I believe we are seeing the equivalent of the industrial revolution for white collar workers. They are now part of a fundamental shift not seen since the introduction of mechanisation to manufacturing.
Look behind the recent decision by Optus to lay off 750 employees "from senior and middle management as well as operations, back office and support functions". How did they decide who to eliminate and who to keep? By taking a manufacturing concept – Six Sigma – and applying it to white collar activities.
An expert in Six Sigma, Paul Walsh at the Australian Graduate School of Management, says that office work has traditionally been spared such a reorganisation because white collar work is invisible. It lives in emails and powerpoints and hidden in our computers. Often computerisation has intended to increase productivity, but too many times have been bolted on to old, inefficient practices. Step back from the process, he says, and you’ll quickly discover waste.
Australian Unity did that. The company couldn’t get on top of its claims backlog. A complete reorganisation in the way it processed claims and responded to customer enquiries saved $180,000 in overtime per year and increased productivity in its call centre by 27 per cent, and claims processing times by 14 per cent. Watch the video to see how they incorporated their staff to map out where they were wasting labour hours through unnecessary or duplicated effort.
By completely cleaning up the systems that were the core of their ‘back office’, Australian Unity was able to think much more cleverly about how they would implement a smartphone app. Once, every claim went through the mailroom to be sorted and sent on to the claims processing department. Now a claim is scanned by a member, uploaded and processed within three hours – without ever seeing a human being. A quarter of such claims are now being processed this way and the method will only grow.
What does this mean for the white collar worker? For the traditional paper pusher, if a smartphone app is not doing your job for you, it probably will soon. For another example of what that looks like, watch this video on Australian Fresh Leaf Herbs. The company grew to $5 million in revenue in four years and does not have a single person working in administration. Owner Jan Vydra can you show you how the company's iPad app has completely eliminated the need for that activity.
GE, the company that made Six Sigma famous, had a simple rule under former chairman chief executive Jack Welch, every year sack the bottom performing 10 per cent of staff.
It’s Darwinian to be sure. But the wave of white collar job cuts we have seen at Optus and at the major banks are part of the same trend. Employees who cannot show how they are able to remove waste in their company will be deemed as contributors to it.
Tomorrow, I’ll tell you about how Australia Post analysed its copious data to determine that 80 per cent of its customers wanted just six services.