Established in 2000 and going public in the U.S stock market in 2005, Firm EFootnote 2 was one of the best among Chinese internet companies. The founder and Chief Executive Officer (CEO) of Firm E is a technical expert in computer science with overseas education and work experience. As of 2014, the firm had over 30,000 employees in Beijing, Shanghai, Guangzhou, and other cities, with headquarters in Beijing. Like many other Chinese internet companies, Firm E has a delicate division of laborFootnote 3 and a project-centered production mode.
To finish a project, laborers from all job categories must cooperate. In Firm E, this process is accomplished mainly through virtual teams. Laborers from different real teams and job categories carry out one project based on the technical division of labor and a non-hierarchical structure. Compared with the bureaucratic hierarchy in real teams, virtual teams comprise a relatively equal relation. In the organization, real teams are responsible for task assignment and performance evaluation while virtual teams drive production. Each mode has its emphasis, constituting a “horizontal-virtual and vertical-real” organizational structure.
The firm intentionally forms this structure to fuel knowledge production. However, it is difficult to avoid problems caused by the difference between real and virtual organizational practices. The fieldwork has found two major contradictions in the labor process. One is the ideological contradiction between engineer culture and bureaucracy. Another is the contradiction between the virtual team and the real team.
The institutional foundation of virtual teams
Establishing virtual teams inside Firm E is not isolated but related to a series of institutional and cultural arrangements. It is on the basis of relevant organizational institutions and culture that this ideal–typical mode of cooperation can function in practice. In Firm E, virtual teams are related to two main organizational features: engineer culture and bureaucratic performance management.
Engineer culture
Castells coined the term “a four-layer structure” to describe internet culture: “the techno-meritocratic culture, the hacker culture, the virtual communitarian culture, and the entrepreneurial culture” (Castells 2007: 38). Technical elite culture is the ultimate reflection of “a mission of world domination by the power of knowledge” (Castells 2007: 60). In Firm E, this mission is enlisted in its engineer culture.
The most direct demonstration of this mission is salary. Taking fresh college graduates as an example, the average salary of computer and internet engineers exceeds that of other occupations by 20%. Computer and internet engineers often have the opportunity to obtain scarce hukou quotas. Furthermore, besides the common compensation that Firm E provides for all departments, the technology department has specific extra benefits, including the weekly provision of snacks and relaxation and exercise equipment such as foosball tables and table tennis tables. Management even organizes regular group online games during working time as a team-building activity.
Outside of work, Firm E organizes various technical competitions. The model-hacker innovation competition is a classic example. In this competition, technical employees form their own teams and meet at the competition spot. In 24 h, they sacrifice sleep to bring a product idea to life. In the process, technical employees at lower levels of the firm have an opportunity to show their skills and creativity to the firm’s leaders. Competitions of this kind give the firm a path to innovation, and they provide a perfect opportunity to exercise engineer culture.
In actual cooperation, engineers also enjoy certain privileges.
As I see it, the so-called engineer culture just means that the firm values engineers. Most directly, (engineers) have the highest salary. Their salary is about 20% higher than that of PMs(Product Manager). The engineer culture is reflected in, as I said, the discourse of engineers. They have options. For example, when we design products, RD(Research and Development engineer) doesn’t just make what PMs design. If RD don’t think your product is good enough, they’ll tell you what they want to make.Footnote 4
Generally, the engineer culture promoted by Firm E is a concrete reflection of the internet culture on core technical laborers. The difference, however, is that Firm E’s engineer culture emphasizes the preference over and reliance on technical laborers. This has profound implications for cooperation in the labor process.
Bureaucratic performance evaluation
Internet firms often emphasize their flat organizational structure, taking pride in an internet culture of equality and democracy that reflects that structure. Consistent with what it advertises to the public, Firm E has only five levels—entry-level employees, managers, directors, Vice Presidents (VPs), and the CEO. However, on closer inspection, we find that each of the three middle levels is further divided. There are managers and senior managers, vice directors, directors, senior directors, VPs, senior VPs, and executive VPs. Under the disguise of a flat structure is a ten-level administrative hierarchy. Internet firms are still largely bureaucratic organizations. Performance management, a critical method for managerial control, is also organized through such a bureaucratic structure.
In internet firms, performance management is the main method of work evaluation. The firm breaks down its general goals, distributes responsibilities to individual laborers, and evaluates performance through quantitative and measurable indicators. The result of this process determines the reward, punishment, and career development of the laborer. Performance indicators are divided into two levels.
At the organization level, target setting and measurement use the balanced scorecard system. At its tenth anniversary, Firm E proposed a target to achieve 40 times its revenue in the next 10 years. This goal was broken down into mid-term strategies and relative strategic targets and then further into annual strategic targets and quantifiable annual working KPs and their key performance indicators (KPIs).
