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Business-Managed Democracy

“Business-managed democracies are those in which the political and cultural arrangements are managed in the interests of business”

Sharon Beder

Business-Managed Culture

Corporate Loyalty

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The relationship between unskilled or semi-skilled workers and management tends to be marked by mutual distrust and therefore tasks have to be closely prescribed and supervised. However, at higher levels in the corporate hierarchy employer/employee relationships are marked by a high degree of trust.

This provides an alternative means of control through the rewards and punishments of a career structure.  Those who can be trusted to work hard towards company goals get promoted. The aim of managers of higher level workers is to encourage the worker to identify with the aims of the company so that they will be self-motivated and require less direct supervision. In return employees can expect better rewards and promotion prospects if they work hard and loyally.

For white collar salaried male corporate employees, employment at a particular company became a lifetime career. Employers offered rewards and life-time security in return for life-time loyalty:

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Corporations sought to craft a broad definition of corporate employment. Under this definition, employees would not only meticulously perform their specific duties over a lifelong career, but would also assume a sense of obligation to promote corporate prosperity... The early years of most enterprises were dominated by efforts to implement programs and policies that would induce ambitious young people to tie themselves to a single firm and to view its interests as synonymous with their own.

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Autonomy and Trust

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Studies of engineers in their workplace have found that trust is an important element in the relationship between engineers and their employers. Engineers are promoted when they have proven their dependability and responsibility and shown they can be trusted by their employers. In return the engineers receive a considerable amount of freedom to exercise discretion, that is, ‘responsible autonomy’.

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Giving autonomy to skilled workers suits employers as it is "the most efficient mode of deployment of skilled workers" in many circumstances. Work is assigned in large chunks and the employee is able to decide how s/he will do it, given certain time and money constraints and performance specifications. Performance is judged by results. Company objectives are often internalised so that workers are self-motivated and self-disciplined.

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Authority is exercised in situations of loose supervision through selection, training and promotion. In engineering as in many other occupations career success is entirely dependent on the salary grades and promotion levels established by management. In this way an engineer's career and thus their personal success is completely determined by management and this constitutes a form of control over the engineer which can be more extensive and pervasive than direct supervision.

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Not only is close supervision unnecessary but given that future managers are often chosen from these engineers it is considered to be counterproductive to their training. Also close supervision can undermine the trust that is so essential to the relationship. Authority is very much behind the scenes and invisible with job demands being seen in terms of company goals and profitability, goals that are accepted by engineers who are able to fit their job into a company context.

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It is especially important to a company that its senior management and executives submit fully to the company goals and believe wholeheartedly in the company. The route up the corporate hierarchy requires the employee to demonstrate that they “subscribe to the company’s values”. The importance of loyalty, particularly amongst salaried white-collar employees is recognised by employers, who urge their employees to identify their welfare with that of the company. 

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Clark Davis in his research into corporations at the beginning of the twentieth century found that “Employers expected from employees nothing less than total commitment. Managers wanted employees to agressively support their firms not only while at work but in their non-working hours as well—to act like limited partners, or stockholders.” They recognised that it was employees who came into contact with the community and it was that contact which could be vital in how the community felt about the corporation. For example the Pacific Mutual Life Insurance Company told its employees in 1925: “Happy is he who speaks, not of the boss’s business, but of our business, who considers himself an integral part of the concern, who thinks not of personal gain or satisfaction but of the welfare and greater success of the organization.”

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Company Promotion

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Employers believed “employees should identify so strongly with the company that promoting its products and services would be a logical part of every job description.” Employees were expected to take advantage of any opportunity to sell the company’s products or stock to friends and family and to set an example by using those products themselves. “Leaders of oil companies asked employees to support new industries and technologies that would create a heightened demand for petroleum” by buying automobiles, sending letters airmail, and advocating these and other products such as ashphalt and pesticides.

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During the second world war, Shell Oil sent booklets to its workers exhorting: “If every member of the Shell family will make just a few good friends, and will have a good word for his associates and his company, within a year the Shell family will have thousands of new friends and supporters. And a good, strong, well-liked company is a mighty fine guarantee of a good, steady job.”

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This identification with the company was supposed to encourage more than just voluntary salesmanship outside work hours and courteous service during work hours but also political activism on behalf of the company’s interests. Most firms tried to ‘educate’ their employees as to the correct political view they should take on matters concerning the company and some asked workers to “become advocates of specific political issues and to canvass their friends, neighbours, and relatives for support”.

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Corporate Outreach

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Also employees, particularly managers, were urged to “represent the firm as a vital local institution” at meetings of professional societies, neighbourhood associations and with other community organisations such as scouts and to give speeches at schools, clubs and churches. The ability of executives to mix socially with the community became an important element of their job.

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The US private utilities were perhaps the earliest firms to expect their senior employees to join various community groups and activities, the rationale being that the company gained prestige and an opportunity to present its views in the community but also that it increased its opportunity to distribute pamphlets, films and other PR material. In 1912 the Electric Railway Journal pointed out that executives who actively participated in community affairs were considered to be more trustworthy when they made statements on behalf of the company. The utilities often paid membership dues to the various social, sporting, civic, scientific and professional organisations that executives joined. Boy Scouts was a particularly favoured organisation to become involved in.

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Such expectations became more common following the second world war. For example, Sears Roebuck ‘encouraged’ its executives “to participate in community activities, outside business hours and outside the relatively narrow circle of business acquaintances”. A 1954 American Management Association report noted that “No control or guidance is offered, except that in any local community the company would expect to find its senior personnel playing some part in such groups as Rotary, Chamber of Commerce, Community Chest, etc.”

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