A Conversation With Charles Handy

On the Future of Work and an End to the ^'Century of the Organization "
Interviewed by Barbara Ettorre

harles Handy has been an oil executive, an economist, and a professor at the London Business School. But he is now best known for

his bookschiefly. The Age of Unreason, The Age of Paradox, The Gods of Management, and, most recently. Beyond Certainty: The Oianging Worlds

of Organizations. Handy is unflinching in his belief that societies and organizations must ETTORRE:

changeand change profoundlyor they will not endtire. And these changes have farreaching implications for the way people manage their lives and careers. The interview was conducted by Barbara Ettorre, senior editor for Management Rei'iew. A shorter form of the conversation appears in the July issue of that magazine.

A lot of people are fascinated with your comments on the future of work and organizations. For starters, could you glance into your crystal ball and tell us some of the changes you're seeing? Of course. I don't mean to frighten people, but I see a withering of the "employment organization." A lot of scripts will need to be rewritten, including the script that includes job security in a corporation followed by a comfortable retirement. A lot of us will become "portfolio workers" selling our skills to a variety of clients. And all of us will be looking beyond work to find meaning and identity. Those are all ideas I would like to probe further. But first, let's get a picture of where we are now. Your book. The Gods of Management, makes creative use of Greek mythology to describe current organizational cultures, and how these are changing. First, could you just summarize the mythology for otir readers? Yes. The Greeks had many gods. And you chose to worship the ones that stiited your style and circumstances, as it were. And I think that, to a large
SUMMER 1996 15

HANDY:

ETTORRE:

HANDY:

extent, marriages and organizations should choose the style that suits their circumstances and their purposes. I selected four Greek gods as tj^ifying what you might call the "choice of managerial cultures" that are available. ETTORRE: HANDY: And you say that every organization will blend these in some way. Right. The four, very briefly, are Zeus, who was the king of the gods in ancient Greece, and he ruled by a thunderbolt and shower of gold. He would either beat you over the head or seduce you. And act like an occasional bull in a china shop, as well. That's right. And the Zeus style is the typicalsomewhat autocratic owner/manager. But there's a positive twist to this. In Zeus organizationsZeus culturesthe method of communication is empathy. They don't write things down. They surround themselves with people whom they know very well and can trust. That allows them to work very fast and to be very cohesive. They could have lieutenants in different parts of the world, and the lieutenants don't have to communicate with headquarters. Because they know what the person in the center is thinking. Right. And so, in a positive sense, these organizations are based on trust and empathy. The down side of this, of course, is that these organizations are very much dependent on the whim of the man at the centeror the woman at the center. And if you don't get on with the person at the center, then you better get outin fact, if you don't get out, you're chucked out. So they're quite tough cultures. They're also nepotistic cultures, so you find these in family firms, in trading organizations, in some banksit used to be. These cultures work very effectively where the personality of the organization is important, such as in small family businesses, where speed is of the essence. Okay. The next god? The next god is Apollo. He is a god of many things, but particularly of harmony and order. And Apollo organizations are what 1 call the "role organizations." In other words, the philosophy behind them is that you divide the work up into discrete segments, which eventually become roles for an individual actor. I see how that fits. And then you link the roles together into systems, with rules and procedures. And provided you, as an individual, fit your job description, and provided you obey the rules of the systems, everything works beautiful-

ETTORRE: HANDY:

ETTORRE: HANDY:

ETTORRE: HANDY:

ETTORRE: HANDY:

ETTORRE: HANDY:

16 ORGANIZATIONAL DYNAMICS

ly. And you'll find, therefore, this kind of culhire working very well in bureaucracies and anywhere where there is a stable environment. So, large, traditional firms tend to be dominated by Apollo, particularly if the industry is old, like the stee! industry or the paper industry. The problem, of course, is that they're very slow to change because they'd have to reorganize the whole system. A second problem is that Apollo is also the god of sheep.
ETTORRE:

Sheep? Yes, sheep. The people who find themselves in these organizations are a bit sheep-like. In other words, they don't like taking a lot of initiative.. .Indeed, it's bad news if they do, because this upsets the system. You shouldn't act beyond your job description. For instance, within the accounts department, you may well want rules and procedures and people doing what they're supposed to, and no more than they're supposed to do. The same is true for airlines. In this setting, you need Apollo. The third god I chose was actually a goddessAthena. She is the goddess of wisdom, but she's also sort of a commando goddess. She's the patron saintor patron goddess, ratherof Ulysses.

