Efficiency vs humanity: Elevating Care
As part of a 2021 investigation by Fordcastle into the business of caregiving, this post suggests looking outside for new models for how to get the best out of employees, rather than simply trying to optimize efficiency.
The tyranny of efficiency
A hundred years ago it made sense to introduce more rigor and scale into the economy in order to increase the quality and lower the costs of mass-market consumer goods. But the enduring metaphor of ‘scientific management’ - that of the economy as a machine - creates a phalanx of managers focused on minimizing the costs of the system rather than the benefits to the stakeholders. In the business of care, this impacts patients, families and communities. Optimizing efficiency generally goes hand in hand with reducing the flexibility of front-line workers to make their own decisions and not valuing the innately human aspects of the workers’ roles. This can result in a dehumanization of workers’ roles, giving workers the role of ‘cogs’ (in both senses); an inconvenient cost to bear, while capital owners are making technology good enough to replace the unfortunate ‘other dude in the car’.
This hits home when it comes to caregiving; thinking of care as a widget to be processed on a production line leads to ever more pressure on managers and caregivers to tick boxes, rushing around trying to get stuff done and see as many people as possible in a day. One caregiver in the UK reports of shifts that can consist of fifteen 15-minute visits, with just a few minutes to travel between clients (generally at their own expense):
“I start the day with a 15-minute visit to Henry who has dementia. His wife Vi, who has Parkinson's and who we also support, is in hospital so he is on his own at the moment. I have only 15 minutes to make Henry's lunch and help him to eat it, assist him with his medication and ensure he has everything he needs until his evening care visit, including the little things like a hot cup of tea and a newspaper.”
When people are forced to constantly optimize and be efficient, the system starts to break down. Roger Martin’s When More is Not Better shows how an obsession with sweating the assets of the ‘economy as a machine’ is not only a fruitless task, but responsible for much of the escalating inequality and misery we’re seeing today. Better, he says, to think of the economy as a delicate complex adaptive system, which requires constant experimentation and awareness of positive and negative feedback loops.
Looking outside for inspiration for how to ‘elevate care’
Rather than doing the same thing over and over and expecting a different outcome, it’s time we take a step back and look outside. Specifically, let’s look at other sectors and other geographies for novel approaches. Our starting assumption is that we need to take account of the humanity, capacity and skills of both the person being cared for and the caregiver. A shortcut for this is we need to ‘elevate care’. This challenge is not unique to caregiving, it’s been increasingly seen in other industries with growing unease and unhappiness with the workforce, and corporate environments where just sweating the assets and minimizing costs doesn’t deliver much-needed innovations. Instead, there’s a growing sense that much work is not meaningful, likely to be taken over by a robot or outsourced to a low wage country, which is coupled with ever greater pressure to perform. Up to 40% of people report the jobs they do add nothing to society, while according to Deloitte’s Center for the Edge, only around 14% of American workers are passionate about their jobs.
Taking a washing machine company for a spin
Qingdao, China-based Haier is the world’s largest appliance manufacturer, with 70k employees delivering annual sales of $35bn covering a variety of products and services from washing machines, launderette services, gaming computers and smart homes. The company was called Qingdao Refrigerator and in the early 1980s was a bankrupt fridge maker. Zhang Ruimin, then a mid-level local government functionary, was put in charge of the company and the company has been on a tear ever since. Ruimin was clearly not your average bureaucrat - ambitious, curious and a voracious reader of management theories, he turned the company into what it is today - revenues and gross profits have risen around 20% per year for the past decade, while the company has created over $2bn in market value from new ventures. In 2016 they purchased GE’s appliance unit and their 20k employees for around $5bn. Their innovative reputation is such that 10,000 foreign companies visit Haier in China each year to learn more. There are lessons in its remarkable transformation that may help us with the transition that caregiving needs to take.
Over the past 30+ years, Haier has questioned many core assumptions of how manufacturing, indeed business, is done. In a nutshell, it’s changed the concept of large firm from a static, top-down organisation to something dynamic, complex and adaptive, such as a city or a rainforest. As CEO Ruimin put it, “Organization models can no longer be rigid. They need to be ‘alive’. [Wired founder Kevin] Kelly thinks organizations should be organized like cities, because cities have proven to be immortal. And cities are constantly moving. That’s why we work with moving targets.” There’s a lot happening with Haier (and lots of failed experiments) but here are three elements that are often discussed with regard to the company’s very entrepreneurial approach:
1. ‘Zero distance to the customer’
Over the last decade Haier has crystallised its innovation approach into a system called Rendanheyi, which is a Chinese neologism fusing ‘workers’ and ‘customers’. In Haier’s eyes, these two are intimately and closely connected. The idea is that every worker is on the front line, and their salaries are paid for by the customers. As such this is a company with 70,000+ employees and no middle managers; in 2012 the company fired all 10,000 middle managers, saying there was only room for entrepreneurs inside the company. Factory floor workers are made to feel like they’re interacting directly with the market - for example, they get instant access to metrics about how they and their team are doing (products made per hour for example, and how it compares to others) and how that translates to the money they’re making for the company, and themselves.
