Monthly Memos

Corporate Dilemma:
Too Much Fat vs. Too Little Meat

Charles I. Mundale
Executive Director of MCCR

May 1994

There wasn't much good news at this year's Stakeholder Dialogue, an annual evening for thought sponsored by the Koch Chair in Business Ethics at the University of St. Thomas and co-sponsored by MCCR. But Juliet Schor, this year's principal speaker and author of The Overworked American, did make one observation that holds out a glimmer of hope. "We are by now well aware of the costs of too much managerial fat," she said, "but we are only beginning to realize the costs of overworking those who remain on the job." Those costs are now showing up as stress (at home and on the job), low morale, weakened job commitment, insecurity, growing distrust, and shrinking loyalty all connect to the bottom line.

Unfortunately, they tend to evade detection by standard accounting practices, so we must rely on insight and common sense to make the connection, and these are seldom as convincing as numbers. We can hardly deny the benefits wrought by sophisticated accounting methods, but they do not account for everything.

In fact, as advanced economies become more and more "knowledge-based," business decision makers will have to rely more and more on insight and common sense. When workers mostly made widgets, their productivity was easy to measure because what they did could be counted. When workers are there to manipulate information, counting is always more difficult and frequently irrelevant.

Of course, hours worked can still be counted, so they still rank high among the considerations that go into promotion and pay decisions. Ms. Schor argues that the ease with which we connect long hours to things like commitment, loyalty, ambition, and other attributes thought to be important to the company has created a managerial bias in favor of long hours.

But, as Ms. Schor also points out, longer hours can indicate inefficiency just as surely as they imply commitment and ambition. Moreover, the bias in favor of long hours prevents us from adjusting to the new circumstances represented by large numbers of women in the workforce and high percentages of our work time devoted to using and creating knowledge.

The use and creation of knowledge, meanwhile, is its own source of overwork. With its capacity to process information, the computer contributed decisively to the disappearance of clerical and middle-management positions. Now, we see that very capacity overwhelming us with information, leaving those left in place after the fat trimming in the position of the sorcerer's apprentice: working frantically -- and not very effectively -- to stem the tide of unintended consequences.

Ultimately, the cost of too little meat on the corporate bones will show in the numbers. Look it up under medical costs, turnover rates, and absenteeism.

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