Mainstream vs. Multistream Management: Key Differences

Introduction: Two Approaches to Management

"The servant leader is one who focuses on his or her followers. Servant leaders do not have particular affinity for the abstract corporation or organization; rather, they value the people who constitute the organization" (Stone et al., 2004, p. 355).

The two approaches to organizational management reviewed and critiqued in this paper — illustrated through examples of corporate success and failure — are the mainstream and multistream approaches. The mainstream approach, the more traditional and typical of the two, relies on a hierarchical management style, with decisions coming from the top down and with shareholders — not necessarily employees — being of utmost importance. Generally speaking, mainstream managers are trained to be effective, efficient organizers, planning carefully in order to meet strict production and competitive goals. According to Dyck and Neubert, mainstream managers organize their talent in a standardized, centralized manner, lead by motivating staff to "achieve organizational goals," and control their divisions through "vigilant monitoring" of employee performance (Dyck et al., 2008, p. 25).

Multistream managers, by contrast, are less hierarchical and more employee-centered. As a general rule, they organize their business strategies around team concepts rather than placing power in the hands of a single leader or a small group of executives. The happiness of employees is of fundamental importance in a multistream management approach, and employees are encouraged to offer creative ideas about how the company can become more profitable. Courage is a virtue when it comes to "implementing initiatives that have potential to improve overall happiness" (Dyck et al., 2008, p. 18).

Indeed, a multistream management approach is focused on closing the gap between the rich and the poor, and between marginalized nations and powerful ones. The progressive nature of companies that embrace multistream management can be seen through the compassion and self-control of their leaders. Multistream leaders employ self-control in order to treat others in the company with "dignity," even when that approach may not directly bolster the bottom line (Dyck et al., 2008, p. 19).

Among the most obvious differences between the two approaches are wages and prices. Mainstream managers emphasize low wages — Walmart being a prominent example — and low prices to attract more customers, while multistream managers tend to pay their employees more and are not obsessed with undercutting the competition on price. The underlying theory is that satisfied employees help create satisfied customers.

Mainstream Approaches: Walmart and GE

Professor Robert F. Russell of Emory & Henry College offers another scholarly perspective on this distinction, illustrated through the servant leadership model. Writing in the Leadership & Organization Development Journal, Russell argues that when servant (multistream) leaders appreciate others, it reflects "fundamental personal values that esteem and honor people" (Russell, 2001, p. 80). While "authoritarian leadership styles" — often seen in mainstream approaches — "may demean followers," multistream styles tend to engender "trust, appreciation of others, and empowerment" (Russell, 2001, p. 79).

When it comes to Walmart and its mainstream approach to management, a substantial amount of both positive and negative evidence is readily available. Walmart's successes are considerable. The company has enjoyed tremendous financial growth, with stores being built all over the world. It is the largest retail employer in the United States — and outside of the federal government, the largest employer in the country overall — currently employing 2.1 million "associates" worldwide, according to the company's "Corporate Facts: Walmart by the Numbers" fact sheet. In the U.S., Walmart provides jobs for approximately 1.4 million people.

Walmart also highlights the diversity of its workforce, noting that it employs 257,000 African American associates, 171,000 Hispanic associates, 41,000 Asian associates, 5,909 Pacific Islander associates, and 16,000 Native American associates. The company reported sales totaling over $405 billion in the fiscal year ending January 31, 2010, generated by 4,300 stores in the U.S. — including supercenters, discount stores, neighborhood markets, and Sam's Club warehouses — and 4,000 stores across 15 international markets including Japan, China, Canada, the UK, and Mexico.

In recent years, Walmart has also made a high-profile commitment to environmental responsibility, pledging to be "supplied by 100 percent renewable energy, creating zero landfill waste and selling products that sustain our environment" (Walmart Corporate Facts). These pledges have been largely welcomed by the business community and the public.

However, Walmart's history is also marked by considerable controversy, much of it stemming from its mainstream management approach — in which powerful supervisors dictate store policy to subordinates rather than fostering cooperative, employee-friendly policy-making. While the company now advertises low-cost health insurance for 1.2 million of its associates, it was not always so generous. In 2005, The New York Times obtained an internal memo from M. Susan Chambers, Walmart's executive vice president for benefits, which proposed "numerous ways to hold down spending on health care and other benefits" (Greenhouse & Barbaro, 2005).

