What is the political status of the federal bureaucracy? What is its power? How does the public view it? What essential functions do bureaucratic agencies and departments perform? How are individual departments and agencies organized?
What types of departments and agencies exist? Clients who wanted positions in the civil service pledged their political loyalty to a particular patron who then provided them with their desired positions. These arrangements directed the power and resources of government toward perpetuating the reward system.
Caption: It was under President Ulysses S. Grant, shown in this engraving being sworn in by Chief Justice Samuel P. Chase at his inauguration in a , that the inefficiencies and opportunities for corruption embedded in the spoils system reached their height. Grant was famously loyal to his supporters, a characteristic that—combined with postwar opportunities for corruption—created scandal in his administration.
This political cartoon from b , nearly half a century after Andrew Jackson was elected president, ridicules the spoils system that was one of his legacies. In , after the election of James Garfield, a disgruntled former supporter of his, the failed lawyer Charles J. Guiteau, shot him in the back. Guiteau pictured in this cartoon of the time had convinced himself he was due an ambassadorship for his work in electing the president.
The assassination awakened the nation to the need for civil service reform. As the negative aspects of political patronage continued to infect bureaucracy in the late nineteenth century, calls for civil service reform grew louder.
Those supporting the patronage system held that their positions were well earned; those who condemned it argued that federal legislation was needed to ensure jobs were awarded on the basis of merit.
Eventually, after President James Garfield had been assassinated by a disappointed office seeker, Congress responded to cries for reform with the Pendleton Act , also called the Civil Service Reform Act of As an active member and leader of the Progressive movement, President Woodrow Wilson is often considered the father of U.
Born in Virginia and educated in history and political science at Johns Hopkins University, Wilson became a respected intellectual in his fields with an interest in public service and a profound sense of moralism. He was named president of Princeton University, became president of the American Political Science Association, was elected governor of New Jersey, and finally was elected the twenty-eighth president of the United States in It was through his educational training and vocational experiences that Wilson began to identify the need for a public administration discipline.
He felt it was getting harder to run a constitutional government than to actually frame one. Therefore, administrative activities should be devoid of political manipulations. Wilson advocated separating politics from administration by three key means: making comparative analyses of public and private organizations, improving efficiency with business-like practices, and increasing effectiveness through management and training.
Rather, the bureaucracy should act with a sense of vigor to understand and appreciate public opinion. Still, Wilson acknowledged that the separation of politics from administration was an ideal and not necessarily an achievable reality.
The late nineteenth and early twentieth centuries were a time of great bureaucratic growth in the United States: The Interstate Commerce Commission was established in , the Federal Reserve Board in , the Federal Trade Commission in , and the Federal Power Commission in With the onset of the Great Depression in , the United States faced record levels of unemployment and the associated fall into poverty, food shortages, and general desperation.
When the Republican president and Congress were not seen as moving aggressively enough to fix the situation, the Democrats won the election in overwhelming fashion. President Franklin D. Roosevelt and the U. In the s, the federal bureaucracy grew with the addition of the Federal Deposit Insurance Corporation to protect and regulate U.
Additional programs and institutions emerged with the Social Security Administration in and then, during World War II, various wartime boards and agencies. By , approximately , U. Johnson in the s, that number reached 2. Volunteers in Service to America was a type of domestic Peace Corps intended to relieve the effects of poverty.
Johnson also directed more funding to public education, created Medicare as a national insurance program for the elderly, and raised standards for consumer products. All of these new programs required bureaucrats to run them, and the national bureaucracy naturally ballooned.
Its size became a rallying cry for conservatives, who eventually elected Ronald Reagan president for the express purpose of reducing the bureaucracy. While Reagan was able to work with Congress to reduce some aspects of the federal bureaucracy, he contributed to its expansion in other ways, particularly in his efforts to fight the Cold War.
The two periods of increased bureaucratic growth in the United States, the s and the s, accomplished far more than expanding the size of government. They transformed politics in ways that continue to shape political debate today.
While the bureaucracies created in these two periods served important purposes, many at that time and even now argue that the expansion came with unacceptable costs, particularly economic costs. The common argument that bureaucratic regulation smothers capitalist innovation was especially powerful in the Cold War environment of the s, 70s, and 80s.
But as long as voters felt they were benefiting from the bureaucratic expansion, as they typically did, the political winds supported continued growth. As Laurence J. Haier, by contrast, has turned its entire organization into a start-up factory. They run the gamut from Hairyongi, a fintech start-up that securitizes loans to small businesses—notably, Haier suppliers and distributors—to Express Cabinets, a network of storage lockers that allows local farmers to deliver directly to consumers in some 10, communities.
