Silicon Valley signals a management stranglehold

High unemployment is enabling bosses like Yahoo's Marissa Mayer to get more for less out of their workers. Combined with new tracking technology, some managers might go too far.

Marissa Mayer, Yahoo’s new chief executive, has caused consternation by insisting that employees who have worked from home must in future come to the office. Her critics have pointed out that home workers are as productive, if not more so, as those in cubicles.

They are, however, missing the point. Mayer is mostly doing this as a rough and ready way to reform Yahoo’s notoriously dysfunctional and disorganised culture. She is also doing it because she can.

The lesson to draw from Mayer’s whip-cracking – in Silicon Valley, of all places – is that this is an age of harder work. From intense teamwork at the top to monitoring and surveillance at the bottom, managers are squeezing more from employees than they previously would have dared.

Even Santa Clara County, where Yahoo’s headquarters are located, has a 7.5 per cent unemployment rate, and Yahoo is among the old Valley companies shedding layers of employees so it can regain its edge. The US and Europe still suffer from high unemployment long after the 2008 financial crisis.

That has undermined employees’ bargaining power, enabling managers to impose greater demands on their shrinking workforces. "For several years, managers have been able to ask workers to do two jobs without any of them quitting,” says Peter Cappelli, a management professor at the Wharton School of the University of Pennsylvania.

Managers also have more technology than in the past to measure what each employee contributes – from billing software at law firms to tracking technology in warehouses. The incentive, particularly when any worker who leaves can easily be replaced, is to push this to its limits.

On the face of it, Silicon Valley is at the benign end of the scale – it is devising software to measure others rather than being measured itself. Valley companies were pioneers of team-working and employee autonomy compared with tough methods elsewhere.

"There are military type organisations in which the person at the top issues an order and it is passed down the line until the person at the bottom does as he or she is told without question or reason. This is precisely the type of organisation we at HP did not want,” wrote David Packard, the co-founder of Hewlett-Packard, about his company in the 1950s.

Indeed, companies such as Google sound like holiday camps by comparison. Free buses from San Francisco with WiFi! Free food! Free haircuts! Wacky furniture! Saunas! Bring your dog to work!

But these perks are there to entice employees to spend as much time alongside each other as possible. "There is something magical about sharing meals. There is something magical about spending the time together, about noodling on ideas,” Patrick Pichette, Google’s chief financial officer, told a conference in Australia last week.

Mayer, a Google alumna, presumably wants to achieve the same effect at Yahoo. Engineers at start-ups, and at the most successful of the big companies such as Google and Apple, have plenty of autonomy, and are paid and rewarded highly. They also work very hard.

These companies use anons of Frederick Taylor, a mechanical e extreme version of the motivational technique called Theory Y by the management theorist Douglas McGregor in 1960. The opposite approach – Theory X – assumes that workers need to be tightly managed and supervised because they are inherently slackers.

Theory X goes back to the "scientific management” notingineer who, in 1911, advocated breaking down the work of unskilled labourers and assembly line workers into small tasks and then telling them exactly what to do, while watching them closely.

Theory Y has been in the ascendant for several decades, partly because it has worked out well at companies such as Google, and partly because of the rise in white-collar work. But a combination of new technology and a shift in the balance of managerial power is bringing back Taylorism.

A recent Financial Times article on an Amazon UK warehouse gave an insight into what is happening in the logistics industry. The "pickers” who collect items from the warehouse shelves carry handheld computers that tell them exactly where to go, and check how fast they do.

Technology is enabling the kind of surveillance of which Taylor could only have dreamt. Managers used to be able to check with technology when a worker clocked in or out. Now, those who run call centres and logistics depots know his or her every move in real time.

"If you have a plentiful supply of labour and don’t need to worry about quality, the temptation is to nail your workers for every minute of the day,” says Kirstie Ball, reader in surveillance and organisation at the Open University.

Nor are professionals immune to surveillance. Law firms use software to calculate the time that lawyers spend on individual cases in order to bill clients by the hour, or even 10-minute blocks. The computers that hum on most people’s desks can easily spy on their users.

Mayer is not attempting to implement command and control at Yahoo. But her edict has one thing in common with Amazon’s approach – it is calculated to intensify effort. Commuting to the office to work in a group ensures that everyone knows what you are doing. Peer pressure can be as powerful a management tool as surveillance.

That need not be sinister. I would prefer to work hard at a successful company than idle at a demoralised, lethargic one. But a combination of high unemployment and technology hands managers a lot of power. Some will abuse it.

Copyright The Financial Times 2013.

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