do; and other movement organizations are less likely to interact with the successful and stagnated organization. The “one win and done” model does not sustain a social movement.

But isn’t an early win better than facing early setbacks? That depends. The authors found that opposition from target firms often led to refinement in the strategies used by movement organizations, and it kept the activism high. Repeated blocking by the target firm could make a movement organization stagnate, but often the movement organizations were able to find some approach leading to progress. These were exactly the movement organizations that stayed active and continued to wield influence over firms. Other movement organizations observed them and stayed in touch with them to learn how to overcome resistance and were stimulated by their activism and success.

The key to understanding social movements is not to focus too much on any single movement organization, but instead to look at them as an ecosystem and study their interactions. Interestingly, this is also a good way to analyze how firms overcome adversity. Learning from other firms is always central in how firms adapt to the environment, and a full view of the ecology of firms can help us learn how they overcome mistakes and adversity.

We have learnt much from looking at organizations one by one, and we will learn even more that way. We have also discovered how many more lessons are available when we look at ecosystems of organizations, and this will continue to propel our research progress. For managers, the key insight is that other organizations may already hold the key that unlocks the stagnation their organization is trying to shake off.

DeJordy, R., Scully, M., Ventresca, M. J., & Creed, W. E. D. Inhabited Ecosystems: Propelling Transformative Social Change Between and Through Organizations. Administrative Science Quarterly, forthcoming.