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Organizational Effectiveness

The Discovery & Loss of a “Compelling Space”: a case study in adapting to a new organizational order

In a case study of a CIO in an investment bank, Sharon Horowitz helps capture a number of shifting paradigms within organizational life and describes how these shifts may inhibit creative and innovative thinking.

Clare Huffington, David Armstrong, William Halton, Linda Hoyle, and Jane Pooley, Working Below the Surface: The Emotional Life of Contemporary Organizations, Karnac Books: London, 2004. Chapter 8, pp. 151-163.

Chapter Eight

Setting the Scene
Dr. Johnson, in his famous eighteenth-century dictionary, defined “job” as: “petty, piddling work; a piece of chance work.” In the late nineteenth-century Garment District of New York City, “job work” meant “piecework.” (Fox, 1994) While much has changed over the centuries, it appears that this earlier “piecework” description of jobs resembles emerging features of contemporary organizations, which, in their adaptation to changing technological and global competitive forces in the marketplace, have had to reinvent many aspects of their business models.

This adaptation process has shortened the length of most business time frames and changed the length of today’s employee contracts. These structural and procedural shifts have, by extension, required a parallel adaptive function in the workforce in that people have had to alter how they take up their authority as well as their relatedness and attitudes towards their place of work. One unintended consequence of the new employment contracts has been the untethering of the psychological contracts that contain the multitude of unconscious themes around individual attachment to the organization. Previously, employment contractual relationships had helped foster and maintain an organizational containment function that offered a certain level of psychological safety to individuals, enabling them to take professional challenges and creative risks that, in turn, helped nurture innovation. With the advent of ubiquitous short-term employment contracts, existing structures in which it is psychologically safe enough to take the challenges and risks of learning and creativity are vanishing. Yet, there remains a pressing need to tap into and release learning and creativity in order adequately to respond to external challenges and still achieve goals, targets and performance criteria. This then presents a dilemma:  how do organizations remain competitive and innovative when they can no longer provide their employees with the creative space in which to produce the innovations so vital to their survival? How do they resolve the dilemma of both needing to be creative in order to adapt and innovate while, simultaneously, meeting productivity needs within a short business cycle? 

The chapter explores this dilemma in detail based on emerging theories as well as a client case study and concludes by suggesting some potential ramifications it may hold for both individuals and institutions as well as for the organizational psychoanalytic consulting community.

Case Study
The consultation process originated in 1996 in New York City with a senior executive, Robert, in the Information Technology (IT) division of an international investment bank. After a transitional period, it eventually expanded to include organizational development and role consultation to his direct reports who were located in Europe, Asia and the United States. Partnering with colleagues in these different countries to provide one-on-one consultation to each of the clients, the consultants worked collectively as a team to identify common as well as differing overt and covert themes and dilemmas that emerged within the client system. The consulting team reported these themes back to the clients, who in turn either built upon their hypotheses or in some cases, rejected them outright. The consultation, over an eight-year trajectory (1996-2004), helps capture a number of emergent developmental phases within organizational life over the past decade and demonstrates some of the ways in which contemporary global organizations are evolving. 

Phase 1: Initial Themes
Some of the themes which the consultation initially worked with included ways in which structural defenses were mobilized against intense interpersonal and collective expressions of competitiveness, envy, rivalry, fear and greed between and within teams and within the larger Wall Street culture. A recurring theme focused on the vicissitudes of IT’s alignment with the bank’s business units, specifically, the management of dependency dynamics that were built into the structure of these business relationships. On the one hand, the clients were astute and adept at anticipating the business’ agendas and worked feverishly to build and maintain platforms and products vital to business units’ functioning. On the other, there were expressions of resentment and envy centering on the inequity of the reward system that resembled the dynamics of wanting to bite the hand that feeds you. There was always a longing for recognition, a longing to have “a seat at the table” and great difficulty in accepting IT’s role and place within the business model. Their fantasies included the wish by the senior managers to be recognized beyond what was generally offered in return for their having gone “above and beyond the call of duty.” Statements such as “I built the systems that made him successful!” were commonplace. Some of the major events that occurred during this phase of the consultation and that fed such fantasies included systems integration for a global bank merger, Y2K, and the Euro Conversion. All of these events necessitated IT’s active planning and engagement with the business units, but also seemed to feed their grandiose strivings in that they frequently saw themselves as the “savior” of the organization. These fantasies were often followed by resentment and disappointment when bonuses and promotions did not mirror managers’ internal and collective wishes and needs. Through the unearthing and naming of these fantasies, the clients were able to gradually develop a more realistic management of “self in role” and position themselves more effectively in the workplace.