At the individual level, target setting is based on the well-known performance management measure of the KPI. KPs are the important tasks an employee must accomplish, the “focus of work that you should put the most attention and effort into.” KPIs are “items and markers to measure the completion of KP.” A common employee will have no more than 5 KPs, with each KP having no more than 3 KPIs. Presidents set their own annual KPIs based on the firm’s annual goal. Leaders of Departments set their own KPIs based on KPIs of their corresponding VPs, and so on down the hierarchy until the KPIs are extended to entry-level employees. At every level, the manager’s performance target is the sum of all performance targets of her subordinates. In addition to KPIs, cultural value and competence are also measured. Despite accounting for only 5% to 10% each, lower scores on cultural value and competence will greatly affect the general assessment.
Firm E evaluates the progress of the annual performance targets two times in a year—at the mid-year and the end of the year. The evaluations are mainly carried out by each employee’s immediate superior. Although the employee first conducts a self-evaluation, the firm emphasizes that the self-evaluation is only a reference that does not count toward the final result evaluated by management. A score of 4 or 5 in the performance evaluation puts the employee in danger of that year’s eliminations. The individual laborer represents the basic unit for evaluation. In virtual team cooperation, differences in performance targets unavoidably lead to conflicts in individuals’ interests. In this regard, internet laborers also exhibit the “atomization” described by Braverman.
When setting KPIs, both vertical disintegration and horizontal coordination (cross-team, cross-department cooperation) should be considered. The actual practice mechanism, however, only ensures the effectiveness of vertical disintegration. For example, KPs that have a larger influence on the superior’s target completion or direct and significant effects on employees often carry a heavier weight. Performance evaluation is mainly conducted by the immediate superior. Therefore, horizontal coordination has little influence in practice at the evaluation stage as there is no actual evaluative indicator for it. Horizontal coordination is partly evaluated with cultural value items. However, the system and method of evaluation are still bureaucracy-based. Bureaucratic characteristics are still the core of performance evaluation.
The two institutions of Firm E exhibit a seemingly contradictory but rational organizational structure. The contradiction is between the cultural foundation of virtual teams—the engineer culture of equality, autonomy, and cooperation—and the bureaucratic performance evaluation, which indicates an individual orientation and hierarchical characteristics. On the surface, the two aspects demonstrate an unsolvable dichotomy. It is rational, however, because the engineer culture shows both the firm’s acceptance of and compromise with the internet culture as well as its emphasis and elevation of internet technology to the mainstream to promote innovation and progress in production. Bureaucratic performance evaluation is a managerial control method that capital uses to address uncertainty in labor transition and to secure surplus value. From this perspective, the two aspects converge in the goal of promoting the production of surplus value.
However, contradictions in institutional arrangements will necessarily influence production. In the following, this article will further discuss the consequences of such contradictions.
Differentiation of virtual teams in the labor process
Similar to many other Chinese internet companies, Firm E drives production mainly through projects. Here, a “project” refers to “utilize[s] a specific organizational structure to complete a one-time task with [a] clear expected target (a unique product or service), under constraints of time and resource” (Qu 2012). In the internet labor process, the “specific organizational structure” is the project team, which includes groups such as RD (software developers), PM (product managers), and QA (quality assurance). In Firm E, specifically, the main format is the virtual team.
“Virtual team” is defined here slightly differently from the common definition in the business management scholarship.Footnote 5 Members of a virtual team come from a variety of actual departments. In sharp contrast with the bureaucratic hierarchy between managers and the managed in real teams, virtual teams consist of equal and cooperative relationships. Otherwise, the daily evaluation of laborers is still the responsibility of the leaders of real teams. The framework of the virtual team is rooted in project management ideas developed since the mid-twentieth century in the business sector (Davis et al. 2010). In the project management structure, projects have a singular, piecemeal, life-course model (Yue 2012) and provide cross-department solutions (Cheng et al. 2004). In this sense, virtual teams in Firm E are managed in the same way as normal projects. The difference lies in the virtual teams’ simultaneous “crossing” of organizational boundaries and elimination of bureaucratic power relations. Each virtual team member cooperates on mostly equal ground, while their position and power in their corresponding real team have little effect. Project managers in Firm E, who are centrally responsible for managing and coordinating in project management, become rank-and-file workers who only coordinate but do not manage in the virtual team working process. In this sense, virtual teams are more than the “cross-department solution” in conventional project management. They are a unique mode of operation that dissolves organizational and bureaucratic power relations. As such, the virtual team is a method of work, while the real team is a management method. The two institutions combine to form a “horizontally virtual and vertically real” organizational structure.