HANDY:

ETTORRE: HANDY:

She's my personal favorite, by the way. Of course. Born, I may say, out of the head of Zeus.. .which is important to remember. So, there's a bit of "oomph" there. But basically, she is the goddess of the task force, the goddess of expertise. And the philosophy of the Athena organization is that, if there's a problem, then you should group all the relevant talents around it, give them the resources they need, and say, "Go to. Solve that." So, every MBA student that I know wants to join an Athena organization because basically life is a continual case study. And every professional who works inside an organization would like to work in an organization that values their expertise. In these organizations, the person who is best is in charge. At the same timeremembering that Athena came from the head of Zeusthere's got to be a little bit of entrepreneurial zeal to push the projects forward. That's interesting. But I also like Dionysus. Of course. Dionysus is the fourth. And like all the Greek gods, he is a god of many thingswine, drunkenness, and all this sort of stuff. But, for me, he's also the only god that is, in a sense, existentialthat basically says, "You make what you will of your life. You are free to choose. You are no man's slave, no woman's slave." And so he is the god of the real professionalthe independent craftsperson, the independent thinker, the researcher, and so on. These people don't acknowledge anyone as their boss. They value freedom. On the other hand, organizations need them because organizations need their creativity, their irreverence, that type of thing...so bureaucratic ApoUo-type organizations find Dionysians very difficult.
SUMMER 1996 17

ETTORRE: HANDY:

ETTORRE: HANDY:

But I would think Athenians and Dionysians might work nicely together in certain ways. They do, provided it's a fairly loose kind of Athenian organization, sort of "network" organizationsproject groups. And when you do that, you end up with fewer peoplebetter qualified, more expensive, and more independentgrouped around projects, and with rather few elements of ApoUo. Right now, there's a lot of talkand effortto change organizational cultures. A large reason for all the downsizing and layoffs that we see in America at the moment is that we are changing from Apollo to Athena, which I would say actually is inevitable and good news. It's just rather sad for the people who thought they had safety in Apollo, which is the reasonable expectation, because in Apollo, if you just do your job alright, you're okay; and suddenly they find that the god has let them down and they begrudge their own god, and that's tough. How should managers in the Apollonian organizations respond? Well, if they're still there.. .A lot of the people who lose out in the shift of ApoUo are the middle layers, and they are basically information processors and checkers. What you're saying is that management skills used to be collating, recordkeeping, tracking, so forth. Yes, used to be. Because in the past, one of the manager's main jobs was to pass relevant information to people below them, and then collect different relevant information from those people and pass it upwards, and to check that everybody was doing their little bit in their little box. Now, if you shift to independent task forces in the Athena style, and if you use new technology to give them all the information they need or they wanted, then you don't need these intermediate layers. So what should the managers in the Apollo organization do.... Yes. What should they do? Well, basically, get outget out and tum themselves into Athenians or Dionysians, which is very difficult. I often say that many managers I know have been promoted to a level of personal incompetence. They should either leam the new cultural language or.... ...get out of the organization. Yes. The problem is, even if they try to change, it's very difficult to change in the same place. People know you as you were. You may wear different clothes; you may say, "I'm a free, jeans-wearing Dionysian type." But

ETTORRE: HANDY:

ETTORRE: HANDY:

ETTORRE: HANDY:

ETTORRE: HANDY:

ETTORRE: HANDY:

18 ORGANIZATIONAL DYNAMICS

nobody's going to believe it because they knew you as a whole. ETTORRE: HANDY: ETTORRE: HANDY: Can teamwork help Apollonian organizations survive and prosper? Well, teamwork is Athenian, you see. So, basically, what Apollo organizations have to do is to tum into Athenians. Have many companies made the change successfullyor is it lip service? In many cases it's lip service; in other cases, in order to become Athenian, they have to change their personnel. So, you will see a company like IBM getting rid of lots of people and hiring lots of people at the same time. They get rid of ApoUonians and bring in Athenians. So, yes, teamwork is the answer, or Athenian culture. You've written about what you call "the federalist organization." Just to clarify for our readers, how is federalist different from decentralized? Federalism is one of those paradox words. It's not "either/or," it's "and/and." A federal organization is decentralized and centralized. In some respects, an organization needs different bitslocal, if you like that do things more or less autonomously. But in some respects the organization needs to be centralized, doing things in the same way. For instance, purchasing should be centralized. The trick about federalism is to get the right balance. The trouble with federalism, as a concept, is some people think it means total decentralization, and therefore, anarchywhich it doesn't. Other people, notably the British, think it means centralization^but somewhere else other than Britainwhich it doesn't. It means a mixture of both. ETTORRE: HANDY: A global organization would likely be federal. Right? A global organization, by definition, has to be federal. If an organization has its headquarters in Pittsburgh, and every branch around the world is a branch organization from Pittsburgh, then it will not succeed. It will not reply appropriately to the Chinese situation, or the Japanese situation, or the African situation. On the other hand, if it is totally decentralized, then it's what I would call a commonwealtha group of individual organizations that happen to like each other, that come together occasionally. Whereas the centralized one is an empire. Neither one is right. You have to be a bit of both. Yes. So you might, for instance, centralize the information system so that everybody can communicate with everybody else. That's always a priority because otherwise people can't talk to each other, and the bits get too independent and autonomous. What else might be centralized?
SUMMER 1996 19

ETTORRE: HANDY:

ETTORRE: HANDY:

ETTORRE:

HANDY;

You would probably also want to centralize research and development; but you mightn't put it in the center. You see, the interesting thing about federal organizations is they have dispersed centersthat is, bits of the organization will do something for the whole of the organization. In other words, they might do the research and development for the whole, but it might be located in Switzerland because that's the most sensible place to have it. That sort of thing links the whole together so that the units feel interdependent. You probably would keep advertising separatedecentralizedbecause each organization will want to do its own thing. This doesn't please the advertising agencies who, in response to this, have had to go global themselves. So, for instance, J. Walter Thompson will say that they can offer you a service around the world because they have an office in every country. So you could have an individually tailored campaign for your own individual operations, but yet have a common message. In other words, it's a federal approach to advertisingcentraUzed and decentralized.

ETTORRE: HANDY: ETTORRE: HANDY:

You cite ABBthe Swiss companyas one example of federalism. How are decisions made in that company and in other federalist organizations? It depends on the type of decision. ABB is in some respects highly decentralizedfive thousand independent business units. Independent? Independentwith their own accounts. And when the decision affects only their accounts, and doesn't affect any other bit of the organization, then they, alone, make that decision. And provided it's within the general guidelines under which they're operating, that's fine. But some decisions at ABB are far too big for any one of these relatively small units to take on themselvesso if they're building an underground system for Mexico City they will have to coordinate a number of different units in order to deliver that; and in that case they have a product organization, which is a coordinating organization. The product organization might be responsible for building underground railway systems. That definitely exists as a function of the central office. It exists as a small core of competence in one of the operating countries.

ETTORRE: HANDY:

So the company is clustered around core competencies then"decisionmaking-appropriate" core competencies. It's clustered in three different ways: around a business unit (an operating unit), a set of core competencies (which we'll call a product division), and around a country. And it works because people have linked roles. For instance, I was talking to an ABB man from Italy, and I said, "What's your job," and he said, "I'm head of personnel, Italy, and management development, world." So, he's not at the head office, but he's responsible for

