Economic and technological changes: their effect on organisational management and the implications for working conditions
Sandrine Guyot, National Research and Safety Institute, France
- 1 Introduction
- 2 Economic and technological changes
- 3 New modes of corporate management
- 4 Impacts on working conditions for employees and psychosocial factors at work
- 5 References
- 6 Links for further reading
In the last thirty years, the working world has undergone major economic and technological developments. Faced with the challenges of a globalised economy, in which financial markets are increasingly actively involved, firms have adapted to accommodate the requirement of improved profitability. They have adopted new modes of organisation enabling them to be more flexible and more reactive, and they have instigated management methods focused on individual autonomy. These transformations have profoundly changed the nature of production activities and the working conditions of employees. Some of these changes give rise to tension and suffering at work, leading to psychosocial risks.
Economic and technological changes
The growing globalisation of the economy and work
In recent decades, globalisation has intensified under the combined effects of the liberalisation of trade and the development of means of communication and transport. Flows of capital, and movement of people, goods, and services have increased constantly; with scant regard for boundaries between countries.
The consequences for firms are multifarious. Globalisation has brought them into an era of generalised competition. Firms are doing battle commercially and technologically to meet the needs of an economic market that is particularly sensitive to fluctuations in demand. This competition is forcing them to increase their innovation efforts, and to produce an endless stream of new products and services in order to win additional market share. It requires dynamics of continuous change, forcing firms to adopt more flexible modes of organisation and production, and to incorporate market logic into their industrial processes.
In an economy that is increasingly borderless, work is also becoming borderless. Some firms relocate their production or logistics units in order to take advantage of low labour costs and of the proximity of emerging markets. Others outsource some of their activities internationally to subcontractors or to subsidiaries, distancing their production centres from their decision centres. Whatever options the firms take, those choices guide their entrepreneurial strategies and influence their management policies on production, human resources, and jobs.
The increasing involvement of financial markets in corporate governance
At the end of the 1980’s, shareholders and financial markets increased their power of influence over the management of large companies. They no longer hesitated to change the policies of the firms in which they invested, and refused to invest when the return on equity was not maximised. They thus encourage structural reforms, in particular mergers. Through the resulting economies of scale, such restructuring aims to improve the competitiveness of firms. Under certain conditions and in some sectors of activity, in particular severely affected sectors, this rationale of profitability can serve to maintain a certain level of employment; or even create new jobs via the structural reforms. It is not always on a par with the speculative financial rationale that guides certain investors.
The deregulation of the financial markets has fostered the rise of speculative investment funds (pension funds, performance funds, and mutual funds) whose aim is to make fast and substantial return on investment. Wielding their financial power, they impose short term and immediate high profitability strategies. This increases the risks of the firms becoming destabilised, and is sometimes detrimental to their subsequent development. In addition, they are often accompanied by job cuts not only at the level of firms but also at that of their subsidiaries, suppliers, and subcontractors. The frontline victims are the employees who are in the weakest positions on the labour and job market: young people, immigrants, women, and older workers.
The development of advanced information and communication technology
Advanced information and communication technology (ICT) developed to a considerable extent during the 1990’s, marking the switch to an Internet economy; enabling information from all over the world to be accessed in real time. Computer servers now make it possible to distribute a mass of encoded data in real time to all of the workstations of a firm. Production process management can be organised in real time, as can planning of labour needs.
With this new technology, the concept of time disappears and distances are also wiped out. There is no need to be physically present to work together and to coordinate the activities of the firm. Mobile telecommunications, video-communications, and laptop computing with the possibilities of interconnection with company computer systems facilitate such networking and make the various forms of distance work possible, either at home or nomadically. Computer innovations (such as, teamwork software or “groupware”) and software for decentralised workflow management, offer further technical assistance. Groupware enables dispersed teams to work together interactively on common tasks. Workflow software makes it possible to check a process from upstream to downstream, and to optimise management of information and of time. These various innovations offer the technical substrate on which to develop flexible organisation modes.
New modes of corporate management
Unstable economic markets, pressure from globalised competition, and demand (that is increasingly hard to satisfy in terms of variety, quality, and lead times) have led firms to adapt in order to accommodate this new situation. They have rethought the way they organise their work, driven by their need to be reactive and profitable, and by the aspirations of employees to gain better control over their work. This is how a new production system has come into place. Different from post-war Fordism whose goal was to increase manufacturers’ production through a marked division of work, work standardisation and series production. However, all Taylorist forms of work organisation, based on the segmentation and breakdown of tasks into individual operations, have not completely disappeared. One of the major innovations has been the introduction and then the generalisation of more flexible and demand-driven modes of managing and of organising companies.
The development of flexible organisation modes
The search for flexibility and reactivity has, in particular, developed through certain technical and organisational models: such as, lean production and networked organisation.
The principle of just-in-time or lean production is to produce the necessary output with a minimum level of stock of supplies, and to react within very short lead times to demand; be it from the instructing customer or from the end consumers. In order to increase production profitability, the idea is to produce as and when required by the customer; while minimising the costs of immobilising the products and mobilising only the resources that are necessary. No sooner produced than marketed. Cycle times are reduced, dead times are tightened, and lead times are shortened. Labour needs are calculated down to the bare minimum and contracts are adapted accordingly. Employee working times need to be compatible with the uncertainty and with the unforeseeability of demand. In certain sectors of activity (such as, the large-scale retail trade) or distance selling, employment contracts do not indicate specific working hours. Instead they merely mention timeslots of availability during which employees are “on call”.
The principles of “networked organisation” aim to replace the model in which tasks are organised sequentially with each person working separately, so as to set up teams working collectively as projects arise. At the end of the project, the teams are dissolved or can recombine for other needs. Instead of being rigidly hierarchical, the way the firm operates becomes more modular, cross-cutting, and decentralised. This flexibility makes it possible to reconcile the advantages of mass production with the advantages of customised consumption, and to propose more rapid responses to customers. Within the firms, it changes the forms of coordination and cooperation: teamwork is developing, the number of hierarchical levels is decreasing, customers and suppliers are stakeholders involved in the process of production, decision and supervision. Employee initiative, autonomy, and responsibility are seen as more worthwhile or effectively required in order to achieve performance and quality targets.
Overall customer satisfaction at the core of corporate management
Economic markets are increasingly driven by demand, rather than by supply. In addition to addressing industrial concerns, firms now have to accommodate market concerns leading them to adjust their outputs to match the fluctuations and needs of demand. To achieve this, many firms have developed “customer-oriented” strategies. The customer and customer satisfaction are placed are a key concern for companies. Active customer participation is increasingly sought after: surveys are conducted on customer tastes and preferences, customers are asked for their opinions about the quality of the services rendered to them. Customer needs are examined, and pre-empted: unrestricted access to services is facilitated for customers, and new needs and new expectations are created for them. Customers are no longer merely consumers, they are also opinion leaders for the products and services they receive and assessors of the quality of those goods and services.
Total quality approaches are now part of the promises by firms to guarantee high standards of requirement for their customers. Such approaches are based on compliance with very strict quality standards, such as ISO standards. and on setting strict frameworks for everyone’s tasks. The idea behind these approaches is to make sure the goods or services delivered to customers have characteristics that are always constant; independent of the person producing them. It is thus certified that the products coming off the production lines or that the services proposed will comply with strict specifications, compliance with which can be checked at any time. Through these approaches, everyone in the firm is committed to following formalised working methods that are defined precisely, and to accepting being monitored and inspected to ensure that they are performing those methods properly.
The introduction of new forms of organisation was originally associated with promises of improved working conditions through improved autonomy for employees, increased participation in the running of the firms, and lightened hierarchical structures. Different to Taylorist forms of work organisation, the new organisation models originally promised workers improved working conditions. They were to have greater autonomy and increased involvement in the running of firms, and hierarchical structures were to be lighter. But hopes have had to be tempered. Work has intensified under pressure from increasingly tight deadlines and throughput rates. Employees have discovered autonomy without means, and additional working constraints together with the costs of responsibility. Monitoring of work is developing, and is taking unprecedented forms through quality approaches and ICT. Finally, the boundaries between being at work and not at work are becoming increasingly blurred, making it more difficult to achieve work-life balance (ie., reconciling work, family, and social life). The tensions created by working under such conditions may result in the exposure of employees to psychosocial risks, which may, in turn, have an impact on physical, psychological and social health. See Psychosocial risks and workers health for more information on the impact on psychosocial risks on worker’s health and wellbeing, the definition of psychosocial risks, and the taxonomy of key psychosocial risks.
