Effects of Globalization on Work and Organizations: Exploring Post-Industrialism, Post-Fordism, Work and Management in the Global Era
As we move from Fordism to Post-Fordism and from Industrialism to Post-Industrialism, the new Market that prevails under Globalization implies many changes to the nature of work and organizations. This new Market dictates, or rather governs, the way corporations think and how workers are treated. It implies, among others, arbitrariness in the workplace, pervading threat of termination, an increasingly wide gap between the rich and poor, job loss and a weakening of job security, and the rise of superstar CEOs. Thomas (2000) most aptly describes this: “The corporation ‘delayered’, throwing off entire levels of management; it ‘disaggregated’, ridding itself of its extraneous operations; it embraced ‘flexibility’, making it easier to replace career employees with (zero-benefit) temps; it ‘outsourced’ every possible piece of work to the lowest bidder; it ‘reengineered’ its various processes in a less labor-intensive way; it ‘disintermediated’, using new technology to cut out middle-men and move back-office jobs to wherever wages were lowest” (p191).
Before describing the impact globalization has had on work and organizations, it may be useful to briefly speak about the central ideas of Post-Fordism and Post-Industrialism. Fordism refers to ideas and principles propagated by Henry Ford: mass production of uniform goods and a market for this, rigid technologies like the assembly line, unvarying work routines (Taylorism), and increasing productivity through economies of scale, deskilling and intensification (Ritzer, 2000). It is believed that Fordism began to decline in the 1970s, replaced by Post-Fordism. The distinctive characteristics of it are as follows: declining interest in mass products, growing interest in customized products, consumers willing to pay more for high quality and easily noticeable goods, shorter production runs, flexible production, flexible management, more capable workers with greater autonomy and responsibility, and greater differentiation in society and the workplace (Ritzer, 2000).
It has also been argued, most famously by Daniel Bell, that we have moved from an industrial to a post-industrial society (Ritzer, 2000). Bell argues that focus has shifted from producing goods, like steel and automobiles, to producing services, like fast food and health. There has also been an increase in new technologies and in knowledge and information processing, while scientists, technicians and professionals are growing in number and importance. This means that creative knowledge workers will take over routinized workers. The post-industrial organization is characterized by: flattening in hierarchy, blurring of boundaries between organizations, an organization structure that is more integrated and less specialized, lack of rules to govern behavior, selection of employees based on their potential for creativity, and customized work and products. Ritzer (2000) argues that despite the fact that Post-Fordism and Post-Industrialism has emerged, there has been no clear break from either Fordism or Industrialism, as elements and aspects of it are still present in work, and even though it may be contradictory, they co-exist.
Multinational corporations have begun to focus principally on brands and brand management, believing that while products are made in factories, a brand is made in the mind and bought by the consumer (Klein, 2000). A brand is an idea, a lifestyle, and an attitude. The result is innovative ad campaigns, superstores and corporate campuses, but also a change in the face of global employment. Superbrand companies focus on first creating the ‘soul’ of companies and then removing the burdensome bodies of employees, factories and machines. Making a superbrand is costly: after money is spent on sponsorships, ‘cool hunters’, ‘marketing maverns’, and branding, removing cumbersome bodies is crucial for cost effectiveness, or more clearly, profit. Priorities have changed; the logic of the new priority is not to spend money on machines that will rust, factories that need constant upkeep, and employees that will age and die; resources should be used on sponsorships, packaging, expansion, and advertising as it is this that will help to build superbrands. This increased resistance to investing in labor and factories has led to the inevitable devaluation of the production process, producers and employees.
It was Team Nike that initiated the no-limits spending on branding, together with complete disinvestment in its workers. As Phil Knight says: “There is no value in making things any more. The value is added by careful research, by innovation and by marketing” (Klein, 2000, p197). Nike is the epitome of the product-free brand. Major companies embraced the very successful Nike model: “Don’t own any factories, produce your products through an intricate web of contractors and subcontractors, and pour your resources into design and marketing” (Klein, 2007, p285). Mass layoffs are necessary shifts in corporate strategy, the focus is on the needs of the brand over the workers. One company that followed the Nike model was Levis, with the same explanation: “The future belongs to companies that own little but sell much” (Klein, 2000, p200). But, factories do not disappear to rematerialize, they become something completely different: an ‘order’ placed with a subcontractor who in turn pushes it off to ten more subcontractors, who passes it on to workers who work from basements and living rooms. Because of this procedure, once the sub/contractors take out their own profit, all that is left is the worker – at the bottom of the chain – receiving a paltry paycheck: “When the multinationals squeeze the subcontractors, the subcontractors squeeze the workers” (Klein, 2000, p212). This change is so extreme that superbrands refuse to disclose locations of production sites, using competition as an excuse, and stating that they, like us, are “bargain hunters in search of the best deal in the global mall” (Klein, 2000, p202). But all they are interested in are materials, delivery dates, designs, and low prices, paying no attention to how low the prices are, the workers, or working conditions.
