[.uk] The New Ruthless Economy: Work and Power in the Digital Age

Big Brother Is Watching:
The New Ruthless Economy by Simon Head is a somber, thought provoking examination of how the American workforce has been dehumanized over the past decade. The widespread use of Information Technology in business was predicted to decentralize decision-making and empower employees through greater team efficiency. The reality of IT is an aggressive return to Taylorism and assembly-line routine and controls that migrated from manufacturing to service industries. During the 1990?s, wages of top management went through the roof but the average American worker realized little, if any, increase at all. The New Ruthless Economy explores contributing factors to the inequality of wages, loss of job security and weakened bargaining power in the American workforce. Simon Head drew his conclusions based upon ten years of research across industry lines and geographic boundaries. He discovered that in the name of efficiency, businesses have established highly structured rules, computerized their processes and then implemented technology to ensure these rules were strictly adhered to al? George Orwell. The author provides concrete examples ranging from software implemented by HMOs that determine a patient?s length of care and treatment to the computer scripting used in call centers for wide-range solicitation. Use of these systems once again separates decision-making from the worker. It devalues an employee?s education, training and experience while subjecting them to excessively close supervision and monitoring. Head also points to the ?lean production? and ?ERP? (enterprise resource planning) practices that prompted wholesale layoffs in the early to mid 1990?s. Not only did these systems reduce the skill levels of employees but they also significantly increased the level of worker scrutinization. Head explores the relationship between Information Technology and Scientific Management and concludes his book with a discussion of ?the economics of unfairness? where both the National Labor Review Board and employee privacy rights take major hits at the waterline. The New Ruthless Economy takes a look backward and forward where the view for American labor is equally disappointing.

Working Under the All-Seeing Eye:
With Drucker`s Post Capitalist Society, I got the impression that production was the key to higher pay, but Head contradicts that notion saying that the American work force has been made more productive, but it still has not seen much of an increase in pay. A worker works harder and faster, but still gets paid about the same. Even white collar workers and highly skilled professionals are managed scientifically under Taylor's principles. There seems to be a spreading madness for higher production. It is dehumanizing to have to do tasks at a speed and manner that may not fit the personality and ability of the person doing the job. I suppose that increasing production may decrease the price of the product because of the increased supply due to higher production. This would lower the cost for the consumer who is also the worker, which would be a benefit. I can see why workers resisted Taylor's schemes to get them to be more productive. It is much more desirable for the workers to set the pace without having supervision, rather than having a supervisor tell you to speed up. Besides, not everyone works at the same pace, unless you force them to. Even health care has become a dehumanizing experience for patients as they too have to endure a managed care system geared toward production, rather than caring for the patient. It seems to be a very male-oriented philosophy to coldly concentrate only on production and beating out the less productive competition, as opposed to other values that could be emphasized. By increasing the productivity of workers, an employer reduces the labor cost of making the product, ultimately trimming down the number of people employed. With Taylorism, the worker participates in his own eventual replacement by suggesting ways to do the work more efficiently. Although there had been some talk of the increase of worker autonomy and empowerment with rise of Japanese auto production, actually management practiced a more refined Taylorism. Workers were both bored by simple tasks and stressed to keep up with the speed of the line. This decreased the quality of working life. Unions were unable to penetrate into Japanese run plants worldwide to attempt to slow down the line and give workers more power. It's amazing that the engineers of the Casepoint software thought that it would work. Customers who call in about equipment they don't understand are often rambling and incoherent. Such unpredictability would ruin such a system. You need to use the human computer to figure out such problems. No artificial computers have been created yet that would fix such problems. I agree with Reichheld that if you treat employees well and retain their loyalty and service, then the business runs much more smoothly and profitably, without having to resort to such immoral tactics as management by excessive and stressful monitoring. Management, employees, and customers benefit from having a humane work environment. Businesses should focus on this, rather on just production. Unfortunately, businesses often view their employees with contempt and think that they can be easily replaced. Businesses listen more to scientific managers, rather than to humane ones. With Head's review of scientific management, I get the impression that Taylor and his followers really do belong in the lowest parts of hell. But focusing on higher production is not a bad pursuit as long as it doesn't become the only goal. There are many problems with scientifically managed healthcare. Patients are "medical losses" in managed care; the term is used to describe the loss of profit when the patient cost the MCO to much money. Such patients are unprofitable clients to the reengineers following the principles of scientific management to try to reduce the cost of healthcare. The invasion of this philosophy into the healthcare system has not gone over well with doctors or patients. Patients don't want to be treated like products; doctors want to make their own decisions about the patient's care without having to go by the rigid guidelines of managed care. Because physicians are no longer making flexible decisions during the diagnosis of patients, medical errors are opening them up to lawsuits, which further increase the cost of healthcare. MCO's are more interested in making a profit, than merely holding down costs. Since there has been an increase of bureaucracy because of the contentious negotiations between doctors, hospitals, and HMO's, costs are increasing probably more so than they were before managed care. To bring costs down they must deny care to patients, particularly if they are unprofitable patients with severe and chronic health problems. This market solution to rising health care costs has not been that successful; the author suggests that all could be covered under nationalized health care. Drucker would probably object with the usual argument about people waiting years for a serious operation to be done under nationalized care. Although companies talk of employee empowerment with the advent of IT technologies, the opposite has actually occurred. There is a chance for empowerment, but not with the way the technology is being used now. The technology actually gets in the way of employees becoming more experienced at solving problems, which could lead to job satisfaction. While scientific management has had some success in manufacturing as far as higher production goes, it has not been successful in services that deal with humans, which requires more complexity and caring. There are other values that are more important than production in the services. Head disagrees with Drucker that higher production necessarily leads to higher wages. The fruits of increased productivity often go to the CEOs and shareholders, and senior managers, not employees.