Intensification of work
Quite widespread across the European Union, work intensification is a predominant feature of the way work and firms are changing. It manifests itself essentially through acceleration in the speed of working, under pressure from customers, through urgent work, and through denser working time.
With the development of market rationale in industrial firms, the number of employees in direct contact with customers has increased constantly. Creation of on-line services has, in particular, contributed to this expansion by putting customers in contact with employees who process their requests, without going through intermediaries. Thus, employees are increasingly subjected not only to “conventional” production constraints (throughput rates, production standards, etc.) but also to direct pressure from demand. The speed at which they have to work is dependent not only on production targets but also, and indeed above all, on variations in demand and on customer pressure. According to the latest five-year survey by the European Foundation (Eurofound) in Dublin, the speed of working of 75% of women and of 68% of men depends on direct demand from customers, passengers, pupils, etc. Requests from customers or users are the primary factor in working speed intensification (cited by 67% of respondents), constraints of work done by colleagues come second (48%), well ahead of hierarchical supervision (38%). Lead time constraints often imposed by contact with the customer. In addition, to those imposed by production standards can be detrimental to performance of quality work. Employees can then have to grapple with contradictory requirements in attempting to satisfy as many customers as possible, while also being available and fully tuned-in to what they are saying. Concern for quality of service can be in conflict with concern for quantity or for immediate satisfaction of demand. For some workers, this situation can injure their professional pride when “doing a quick job” conflicts with the concept they have of “doing a good job”.
Flexible modes of organisation have established urgent work as an accepted fact of life. Such work has become a permanent feature and almost the norm. Whether working with a machine or with a customer, employees have to react as quickly as possible and in compliance with defined quality standards, which adds an additional pressure factor. Any lateness, malfunction, or unforeseen event then causes major disruption. In the absence of margins for action, workers are placed in a situation of overload that is difficult to cope with, as urgent jobs and pressure accumulate. Such a situation is not without its costs to employee’s physical and psychological health. According to the five-year survey by Eurofound, 60% of employees declare that they have to work to deadlines that are too tight and 58% declare that they have to work too fast.
Time pressure is not only intense, it is increasingly exerted continuously on employees. Maximum efficiency is required at all times of the day. In such modes of organisation, where times are calculated without any additional margins, slack periods are a rare occurrence. Times for taking a break and for recovering can no longer be found in the cycle of peak periods and of quiet periods. The growing density of work also manifests itself through the squeeze on lead times. In order to win new contracts, firms propose manufacturing and delivery times that are ever shorter and prices that are ever lower. It is the employees who bear the brunt of these strategies for reducing costs and lead times; and, in turn, it is up to workers to comply with the contractual commitments made to customers and that are sometimes difficult to honour.
Autonomy counterbalanced by increasingly numerous constraints
In the 1970’s, there was a strong demand from employees for greater autonomy in their work. That demand was fired by the desire of workers to have influence in their work; both in terms of doing it, but also in terms of participating in decisions made about it. That desire for autonomy was also voiced by management who wanted to foster initiative, innovation, and responsibility in employees through new managerial strategies: for example, fewer instructions given by superiors on how to do tasks, workers encouraged to sort out incidents and malfunctions by themselves, and workers given possibilities of changing the lead times set, and so on. Such managerial reforms were part of a larger trend; that of transforming employees into entrepreneurs individually responsible for the assignments that are entrusted to them.
In spite of the emphasis being put on developing procedural autonomy (i.e. choosing how to work), the progress achieved was limited; and a return to greater control was observed in the early 2000s. Although employees are increasingly autonomous in carrying out their work, they are at the same time, subjected to more constraints. The screw has been turned as regards performance targets that the employees are expected to reach, and work speed and time pressure have increased. By limiting the ways work can be done quickly, work intensification has reduced actual autonomy. Quality control standards have further eroded autonomy; making autonomy a controlled autonomy, serving to reconcile mobilisation of employee initiative and creativity with managerial control.
