Conference Paper for ILPC (2010)

Weigan Li and Linda Twiname

Management Control in Reforming China

--- Labor process theory revisited

(Full paper)

Weigan Li

Linda Twiname

WaikatoUniversity

New Zealand

ABSTRACT

China’s post 1978 reform has impacted on Chinese workplaces management control. Reform has transformed many State-owned enterprises into privately owned businesses and established them in the internationalmarket economy. Management strategies have been revitalized, controlling and transforming the labor process to serve the task of profit maximization. We studied elements of management control in a Chinese workplacethrough the Labor Process Theory (LPT) lens. Xuzhou Civil Engineering Company (XCE) offers a dynamic and typical research site as it has been transformed from State to private ownership.

We argue that by controlling knowledge and creative conception, China’s State ownership regimeembeddedthe notion of power as the prerogative of management in the minds of workers. Traditional Chinese management control practices have, we discovered, been challenged: a potentially unexpected consequence of the Chinese Government privatization process. As the former socialist ideology isreformed, its corresponding ideological bond in the workplace appears to be broken. Today, management have the challenge of maintaining worker morale, while maintaining managerial prerogative of power over workers’ knowledge and creative conception. Management is seeking new ways to regain its control in the nascent Chinese capitalist labor process. We suggest that management has focused on three key elements: knowledge, creative conception and ideological bond.

INTRODUCTION

Internationally, the modern workplace has developed in a direction of great heterogeneity; nevertheless, as Doherty (2009) argues, it remains the axis of the workers’ lives as they seek social networks and identities. Doherty notes that “far from ‘rough coercion’ or working to survive, the work experience is of some inherent value to the individual in terms both of the work task itself and in terms of social relations at work” (pp.86-87).Capitalist societal ideologies are embedded in workplace practices, over time they can be perceived by workers as their own beliefs and values thus theyshape and stabilize workplace practices.

Braverman (1974) argued that, although workplaces appear to be divergent, management control strategies are generally based upon the following principles:

  • First, capitalistssequester production knowledge, reprogram the knowledge and distribute programmed knowledge to workers. Workersare given only sufficient knowledge to fulfil their tasks.
  • Second, by separating workers’ creative conception from execution, capitalists are able to reduce workers’ contributionsto functioning merely as operational hands.
  • Third, through control of both conception and knowledge, capitalists are able to control and schedule the labor process in ways that maximizes profit generation.

Over the past 100 years, China has experienced continuous societal transition. Each societal transition has been associated with major ideological change. For instance, the abolition of China’s feudal emperor in the early twentieth century was associated with the flourishing of capitalist ideology, and the establishment of State Socialist China in 1949 was assisted by the development of socialist ideology. Ideological alignment has been an important and powerful factor in the process of Chinese societal transition. Furthermore, the ideological alignment has been explicitly implemented in Chinese workplaces.

In Socialist StateChina, people were taught socialist ideology from primary schooling onwards. The associated values and beliefs penetrated subtly into people’s lives, set guidelines and boundaries for people’s behaviours, and effectively enhanced State control over the societal terrain. Such values and beliefs created ideological bonds that were obvious not only in people’s social lives but, possibly more prominent, in the State-owned workplaces.

Chinese economic reform transformed many State-owned Enterprises (SOEs), such as XCE, by creating private ownership and establishing the companies in the international market economy. On the one hand the market economy is prevailing; vitalizing management’s labor process control strategies, according to economic rules, to serve the task of extracting labor from labor power. On the other hand, the reform has weakened the former socialist ideological bonds in workplaces, leaving a vacuum in workers’ values and beliefs, and consequently de-caged the workers’ resistance towards management control.

This paper is a part of the lead author’s PhD research where the intention is to apply a LPT lens in investigating Chinese workplaces in a transformingsocial and economic context.In the paper, the authors focus upon addressing how management’s control strategies have been incorporated with ideological bonds in the Chinese workplace.

Under reform, many Chinese workplaces have been privatized. As a result, State control has been reducedto allow private owners to replace the State in controlling the labor process. We found that management control strategies have been progressively modernized in the reform period.Through a LPT lens, we see a process in which workers’ knowledge and creative conception are degraded and upgraded as a consequence ofreformed ideological bonds in the workplace.

LITERATURE REVIEW

Labor Process Theory (LPT) is a theory that offers a unique historical, systematic, and theoretical lens for analyzing labor development at a macro as well as micro level. LPT is based on Marx’s “Capital: A Critical Analysis of Capitalist Production” (1887) a text that was particularly popular in the 1970s as a means of examining workplace development. Overall, LPT makes a unique meta-theoretical assumption that modern society is characterized by structural conflict. LPT theorists’ focus is upon the study of economic and political administrative structures, power relationships among divergent interest groups, processes of organizational change and their impact upon the workplace, and the labor process (Braverman,1974; Burawoy, 1979; Edwards, 1986; Friedman, 1977; Storey, 1983; Thompson, 1992).

Braverman’s (1974) exploration of the framework of LPT is based on Marx’s benchmark analysis of capital. Braverman’s work presents a study of labor development under monopoly capitalism. He particular focuses on scientific management that is characterized by de-skilling work, and management’s direct control over the labor process. He employs the analogy of the production process as operating like a hand, watched, corrected, and controlled by a distant brain. As Braverman observes, the worker is trained to perfectly match the mass production’s demand of labor only when the worker renders the production knowledge and creative conception to management. Through this fundamental process, the most significant achievement of contemporary capitalism is that labor extracted from the worker’s labor power is maximized through large scale industrialization.Braverman’s analysis grew out of the movement of “scientific management” that was initiated by Frederick Winslow Taylor (1856-1915) in 1890s.

While Braverman (1974) articulates Taylorism as a general trend of the development of the western labor process, contemporary theorists view management control strategies from much broader terms. For example, Thompson (1992) suggests that thereare no specific ways of using skills, forms of discipline and reward in the labor process. Furthermore, he identifies three levels of employee whose experiences, under management control, are totally different. The highest level acts as agents of owners; the second level receives reskilling; and only the low level is deskilled. This three-level theory is strengthened by Kuhn’s (1988) argument that deskilling a manager’s job is to have a manager in name without letting that person solve problems. Kraft (1986) also states that deskilling can exist in low level employeesonly.

Friedman (1977) suggests that “managers may loosen direct control over work activity as part of a strategy for maintaining or augmenting managerial control over productive activity as a whole (responsible autonomy), or they may be forced to loosen direct control as a part of general shift in control over productive activity in favour of the workers” (pp. 84-85). In researching self-managing teams, Barker (1993) observes how team members create normative rules and eventually control their own actions. He then significantly defines concertive control as a less apparent, but more powerful, form of control which he argues is continuously replace bureaucratic control in the modern workplace.

Gaining workers’ consent is also argued to be a subtle and effective way to weaken workers’ resistance towards management control in the modern workplace (Burawoy, 1979; Wood, 1986; Kraft, 1999; Sennett, 2004). Burawoy (1979) argues that accommodation is a consequence of shop-floor tensionand a result of changes in the competitive position of firms. Wood (1986) describes the notion of attitudinal restructuring in which notions of cooperativeness and self-discipline are carefully inculcated and shaped.

Furthermore, scholars also argue that management control might be achieved through psychological contracting. Atkinson (2008) argues that psychological contracting can take different forms. One form of psychological contract is called the “transactional contract”. It mainly monetizes management control strategies. A second form of psychological contract is called the “relational contract”. Atkinson notes that in these relational contracts, management control strategies are flexible and workplaces which have them are bound by certain emotional employment relations through continuous negotiation.

Among scholars who pay special attention to power relationships in the workplace, Edwards (2006) notes the significance of ideological power in achieving effective management control. Edwards quotes Buroway’s (1985) argument that “He and his fellow workers in an engineeringfactory produced not only parts of engines but also ideology, that is sets ofbeliefs which expressed and reinforced a particular set of power relations” (p. 4). Edwardsgoes on to say that ideology is “not only something that is created by the powerful andimposed on others, though of course it can have that quality. It is also producedin the process of social interaction, as in rituals and ceremonies but also in day-to-day life” (p. 4).

Though many scholars have scrutinized the simplicity of Braverman’s theory and the complexity of management control strategies in contemporary workplaces, seldom has research gone beyond Braverman to explore the key elements of management control in a specific workplace. This research makes such a contribution.

Labor Process Study in China

Prior to 1978, Chinese society was characterized by centralized State power and its prevailing planned system (Thompson, 1992). The development of the Chinese labor process through the reform period (1978 onwards) exhibits a strategic and widespreaddevelopment of a market economy. A major breakthrough happened in 1992 when the market mechanism overturned central planning after 14years of experimental co-existence (Taylor, Chang, & Li, 2003). The unique and energetic reform inChinapromoted great potential in labor process development.

Thompson (1989) argued that the interactive relationships between the ChineseState, management and workers in social development and industrial relations were seriously downplayed.Therefore, a hierarchical structure imposed by the ChineseState, which worked to establish its prerogative and exclusive power, appeared to become a sine qua non. With the market playing an increasing role in Chinese social and economic development, an interactive relationship between workers and management emerges to fill the vacuum in the labor process left by the former State power.

Taylor, Chang, and Li (2003) examined industrial relations in the process of economic and political reform inChina. They argued that (a) the Chinese government continues to play a dominant role in industrial relations; (b) the position of workers in the power structure is steadily declining; and (c) conflict of interest among the social classes is becoming more pronounced. Sheehan (1998) also studied the political history of Chinese workers. In an attempt to locate workers within the context of Chinese political history, Sheehan provided a detailed and complete picture of workers’ protests in China. Likewise, Frazier (2002) studied the Chinese workplace through analyzing conflict and coalitions among workers, management, and State officials over several critical decades. His study showed how particular work unit structures emerged during the different crises that have swept through China’s industrial sector.