Although the initial role consultations proved beneficial on an individual level, in that they facilitated clarity and insight into the senior managers’ strategic choices and motivations for business decisions, the broader organization development consultation on a systemic level did not seem as fruitful. In fact, one of the themes that emerged within the consulting team itself was a pronounced counter-transferential feeling state of ignorance as to “what was going on.” Despite repeated and detailed description from the clients, the system appeared chaotic and unstructured, replete with poorly defined roles, diffuse boundaries and a loosely managed senior management team. How different parts of the system linked together was a mystery, and it seemed impossible to get a sense of the whole. The organizational structure was also quite puzzling in terms of reporting lines and decision-making processes. There seemed to be few if any meetings and little formal time devoted to longer-term planning. New divisions, structures, and other expansions appeared like mushrooms and there seemed to be no cohesion and integration. Furthermore, based on the lens used to interpret the system, group and team building interventions were offered and repeatedly rejected by the clients.

In response, the consulting team began a process of re-examining its basic underlying hypotheses and hunches about the system, suggesting that the team’s limitation was in trying to conceive of the organization within traditional organizational theories and paradigms. With this awareness, the team began to reframe the question for analysis: In lieu of traditional formulations what are the new interpersonal constructs that are emerging? How is work getting done in this seemingly chaotic work environment?

An important clue to this inquiry came shortly thereafter with the synchronized discovery of the phrase “compelling space.” 

Phase 2: The Concept of the “Compelling Space”
Robert, who has worked in IT in the financial services sector for over 20 years, started out as a computer programmer and rose to become a managing director in 1993. In the late 1990’s, when mentoring one of his direct reports, he reflected on the strategies of his own success and advised his direct report to find himself a “compelling space” within the organization to develop and mature as a leader. How he came to the concept and what it meant to him involved a series of speculations and hypotheses. To the consultants working within a psychoanalytic framework, this phrase had great emotional and cognitive resonance.

Robert’s explanation of the concept was more of a metaphor in his mind than a specific description. It seemed to capture and describe adaptive responses to challenges and dilemmas facing organizations at that point in time. On one level his work within this “space” reflected his own self-initiated opportunities for professional development. After realizing he was no longer learning anything from his boss, he strategically positioned himself within new key one-on-one relationships within the organization where he was not an expert. By putting himself in a place of “not knowing” and tolerating the anxiety generated by this situation, he was able to engage with another person to learn something new. He thought that engaging in numerous self-initiated and self-authorized risk taking projects across the organization was the best way to strengthen ones learning for leadership.

On another level, Robert’s concept seemed to capture a niche whereby individuals could best position themselves for business opportunities.  It reflected his partnerships with the key business users he supported. Within these partnerships, new and innovative technological solutions were designed and delivered. Thus, from this perspective, the notion of “compelling space” did not refer to creative engagements of groups and teams, but rather to the organizational growth and development that was taking place within the immediate, unpredictable and mutual engagement of working pairs. These pairs were not defensive in nature, but rather seemed to reflect peoples’ creative attempts to connect with one another and work together within a vast, sometimes anonymous and diffuse organizational structure.

Once named, the term had an important impact on the consultation process. It clarified the value and significance of organizational dyads.  It gave an appreciation of how the client explained his own career advancement and his effective leadership style within IT. Additionally, it led the consulting team to re-examine and question the hypotheses they were themselves using to interpret the systemic dynamics. They concluded that, during the transitional period of the late 1990’s, the client and system at large were functioning effectively within a series of partnerships or dyads. As an initial adaptive response to the forces of globalization, the client system was not trying to take in or attend to the whole. Hence, the consultation had to adjust its theoretical notions of systemic thinking and change its theoretical framework accordingly.

Phase 3: The Bubble Bursts
In 1999 as the organizational and individual role consultation with this client system continued to evolve, Robert left the bank to become Chief Information Officer (CIO) of another global financial service firm. During his transition, he requested organizational and individual role consultation in this new system. Having assumed his new duties near the height of the “irrational exuberance” of the “bubble economy” followed quickly by the deep recession of 2000-2001, the emphasis of the consultation began to vary, reflecting both the culture of the new organization and the rapidly changing economy. The boom and bust of this business cycle made for an exceptionally challenging and exciting work environment in which Robert flourished.

Phase 4: A Need To Adapt
In early 2003, the consultation process seemed stuck. Robert began to complain of chronic boredom. Numerous attempts were made to analyze the boredom as a defense against the psychological and emotional repercussions of the extreme downward trajectory of IT’s role and business importance in the post-bubble economy. (It bears noting that between 2001 and 2002 over 560,000 IT-related positions were eliminated in the United States alone. [Platzer, 2003]) A much discussed and hotly debated Harvard Business Review article entitled “IT Doesn’t Matter” (Carr, 2003) seemed effectively to capture the zeitgeist. Along similar lines, Robert offered the following assessment:

“During the pre-bubble and bubble phase, IT was at the top of the heap. As a profession we were considered artisans. Having an IT person in ones household became something akin to having a doctor in the family. But when we finally got a chance to sit at the table, what did we do? We overspent and overcommitted. We did not know how to handle our newly achieved strategic business role over the long haul. And now, all of a sudden, IT is back to merely being a service provider. People in IT are only now coming to terms with that realization. It’s a painful pill to swallow. But, everything is cyclical, even this, so hopefully next time around, as a profession, we will get it right.”

However, focusing on the diminishment of the profession itself, or what he experienced as a narcissistic injury, did not seem altogether to capture what Robert was trying to name or understand. One consultation meeting in particular was very challenging. There was almost no conversation between the client and consultant. There was nothing to build upon. After the meeting, the consultant felt filled with feelings of loss and sadness, sensing that there was no work to be done. But this loss was not about termination. Rather the work had been stopped dead in its tracks. The next day, Robert sent the following e-mail:

“It was nice to see you… However, after you left, I had an anxiety attack, I think. I got this terrible feeling all over, like dread, and felt flush and wanted to cry. I kept feeling all sorts of bad feelings about the situation at work ... It lasted for maybe an hour. I felt all knotted up. I went through each thing that was bothering me afterwards and tried to address them. It’s the same stuff ... boredom at work, lack of direction ... feeling I have no choices ... bummer, because it was nice to see you but I was rattled by what happened afterwards.”

After several meetings attempting to analyze and explore the boredom/panic sequence, it occurred again. In a subsequent e-mail communication, Robert wrote: “the revenue units have gained all the power, so to speak and there is little room for the functional units like IT… while running IT here is a good job, I’m afraid that I’ve outgrown it. Thus, more fuel for the boredom. The challenges have moved to subtle politicking.”

Robert’s experiences of boredom and panic were multi-determined. For one, they could be understood as reflecting the dramatic decline of IT’s importance in general, which he described as “a humbling, crushing blow.” In this, his identity had primarily been defined through climbing, aspiring, reaching and scheming. Now there was apparently nowhere to go and nothing to climb. Yet, the timing and organizational context of these emotions also served to reveal some potential intelligence about the adaptive, and in some ways maladaptive, processes that had evolved since the concept of the compelling space first emerged in the consultation process. Eventually, one explanation seemed to make sense: Robert had lost his own compelling space.