At the same time, autonomy has been accompanied with the individualisation of work. It is the worker who has to bear the burden of responsibility for the work, with little means being allocated by the organisation for succeeding in his or her new assignments. The obligation to achieve results is looming ever larger, while the resources given to the employees are rarely up to the results called for by the firm. Collective labour associations are not able to support employees. Increasingly transient in the flexible organisation models, such associations are themselves weakened. The speed of change and priorities in the firm jeopardise construction of genuine autonomy. Employees often find they are alone in coping with the blurred zones they encounter in their assignments. As potential consequence to the autonomy granted to employees, can be they may be held individually liable for performance of their work and for the results thereof. As shown by the French survey on working conditions, sanctions can be sudden and tough when results are not up to expectations. In 2005, 55% of French employees questioned for that survey declared that a mistake in their work could result in sanctions being taken against them.
Reinforced monitoring of work
Even though new forms of work organisation give preference to autonomy and responsibility at work, employees are increasingly inspected, monitored, and assessed. Such monitoring relates not only to optimisation of resources, but also to customer satisfaction and to compliance with quality standards. At the same time, the spectrum of forms of monitoring is broadening.
ICT is playing a leading part in these new forms of work organisation. Thanks to information systems, ICT makes it possible to collect and to analyse a large quantity of information on the way in which workers are carrying out their tasks. Speed of performance, response time for responding to a customer request, and achievement of performance targets are recorded and transformed into a battery of indicators on the performance of each employee. Today, few employees escape such individual monitoring and inspection. This can put workers in an unprecedented situation of surveillance and dependence. Most sectors are concerned, and in particular service sectors. Especially call centres where we have reached hitherto unparalleled precision in the measurement.
Individual assessment, when it is combined with management by targets, can give rise to generalised competition between workers. Mistrust, conflicts, and even unfair behaviour between employees can become generalised and can transform and impact social relationships at work. Social solidarity and the ability to get along with one another can be jeopardised by such tension.
Similarly, quality approaches reinforce the specified and individualised nature of work. They constrain employees to adopt standardised and homogeneous working procedures, regardless of the characteristics of the working situations. They rigidify the occupational practices of the employees by setting formal frameworks for them. These approaches can also bring workers to face certain dilemmas: for example, should an unforeseen event occur, it may be up to the employees to decide between departing from a procedure, so as to get around a problem in the production line, or complying with the specified instructions at the risk of not guaranteeing continuity of workflow. Having to choose between such contradictory requirements does not fail to give rise to situations of tension, in which the employees are very often alone.
Encroachment of working time into other living time
With flexible organisation modes, working time is also becoming more elastic. Working hours are adapted to new production throughput rates, and to easier access to services for customers. More split, irregular, and unpredictable than ever working hours are also spread over wider ranges of time. Thus, working time encroaches more easily into personal time:
- Unrestricted availability required of executives can lead to frequent overtime and extended availability, in particular by using mobile technologies shifting work from dedicated work areas. Work then invades the personal sphere.
- Odd or time shifted hours mean employees are out of phase with family and social life. Similarly, working on call complicates any organisation of private life.
This intrusion of working time into other living time makes it difficult to find work-life balance, that is reconciling life at work and life not at work. However, not all employees are confronted equally with such time tensions. Type of occupation and margin of autonomy have an influence, but it is above all the family situation and the distribution of roles by gender in society that give rise to major differences between men and women in this regard. In general, it is women who most frequently have to make choices against their private and social activities. They may also have to give up to some extent their careers and their financial independence.
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Links for further reading
EU-OSHA – European Agency for Safety and Health at Work, Expert forecast on emerging risks related to occupational safety and health, Office for Official Publications of the European Communities, Luxembourg, 2007. Available at: http://osha.europa.eu/en/publications/reports/7807118
Leka, S., Hassard, J., Jain, A., Makrinov, N., Cox, T., Kortum, E., Ertel, M., Hallsten, L., Iavicoli, S., Lindstrom, K., and Zwetsloot, G., SALTSA: Towards the development of a European Framework for Psychosocial Risk Management at the Workplace, I-WHO publications, Nottingham, 2008. Available at: http://prima-ef.org/prereport.aspx