Why does our service economy offer such bad service?

How do you get a call centre to do anything for you that involves change, or taking responsibility? Robert Skidelsky and Nan Craig on the downsides of our overdependence on a service economy.

Britain is a service economy with a lot of lousy services. The paradox is easily explainable. Service and cost-cutting are contradictions in terms. Good services are intrinsically expensive because they require a high ratio of labour to product; hence the old view that services could not be automated. Yet the main aim of those who run our service economy is to cut the costs represented by human labour as much and as fast as they can.
 
The view that services are automationproof has been disproved. Think of the labour-saving devices in the home – vacuum cleaners, washing machines, dishwashers – that have reduced the burden of domestic drudgery and created leisure time that in the past only the rich enjoyed. Think of cash dispensers, of online shopping. In all these cases, machines provide the services that people once did – and usually more conveniently.
 
On the other hand, think of call centres, which offer services according to automated formulae. In this case, it is not that people are being replaced by machines but that they are being programmed to act like machines. This enables them to process a greater number of calls per unit of time.
 
Recently, NHS Direct announced that it will pull out of contracts to deliver the new NHS 111 helpline. The details are complicated but the gist is that contracts to run the helpline have been awarded by competitive tender, with bidders offering the service at the lowest cost. Cost reduction is secured by reducing the number of doctors and nurses per operator, with operators relying on callcentre scripts and algorithms to process calls: exactly the opposite of what most people think of as a good service. Andy Burnham, the shadow health secretary, has spoken of nurses being replaced by computers and of an urgent need “to get more clinicians back in the front line handling calls”. He is right.
 
Try changing your mobile telephone provider, reporting a lost credit card or making almost any attempt to contact your bank, and you are likely to enter a Kafkaesque world of customer frustration. The recent attempt by our office to upgrade a phone package is a case in point. We were moved back and forth between the old supplier, the new supplier and the delivery service, none of which seemed to have the faintest idea what the others were doing.
 
What distinguishes services that can be automated successfully from those that can’t? The answer is the nature of the need: the less complicated the need, the more efficiently it can be satisfied without human intervention. The economist William Baumol identified services that resisted commodification, for whichthe human touch was essential and quality was correlated with the amount of human labour dedicated to their production. He gave the performing arts as an example, but the analysis can be extended to such services as teaching and medical care.
 
Amazon, for instance, works well when it allows people to order, quickly and conveniently, an item that they already want. Its recommendation system, however, is based on algorithms rather than the knowledge and intuition of a good bookseller. That is why bestsellers sell more and everything else sells less. Automated services fit and thereby create products that can be standardised, because an automated system can’t cope with anything else.
 
In the rich countries of the west – in some more than others – personal service has fallen victim to a kind of Fordism or its successor, scientific management, which dissects tasks into tiny individual units. Scientific management, developed by the American mechanical engineer Frederick Winslow Taylor in the late 19th century, is the foundation of modern techniques such as the use of strict call-centre scripts, which aim to create algorithms that automate the human element of work as much as possible.
 
Adam Smith foresaw this development in manufacturing 250 years ago.He gave the example of the pin factory, in which “the important business of making a pin is . . . divided into about 18 distinct operations, which, in some manufactories, are all performed by distinct hands”. The result of this “division of labour” was a tremendous increase in the productivity of the factory.
 
Cost-cutting in services proceeds by a false analogy with the pin factory. In all services that can be automated, part of every process is delegated to a team that inhabits a separate silo. No team is able to carry out more than its tiny element of the process; as a result, from the first moment you contact a company, you have to choose which team to talk to (“Press one if you are a business customer; press two if you are a personal customer; press three if you wish you were dead”).
 
Then, if you have a query that is even slightly complicated, at least the first three people you speak to will probably not be able to help. No one has an overview of how the whole thing works and no one has any power to cut through the undergrowth, because each person is in control of only a tiny patch of the service. As no one person or team knows what anyone else does or who any of the customers is, all information has to be stored centrally; if something is “not in the system” or if the system has broken down, it’s a dead end.
 
As the call-centre worker has never met you before, he or she will have little sympathy and no relationship to draw on; because they will almost certainly never speak to you again, there is no incentive for them to be helpful if your problem can’t be fixed within the formula. From their perspective, they are having to deal with customers who are irate because of events that the service provider has no control over and no responsibility for.
 
As ever, there are people with a sense of service, but whose hands are tied by the architecture of the system that they inhabit. There are also, inevitably, a few people who hate customers and are terrible at their job. They suit the system well because they are never required to be innovatively helpful and, if something goes beyond their remit, they can happily transfer you to someone else or simply tell you that what you want is impossible and ring off.
 
Eventually, someone at one of the call centres we contacted in our efforts to upgrade our telephone agreed that the system does not work very well. He sounded unhappy about it but said, “That’s the way the world works.” He is almost right. That is now how much of the world works. It hasn’t worked this way for long but it is no longer possible to imagine a world in which contacting any large company by telephone would not involve speaking to a different person every time you called.
 
No one is made happier by the system except, perhaps, the owners of the cost-cutting companies, who can pay for properly personal services for themselves out of hugely enhanced profits. As the cost of idiosyncracy rises, what used to be thought of as personal services can be afforded only by the rich. The so-called concierge services make a great play of being adapted to individual requirements. Yet, like the “bespoke” tailors of old, they mainly serve the rich. If you have £100,000 on deposit, your bank gives you a “premium account manager”; if you don’t, you go through the call-centre system.
 