For Robert’s concept of a “compelling space” to exist, certain organizational conditions were present. First and foremost, in spite of the emotions that were stimulated, there was always enough containment within the structure of pairs to enable a certain amount of psychological security to prevail for work to take place. Indeed, the pairs interacted and related to one another over a long enough period of time for trust and loyalty to develop. Thus the individual was not simply as good as his or her last performance. Mistakes or disagreements could be seen in context. Within such a relationship, people could experiment, take risks, rely on hunches and intuitions and, by extension, co-create and gain new knowledge. It was from these vital components of a compelling space that personal, professional and organizational developments were able to take place. In this context, Robert’s boredom and panic could be understood as an expression of the lack of the possibility for creativity to occur. Because there seemed to be few conditions in which the prospect of new ideas could take root, he was no longer able to experience his work as providing opportunities for innovation and mental development. 

“Pseudo-Adaptation” As A Mode Of Survival
Robert’s experience is indicative of the consequences of changing global organizational structures in which few, if any, stable, long-term work relationships are able to exist. The pressures and uncertainties of global competition have resulted in such cost-saving measures as international outsourcing (coupled with its attendant lay-offs) as well as a profound shift in the underlying nature of the employment contract itself. New employment contracts are now increasingly structured to be short-term, extending only for as long as the particular project or skill set is needed. In this context, employees are no longer treated as assets, but rather as commodities. Within such contractual arrangements, the new credo has become “loyalty is dead.”

Arguably, this commoditization of the workforce has had numerous benefits for the organization. One positive outcome is that work places are now viewed as more honest, in that unreasonable expectations and wishes from both sides are quickly eliminated. Workers receive financial reward in return for a specific type of work for a specified amount of time. Additionally, individuals are no longer free to rest on their laurels or coast on the job. And previous loyalties amongst team members and ones immediate supervisors are being replaced by competitive rankings and 360 appraisals of competencies and value added. Not surprisingly, these new contractual arrangements require increased self-reliance and self-sufficiency. Each person has to take responsibility for his or her own career. 

However, within a culture of no long-term employment resides a job experience of “dull continual worry” (Sennett,1998). While the new global organizations may be more nimble, leaner and efficient, the compelling space construct is being lost. This has primarily unfolded in two ways: First, the new structures do not address or provide for peoples’ basic aspirations for security and mental development. Secondly, they not only lack containing functions, but the new organizational design serves to inflict continual anxiety onto the workforce. If one is only as good as one’s last performance, if one is routinely subjected to “ranking and yanking” via 360 performance evaluations, and if ones job can be outsourced, then one is always living on edge, maintaining a survivor mentality in the face of colleagues and friends getting laid off. The reality of international outsourcing means working in a chronically uncertain work environment where the only predictable element is to be self-protective, keep one’s skills updated, and build as many relationships as possible outside of the place of employment because those contacts will offer better security towards the next job opportunity. Perhaps this is also the reason for the growing emergence of work-life balance issues in that people are seeking real, as opposed to pseudo, connections outside of work in their home lives because they are not available to them in the workplace.

As such, the new organization can no longer be considered a vehicle through which unconscious anxieties and fantasies can be effectively contained. Rather, organizations can now be seen as being a primary source for fueling and heightening the anxieties of annihilation, resulting in uncontained anxiety levels that are “inhibiting, eroding, and even paralyzing our capacity to function effectively” (Gutmann, 1989).

In such a highly charged environment, it appears that the pairings and partnerships which form the basis of “compelling space” construct have now been replaced by the crystallization of an organizational culture utilizing the basic assumption of Me-ness (baM) (Lawrence, Bain, and Gould 1996). In baM an individual eventually determines that engaging and connecting with the group or organization as a whole is too threatening and, on an unconscious level, retreats. In such a defense, perceived workplace vulnerabilities are no longer experienced as anxiety producing and potentially overwhelming because the identification with the organization has been withdrawn. The growing prevalence of baM can correspondingly be understood as a defense against the loss of identification with the institution. In this context, self-reliance emerges as an adaptive defense against the anxiety and rage associated with the loss of dependency on the organization. But what is most striking about the baM culture, is that baM, by its very nature, means there is no “institution in the mind.” There is no acknowledged relatedness to the organization as a whole. Rather, people work in isolated formats and retreat into a “socially schizoid withdrawal.” In baM, even the basic elements of a compelling space, which were so much in evidence in organizations during the 1990’s, are vanishing.