Best Economic Book I've Read in Five Years:
It traces how the original assembly line of Ford and Taylor was refined in Japan by Shigeo Shingo into the 'Single Minute Exchange of Death.' This basically is the Japanese 'kaizan,' incremental improvement of productivity second by second under assembly line conditions, where workers are relentlessly pushed to speed up or die. Japan has no unions. Over the decades the employees sped up, died, or were fired. Nissan and Toyota became amazingly productive without skilled labor by redefining formerly-skilled processes into small, easily graspable steps any hard worker could eventually learn, provided they had a healthy body and good coordination. This is the basis of the New Ruthless Economy, Enterprise Resource Processes, the demystification and re-engineering of formerly skilled professions into the simplest, best way any uneducated man who wants work can understand. These theories migrated into the service sector, pioneered by William Henry Leffingwell. They increased productivity, but also blurred the like between manager and worker. Enterprise Resource Software allowed senior managers to 'informate,' monitor and streamline processes thanks to power of the computer. Customer relations is a dynamic system, and no 'best' way exists for every situation. For every success of 'just in time' inventories and micromanged panoptic oversight, there are unsatisfied customers yelling at outsourced Indian customer service techs who don't understand why the appliance broke because it isn't in their expert-system generated branching scripts. Micromanagement of employees into harassed stress ulcers is now common. Finally, these ideas were applied to medical care, where they failed. Managed Care Organizations (MCO) and Health Maintainer Organizations (HMO) now use expert systems to replace the expertise of the ultimate skilled profession -- your Doctor. But the human body isn't fixed. One symptom can mean hundreds of different diseases. Two people aren't alike, and can't be reduced into a common denominator. As a result, US medical care is screwed, to a point where it's lost productivity at around 1% a year because of the new huge bureaucracy. In effort to micromanage disease into easily understandable bits, Doctors see 60 patients a day, but aren't doing any better for the public. The New Ruthless Economy in Medicine doesn't work to the point where non-profit hospitals are making more than for-profit hospitals. Each MCO, HMO, and Insurance Provider has different forms and requirements, meaning a single payer (single united system) would actually save around $100 billion a year. Meanwhile people die because it isn't efficient for a corporate doctor to care about a patient-unit. Essentially what the New Ruthless Re-Engineered Economy has done is break the link between higher productivity and higher real wages by de-skilling the working class. Unions checking unbridled corporate power is a thing of the past, thanks to careful and united lobbying. This means good times for CEO's, and bad times for people who need a job to pay their bills.