Beyond the nightmare for the consumer is the nightmare for the producer. Smith rightly understood that the division of labour, though good for productivity, was degrading for the worker. The effect on the “hands” of knowing nothing about the manufacture of pins except what was required for their specific tasks was, he said, to make them “as stupid and ignorant as it is possible for a human creature to become”.
 
The same deskilling effect operates in the service economy. It has been suggested that part of the problem with call centres is that the people who staff them are uneducated and badly trained. However, the problem is that the system in which they work prevents them from taking responsibility for their products. Taking away the ability of a callcentre worker to help people doesn’t just frustrate the caller but destroys the satisfaction that comes from solving someone’s problem. It’s the deprivation of this satisfaction that makes the work of the operator both boring and emotionally stressful, rather than something that has an intrinsic motivation. The call-centre operator is a contemporary example of the artisan deprived of the pleasure of workmanship.
 
There is an even more dire implication. If profit maximisation requires human beings with machine-like qualities, why not get rid of the people altogether? Machines don’t need wages. Call centres, like factories, will soon be staffed entirely by machines; all checkout services at supermarkets will also be done by machines; the specialist knowledge of taxi drivers will be replaced by satnav; there will eventually be driverless cars. Machines will “talk” to each other. Except for a few specialists to make and fine-tune the machines and others to meet the continued demand of the wealthy for personal services, the human race will no longer be required for work. It will have to find something else to do.
 
Robert Skidelsky is a cross-bench peer and emeritus professor of political economy at the University of Warwick Nan Craig is the publications director of the Centre for Global Studies.
Artwork by Nick Hayes.

This article first appeared in the 26 August 2013 issue of the New Statesman, How the dream died

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Pity the Premier League – so much money can get you into all sorts of bother

You’ve got to feel sorry for our top teams. It's hard work, maintaining their brand.

I had lunch with an old girlfriend last week. Not old, exactly, just a young woman of 58, and not a girlfriend as such – though I have loads of female friends; just someone I knew as a girl on our estate in Cumbria when she was growing up and I was friendly with her family.

She was one of many kind, caring people from my past who wrote to me after my wife died in February, inviting me to lunch, cheer up the poor old soul. Which I’ve not been. So frightfully busy.

I never got round to lunch till last week.

She succeeded in her own career, became pretty well known, but not as well off financially as her husband, who is some sort of City whizz.

I visited her large house in the best part of Mayfair, and, over lunch, heard about their big estate in the West Country and their pile in Majorca, finding it hard to take my mind back to the weedy, runny-nosed little girl I knew when she was ten.

Their three homes employ 25 staff in total. Which means there are often some sort of staff problems.

How awful, I do feel sorry for you, must be terrible. It’s not easy having money, I said, managing somehow to keep back the fake tears.

Afterwards, I thought about our richest football teams – Man City, Man United and Chelsea. It’s not easy being rich like them, either.

In football, there are three reasons you have to spend the money. First of all, because you can. You have untold wealth, so you gobble up possessions regardless of the cost, and regardless of the fact that, as at Man United, you already have six other superstars playing in roughly the same position. You pay over the odds, as with Pogba, who is the most expensive player in the world, even though any halfwit knows that Messi and Ronaldo are infinitely more valuable. It leads to endless stresses and strains and poor old Wayne sitting on the bench.

Obviously, you are hoping to make the team better, and at the same time have the luxury of a whole top-class team sitting waiting on the bench, who would be desired by every other club in Europe. But the second reason you spend so wildly is the desire to stop your rivals buying the same players. It’s a spoiler tactic.

Third, there’s a very modern and stressful element to being rich in football, and that’s the need to feed the brand. Real Madrid began it ten years or so ago with their annual purchase of a galáctico. You have to refresh the team with a star name regularly, whatever the cost, if you want to keep the fans happy and sell even more shirts round the world each year.

You also need to attract PROUD SUPPLIERS OF LAV PAPER TO MAN CITY or OFFICIAL PROVIDER OF BABY BOTTLES TO MAN UNITED or PARTNERS WITH CHELSEA IN SUGARY DRINK. These suppliers pay a fortune to have their product associated with a famous Premier League club – and the club knows that, to keep up the interest, they must have yet another exciting £100m star lined up for each new season.

So, you can see what strains and stresses having mega money gets them into, trying to balance all these needs and desires. The manager will get the blame in the end when things start to go badly on the pitch, despite having had to accommodate some players he probably never craved. If you’re rich in football, or in most other walks in life, you have to show it, have all the required possessions, otherwise what’s the point of being rich?

One reason why Leicester did so well last season was that they had no money. This forced them to bond and work hard, make do with cheapo players, none of them rubbish, but none the sort of galáctico a super-Prem club would bother with.

Leicester won’t repeat that trick this year. It was a one-off. On the whole, the £100m player is better than the £10m player. The rich clubs will always come good. But having an enormous staff, at any level, is all such a worry for the rich. You have to feel sorry . . .

Hunter Davies’s “The Beatles Book” is published by Ebury

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories