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Donkin on Work - Work Futures

March 2007 - Who wants to be a commodity?

You are unique. I don’t need to outline the fundamentals of Darwin’s theory of evolution to find agreement here. It is, as Jane Austen once wrote when making a far more pointed observation about single men with money, “a truth that is universally acknowledged.”

But you may be forgiven when looking at your daily workload if there are times when you consider yourself less than unique. This is because most of us, even those who are working in what we believe to be high level technical jobs, are facing a constant competitive urge within our industries to commoditise.

Commoditisation has been one of the most significant influences on the development of working practices for centuries. Arguably, it was the force that drove the industrial revolution as factory-based machines, operated by semi-skilled workers, undermined the relative prosperity that had been enjoyed by craft-based artisan weavers and croppers.

It happened again in engineering when Frederick Winslow Taylor distilled work in to its constituent parts to break down the artisan monopoly enjoyed by lathe makers.

Now these same processes are transforming the white collar industries as technological innovation and the proliferation of standard operating procedures erode the once marketable skills and pay rates enjoyed by information technology and other knowledge workers.

Once an IT job becomes replicable in all its forms, then it can be transferred to a part of the world where there are people willing and able to do it more cheaply. In some cases jobs are automated. How many software packages, for example, have circumvented the need to write pages of HTML code?

Andrew Holmes, an author, It professional and a founding partner of a management consultancy called Paricint, believes that few areas of work are safe from the forces of commoditisation. “Even project management can be boiled down in to processes that leave companies competing on price,” he says.

“At one time it had a bit of mystery to it and not everyone could do it. But as soon as the work becomes codified and made more transparent it becomes sensitive to price and pay rates start to fall.”

His choice of language is interesting because the word “mystery” derives from the Latin word, misterium, that referred to a professional skill and was once used as an alternative word for a guild. It was the guild system in medieval times that governed and protected many forms of skilled work.

Some this protection was condemned as restrictive practices. On the other hand, through long apprenticeships, guilds did ensure a dedicated line of progression from journeyman to craftsman. Excellence was achieved through commitment and through learning passed on by the existing masters of their craft.

Some of these masters differentiated themselves within their craft. If you bought a piece of furniture made by Robert Thompson, a Yorkshire-born woodworker, who specialised in oak furniture and panelling, you would have found a little wooden mouse carved in to the finished piece. The Kilburn-based workshop he founded maintains the tradition today but even here there has been some commoditisation because the mouse is now carved by various craftspeople.

The mouse has become a trademark and like all the best trademarks or brands, it is supposed to stand for something. Thompson was part of the English arts and crafts movement that flourished across Europe and the US in the late 19th and early 20th centuries where practitioners consciously rejected the forces of mass production.

These forces - mechanisation, the factory system, the development of interchangeable parts and management processes such as work study, moving assembly and divisional administration - transformed society, making thousands of goods accessible to an ever broadening marketplace.

But for all the good it achieved, commoditisation and all that it represented, had a negative influence once fulfilling work that had been intrinsically rewarding into cheerless, repetitive jobs in which the very language of work became associated with something no longer desirable.

In a forthcoming book, Commoditization and the Strategic Response, to be published by Gower later this year, Mr Holmes portrays a future of commoditisation that through technological advance and process development will not only continue to eliminate low level work but will have soon worked its way through the mid-level tiers and in to higher level employment.

He forecasts “the emergence of the extreme worker at one end and the disenfranchised jobber at the other and the inevitable rise of a wider labour war which will no longer be focused on just the most talented in the workforce.”

These forces, he believes, could lead to a widening gap between winners and losers within the workplace creating implications for health and well being, even for some apparent winners since their skills will be so much in demand that they will have little time to enjoy the financial rewards attached to their work.

What kind of jobs will be safe in an increasingly commoditised society? Well, not that many, it seems, and certainly not those in management. He notes that one of India’s largest information technology companies, Infosys Technologies, based in Bangalore, pays its chairman and chief executive salaries of about $100,000 each and their highest performing executive about $250,000.

“Not bad,” he writes, “But when you consider that Accenture pays their top executive $6.1m and EDS $8.7m and their share prices are doing significantly worse than Infosys one has to ask: where is the return on management?

“There are those that believe that firms such as EDS and Accenture could save as much by sending 100 top management positions to India as by eliminating 10,000 staff.”

Whether this would actually happen is a different matter, he writes. I would agree. The generals, governments and ruling royal families could have fought out the First World War between themselves with pistols at dawn. But this is not the system of self-preservation and conquest favoured by elites.

Unfortunately elites have a poor record of intervention when faced with commoditisation, other than to ring fence their own interests even as they sacrifice those of their employees in the struggle to maintain competitiveness.

Mr Holmes warns of dangers inherent in what he calls a “vicious cycle” of lower prices supported by low-wage polices that must beat a benchmark “China price” representing the cost of labour in emerging economies.

He writes: “In the late 1960s the biggest employer in the United States was General Motors and they paid their staff on average $29,000 (in today’s terms) together with generous pension contributions, healthcare and other benefits. Today Wal-Mart is the biggest employer and they pay their staff $17,000 on average with few if any benefits.”

This forces Wal-Mart employees to shop at the company’s own stores or those of other retailers who chase the lowest cost option. The “China price” influence is spreading elsewhere as China and India move in to high-technology and high-skilled sectors. “Having spent two decades hollowing out the West’s manufacturing industry, China now wants to spend the next two moving from “made in China”, to “invented in China,” writes Mr Holmes.

The upshot could be a return to protectionism that may preserve incomes for a while. Bt could it succeed those industries built around the internet which has demonstrated an ability to defy national intervention.

In time I believe that globalisation and increasing wealth in emerging economies will create the tide that “lifts all boats” once more across labour markets. But in the interim it is important that individuals do as much as they can to differentiate themselves, either through multi-skilling, the development of ultra niche services, personal branding or the honing of a rare talent. If differentiation can work for companies it can work for people too.

See also one of my previous columns: Workers find their voice on the internet

©2006 Richard Donkin - all rights reserved