To make the products for the superbrands to put their logo on, the free-trade or export-processing zones (EPZ) have emerged. An example is the Cavite EPZ, the largest trade-free zone in Philippines, which produces goods only for the export market. Klein (2000) states that production here has a worthless status, factories are unbrandable and producers are industrial untouchables, yet Cavite is one of the many EPZs that “presents itself as the buy-in-bulk Price Club for multinationals on the lookout for bargains” (p203). Life stops inside Cavite; it is a place of pure work, a tax-free economy zone, and a military state inside a democracy. While Philippines has 459000 workers in 52 zones, China has 18 million workers in 124 zones, in the world, there are about 1000 EPZs in 70 countries with 27 million workers: $200-250 billion worth of trade flow within these zones. The similarity of the workers lives within the EPZs are striking: long workday (12-16hours); young women workers working for sub/contractors from Korea, Taiwan, or Hong Kong; contractors filling orders for companies in US, UK, Japan or Canada; military-style management; abusive supervisors, below-subsistence wage; low-skill monotonous work; unstable contracts; migrant workers; and short term, unstable work. Workers are left penniless and homeless, feeling ‘alien’ in the factories, and ‘alien’ in that they come from faraway provinces. Sleep deprivation, malnutrition and homesickness combine to result in deep disorientation and alienation. This is, as Rose (1990) states, the basic alienation that lies at the heart of work: “Workers work because they have to, they work at the behest of others in a process they do not control, to produce goods or services they do not enjoy… work is made up of the elements of obedience, self-denial and deferred gratification” (p56).
Fear and instability characterize these zones: governments fear loss of foreign factories, factories fear loss of superbrands, and workers fear loss of unstable jobs. The governments of poor countries thus offer 5-10 year tax breaks, lax regulations, their own workers with the lowest wage, and dirt-cheap rent: “a fantasyland for foreign investors” (Klein, 2000, p207). Because of the competitiveness of the global economy, 70 countries are competing for the EPZ dollar, and incentives increase at the expense of wages and standards. Thus, globalization puts pressure on the workers and the producers by weakening their bargaining power as a result of the increased competiton (Carr & Chen, 2001). Even though factories do not pay taxes or create infrastructure, they are there because of the trickle-down theory: the belief that EPZs create jobs and workers income from these jobs will boost the local economy. But, zone wages are so low, after money is spent on transportation, food and accommodation, workers cannot afford regular consumer goods. In addition, labor laws are not being enforced because governments regard EPZs as foreign trade policy, not a labor rights issue, and because they promised a cheap and compliant workforce to foreign investors, labor officials bend the rules in the zones. EPZ factories are run according to rules that break the country’s labor laws. The result is: highly monitored bathroom breaks, rules against talking (and smiling), no social security, no ‘real’ overtime, poor ventilation, lack of protection, and below-minimum wage. And, for the majority of young women working in these zones: pregnancy tests, mistreatment of pregnant women, forced abortions, contraceptive pills and condoms, and monthly ‘checks’.
So, while the above corporations used the Nike model, other companies were using the Microsoft model: “maintain a tight control center of shareholder/employees who perform the company’s ‘core competency’, and outsource everything else to temps” (Klein, 2007, p285). Temporary workers and outsourced divisions began in Microsoft, where there is a two-tier workforce: at the center are permanent, full-time workers with benefits and stock options, and around this are the temporary workers, who provide the company with the flexibility to “expand and contract its workforce at will. ‘We use them,’ says Microsoft personnel officer Doug McKenna, ‘to provide us with flexibility and to deal with uncertainty.’” (Klein, 2000, p250). Thus, another effect of globalization on work and organizations, another result of the ‘brands, not products’ revelation, and another way of cutting ties to the workforce: the upsurge of temporary contracts.
