REMEMBER the advertisements for Toyota motor cars? The ones which boasted about the freedom any worker had to stop the production line to suggest a better way of doing things? In management jargon it's part of what is known as a "lean production" system and it is held up by author Francis. Fukuyama as an example of the way a modern industry should work.
Prof Fukuyama, who will address the IBEC annual conference in Dublin today, is best known for his best selling book The End of History and the Last Man, which put forward the thesis that the end of the Cold War and the fall of the Berlin Wall represented the end of ideological conflict. The search through history for an ideal system of government had been solved and a liberal, democratic and capitalist system had emerged as "the winner", he argued.
Today Prof Fukuyama will talk to the assembled business leaders about themes in his new book - Trust - which is a study of the link between culture and economics. And the key message to managers is that they must "pay more attention to treating their workers not as short term costs but as long term assets".
Prof Fukuyama, a former deputy director in the US State Department's policy planning department, argues in Trust that the standard, neo classical economic theory, based on rational consumers and producers acting in their own self interest, does not tell the full story. Instead, the type of society and the way business is organised play a key role in economic development.
Economics tells 80 per cent of the story, "but there is a missing 20 per cent of human behaviour about which neo classical economists can only give a poor account", the books says.
The message he would be bringing to the IBEC conference, he told The Irish Times, was that the world of business was changing. Increasingly, organisations are becoming "flatter" - with fewer management layers - and employees are typically much better educated and able to take on more responsibility.
"Mastering that form of organisation will be a key to building an effective company moving into the next century", he says. Which brings us back to the Toyota production line - a long way from the old Ford motor company operation in the earlier part of this century.
Henry Ford made money through a mass production, tightly controlled production line, inspiring the leading management theorist of the time, Frederick Taylor, whose book The Principle of Scientific Management became the bible of the new industrial age. Taylorism emphasised the need for the greatest degree of specialisation on the production line, requiring no initiative from the individual workers.
The lean production system pioneered by Toyota is the exact opposite. As opposed to the lack of trust shown by the traditional system, the lean production method is an example of what Prof Fukuyama calls a "high trust" system, where responsibility is widely delegated and employees are encouraged to participate. He believes that managers who pay most attention to "the sociable side of the human personality" may become the most efficient.
A tightly regulated and hierarchical workplace "is absolutely inappropriate for high technology sector, where innovation is the key" and human capital is the key source of wealth creation. The key for management, he argues, may not be the networking and use of technology on which so much emphasis is placed, but rather whether it can create the necessary "trust" in the organisation to get the best out of its employees.
Increasingly this trust must also extend to other organisations, as manufacturers increasingly contract out important parts of their business.
Management's job may be easier in high trust" societies such as much of east Asia and in the US, where Prof Fukuyama identifies a "spontaneous sociability" which allows people to trust each other and work together more readily. This, he believes, helps to explain the much greater success of some economies in creating large industrial companies.
Prof Fukuyama concedes that introducing flatter organisations and encouraging participation from employees is a tough challenge for managers.
"CEOs tend to closet themselves with their close aides and spring it on the organisation," he says, which defeats the whole point of empowering all layers of the company.
Companies may also be tempted to go for short term performance through cost cutting. The management fad of laying off large numbers of employees in an attempt to boost short term profits and push up the share price has a cost in destroying the trust of the remaining employees.
In looking for trust and participation from employees, "managers often don't get the part that they have to give something in return". This "something" is usually some type of job security which, while not the guarantee of a job for life, will at least involve the employer showing loyalty through measures such as offering retraining and redeployment to employees whose old jobs are going.
Managers - particularly financial officers - tend to think that the stock market will reward them for being ruthless, he says. "They only see employees as costs, not as assets, and cut into the bone rather than just trying to remove the fat." This can leave the whole organisation damaged and, while delivering short term savings, can limit its ability for long term growth.
