Managerial practices and implications for the shop-floor culture – a call centre in the UK insurance industry
We begin this book with several facts. There are widespread differences in managerial practices across firms, across establishments within firms, and across countries. Comparing across countries, in recent years, productivity has been higher in the U.S. than in many European countries, and some of these productivity differences appear to be attributable to differences in managerial practices. Comparing across firms, even when firms or establishments produce products that are nearly identical, the management practices of these firms can differ widely. These differences in management practices are likely to result in differences in productivity. Many studies show that when firms adopt a set of ‘best practices,’ the productivity of the establishment often rises. Of course, the “best practices” for one firm need not be best practices for other firms. However, studies show that when we compare the performance of establishments that are very similar, such as performance of establishments in narrowly defined fairly homogeneous industries, best practices raise the performance of the establishments. Yet, these same establishments do not all adopt best practices.
These “facts” lead to questions. What makes some innovative management practices especially effective? Why do some firms adopt new practices and some do not? Do the institutional rules and regulations that are often specific to countries play a role in the adoption or success of innovative management practices?
And given the fact that multinational firms operating across country boundaries are often guiding the adoption of management practices, what can we learn about the effectiveness and adoption of these practices by looking within multinational firms? What can such a study of best practices in multinational firms tell us about the optimal management of such firms? Nevertheless, we will be looking at the shop-floor culture – a call centre in the UK insurance industry as a case study.
Today, a rapidly growing form of work organisation in the industrialised part of the world is the call centre. This paper defines the call centre to be a separate building constructed in order to offer direct line services, meaning interactions with customers through computer-telephony links. The call centre organisation is relatively flat, and usually consists of a huge group of telephone operators (agents), some “teamleaders”, and a small team of senior managers. The internal labour processes may therefore differ from the parent organisations. This means that the phenomenon could be studied separately as an organisational grouping within the organisation.
Recently business insiders, and the public press, have criticised the managerial practices for being top-down oriented, leading to a factory-like shop floor culture. Ingredients mentioned are tight managerial control, both electronic through (monitoring) and manual through (“teamleaders”), and high intensification of the pace of work in search for capital gain.
Tentative case example; Guardian Direct (GD) Insurance
The GD was established in 1994 by the big UK insurance firm GRE. The GD site in Colchester was the company’s first attempt to consolidate the direct sale operation into a regional centre. This was quite late compared to other big corporations operating in the financial service sector.
The insurance industry has three main categories of activity: 1)life insurance (long term), 2)general or non-life insurance and 3)reinsurance. GRE is a composite insurer dealing both life and general insurance products. The insurance industry is based in the rich countries with over 80 per cent of the global market dominated by the seven leading industrial nations. Over recent years, other market locations have emerged. (Poynter and Waddington, 1997). The GD-operation can be seen as a part of a new business approach constituted by the leadership in GRE which started as a restructuring program in the beginning of the 90’s. This new business strategy can be summarised as follows:
Delayering: a)reducing middle level management b)cutting staff level between 1994-97 by approximately 2,500
New leadership: new executive director and new executive management team recruited, mainly from outside the company
Centralising: reducing the number of branches; concentration into regional centres. Rationalisation and restructuring of its domestic UK companies
“Towards customer”: concentrating on the development of a new customer orientation to expand the general insurance area, and the life side of the business
Technology: a)using technologies to replace “old branch administrative system” b)developing technology-driven distribution channels – direct sales; an important contributor to increased competition in the general insurance area
New markets: expansion of its overseas activities (60 % of GRE’s life insurance income was derived from overseas by 1995)
Table 4: Source: Poynter and Waddington (1997); summarised into a table by the author
This new business profile arguably was an attempt to compensate for problems facing the GRE in the beginning of the 90’s. According to Poynter and Waddington, the life insurance business within GRE suffered from poor investment decisions and from being to small relatively to other companies operating in the sector. The so-called 1990 recession hit GRE badly, which revealed a number of problems caused by the external market developments and also internal weaknesses. One of these external factors was arguably increased competition in general insurance caused by direct selling. Two internal weaknesses were i)use of inefficient technologies, and ii)inadequate management systems for monitoring performance in different product markets.(Poynter and Paddington, 1997: 8). In fact, by establishing GD in Colchester (and in other sites), the company wanted to build a new cultural outlook and simultaneously strengthen the internal weaknesses. Another point, taken from the Poynter and Waddington report, is that the GD operations are no-go areas for the GRE labour union. This probably has been an obstacle for eventually worker resistance activities and a reason for high labour turnover according to the union.
Location: Colchester (a small town 1,5 hour north of London)
Parent company: GRE
Main activities: Handle calls from customers/consumers; four types of calls: 1) Sales
2) Services (for example customer changes such as car, address etc.)
3) Claims (notification, technical)
Opening hours: Monday to Friday 08.00-21.00; Saturday 09.00-16.00
Number of employees pr. January 1998: 426
Pay system: Progression through the salary scales is based on individual performance
Shift premiums: None
Bonuses and profit-related pay: Non-pensionable bonus worth 10-15 % of salary can be earned for exceptional performance
The evidence is taken from in-depth interviews with two senior managers; manager 1 and manager 2. They were both interviewed at the same time during a visit June 8 1998. In addition, manager 1 showed the call centres environment. We were observing the workers doing their jobs. He told how they had organised and constructed the working environment. Later, two more interviews were done; one by using the e-mail, the other was done over fax.
Manager 1 was an IT expert. He was employed directly to join the GD management team in July 1994 and came to help the GD to “get most out of its technology”. Manager 2 was a human resource director. He was moved from the GRE’s head-office in Ipswich at Christmas 1993, after 21 years in the GRE insurance. He joined the management team of executives to help the GD to “get the right people and get the most out of them”. These two joined a managerial team, which was given the responsibility for the GD establishment in Colchester.
Aims and objectives:
To assess the validity of the call centre critique, Braverman’s critique of Taylorism was preferred as a theoretical framework. Three of his main arguments limited a boundary of analyses to:
1) Separation of conception and execution
2) Fragmentation into a series of simple and repetitive tasks
3) Tight direct control over the shop-floor labour force
In addition, the paper aimed to study theoretical issues highlighted within a Post-Braverman shool. The paper evaluates intensification of outputs within services in general, and discusses common Post-Braverman views such as “internalisation of Taylorism” within services and the relevance of “emotional labour”.
In spite of the lack of data material, the research highlighted some interesting findings. The data material suggested some links, but also several differences to Braverman’s critique of Taylorism.
Monitoring and reading of statistics as an extended form of time-and-motion studies.
Training period’ as a separation of conception of execution. The managers stated that they knew, by recording calls and by reading statistics, approximately 80 per cent of the content of the incoming calls. The managers therefore agreed in how customer inquiries should be answered in relation to the overall goal, which was to sell as many inquiries as possible. As a result, responsible autonomy among the telephone operators at the shop floor became limited.
Automation, for example through the so-called ACD-system (Automatic Call Distribution System) which enabled fragmentation of worker tasks into a series of repetitive and simple procedures. Arguably, the telephone operators could make sophisticated records about customers only by being nice over the phone and by touching a few buttons on the computer.
Use of “teamleaders” on the shop floor, which in some ways gave control over the shop floor activities.
Self-monitoring. The telephone operators were given the responsibility to study their own statistics. They could arguably then learn from their own mistakes.
Worker resistance, which forced the managers to re-evaluate the so-called blame culture. The most visible example of worker resistance was the high turnover rates.
The majority of women on the shop floor. An example of patriarchal relations, rather than de-skilling and control identified in a Braverman-like ideology?
The open-plan office facilitated control between the shop-floor workers with only passive managerial interventions. One example was competitions arranged between both teams and individuals. Status-lists of the best seller of the week etc. could be seen as a reasonable reason for such competitions. The competition seemed to be an obstacle for sharing of knowledge and undermined a learning culture. Such observations made it reasonable to suggest that there existed a gap between the managerial rhetoric, which argued that the call centre was a “learning organisation”, and what was actually going on at the shop floor. However, the worker-worker control suggested a different labour process compared to the manager-worker relations suggested by Braverman.
Work in teams. The observations suggest that this did not work out very efficiently. The telephone operators were too occupied with answering phones, which forced them to turn their faces towards their screens. Accordingly, much of the positive teamwork seemed to get lost.
In relation more current Post-Braverman literature, the paper discuss some interesting findings in a separate section. This section has to be reviewed and will be delivered at the conference in London in the end of March.
The paper concludes that there existed gaps between the managerial rhetoric and what was actually going on at the shop floor. However, the managerial rhetoric should be taken seriously. The data material suggested that they were forced to create a multi-skilled environment. This program consisted of increased (i.e. discussion forums with senior managers) and more responsible autonomy among the telephone operators so that the high turnover rates could be avoided. Such actions indicate that running an organisation today by implementing a “classic” Taylorist rationale might lead to problems of developing a high quality labour force. Therefore, this paper suggests that the managerial procedures in relation to call centres tries to distance itself away from the “big brother” culture. This was different from what business insiders and the UK press recently had argued.
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 Life insurance covers pensions, annuities and permanent health insurance; general insurance covers the assets of individuals and businesses and reinsurance is the “insurance of the insurers”, the wholesale side of the industry (Poynter and Waddington, 1997: 7).
 Particularly S:E Asia (South Korea and Taiwan) and South Africa, but also Eastern Europe, and Latin- and South America.
 GD now has sites, a part from Colchester, in Darlington, Watford and Hitchen.
 At the end of 1997 GD had 837,000 policyholders and from this they expect about 2,000,000 calls only on customer service.