Chambers suggested hiring fewer full-time workers and discouraging unhealthy people from working at Walmart — in effect, overlooking overweight applicants — reasoning that bringing in younger part-time workers was easier than "changing behavior in an existing" workforce. The memo also recommended reducing the company's contributions to workers' 401(k) plans (from 4% to 3% of wages) and asking employees to pay more for their spouses' health insurance (Greenhouse & Barbaro, 2005). Because of Walmart's low wages, Chambers acknowledged that "a significant percentage of associates and their children are on public assistance," and that 5% of Walmart workers were enrolled in Medicaid, compared with 4% for other national employers. The top executives who received these proposals responded "enthusiastically," according to Greenhouse.

The memo also reflected a defensive posture toward public criticism. Chambers wrote that Walmart must do everything possible to send "a powerful set of messages to use in combating critics," adding: "Walmart's critics can easily exploit some aspects of our benefits offering to make their case...in other words, our critics are correct in some of their observations" (Greenhouse & Barbaro, 2005).

Walmart's labor controversies extended beyond benefits. In 2005, the company was required to pay $135,540 to settle federal charges of child labor law violations in Arkansas, New Hampshire, and Connecticut, following a prior settlement of $205,650 for 1,371 violations in 128 stores (Greenhouse, 2005). These fines were a pittance compared with the $78 million Walmart was ordered to pay in 2006 to current and former Pennsylvania employees for failing to compensate them when they worked through rest breaks or off the clock (Greenhouse, 2006).

As for General Electric, former CEO Jack Welch — an icon in American business management — used charm, charisma, and exceptional communication skills to transform GE from a $12 billion company into a $280 billion company over 17 years. Welch demonstrated that inspired leadership is possible within a traditionally mainstream-managed company. The management model he developed brought in what journalist John A. Byrne calls "the most talent-rich management bench in the world" (Byrne, 1998, p. 3).

Welch achieved this not by dismantling the management structure but, according to Byrne, "with the sheer force of personality, coupled with an unbridled passion for winning the game of business" and a knack for "near-brutal candor in meetings," rooted in his status as a "fierce believer in the power of his people" (Byrne, 1998, p. 3). He cultivated a more informal atmosphere — employees were encouraged to call him "Jack" — and he was a highly visible CEO who regularly interacted with workers. He also loosened the chain of command, demonstrating that listening to employees makes management more responsive to the need for change and innovation.

Hubris as a Source of Mainstream Management Failure

Matthew Hayward, associate professor of business at the University of Colorado Boulder, argues in his book Ego Check: Why Executive Hubris is Wrecking Companies and Careers and How to Avoid the Trap that businesses following the mainstream management path are often "susceptible to being overconfident" (Hayward, 2007, p. xiii). That overconfidence can lead to "false confidence," which in turn produces serious mistakes and financial losses.

Hayward identifies four sources of false confidence: (a) getting "too full of ourselves" — an inflated view of one's achievements and capabilities; (b) getting "in our own way" — allowing pride to lead a manager to tackle decisions single-handedly that should be made collaboratively; (c) "kidding ourselves about our situation" — failing to seek and use full, balanced feedback from colleagues and employees; and (d) failing to manage the "consequences of our decisions ahead of time" (Hayward, 2007, pp. xiii–xiv).

After conducting more than 200 interviews with CEOs and executives in Europe, Australia, and the United States, Hayward developed what he calls "behavioral decision theory." At its core, the theory holds that overconfident managers rely too heavily on self-appraisal rather than drawing on the knowledge, experience, and relational perspectives of their employees — precisely what the multistream approach is designed to encourage (Hayward, 2007, p. xvii).

Conclusion

The number of companies that embrace multistream management strategies may not increase tenfold or even twofold based on the success that companies like Google, Whole Foods, and others have enjoyed. But the very fact that more innovative, employee-centered management approaches have produced strong results — reducing turnover while improving the bottom line — should provide meaningful motivation for more companies to follow suit.