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Outsourcing: The Evolution of Irresponsibility

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Beginning in the 1970's, picking up steam in the 1980's and increasing its stranglehold in the 1990's, the notion that the management of an organization can displace responsibility for its failures to the backs of outside contractors continues to this very day: today we call it outsourcing, or by its even more obtuse label, "globalization."

 

How could anyone equate irresponsibility with "globalization?"  Like many corporate foot soldiers in the blogosphere, I have, over a twenty-two year period, survived at least a dozen reorganizations with and without corporate takeovers.  As an IT technical knowledge worker, I have had serious "skin in the game" working with corporate consultants, IT and otherwise, during most of my tenure.  Once one understands the use and abuse of outside consultancies by organizations during the 1970's and 1980's, the dark cynicism of "outsourcing" and "globalization" begins to resemble a labor force version of the "credit default swaps" that the reliance on outside consultancy practices, in fact, are.

 

The notion of outside consultancies began innocently enough: a governing board or chief executive would be handed responsibility for the remediation of an intractable problem within an organization.  Over time, this problem, or cluster of problems, could well have ended the careers of a string of chief executives within a particular organization.  Eventually the problem or problems attracts the attention of higher and higher levels of authority until the organization goes out of business, resolves the issues or figures out how to live with the problem(s) as best it can.

 

Typically, although not always, these intractable problems are directly related to a middle management layer that has become larger and/or more powerful than is necessary for that layer to discharge its normal tactical duties.  The strategic and tactical layers of management next begin the process of "cold war," that over the years spawns any number of "hot" battles throughout the organization as the situation becomes increasingly difficult to "manage," or simply ignore.  In these situations, employees are always caught in the middle between warring factions and are frequently used as pawns with and without their full and complete knowledge.  But the bottom line is that the organization cannot resolve its problems through normal channels.  The astute manager, usually operating under some form of "honeymoon" period, will hire an outside consultant to provide an "assessment" with recommendations.

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Assuming that the outside consultant and the chief executive are truly operating an above-board relationship, the outside consultant produces a report with recommendations that resemble some version of a viable action plan in concert with the organizational changes the chief executive would be willing to make.  More often than not, another consultant is hired when the first consultant's recommendations end up being "shelved," or otherwise adjudicated as "untenable."

 

Notice at this point in the evolution of this intractable problem, we have begun the process of transferring responsibility for what began as a management problem to one or more outside consultants.  In this generalization, what we see happening is the systematic removal of responsibility from the chief executive, or manager's, shoulders to the shoulders of an outside consultancy.  In effect, the chief executive has sold his "debt" to the organization to a consultant willing and able to purchase said debt, as well as shoulder the burden of the risk of the debt should it ever become, "due and payable."  The calling-in of this "debt" can take place at any time and in any number of ways, but the most common form of "calling in the debt" for this swapping of responsibility is a political row between the chief executive and his or her governing board, or higher level of management.  Under pressure, the outside consultancy takes the "hit" to its reputation and absorbs the political flak that unresolved organizational problems generally entails.

 

Also notice that while the problem has not been resolved to anyone's satisfaction, the chief executive or manager has bought an enormous amount of time for him or herself and managed to collect a huge paycheck in the process.  Perhaps said manager or executive has found a way to make themselves valuable to the organization in other ways to stem the flow of "blood" that intractable organizational problems always cause.

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This swapping of responsibility took place throughout the 1970's and 1980's until it became a bona-fide economy unto itself.  Beginning in the 1990's, this new economy was finally repackaged as "outsourcing."  Have an intractable management problem in need of a solution?  No problem!  If it can be localized to a section of your organization's infrastructure we will "materialize" a resolution to that problem and turn a profit while doing so!

 

Just as credit default swaps (CDF's) resulted in the economic collapse each of us is only now beginning to recognize the depth of, outsourcing is only now becoming recognized for the hoodwinking that it actually represents.  For while we have packaged a resolution to any number of intractable organizational and management problems and sold them to someone else through a seemingly legitimate process, we have only changed the form of the problem.  We have converted, through smoke and mirrors, a management problem into what is now a labor problem.  Clever, no?  Once again, management problems are repackaged as problems with line labor, usually in the form of "compensation," and precious little responsibility falls at the origin of the problem: a bloated, or overly powerful, middle management layer within the organization.

But it would be unfair to lay all blame at the feet of middle managers or line employees.  Even some chief executives are only responding to political pressure to get things done with fewer and fewer resources upon which they can draw.  Indeed, some employees can so fireproof their positions within an organization that no manager or chief executive can hope to control or contain these (usually) long-term employees in a rapidly changing economic and political environment.  So where is the actual point of origin of this outsourcing conundrum?

 

A rapidly changing labor environment, of course.  The vast majority of the increases in productivity upon which the boom of the 1990's was built came from the business use and abuse of advances in information technology.  From 1975 through the early 1990's, the cost of processing information for all organizations able to capitalize on this (then) new technology decreased well over 150,000%.  Anthropologists and historians have written volumes about the impact of the wheel, fire or even the printing press on the culture or economy of civilizations but there has never been a technological advance, before or since, that can hope to rival the economic, cultural or even the political impact of the personal computer and the advent of the world wide web (WWW).  The reduced cost of processing information over time has, in fact, created a vacuum so intense that not only have whole careers been pulled into shreds and scattered to the four winds, but also this process has done it all in less than twenty years.  So even while a child may grow up and in and around personal computers for the first twenty years of their lives, it has now become possible for that child-turned young adult to enter the job market about as prepared to economically compete as a modern steel worker.  The difference is that steel work had a long and proud 130-year history than spanned multiple generations and involved many thousands of families both in the United States and abroad.  Information technology work – not so much.

 

The net impact of the enormous increase in productivity of the American, and the global, labor force has been a net shrinkage in the number of professionals required to staff a viable and competitive business organization.  To compete with younger, leaner organizations, the older organizations who automated their business operations prior to the advent of the personal computer and the WWW have had to shed jobs and embark upon a course of endless reorganization and "downsizing" that must ultimately lead to economic failure.  The value of human resources within an organization can become so deprecated by the economic vacuum of a massively productive labor force that valuable employees and intellectual capital flee the constant turmoil of a large organization that cannot keep up with an accelerating marketplace.  At the same time, the individuals responsible for deciding whose jobs must stay and whose must be eliminated have always been some layer of management – and always somewhere between the tactical and strategic layers of management.  Of course, when the fox is placed in charge of the "henhouse," it is the farmer who will ultimately be run out of business.  The collapse caused by the economic vacuum of unimaginable productivity gains is, in fact, forcing formerly strategic managers into the purely tactical roles that they might not wish to quickly embrace.  Who could blame an executive who has fought their way to the top of the executive heap only to discover that they are now back at the bottom of the management totem pole doing essentially tactical work.

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So where is the irresponsibility of globalization and outsourcing to be placed if no one entity can be co-located with the source of the problem?

Since we have a net push with respect to all forms of labor within the organization, we have to look beyond the management and labor that populate the modern organization and fix our gaze squarely on those creative geniuses that have invented whole economies where, in effect, no real work is ever accomplished.  Creative geniuses whose raison d'etre has been to become something between a banker and a street urchin playing Five-Card Monty.  These arbitraging mad dogs are where we need to look to co-locate the source of, and the solution to, the irresponsible outcomes we are presently living with and through in these very turbulent and economically vicious times.

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Award winning poet, writer and refugee from the educational testing industry. Richard agitates, supports and motivates activists of all kinds, the most well-known being Cindy Sheehan. Web developer and designer by day, writer by night, Richard has (more...)
 

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