Since baM does not foster notions of attachment and connectedness to others, what becomes central to peoples’ motivation towards the organization is how the relationship will advance their self-interest and their employability. The motivation is “take care of oneself.” Thus, what appears to have emerged is a “pseudo adaptation.” Since, the notion of professional security is now perceived to be located within the market place, rather than the workplace, employees find themselves, as Robert noted, “caught in a game of subtle politicking.” In other words, one relates to the organization solely as a source for self-advancement.

In addition to the potential for exploitative situations to occur, “pseudo-adaptation” in turn poses challenges for organizational longevity, which rests on the possibility for creative processes to unfold. Within baM cultures, “there cannot be a joining with others to create something new.” (Lawrence, Bain and Gould 1996) No true learning can take place because there is no true reaching out and internalizing, as there is no corresponding recognition and acknowledgment from the other. Without the conditions for reaching out and connection, organizations are highly vulnerable because innovative ideas cannot come forward. Innovation relies on the exchange of ideas, hunches, intuitions, that unfold between and among people and that are built upon, negated, fought against and added to within collaborative and cooperative processes. (Cf Chapter 6) Collaboration and cooperation in turn require shared history between and among people who have been around long enough to take risks and expose their “not knowing” to one another. In other words, they can allow the anxiety inherent in the process of learning to be used productively (Cf Chapter 5).

Hence, the dilemma for organizations is how do they continue to adapt productively? How do they remain competitive and innovative when they can no longer provide their employees with the creative space in which to produce the innovations so vital to their survival? How do they resolve the dilemma of both needing to be creative in order to adapt and innovate while, simultaneously, meeting productivity needs within a short business cycle? The solution seems to lie within a new structure or form that has yet to fully emerge or take shape, but which must successfully allow for mutual contractual negotiations that acknowledge the shared dependency between employer and employee.

One association is to Menzies-Lyth’s description of the butterfly phenomenon (Menzies–Lyth 1991). This reference is to the behavior of children in a day nursery who, as a result of the discontinuity of care, exhibit a “discontinuity of attention.” A follow-up of these children observed that they formed a series of episodic and discontinuous relationships with their world, and had difficulty sustaining continuous attention in school. Menzies goes onto say that fortunately such situations are not inevitable and that consultation at the right level can influence personality changes in the individual children. 

Implications For Organizational Consultants
All professions will ultimately have to adapt to these changing institutional structures. It is likely that this will initially be met with by great resistance and opposition. People cannot simply adjust to new economic conditions overnight. Rather, such adjustments require a process whereby the individual has to alter dependency dynamics, de-cathect from libidinal attachments, mourn the relationship, their group memberships and their own identity before ultimately reconnecting to other forms of relating whereby new work can get done. The process of adaptation involves a series of non-linear developmental shifts whereby the individual might eventually realign his or her skills and competencies with the new work required.

Specifically, these shifts within the client systems and the larger economic environment will have significant and long-lasting implications for the profession of organizational consultancy. Historically, the central paradigm of psychodynamic consultation has been based on long-term engagements whereby process, reflections and insights are key components of the consultation process. But over the years, the client needs have changed. Moreover, the contracts for consulting work have gradually been relegated to gatekeepers such as HR, procurement departments and supply chain management. People external to the experience of the consultation process itself are making decisions about the efficacy and applicability of organizational change initiatives. Moreover, they are under increasing pressure to apply criteria for evaluating success and viability according to short-term business models. Metrics, then, becomes a part of the contracting phase. How does one measure and quantify behavioral changes or psychological and systemic changes? In short, the profession may have to mirror the adaptive processes of the clients to whom they consult. They too are being required to redefine and adjust their own identity as well as their skills, interventions and theoretical paradigms.