In May , Lu Kailin, along with three colleagues at Haier, set out to build a laptop computer for video gaming. The upside seemed enormous. Rising incomes and ever-cheaper technology were stoking demand for online games, while the business-oriented laptops on the market were ill-suited to hard-core gaming. Having distilled out 13 customer pain points, Lu and his colleagues wrote a note to Zhou Zhaolin, head of the Haier platform that included the laptop business, begging for a meeting.
Zhou was initially skeptical. By December , only seven months after it began, the venture was ready to introduce a product. Offered on JD. A few weeks later a second batch—of 3, units—was snapped up within 20 minutes. Jazzed by that success, the team members crafted a detailed business plan and in April received an additional 1. VC firms joined in subsequent funding rounds.
With a staff of 80, the venture now leads e-gaming laptops in China and is making significant inroads into other Asian markets. Taking a lesson from its corporate parent, Thunderobot has spawned its own start-ups, which include a business that streams video games, a platform for organizing e-sports teams and tournaments, and a foray into virtual reality technology.
There are three ways to launch a new business at Haier. In the first and most common case, an internal entrepreneur posts an idea online and invites others to help flesh out the nascent business plan. This is how Zhang Yi, who at the time was an after-sales service manager working in the field, started Express Cabinets. Second, a platform leader can invite insiders and outsiders to submit proposals for exploiting a white space opportunity.
Every incubating ME is a separate legal entity, funded in part by the founding team. In a recent period, nine out of 14 newly hatched MEs received external investment before getting money from Haier. Despite this, Haier often ends up with a majority stake in the start-ups, because it typically has the option of buying out its venture partners using a preset valuation formula.
Like other units within Haier, incubating MEs contract with nodes for development, distribution, and administrative support. The only way to find that next billion-dollar opportunity is to launch a slew of start-ups and give each one the freedom to chase its dream.
In a start-up, people tend to think and act like owners. Often they have equity in the venture, and some will have even risked their own capital in hopes of scoring a big win. Start-up teams also have a large degree of autonomy—and no one to blame if things go wrong. It is this combination of upside, freedom, and accountability that gives start-ups their edge. A study of U. Turns out, neither gain sharing nor autonomy on its own had a significant impact on turnover.
But in companies that offered employees both, voluntary turnover was less than half the rate observed when one or none of those two conditions were present.
This makes sense. At Haier, MEs are expected to be self-managing, and their freedoms are formally enshrined in three rights:. These rights come with a commensurate degree of accountability. Targets are broken down into quarterly, monthly, and weekly goals specific to every member of an ME team. Compensation is tightly coupled with business performance. As is true in most start-ups, base salaries are low.
Opportunities for additional compensation are tied to three performance thresholds:. This combination of bonuses, dividends, and profit sharing gives employees the opportunity for hefty payouts. If an ME fails to hit its baseline targets for three months in a row, a leadership change is automatically triggered. If the ME is meeting its baseline targets but failing to reach its VAM targets, a two-thirds vote of ME members can oust the existing leader. New leaders are chosen competitively.
Typically, three or four candidates will present their plans to the ME team. The discussions are intense, as team members press for details on how prospective leaders will get things back on track. Occasionally, a team rejects the entire slate of candidates and the search process goes to round two. Poorly performing leaders are also vulnerable to a hostile takeover. Anyone at Haier who believes that he or she could better manage a struggling ME can make a pitch to its team. If a company consistently underperforms, its board will eject the CEO—or the business may be bought by a competitor who believes it can manage the assets more effectively.
By contrast, Haier does everything possible to turn employees into owners. Thirty years ago the company was a struggling collective enterprise turning out products of dubious quality. The Haier we see today was nearly a decade in the making. The company began testing the concept of small, entrepreneurial sales and marketing teams in A year later self-managing teams were introduced in product units.
Those early tests were instructive. At the outset internal contracting proved problematic. Negotiations were protracted and adversarial as every unit sought to maximize its own success. The solution? Build in a clause that links compensation to marketplace results. That reduced friction and increased alignment, turning a zero-sum game into a joint effort to create value for customers. It has to emerge through an iterative process of imagination, experimentation, and learning.
When asked how Haier can accelerate its transformation, he has a simple answer: Run more trials and replicate the most successful ones faster, because revolutionary goals are best achieved through evolutionary means. For decades, most companies have worked diligently to optimize their operations. Important as this is, Haier has done something even more consequential: It has humanized its management model.
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