20 ORGANIZATIONAL DYNAMICS

management development worldwide. The key people in any one country also have a group responsibility. And that holds the whole thing together so that they are not only working for a local Italian company, they're also working for ABB. ETTORRE: HANDY: But they can all be linked up with things like e-mail and teleconferencing. High tech is wonderful if you know the person at the other end.... The more you want to use remote control devices such as e-mail and radio conferences, faxes, and telephone, then, perversely, the more you need to be in touch with people personally. So, airplanes, and conference centers, and hotels are going to go on doing very good business... I don't think you can build trust if you don't know the other person enough to trust him out of your sight... and know they can cope with the unexpected. And so my argument is that wise organizations will build relatively small groups of people who get to know each other quite well, because when you could do that, then you could operate as an Athenian teamgoing back to that metaphorout of sight of each other. You can't do that if you don't rely on each other very well. I use the metaphor of a rowing crew. They can effectively go backwards without talking to each other. The corporation as we know it is approximately a hundred-year entity. Will it survive the twenty-first century? Not in its present form. The twentieth century will be known as "the century of the organization"...and we're seeing the withering of the employment organization. It won't totally disappear, but it will be reduced to an organizing core. Organizations will literally live up to the name they will organize. [They won't] have to employ everybody who is being organized. You only have to employ the employers, or the organizers. So the formula that I use is half-by-two-by-three: half the workers, paid twice as well, producing three times as much. The other half wilt be outside the organization. And because there is a core on the inside working very hard to be paid twice as well, they will have short lives in the organization. Twenty or 30 years. Instead of 50 years. Actually, it could be as short as 15. It's a hell of a reduction. So I'm trying not to frighten people too much. But yesI would say 15 to 20 if you really press me. ETTORRE: HANDY: Then what happens? Then you will move outnow we're talking about this whole upper half of society, those ones with competent skills. They will become independent workers, selling back into the organization for the most part, but into several organizations at the same time. At the bottom level you will still need people because most of the jobs for the less skilled will be in the service world, giving people food and drink. Keeping places clean.
SUMMER 1996 21

ETTORRE: HANDY:

ETTORRE:

HANDY;

Yes. Taking care of kids, keeping places clean, caring for their own folks... that sort of stuff. And they will be, in my view, probably organized by what I call intermediary employers. Are these companies that provide temp and contract workers? Yes. Only if they're wise, they will upgrade these people. They will regard them as a qualified set that they hire out to projects. You're seeing executive leasing. CEOs have actually been hired out for projects. People at the bottom of society are not very competent to sell themselves as independent workers. They need agents. Since the/re not earning enough money to justify an independent agent, they will have a collective agent. They will have their health insurance and pension paid by these individual employers.... If from the company's standpoint, the new contractthe new implied contractis "We will use you only as long as we would need you," the individual should say, "Well, I'll only use you as long as I need you." But often, employees don't feel strong enough and capable enough to say that. And so they feel conned, and you have to do a hell of a lot to make them comfortable with their contract. And also I'm saying organizations will actually rethink this.

ETTORRE: HANDY:

ETTORRE: HANDY:

Now that's interesting. Can you take it another step? WeU, they will rethink it because under this new contract-implied contractthe best workers are leaving. So they are being left with the second best, who don't have the courage to go out on their own but who are there, feeling cheated, and that's demotivating. If they don't do it, it will all come down, because basically companies are founded on intellectual property these days, on the skills and energies of their special people. I'll bet you if you took a thousand of the so-called best and brightest companies in the mix of large and small, and asked them the question, 'What is your strongest asset?' they probably will say, "People are." Actually, however, intellectual capital is a notion that I don't think most companies nurture. Well, all they've got to do is take a look at their market value today, and look at their balance sheet and see the price of their fixed assets. The market value is probably 10 to 20 times higher than the fixed assets. Now, has the market gone completely bananas, as we say in England? Or is the market actually gone sensibleis it saying that the real value of this company lies in the things that sit inside those buildings. At Microsoft, for example, the buildings are probably on loan or lease, the computers are hired, carpets are worn out, cars are hired. Assets are in Microsoft and people. So, I worry about the implied employment contractorsthat we are increasingly just using peopleand people don't like being used, and I believe that is the implicit contract behind capitalismthat the corporation

ETTORRE:

HANDY:

22 ORGANIZA TIONAL DYNAMICS

is the instrument of the owners; that the individual is the instrument of the corporationand I don't think that is a sustainable position in the long term. ETTORRE: But, if the future consists of virtual corporations, portfolio workers, and knowledge as the competitive edge, what will happen to the vast majority of people who cannot be a part of this? Are we creating an even larger underclasslarge groups without salable portfolios? To some extent, there's no way out of that. In an information society, wealth doesn't trickle down as it used to. You see, in the past, when it was basically an employment society, if you got richer, you employed more peoplewealth did trickle down in some way. Now, wealth gets trapped by the people who make it. So if you want to actually enrich society, you've got to make the poor richer directly, because otherwise the rich are not going to have any customers before long. One of our presidential candidates advocated Fortress America to preserve jobs. We've got a lot of anger and fear because it is a time of inordinate change, which is what you have said all along. Yes. It's a funny kind of fear because if you look at America, you have full employment effectively; you have no inflation; you have a slow but steady, growing economy. When I came to America last week I expected to find a bubbling, self-confident country. I found completely the reverse. So, I really have only two questions. One, is the fear of the future greater than the reality? In other words, the number of layoffs are not an exception, but they get featured, somehow, more largely. Or, are we really worried, deep down, as individuals, about the kind of society that I believe is on its way, but which politicians refuse to acknowledge? And so what we're really worried about is that no one seems to be able to help us through what we think is a very different future. Will all of this accessthe emerging access to informationlevel the playing field.. .or tilt it? No, tilt it. These people will get rich and they will not distribute their wealth because they don't employ any more people as they get richer. So, what we have to do is to worry about the bottom, I would say, 30 percent. It's that bottom 30 percent that I'm worried about. For those who are already in the work force, they have got to be regrouped so they don't have to operate as independent workers, but they then have these intermediary employers, as I call them. But their children. We really ought to start with their five-year-olds now and explain to them that the skills you need for an independent worker society are rather different from the skills you need as an employee society. Tell me. Well, for one thing you've got to have a salable skill, so you've got to have
SUMMER 1996 23

HANDY:

ETTORRE:

HANDY:

ETTORRE: HANDY:

ETTORRE: HANDY:

that credentialed, in some way; in other words, this is not passing reading/writing examinationsthis is actually saying you're good at something. And by the time you leave school you ought to know what you're good at so that you can go on to enhance your competence in that; so the first duty of school should be to find out what you're good atwhich is not necessarily just reading and writing, or doing history, English or math, but it could be life saving, it could be playing the guitar, it could be, you know, driving a vanit could be whatever. Basically, I'm very hooked on Howard Gardner's theory of multiple intelligenceshe's a professor at Harvard. The basis of his theory is now widely accepted, even if people quarrel with the detailswhich is that intelligence can be perceived and measured in different formslogical intelligence has to do with reasoning; creative intelligence has to do with creativity; there's a musical intelligence; there's a linguistic intelligence; there's a mathemahcal intelligence; there's a physical intelligence. Athletes have a kinetic intelligence. And they don't correlate, so you can be a brilliant athlete and lousy at exams. ETTORRE: How should a school help you discover your talents? Are we talking about enlightened testing? Exposure to the outside world, which is something you also said before. I suspect it's a mixture of both. Can I just develop the theory of horizontal fast track for you, because it applies at school and in organizations? The Japanese, when I asked them what they did with their most talented people"Don't you have a fast track?" 1 said. They said, "Yes, but it's horizontal. That is, we move them around from experience to experience as quickly as we can, and because they're very good we can move them quicker and that allows us to test out their talents in different situations, with different managers, different cultures, until they can discover what they're really good atas well, of course, as getting a lot of experience." A lot of us will be out there, seUing our portfolios of skills. What advice can you give to help managers prepare? I would say, step back and try to work out what the qualities are that made you a good manager but might also be combined in a different way to define you as something else. I had an advertising account executive come and see me once, aged late 40s. He'd been made redundant, as you do in that industry at that age, and he said he couldn't find another job, and I said, "Well, what can you do?" And he said, "I can be an account executive in an advertising agency." And I said, "You must be able to do something else," you know. He said, "I haven't done anything else," So I said, "Go and talk to 20 people who know you well, and like youfriends or work colleaguesand ask them each to tell you one thing you're good at. They don't give you a character analysis, just one thing you're good at, and come back and show me the list." And what happened?