2. Structured around ‘microenterprises’
The culling of the middle management was possible because the company simultaneously restructured itself into hundreds of small businesses - microenterprises (MEs). Each of these 200+ micro-businesses is largely autonomous, and 70% of them have annual revenues exceeding $20 million. This allows for some radical decision making, rewarding and coordination changes; Haier is a shareholder in each of these MEs, along with the employees, and all share in the profits (which are paid on top of a fairly low base salary). These MEs set their own goals; if the leadership misses targets three months in a row, a leadership search is automatically triggered, and anyone else can apply to lead the team. Goals are set for these MEs as ‘leading targets’ - looking externally at the market and what could be possible, rather than just carrying over previous years’ goals. This means that employees have direct stakes in the success of their enterprise and can get paid well if they overachieve, while missing out and potentially getting fired if their ME underperforms. Some MEs face the customers while others play a role of servicing the MEs (the common corporate functions) but unlike most companies, these common corporate functions must compete for their business and justify their existence. If the ME doesn’t like HQ’s accounting services, for example, they’re free to go elsewhere.
3. Open innovation
Haier has gone through numerous phases of its transformation journey since 1984, and the most recent incarnation, since 2012, is the ‘networking’ phase. In the spirit of ‘zero distance’ Haier is using the Internet to allow it to engage directly with customers and experts. Over 400,000 experts are collaborating together on its open innovation platform, HOPE, which has reduced product development time by 70%. This also manifests as risk reduction, for example in developing the Air Cube (combo of air purifier and humidifier) they garnered 800,000 comments and 7,500 pre-production purchase commitments before dedicating significant corporate dollars to actually developing the product. The HOPE platform is also useful as a talent pipeline to de-risk hiring.
The approach Haier is taking here is from the excellent, bureaucracy-busting book Humanocracy and other places. Haier demonstrates a new kind of mindset: rather than maximizing the utilization of employees to maximize profits, enlightened organizations maximize the contribution of their employees. The book highlights a number of case studies including an American steel maker, a fruit grower, a Swedish bank and a French tyre company. The stories show that radical thinking is not the unique preserve of Silicon Valley, or the US in general.
Rather than maximizing the utilization of employees to maximize profits, enlightened organizations maximize the contribution of their employees
This is not for everyone. Cutthroat entrepreneurial competition is a far cry from the very human job of caregiving. But is it? There are some similarities between otherwise uninspiring jobs in factories and caregiving: workers who are not delivering their potential, a strict, top-down regime of standardized processes and paperwork, and a lack of individual agency and creativity from those at the front line who often know better what’s needed.
Elements of this working today: Buurtzorg
The Dutch homecare compan, Buurtzorg, has been putting elements of this kind of thinking into practice to improve care, and getting impressive results. They have 14,000 nurses organised into small entrepreneurial teams with zero middle managers. Everyone is empowered to interact directly with their patients. It’s a model that has grown rapidly, helped by costs that are up to 40% lower, using 50% less hours of care while patients that regain their independence more quickly, have fewer hospital admissions and are more satisfied with the service. Crucially, the employees also find it a positive experience - employees have the highest satisfaction rating of any Dutch organisation with 1000+ employees. Buurtzorg doesn’t have the same sense of internal cut-throat competition, or obsession with customer-funded products, but has enough elements such as distributed teams, individual decision-making agency and limited middle managers, to be useful as a source of inspiration for out of the box thinking for direct care workers.
Next steps for this discussion
A consistent theme from innovators in caregiving that we meet at Fordcastle and Aging2.0 is that the current system is failing. In common with other sectors in need of innovation, it’s tragic that the current model often doesn’t reward innovation or allow frontline workers to shine. An alternative model that cultivates a culture of passion, hope and excitement, is structured around small teams that hold each other accountable and shifts responsibility - and outsize rewards - to the front line, would be worth exploring.
There are many questions, such as how to measure success, how to ensure safety and security while experimenting, how to capture and share best practices and what new incentive models work with today’s economic system for health and social care. This is one of the topics that Aging2.0 ‘Elevating Care’ collaborative is going to be doing in 2021, and we’re looking for bold organizations and innovators willing to collaborate and transform caregiving. Do get in touch if you’d like to be part.