These shifts are not dissimilar to the changes the psychoanalytic profession had to make with the advent of Managed Care systems in the United States, when medical decisions along with appropriation of costs and treatments were routinely “outsourced” to Managed Care agencies that were authorized to make decisions about treatment protocols. In efforts to save costs, clinicians were forced to justify and demonstrate the effectiveness of treatment to people who were not trained in the field of psychodynamic psychotherapy. Moreover, clinicians had to adjust their interventions to a new population who wanted shorter, briefer treatment. In that environment, the theoretical paradigms adjusted accordingly. New short-term treatment techniques emerged. While the long-term analytic treatment modality was still offered to patients, it became the exception, rather than the norm.

The consulting profession’s primary challenge is to assist clients in designing structures that provide some positive adaptive features that can contain anxiety states. But this does not mean a return to the past. It is in a future construct that allows for emotional security so that connection and trust can be present to work with—but in a shorter business time frame that contains the conditions in which individuals can support organizational goals amidst a new awareness about the psychological contract with reciprocal rights and obligations.  Management consultants have already begun to explore what these options may look like in, for example: Prince’s (2001) “Employability Security”, Clancy’s (1999) “Product Loyalty” and Bridges’(1994) “Dejobbed Workplace”. What these models all seem to have in common is respect for the psychological contract and a form of acknowledging the mutual need and dependency between employer and employee. 

One option may be to provide a mixture of psycho-educational training and role consultation to leaders, to enable them to provide the containing functions for short-term or transitory groups and teams. In fact, in case examples of adaptation that have unfolded, employees report feeling increased loyalty to a product or their unit. While these attachments are transitory at best, in that as the product is completed or the unit is re-organized, so is the attachment lost, nevertheless, the work production still requires some form of containment.  Leadership insight and ability to handle “emotional” expressions within the workplace may provide enough containment to allow the work to get done efficiently and effectively.

Such a process holds out the opportunity for society to revisit the eighteenth century definition of “job” as “petty, piddling work; a piece of chance work” and the nineteenth century definition of “job work” as “piecework” and, while acknowledging the continuing similarities stemming from this heritage, offer the world a new definition of “job” for the twenty-first century.

Bridges, William (1994) Jobshift: How to Prosper in a workplace without jobs. Addison-Wesley, New York.

Carr, Nicholas (2003) “IT Doesn’t Matter” in Harvard Business Review, May pp 3-10 Harvard Business School Publishing Corporation.

Clancy, John(1999) Is Loyalty Really Dead? in Across the Board, The Conference Board Magazine Vol.XXXVI no.6 pp 15-19

Ciulla, Joanna (2000) The Working Life: The Promise and Betrayal of Modern Work. Three Rivers Press.

Fox, Matthew (1994) The Reinvention of Work. HarperCollins Publishers, New York, New York.

Gutmann, David (1989) The Decline of Traditional Defenses Against Anxiety. Paper presented at Oxford International Symposium Proceedings.  U.S.A. A.K. Rice Institute

Lawrence, W.Gordon, Bain, Alaster, and Gould, Laurence (1996) The Fifth Basic Assumption. In Free Associations, Volume 6, part 1 (No.37): 28-55.

Menzies Lyth, Isabel (1991) Changing Organizations and Individuals: Psychoanalytic Insights for Improving Organizational Health. In Organizations on the Couch, Manfred Kets de Vries, Ed. pp 361-378.

Platzer, Michaela, American Electronics Association, “Tech Employment Update” March 19, 2003

Prince, Bruce (2001) “Career opportunity in the new economy: Mobility versus role enhancement and organizational attachment” - Paper presented at the 42nd Annual Western Academy of Management Conference, Sun Valley, Idaho; April 6, 2001

Sennett, Richard (1998) The Corrosion of Character: The Personal Consequences of Work in the New Capitalism. W.W. Norton.

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