Despite the rapid increase in service and retail jobs, large employers treat these workers as ‘not quite legitimate’, believing their jobs are hobbies and their paychecks are not really needed. As a result, ‘joke’ jobs have emerged: “notoriously unstable, low-paying and overwhelmingly part-time” (Klein, 2001, p232). Employers attempt to reinforce transience in workers so wages can remain low, there is little opportunity for mobility, and working conditions remain bad, while profits increase. But, workers have realized there is no transience, as there is no dream job waiting for them: “it’s a stepping stone to a big sinkhole” (Klein, 2000, p236). The unhappiest workers are those working for the biggest brands. McDonalds McJob for example has been described as a low skill, low pay job, stressful and very unstable. Thus, what multinational corporations have done, according to Klein (2000), is sharply reduce their responsibilities at “both the production and service ends of the economic cycle” (p237). Even though you cannot compare the workers at EPZ with the retail workers, it is the pattern of work that is similar. That is, by generally using young workers, corporations are legitimizing their disposable jobs and low wages: workers are just passing through, no one really ‘depends’ on these wages, and wages do not support families. As in the zones, the youthfulness of the workers in the retail sector is a purposeful choice of corporations who consistently hire younger workers and layoff older workers.
Companies are rapidly expanding to become the dominant one in their market and while employees wages remain low or decrease, these employees are the ones creating the profit used for expansion, which is given priority over workers wages. Thus, as Klein (2000) states: “It is one of the paradoxes of service-sector employment that the more prominent a role it plays in the labour landscape, the more the casual service-sector companies become in their attitude toward providing job security” (p242). The service sector has different ideas and agendas when it comes to part-time or temporary work; they see it as a way to avoid benefits and overtime, keep wages low, and evade commitment, finding innovative ways to make the most of their ‘almost full-time’ employees, reducing their hours and at the same time maximizing their efficiency and productivity. Moreover, by hiring workers on temporary contracts, companies are bypassing the laws that provide benefits to workers and that prevent them from firing without cause. The nature of temporary work is also changing, in that it is no longer temporary. Agencies now provide companies who do not want to commit to full-time workers, the opportunity to staff entire functions and divisions with temporary workers, as well as carrying out the administration and management of the task, allowing companies to focus their time, energy and resources on the core business.
A new idea is that individuals should, to be successful and empowered, create the ‘Brand Called You’ and think of themselves as service providers, creating a ‘Free Agent Nation’ (Klein, 2000). Yet, there is a large difference in the experience and wages of temporary workers higher up on the income scale and those at Microsoft or at an EPZ. For the latter, according to Klein (2000), temporary work is “the worst of both worlds: monotonous work at lower wages, with no benefits or security and even less control over scheduling” (p254). While, temporary work may mean better money, working at your own terms and a balance of work and personal life for some, it has no benefits for the most vulnerable workforce, putting them at a great risk. In addition, there are the ‘Temp CEOs’ who move between multinational companies, earning multimillion dollar packages on the way in and out. As Klein (2000) states, these are the two extremes of temporary workers: “the contractor in Cavite afraid of flying factories, and the temp CEO unveiling restructuring plans New York” (p255). And, while the CEO ‘superstars’ carry out downsizing, mergers and mass layoffs that increase their success (and paychecks), they do so at the detriment of the broader workforce. For example, CEO George Fisher of Kodak cut 20,100 jobs and received a $60 million grant, and Sanford Wiell of Travelers earned $230 million in 1997, despite a merger and a loss of thousands of jobs. So, while “workers work harder, their employers can be more successful, but… the link between overall economic success and the guaranteed sharing in that success is weaker than ever before” (Klein, 2000, p257).
The rise of the global economy thus meant a radical change in work and organizations. Although multinationals are creating economic growth, this happens as the result of job debasement and job loss (Klein, 2000). Thus, a healthy economy no longer translates into job stability or an increase in jobs. Klein (2000) states that while this may mean increased profits for corporations, workers are no longer willing to accept lower wages, joke jobs and lack of job security, and that the “rising inequalities pose a serious threat of a political backlash against globalization” (p262). While job creation once protected corporations from unrest and fostered loyalty, mergers, outsourcing, and layoffs have led to the corporations losing their natural allies. Furthermore, because they have not only affected work, but also democracy, communities, culture and the biosphere, they have given labor, human rights and environmental organizations a way to put together issues and see it as one major problem. It is also no longer about personal grievances against the nature of work, as Klein (2000) states, it is about “an economy that consistently and unapologetically puts profits before people” (p267). This has resulted in the new generation of workers growing up self-reliant, with lower expectations and the belief that they will receive nothing from anyone, leading to them being “greedier, tougher, more focused” (Klein, 2007, p268). In addition, casual, part-time, temporary, and low-wage work does not create commitment and loyalty, and it is among these workers that anticorporate backlash will probably be found.
