The New Ruthless Economy: Work and Power in the Digital Age

By Simon Head

Book Overview

In the great boom of the 1990s, top management's compensation soared, but the wages of most Americans barely grew at all. This wages stagnation has baffled experts, but in The New Ruthless Economy, Simon Head points to information technology as the prime cause of this growing wage disparity.
Many economists, technologists and business consultants have predicted that IT would liberate the work force, bringing self-managed work teams and decentralized decision making. Head argues that the opposite has happened. Reengineering, a prime example of how business processes have been computerized, has instead simplified the work of middle and lower level employees, fenced them in with elaborate rules, and set up digital monitoring to make sure that the rules are obeyed. This is true even in such high-skill professions as medicine, where decision-making software in the hands of HMOs decides the length of a patient's stay in hospital and determines the treatments patients will or will not receive.
In lower-skill jobs, such as in the call center industry, workers are subject to the indignity of scripting software that lays out the exact conversation, line by line, which agents must follow when speaking with customers. Head argues that these computer systems devalue a worker's experience and skill, and subject employees to a degree of supervision which is excessive and demeaning. The harsh and often unstable work regime of reengineering also undermines the security of employees and so weakens their bargaining power in the workplace.
Drawing upon ten years of research visiting work places across America, ranging from medical offices to machine tool plants, Head offers dramatic insight into the impact of information technology on the quality of working life in the United States.

• Format: Paperback
• Language: English
• ISBN: 0195179838
• ISBN13: 9780195179835
• Release Date: March 2005
• Publisher: Oxford University Press
• Length: 222 Pages
• Weight: 0.75 lbs.
• Dimensions: 0.6" x 5.6" x 8.5"

Customer Reviews

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 l

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 t

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.

Wake-up call

Head picks three areas to primarily study in his New Ruthless Economy: autos, health care and call centers, but the first part of the book is devoted to an excellent review of the basic tenets of scientific management as originally envisaged by the engineer Frederick Taylor, and his lesser-known counterpart in office management, William Leffingwell. Armed with this knowledge, the reader can easily trace developments in the last fifty years or so.As Head points out, the overall effect of the extension of these principles, especially combined with the vast electronic monitoring provided by recent advances in IT, is the overall dumbing-down of the worker, regardless of inherent or potential skills. The study of Toyota auto plants in Japan and other countries is particularly distressing, and one can easily see that it is only the influence of unions that has slowed down the treadmill. The situation with regard to call centers is appalling: truly the workers there are exploited ruthlessly. One wonders if in the offshoring of American jobs in the service sector, eventually the same massive turnover numbers will appear in developing countries.Head, in my opinion, saves the best till last?managed care organizations. Here, as one reads both figures rarely published, research findings, and case studies, it becomes all too obvious that MCOs are an absolute disaster. Why are health care costs going up? It?s all here in simple terms. Just this section of the book is worth reading alone if one is worried about health care in America.ERP (Enterprise Resource Planning), CRM (Customer Resource Management) and a host of other business areas literally reorganized by giant software programs (SAP R/3, for example), are also discussed, and viewed as boondoggles that rarely achieve any desired goals.The overall trends discussed in this well-written book should frighten both management and employees, and it is unfortunate that the latter so often buy into the consultants? ill-advised mantras.

Fresh perspective on the perils of the new economy

This provocative book exposes the dark side of IT productivity gains, in which workers in service sectors such as medicine are being transformed into cogs on an assembly line. Ironically, just when industrial assembly line workers have been empowered to take responsibility for the overall quality of the products, the workers in areas where judgment once reigned supreme find themselves extruded through routines-- what to do, what to say-- that make central planning seem creative. The initial productivity gains are apt to disappear, Head suggests, just as they did in old assembly lines, as numb minds produce bad products.