The organization constructs virtual teams for innovation. Through this method, capital not only provides an organizational basis to promote creativity but also constructs a virtual commonwealth similar to the scholar community. At the same time, the bureaucratic institution of performance management remains the real organizational structure and traditional managerial control method. When these two methods encounter each other in the same organization, what kind of labor process will emerge? How will the clash among individualism, hierarchical culture, internet culture, and engineer culture influence the labor process? How should laborers and capital react to such conflicts? We discuss these issues with stories of the labor process.
Projects in Firm E last from 2 weeks to a year, with most of them lasting for 3 months. A common project involves all eight occupations. From the proposal of needs to the launch of the product, a project is generally divided into six stages: proposing the need, establishing the project, production, launching the product, operating the product, and updating. In the first stage, the necessity and viability of the proposed product are discussed. In the project establishment stage, evaluative meetings are called for to gather detailed suggestions on the product’s viability from each real team’s representative. When production begins, technical experts give specific design plans and schedules based on which the product is gradually conceived and produced. The finished product is then launched—that is, integrated into the firm’s general product structure and opened to users. This is the key time point that determines the success or failure of the project. Usually, this time point marks the end of the project’s life course. Subsequent management, operations, and updates are the responsibility of specialized departments outside of the virtual team.
On paper, the above-mentioned project workflow is concretely, smoothly, and thoroughly designed. However, conflicts and uncertainties prevail when it is put into practice in the actual field of labor. Due to space limitations, in this article, we discuss only the scheduling stage.
Scheduling is a key stage after a project is established. The project manager (PM) works with the engineers (RD) on a concrete design for the product, based on which the RD team generates an estimated schedule for the project from start to end. Seemingly simply an objective estimation of future work, scheduling is, in fact, one of the most important leverages of the RD team. After a project is established, a small RD group joins the virtual team. However, the RD group may be involved in multiple projects simultaneously and therefore has priorities among those projects. If the RD group does not agree with a project or does not think it is important, that project will be pushed back into the group’s schedule. For the project manager, her project being situated late in the schedule constitutes a huge challenge. The following experience of project manager He Feng is typical:
Most firms are driven by projects. A project is essentially to finish something with limited resources and time… Normally, PM and RD correspond directly with each other. You may not have the necessary resources when you start a project; then, you’d have to find them in the corresponding department to form the virtual team. If I go talk to them, [they might say] they’re not willing to do it – or they wouldn’t just say they won’t do it, but they would say they don’t have the resources either. In that case, can I postpone it? If I have to postpone it for two months, our PM wouldn’t be able to push for the project at all because of the time cost. So we want to rush and push for things, not drag things on.Footnote 6
As shown here, the project orientation already places huge time pressure on the virtual team’s labor process. The life course of the project is the life course of the virtual team and the key time for performance evaluation for each occupation involved. Therefore, it is important to access the necessary teams and resources in a limited amount of time to achieve the final goal of the project.
However, every organization has only limited resources. This is especially the case in the virtual team environment that dissolves administrative ordering. How does the team fight for resources?
In this case, you have to break through. There are several options. The first is just to wait. This is the most passive. Another choice is to ask my supervisor if she could coordinate the resources for me. She would talk to their supervisor. Their supervisor may agree and provide several names for me to talk to. Sometimes those people would still tell me they don’t have the resources. They would tell me to go ahead and design the project first, and then they’d see if they have the resources. In this case, normally, the project would drag on for half a year or even longer. It’s unlikely that we [would] just give up on the project. I’d have to find another way to get the resources to develop it. There are internal resources and external resources. Some resources for development are outsourced, but that’s not encouraged. I would look for internal resources from my own department or other related departments. They have their own products that have already taken shape. I would join their group chat for a product and ask to talk with them about potential cooperation. They would tell their manager. Once I, on my own, talked to four or five people from another department and asked [if I could] cooperate with them. They thought it was a great idea and agreed to work together.Footnote 7
He Feng finally found some technical personnel to form a virtual team without his supervisor’s help and ensured that his project was finished and launched within a limited time. In this process, the supervisor of his real team had very little influence on getting support from other real teams. Clearly, the virtual team significantly affected the bureaucratic authority. From another perspective, this is also a reflection of equality and autonomy in the virtual team. If conventional authority is partly defunct, what is the basis of cooperation now? When asked why the other team would agree to cooperate with him, He Feng offered the following:
This project had a great influence on their department. For example, they had been doing knowledge accumulation at the firm level, which only covers people at the headquarters. If they want to continue accumulating knowledge, they’d have to go deeper or expand wider. How to expand their range? To branches and partners through my channel. So, this is very valuable to them. They can use it to fight for larger discourse and influence. I just recently realized this – all these groups are like organs in your body. Every organ has its own purpose and interest. They all fight with each other for it.Footnote 8
In fact, bureaucratic authority is partly deconstructed in the cross-departmental cooperation of the virtual team. Administrative orders can hardly influence the behavior of members of the virtual team. Interest is at the center. Each laborer becomes an independent interest entity under bureaucratic performance management. Because of this subordinating relation, individuals and their real teams become one interest community. To a certain extent, the real team is an independent interest entity in the organization. The cooperation process of the virtual team essentially becomes a game between the real team and individual laborers. Interest becomes one of the most important influential factors in cooperation in the virtual team. Since the performance management system is an important institution that the firm establishes for managerial control, we can infer that the influence of the interest principle on cooperation in the labor process is determined by the organizational structure, while laborers are passive actors for implementation and exercise.