Interestingly, it is at Microsoft where, as Klein (2000) states, “temp rage seethes like nowhere else” as they openly admit that these workers only exist to protect the permanent workers, as a quick way to cut costs, to “absorb the blows” (p270). And, in 1998, it was felt when internal workers created a made-for-Microsoft hacking program that was downloaded 300,000 times. Nike also had an anticorporate campaign focusing on their Asian factory conditions, and McDonalds had one prompted by the McLibel trial. So, while companies have divested from their workers, the new generation of workers are divesting from work in that they no longer depend on stable work, and work is no more an extension of the self.
Due to the changes that globalization is creating for work and for organizations, new forms of workplace control are also coming about (Deetz, 1998). The new work environment of high-end industries and changing workforces brings with it subtler forms of domination even though the older forms of apparent, direct domination still exist. As Rose (1990) argues, as capitalism progresses it creates newer and better forms of domination, more manipulative and understated. These newer forms of domination can be understood using Foucault’s concept of disciplinary power that targets individuals or groups of individuals and is regarded as having facilitated capitalism (Clegg, 1998). The Panopticon can be used to explain disciplinary power. Deetz (1998) applies the concept to a corporation: Applied Integrated Management Systems or AIMS. Foucault describes four types of technologies of self-understanding, each related to a particular kind of domination, present in power (Deetz, 1998). These are technologies of: production, sign systems, power, and the self. The four technologies interact, and even though they facilitate productivity and define identities and relations, they also create needless conformity, restrictions on learning and one-sided identities. So, at the same time that they enable, they constrain; one cannot happen without the other. Individuals need to be empowered to create more satisfying identities and power relations need to be reconfigured. Technologies of self is essential to domination in workplaces, and in AIMS, it is explored how employees “consented within a discursive formation through strategizing their own subordination and engaged in active self-surveillance and self-control” (Deetz, 1998, p153).
AIMS is a service component of a multinational telecommunication corporation (LTC). It is made up of six work groups of six to fifteen people. These employees are well educated, well paid and have high job security and career mobility, and work with information systems and computer software. Most employees have worked for LTC for their entire career and for AIMS since it was created. Deetz (1998) states: “AIMS members invest a high degree if their personal identity in their work and employment situation” (p154), appear to be more attached to their work than to anything else, and would like to continue doing their jobs even if it means pay cuts. During the study, AIMS was experiencing an economic crisis yet morale remained high. AIMS employees believe that even if AIMS is broken up, they would be employed in another part of LTC. Management however, does not wish for this to happen and are attempting to increase loyalty to AIMS by creating fear.
Work at AIMS is knowledge-intensive, depending on individual intellectual capital. There are three characteristics of knowledge-intensive work (Deetz, 1998). First, work groups are highly autonomous and self-managed. Direct control is reduced, reducing the managerial control and Foucault’s ‘sovereign’ power. Also, even though orders are given and people are watched, these are infrequent and subtle. In addition, while traditional companies rely on financial capital, knowledge-intensive companies rely on intellectual, relational and artefactual capital, all highly symbolic and mobile, needing constant reproduction, and more a property of the employee than the company. Thus, control processes are unobtrusive and use technologies of power. The strong culture and shared values provides control and coordination. The lack of direct control “leaves employees with a sense of liberation and capacity for negotiated self-identity and reality, as well as potential for different operations of power and forms of domination. Cultural and other forms of disciplinary control… are internalized… as a form of self-control” (Deetz, 1998, p356). Secondly, ambiguous and uncertain tasks characterize knowledge-intensive work, so solutions to problems require ongoing communication and interaction, in this way establishing roles, identities and competencies. This fluid nature of work creates symbolic labour, using technologies of sign systems. Thirdly, because the client plays an important role in task activities, power moves to employees creating a loose work environment. Technologies of production come into play here. These technologies have different forms of domination that over-determined the technologies of self, the actual domination.
