The New Ruthless Economy:
Work and Power in the Digital Age
by Simon Head
In his 2003 book, The New Ruthless Economy: Work and Power in the Digital Age, Simon Head shows how technology speeds things up in the new economy-and the cost of that speed in human and business terms. Head starts by noting that there are three business processes driving the new economy: "lean production," "reengineering," and "enterprise resource planning," all from manufacturing.
In his book's first section, Head traces these three manufacturing work practices back to Frederick Winslow Taylor's late 19th century "scientific management" and Henry Ford's early 20th century assembly lines. Head shows how both Taylor and Ford broke down tasks and then determined better ways for those tasks to be done. Once the best methods were determined, Taylor and Ford timed those methods and then held workers accountable for meeting those times throughout the work day. This approach increased productivity dramatically but led quickly to what Head calls "management by stress," driven by manufacturing management's tendency to quicken the line's rate. Then, if that faster time is met, management may get rid of one or more line workers, which leaves the remaining workers facing even more stress. In this approach, workers are treated as so many interchangeable mechanisms, their actions proscribed, without any way to grow on the job.
Manufacturing by "scientific management" has created many difficulties over the last hundred years, but Head feels these are minor compared to the problems created when this manufacturing model started to insinuate itself into the new service economy in the early 1990s. Head presents three areas in service where scientific management, through new computer systems, has changed work dramatically for the worse. These areas are:
- Call Center Management and Customer Care,
- Managed Care Organizations and Patients
- Businesses Adopting Enterprise Resource Planning Systems
In the case of call center management, Head notes that most centers use systems which, in many cases, force highly-trained and capable customer service people to deal with their customers through scripts designed by their employer. There are several challenges with scripting. First, the customer will almost certainly not be acting from the script, which means the customer service representative (CSR) will have to steer them in the script's direction, a direction in which customers might not want to be steered. The other challenge is by treating all call center workers as script readers, service companies essentially "de-skill" their best workers. If these skilled workers use those skills and ignore the scripts, they are penalized-even if they have satisfied the customer. Given the high turnover rate at call centers, there will soon be fewer CSRs who have the experience to truly help customers outside the scripts. The end result, then, is that firms are spending more on call center systems solutions that offer less to both customers and employees. Head finally shows how expert systems might be used to develop the skills of call center employees, but notes that most management teams are unwilling to give up the monitoring ability that current systems provide.
To a much greater degree, the for-profit managed care organization's (MCO's) rage to standardize and squeeze out costs is currently killing America's health care system. The for-profit MCOs are founded on the belief that trained medical personnel are not needed to manage medical treatment, that "medical directors" and "[d]atabases incorporating decision-making algorithms [can] 'decide' on the proper lengths of a patient's stay, [can] set out the appropriate length of time for a physician to spend with his or her patient, and [can] rule on the treatments that patients should or should not receive." Head provides dramatic and damning examples where rushed or inexperienced MCO doctors, hitting their assigned quota of patients per day and using the MCO's "expert" system, misdiagnose a disease or wrongly prescribe a drug.
Head shows how the for-profit MCOs' financial model drives patient care downhill and dramatically increases the bureaucratization of healthcare. Head cites one study that concludes, "In 1968 there was one administrator for every three patients. In 1990, 4.3 administrators for every patient" and since 1990, that growth has continued to multiply. Most tellingly, Head says that once administration costs were added to "the for-profits' higher spending on consultants, marketing and advertising, the for-profit[s] were...3 [to] 11 percent more expensive than their not-for-profit counterparts." Another case where true returns are questionable at best. In a well-reasoned conclusion in this section, Head argues that U.S. medical care could be offered universally with a single-payer tax-based system.
Head's last section deals with enterprise resource planning software (ERP), which Head says took "the single business processes that were the concern of reengineers and then join[ed] them together to form giant megaprocesses." ERP developers like SAP say their software will string together all the company's processes for greater cost efficiency and provide greater ability to monitor employee performance. What's amazing here is ERP's booming sales growth when study after study has revealed that, as yet, almost no one has received a decent return for having spent the tens of millions for their implementation.
Simon Head shows what happens when a popular manufacturing business model is force-fit into the service economy through powerful and very expensive systems. The systems sellers tell a good story of lessened costs and greater productivity, but say little about the real human costs of such systems when firms start to use them in situations that do not lend themselves to mass production scenarios. This is a great and frightening book, since the approaches and systems he attacks continue to dominate global sales, even as they continue to treat employees as cogs in the wheel.
Reviewed by S4 Consulting
© S4 Consulting