In Firm E, another form of cooperation exists that does not involve direct interest relationships but is based on personal relationships between individual laborers.
The encouragement we PMs give to team members, I would characterize it as lip service. You don’t have anything they want, but [you] ask them to work hard to contribute to your project. But your lip service needs to sound genuine to them. You really want them to help you, so you need to put yourself in their shoes. What good does this thing provide for RD? Don’t emphasize the benefit for the project. What does it give to RD, the person who works overtime for your project? Give him a reason first. Other than that, there’s emotion. To be honest, don’t wait until you need them to treat them to a dinner or afternoon tea. Rest assured, this is a small world – one cooperation leads to the next. Even if he doesn’t have another opportunity to work with you again, people around him may. You need to build this network.Footnote 9
PMs carry that idea through in actual cooperation.
I often treat them to dinners. Landmarks in the project – for example, when we exceed 50,000 views, when our new data package is launched – are times for that. If you put yourself at the position of the project manager, the soul of this project, then [making] these [kinds of gestures] is what you’re supposed to do. For my current team, this was necessary for more than half a year. Now everyone has known each other for one or two years. Later, when we exceeded 100,000 views, I offered to buy them lunch. They were like, “Take a break! How much do you earn every month? Save for your family. Don’t spend it all on us.” See, they care about me now. So, then I proposed to have a little fun together. They would say we can do that in the dining hall, or we can just have ice cream together, things like that. They care about me a lot because we gradually have emotional bonds.Footnote 10
In this kind of cooperation, laborers are often at the same level and from different real teams. Members of the virtual team have no administrative hierarchy or resource or interest conflict between them. Successful cooperation is mainly based on personal relationships between laborers. Unlike personal relationships in everyday life, which are formed on blood or regional basis, personal relationships in virtual teams are intentionally formed by laborers to promote cooperation. From this perspective, these personal relationships are closer to the concept of emotional labor (Hochschild 1983). The purpose for laborers to build personal relationships and bonds is embedded in the labor process, with production at the center.
At the same time, personal relationships in virtual teams implicate identification with and compliance with interest principles. They acknowledge the rationality of individual development and interest, as well as its priority when personal relationships fall into conflict. In fact, this reflects the subordination of the value of personal relationships in cooperation with the interest principle of bureaucratic performance management in the labor process.
It should be noted that the existence of this double dilemma in Firm E causes tremendous changes in the labor characteristics of the operational processes of virtual teams. Work on the virtual team was originally knowledge labor, but because of the necessity to construct personal relationships to promote production, emotional labor becomes an integral part of it. However, most projects in Firm E die due to unsuccessful cooperation.
To summarize, in the labor process of virtual teams, the bureaucratic performance management system still has a major influence. By emphasizing the performance of each laborer, it reveals the interest differentiation and authority relations among individual laborers and real teams, reinforcing the influence of the bureaucracy on virtual teams. Laborers, therefore, exhibit a kind of individualization and atomization similar to that of industrial laborers.
Objectively, virtual teams pose a real challenge to the bureaucracy by freeing part of the labor process from the control of administrative orders. It provides the possibility for equal, democratic cooperation and the generation of laborer agency. The emotional labor of constructing personal relationships is an important indicator of this aspect. However, can this kind of personal relationship counteract the atomization resulting from the bureaucracy? Can it fuel the formation of a virtual community? First, the personal relationship built through emotional labor is essentially aimed at pushing production and cooperation. This instrumental-rational consideration gives such personal relationships an inherent instrumentality, which is not ideal for forming virtual communities. Second, personal relationships acknowledge the rationality and superiority of the interest principle. They, therefore, take a backseat in production and cooperation. Their influence is complementary and subordinated. As such, personal relationships also demonstrate labor agency, and they can hardly pose a critical challenge to the bureaucracy.