Despite the mutually beneficial nature of work at AIMS, a dominant logic prevails, that is detrimental to the company and employee (Deetz, 1998). The logic represents a discursive formation: a system that creates meaning and organizes process. This was facilitated by the consultant nature of AIMS and endorsed by active employee consent. Employees stay in a company because of either ‘loyalty’ or ‘voice’. Loyalty is a kind of consent, which is direct when members subordinate themselves for money, security or identity. Voice is the resistance to consent, which, if present in AIMS – is privatized. To prevent employees from leaving AIMS, the management group attempted to increase loyalty or voice.
With direct control, “management watches the work effort, rewards and punishes according to personal standards for desired work characteristics”, but in subtle control, “management instrumentalizes the employee… and hires experts to construct systems to get the most from the employee” (Deetz, 1998, p164). On the one hand, employees may assume their subjectivities in the system are their own and passively accept it as natural. On the other hand, by creating a false sense of autonomy in employees, management ensures active consent. This is described as strategizing or participating in one’s own subordination where employees are accomplices in their own exploitation, and it is this, which more than destroying subjectivity, makes employees instrumentalize and strategize themselves. Thus, through self-surveillance and self-management of one’s behavior, bodies, feelings and dress, employees use themselves, often benefiting management’s interest more than their own or their company’s. The inner world of the employee is thus managed in this way.
As Holloway, Byrne and Titlestad (2001) state, disciplinary power relies on the control of bodies and behavior. It further allows people to be closely controlled through normative or internal control and its’ tactics discourage undesirable behaviour. The Panopticon is used as an illustration because it does not matter who is observing, or whether there is observation, as the person cannot see the observer. Because the person has no way of knowing whether they are being watched, they are responsible for controlling their own behavior, and so power is able to function unconsciously. In this way, the Panopticon models disciplinary power, or the new and subtle forms of power emerging in these newer organizations. The individual worker therefore becomes a willing participant in his or her own domination.
In short, what globalization has done by way of neoliberalism is, as Chomsky (1999) states, put “profit over people”. By briefly discussing the neoliberal regime, it will be evident how the effects of globalization on work and organizations have been brought about by this regime. Neoliberalism is the current economic paradigm that, by protecting the interests of the very wealthy and less than a thousand corporations, allows them to control public and social life so that their personal profits may be maximized. It emphasizes free markets, prices being set by markets, the liberalization of trade, privatization, and consumer choice. The government is believed to be parasitic, and unable to do any good, and is thus undermined. Lowering taxes on the wealthy, the exploitation of the weak and poor, environmental violations, dismantling of public education and social welfare have all not ‘needed’ to be defended, because, as is stated, “any activity that might interfere with corporate domination of society is automatically suspect because it would interfere with the workings of the free market” (Chomsky, 1999, p8). The results of the neoliberal regime are wide-ranging, including: a huge increase in social and economic inequality, significant growth in extreme deprivation for poor nations and its people, an unstable global economy and of course, an increase in the bank balances of the wealthy. The defense that is provided is the trickle-down theory, discussed above.
Chomsky (1999) cites Krugman, who makes five central points about such policies. First, the knowledge on economic development is limited and should not be used to make generalizations or to form policies. Second, the conclusions made in favour of policies often has an unstable basis. Third, ideas about policies are continuously shifting among its propagators. Fourth, it is often agreed that policies are based on ‘bad ideas’ and did not, as believed, serve their intended goals. And finally, Krugman (as cited in Chomsky, 1999) states: “Bad ideas flourish because they are in the interest of powerful groups. Without doubt that happens” (p25). Chomsky (1999) elaborates on this point: “The ‘principal architects’ of the neoliberal ‘Washington consensus’ are the masters of the private economy, mainly huge corporations that control much of the international economy and have the means to dominate policy formation as well as the structuring of thought and opinion” (p20). It is therefore clear how the regime that is operating under globalization has led to the current nature and conditions of work, to the devaluation of workers, to the exploitation of weak countries, to the different forms of control in organizations, and to the new kinds of organizations that have emerged.
In this manner, the new market and principles that operate under globalization (and Post-Fordism and Post-Industrialism) has not only seen the disappearance of full time work, to be replaced by outsourcing, temporary workers, and a new kind of workforce which is highly unstable and detrimental to workers; it has also seen the emergence of a new kind of organization, one in which domination, control and power is so subtle and so well manipulated, that employees are completely unaware of it. As Klein (2000) states, it is labor market trends under globalization that are “creating increasingly tenuous relationships to employment for many workers” (pxxii).
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