Although many studies have concentrated on the macro analysis of the Chinese labor process, there is, unfortunately, little research that goes deep enough to explore the LPT mechanism and the lives of Chinese workers. The study is intended to address this deficiency through a close examination of a Chinese workplace through a LPT lens.

METHODOLOGY

In this study, the authors adopted a unique set of theoretical assumptions called dialectic structuralistparadigm. Based on Burrell and Morgan’s (1979) analysis of theoretical paradigmin social science, the authors adopted two basic theoretical assumptions. The first assumption, derived from the “sociology of radical change” (p.17), acknowledges that modern society is characterized by change, conflict, disintegration, and coercion. The contradiction embedded within and between solid social structures fuels societal change. This position is a broad endorsement of the potential social developmentthrough the dialectical construction of the social structure.

The second assumption was the objective nature of social science. Ontologically, the authors adopted a realist perspective, in that the structures of the real world are solid whether or not we can realize this. Epistemologically, the authors held a positivist perspective.Wesought to discover the causal relationship between the elements of society. Given the assumption that solid causal relationships exist, the authors suggested that the study of these relationships must be conditioned by a convincing interpretation of the literary representation. With regard to human nature, the authors viewed human agencies and individual organizations and the social structure as interdependent. The study of individual human agencies or organizations would not be complete without the social structure being treated as a totality. Methodologically, the authors hold a position between ideographic and nomothetic. With the intention of testing the generalizability of LPT, the authors seek to explain or at least explore the real lives of informants.

Based on thesetheoretical assumptions, a dialectical approach was adopted. A dialectical approach indicates that the real world is objectively “real”, despite the fact that we can only ever know it through discourses; therefore, there is a subjective consensus about the world. The mode of social change will be conditional upon the construction process. With the dialectical diversity of reality and its corresponding subjective consensus, the dynamic of the construction process of reality deserves significant study in its own right. The dialectical approach also takes it as given that all relationships in society are connected and interdependent. By studying the life experiences of human agents in relation to their corresponding social and organizational structures, it is possible to explore their process of construction. Finally, through the dialectical approach we view the construction of reality as an interactive dynamic between constructors and the constructed - a dualistic process.

RESEACH METHOD

The authors employed case study in the research. The lead researcher gained access to XCE with the help of its managing director. In their pre-research meeting, the managing director said he was concerned with the quality of employees’ work performance given close supervision was impossible for some key positions in the company. For example, employees such as technicians and quality technicians could not be supervised closely as their working environment was remote and tasks were always changing. Independent research of the company, therefore, was welcomed in the hope that some suggestions would be offered to management. In return, the authors agreed to offer research feedback regarding some broad information drawn from the investigation in XCE.

Before the on-site interviews, the lead researcher delivered information sheets and consent forms to potential participants and collected signed consent forms prior to interviewing. Potential participants who did not return their consent forms were not invited for interviewing.The authors selected 23 participantsfor interviewing. The participants were mainly selected from experienced employees in key positions such as technicians. Of the participants, fifteen were technicians; six participants were selected from management positions.Most of the participants had experienced the ownership transformation of XCE.

From 2 January 2009 to 23 January 2009, the lead researcherconductedfield work. He spent three weeks observing the workplace, researching company documentation, and, arranged semi-structured interviews to collect empirical data. This approach was consistent with Chinese culture as Chinese people tend to be reluctant to initiate a conversation and express their real feelings with strangers. They often feel comfortable with a level of structure and will talk to somebody they know.Each interview took anything between half an hour and two hours. The directors of XCE and its subsidiary company were interviewed several times;a project management team was group interviewed. All interviews were held in private meeting rooms and most were recorded.

In maintaining the quality of the data, the authors adopted the triangulation approach to collecting data (Maxwell, 1996).Through combining interview questions and documentary research, the authors were able to investigate the participants’experiences and the context in which they occurred. For the data coding process, the authors adopted theoretical categories to ensure the data are retrievable while carefully stored in a variety of media (i.e. paper files and computer files) (Maxwell 2005).

The authors employed the constant comparative method as the main stream in the data analysis process (Glaser & Strauss, 1967). While the process of scrutinizing the conceptualization of categories was anticipated to be time-consuming, the authors adopted a set of proposed theoretical categories to guide and speed up the category development process. The proposed theoretical categories included knowledge and skill, ideology, conception, control strategies, power structure, culture and social context;they served as a temporary comparison guide for category development. In the data analysis process, the authors continuously compared inductively produced categories with the proposed theoretical categories.

CASE DESCRIPTION

XCE was established as a State-owned contractor for civil engineering projects in Xuzhou in 1978. XCE issitedin Xuzhou city, Jiangsu province. This was a leading province in China’s economic reform. XCE specialized in construction projects including civil engineering and horticulture. From 2005 to 2008, as a consequence of Chinese economic growth, the business expanded rapidly in China’s fast growing construction market. In 2008, XCE became a leading construction company in Xuzhou city. Not only contracting 95 percent of the major civil engineering projects in Xuzhou city, the company also had projects located in many major Chinese provinces such as Zhejiang, Fujian, Guangdong, Anhuiand Shandong. The company website is