The New Serfdom?:
It seemed as though a new golden age had been bestowed upon us. During the optimistic second Clinton term, the "new" economy was booming. There was steady growth. Inflation was low. The Federal Reserve guided it all through monetary fine tuning. U.S. technology was re-establishing its global supremacy. And all of this was sustained by strong investment, especially in information technology. IT, it seemed, would re-invent us and make possible previously unimaginable levels of increased productivity. Yet, even before the tech stock crash, 9/11, and a series of corporate scandals starting with Enron, the 80% of Americans in the service industry were experiencing stagnation of real world wages and benefits. And rising were levels of worker insecurity and dissatisfaction. Simon Head set out with a goal, and that goal was to discover why. Supported by The Century Foundation, Head set out to observe businesses of the "new" economy in action. He observed manufacturing businesses traveling to auto plants and machine shops. He observed service businesses like call centers, hospitals, and clinics. He observed knowledge businesses spending months in the Silicon Valley and Cambridge. And he reported back what he found. That report took the shape of a book, The New Ruthless Economy: Work & Power in the Digital Age (Oxford 2003). What Head discovered happening was not a new type of management at all. Scientific management had been developed by F.W. Taylor more than a century before and applied to manufacturing to increase productivity of unskilled workers. But now this theory intended for industrial mass production was being applied to supposedly skilled white-collar workers. To high-income workers like architiects and engineers, it was to compliment their skills, like a colleague looking over their shoulder. To middle- and lower-level workers like telephone operators, bank tellers, and call center agents, it was to substitute their skills, even scripting every word they were to say. And to college-educated workers like managers and physicians, it was to debilitate skills, dictating action, tying their hands. Managed care organizations, rather than leave such decisions up to the so-called professionals, would now tell doctors the length of time to spend with a patient and what treatments a patient should or shouldn't receive. White-collar Taylorism, as Head tells us, had been attempted before, but it had failed. What suddenly made it become possible for the first time in the 1990s was the networked computer and its workflow software, the very information technology that was supposed to bring about the "new" workplace. But possible doesn't mean inevitable. What made it happen? Head argues that there is a gray area "where outcomes depend upon decisions taken by executives and managers as to how technologies will actually be used in the workplace." He puts forth that it was a conscious decision to take reengineering and ERP (enterprise resource planning) of companies beyond just mundane activities involving goods and numbers (ordering, storing, transporting, billing of goods) and expand it to areas involving people (sales, marketing, customer relations, accounting, personnel management, and, as mentioned, even medicine). Head spotlights a central paradox of the information age. Software companys like Germany's SAP could be considered a poster child for the "new" economy, businesses that are flexible and flattened in their structure, with little or no hierarchy, with a truly skilled workforce, and with a prolific record of technological innovation. Yet when their product was put in place within companies of the "old" economy, it strengthened a business culture embodying values of that are the opposite. To explain how SAP's ERP software allows a manager to control a business's operations, advocates might make the analogy of how a pilot flies a modern jetliner "by wire." But what is being controlled is not machinery but people. Head argues that perhaps a better analogy would be that of Foucault's Tower, a panopic means by which powers observe without being observed. That it was intended for prisons perhaps is Head's strongest condemnation of what information technology has done to the workplace. The casualty of ERP is the employee's accumulated skill, knowledge, and experience which enables employees to do their jobs well. And industry has been evolving in ways unfavorable to labor unions, once the worker's best defense, which might have helped counter this trend. So the changeover lumbers on with the considerable time and expense shifting to ERP takes, despite the overwhelming majority of companies moving to ERP having experienced no productivity improvement. Instead they have only increased worker dissatisfaction and insecurity. Simon Head's observations in The New Ruthless Economy are not optimistic. Instead of a golden age of respect, trust, and freedom for workers leading to previously unimaginable levels of increased productivity, the world Head describes may just as easily be called the "new" serfdom as the "new" economy.

The Digital Age Catches Up.:
The chronology of this book spans almost two centuries of American history. In 1824, John Hall achieved the automatic machining of metal components at the Harpers Ferry arsenal, and Hall's new methods were the ancestors of mass production and scientific management. By another convenient accident of history, one of the pivotal events in this narrative, the beginnings of mass production at Ford's Highland plant in 1913, stands near the midpoint. If time travel allowed us to look back from the perspective of 1913, we would see how Henry Ford and Fred Winslow Taylor pulled together the "technical and organizational achievements of the 19th century" and welded them into a productive machine of commanding power and efficiency. Looking forward from 1913, and with the advantage of hindsight, we can see how Ford's and Taylor's methods were elaborated by the technologies of the mid- and late 10th century, which will continue to shape today's U. S. A. economy. From their base in manufacturing, these methods have launched an invasion of the service economy in which eighty percent of Americans work. After I learned computer training at the Vo-Tech in Pulaski, I agreed that I could effectively work robotic computers. I never had the chance to show my stuff, but I did have various and sundry computer-entry jobs in different factories. It was, for me, the Alpha and Omega -- the beginning and the End. Is it possible for humans to be programmed like machines? Like in the movie, ROBOTS, and 'The Island,' it is likely that some sort of robotic entity will exist in our near future. Simon Head puts doubts on our "illusions about information technology and argues that everyone loses when corporations try to use technology to conquer human nature." We all know that machines have no minds (like the two city of Knoxville representatives at yesterday's TPO meeting) and can never have the ability to think and feel on their own. Computers do as they are told or programmed, which is good. Humans need to always be in control.