HANDY:

EITORRE: HANDY:

ETTORRE:

24 ORGANIZATIONAL DYNAMICS

HANDY:

Anyway, he came back with a list of 20 things and he said, "It's amazing, 1 have a wonderful list," he said. "I'm just trying to think, though. Nobody said 'account executive.'" My last book is called Beyond Certainty because basically, we're moving beyond certainty in all respects of our lives. What politicians are trying to do is to offer certainty again, by saying, "Vote for me and I will restore life to where it was," I think nobody believes them. So, my feeling is we've got to reinstitute the truth in politics, and the first responsibility of government, in my view, is to tell the people the truth. When I said this to a BBC interviewer on television, he commented, "And as Charles Handy said this, I looked out of the window and I saw some pigs flying by."

ETTORRE: HANDY:

But isn't it hard to find a vision these days because life is so chaotic? Yes, but Hfe has always been pretty crazy. The problem for America particularly is that Americans have been brought up to believe that the future would always be brighter and better. If you go to old countriesChina, Japan, Europethere is a sort of deep cynicism about life. It's a mixed blessing, really. I think that the disappointment in America will be much stronger. In America, many of us gain our identity through employment. Right. I believe that for the most of this century, most people have made identity from their workfrom what they do. And in so doing they inherited a script for their lifeit was written out. When I left college I joined an oil company, and they had actually prepared a script for me, an outline of my career with them for the next 50 years. After ten years, and having married Elizabeth, I realized that this was not a script that was right for me. Actually, I had given my life to people I'd never met. They would tell me where to live, what to do, even give me the permission to marry. And success in my life was clearly going to mean success in their companybeing promoted. I had handed my life over to people I'd never met. Looking back, 1 thought that was quite extraordinary. But the problem is, we have al! lived scripted lives, whether we like the script or not. We either put up with it or we left it, but most of us put up with it and looked forward to retirement. Now, what is happening at the moment is that we are being asked to write our own scripts. And we don't know how to do it. And we're not sure, if work is going to be quite so perilous, if we want to attach our identity to work. I'm saying that actually there are four strands to identity, and we will be wise to write a script that includes all those strands. One strand is work, yes, a second is relationships.
SUMMER 1996 25

ETTORRE: HANDY:

ETTORRE: HANDY:

Do you mean traditional relationshipsfriends, family? "Significant others," which have traditionally been family. That strand happens to be terribly important. And the third is place. A lot of people in the old days were known by where they livedthat's Mr. Jones from such-and-such a place. But when work became dominant, we found ourselves having to sacrifice place. We became mobile; we moved every three years, you know. "Yes, I was born in Kansas but now I live in New York. I go home at Christmas and Thanksgiving." And the fourth? The last is a belief system. Some people have in the past built their identity from a particular creed, a set of convictions and so fortha religion, if you like. I'm saying that in the last 50 years, in our societies those last threeplace, relationships, and religionhave given way to work as a main component of the script that was handed to us. I'm arguing, now, that in the future, when we have to write our own scripts, we would be wise to build in the other three as well. Yes. So my hope for the future is that we will compose our own richer scripts for life, we will therefore become more interesting people and society will be a little more stable place. Work will still get done, but we will discover what I call the doctrine of "enough." Do you know about the doctrine of "enough?"

ETTORRE: HANDY:

ETTORRE: HANDY:

No, but I can imagine. The point about enough is if you don't know what "enough" is, you don't know what "more than enough" is, so there never is enough. Only if you can say what enough isof money, ambition, fame, whatever are you free to do anything else. Now, there's another side to this. The other imperative is to make sure that everybody is freeeverybody has enough in some way. And, of course, not by giving it to them, but by educating them and scaling them up so that they can earn what is enough. That becomes my social priority. To wrap upis there any important message you would like to leave with American business peopleor business people around the world? That's hard. I think if s something like, "Believe that you have something really important to contribute to the world. Work out what it is." And if you had endless resources, and the power of a Zeus, what contribution would you make? The first thing I would do is find a way of telling people the truth about the future...so that they could begin to prepare themselves for it.

ETTORRE: HANDY: ETTORRE: HANDY:

26 ORGANIZATIONAL DYNAMICS