Posts Tagged ‘bookkeeping systems’

About the Productivity of Knowledge Workers

Monday, August 10th, 2009

blue collar workerIn the 19th Century The Blue Collar Workers were replaced by Machines operated by White Collar Workers.

When the White Collar Workers were replaced by the Software of the Programmers a new Type of Work was created, called Knowledge Work.

It is very difficult to measure the Productivity of the Knowledge Worker.

In this Blog I will show you that the Problem of the Productivity of the Knowledge Worker can be solved when you Realize that the Business Cycle is a Self-Referring Object (A Fractal).

Work is a Process and is part of a Business Cycle. Work has a Result and it uses Resources.

When the Result of the Process is accomplished somebody has to Use the Results. The process of Use is called Consuming.

When a Requirement is Transformed into a Result and the Result is Sold (Sales) and Used somebody starts to Think, gets Ideas, about Adapting the Requirements and the Cycle of Work is Closed.

When the Requirements are Satisfied we call the process Effective. The process is Efficient when Waste is minimized.

In the Business Cycle the Four “Organs” of the Human, Control, Desire (Consume), the Emotions (E-value-ate) and the Imagination (Create) are Dominating a Phase. The task of the fifth Organ, Conscioussness, The Monitor, is to Balance the Four Organs to make sure that one Human Faculty is not dominating the Cycle. The Business Cycle is Self-Referring.

This means that we are able to apply the Business Cycle in every part of the Business Cycle. A Salesman makes the Requirements of a Sales Plan, Executes a Sales Plan and Improves his Sales Cycle when he gets new Ideas about the effect of his efforts.

What we see is the process of Specialization resulting in the Division of Labour.

Every time when a new specialization of the Business Cycle is created the Level of the Process changes and the Speed of the Movement of the Cycle, the Periodicity, changes. Every Time when a new Division of Labour occurs the Business Cycle Speeds Up.

The Division of Labour not only Accelerates the Business Cycle. The New Roles in the Cycle behave like an Independent Unit. They want to Dominate Cycles on other Levels and most of all they want to expand their Activities.

The Personal Assistant who was helping the Manager to Hire and Fire Personnel transforms into a Human Resource Management Department.

At some point in time the specialized Units disconnect from the Whole and start a Life of their Own. Designers start Design Bureaus. Teachers unite in a School. Scientists cluster in Universities.

All of them are still payed by the Primary Processes in Society (Agriculture (Food), Industry, ..) but the Secundary (or higher order) processes don’t want to hear that. They think they are the Most Important Processes in Society.

When the new Wholes are created they start to Divide again and again. The Result of the Split of the Work Cycles, the endless Division of Labour, is an Incomprehensible, not Effective, Inefficient Network of Competing Work Processes Clustered in many Institutions.

The Business Cycle is Breathing.

When the process of Splitting has gone too far, the process of Union and Integration starts.

Splitting, Expansion, occurs when the Economic Cycle is going Up.

Integration, starts when the Economic Cycle is going Down.

We are now again in an Integration Phase which means that many secundary and higher order processes will be destroyed until the Essence of Society is visible again.

What is a Knowledge Worker?

A Blue Collar Worker works in a Factory and is doing Manual Labour. The people who are part of the Staff Departments of the Factory (Sales, Planning, Design,) are called White Collar Workers. White Collar Workers are more Educated as the Blue Collar Workers. They Earn more money and are doing Intellectual Work. The Knowledge Worker Uses and produce Knowledge. Examples are: Programmers, Systems Analysts, Lawyers, Teachers and Scientists. Examples of processes are: planning, acquiring, searching, analyzing, organizing, storing, programming, distributing and marketing.

What is Productivity?

The Concept of Productivity implies that an organization works as a Physical System with variables and their inter-relationships amenable to precise definitions. The basic reliance is on the acceptance of a Stimulus-Response model of Causality that an Input causes an Output.

Productivity is the ratio of Outputs (Goods and Services) divided by one or more Inputs (Labor hours, FTEs, Capital, Expenses). Using money as a measure of value makes it possible to compare dissimilar inputs and outputs.

Productivity is only applicable in the Production Phase of the Business Cycle. In the other Phases other Measures are used like Customer Satisfaction in the Consuming Phase. Customer Satisfaction is a measure of the Effectiveness of a Production phase.

The Business Cycle is a Self-Referencial Object. Every Phase of the Business Cycle can be divided in the Phases of the Business Cycle. This means that the Productivity of the Knowledge Worker can be Measured when he is Producing Something (A Design, A Research Document, A Plan).

If the Knowledge Worker is not Producing anything there is nothing to Consume in the next Phase. In this case the Knowledge Worker is not Effective. If this happens the  Knowledge Worker has to Reflect, Use his Consciousness, to detect his Added Value to the Whole he is part of.

To Define the Productivity of a Blue of White Collar Worker, the Process has to be Standardized. To standardize a process you have to define the Flow of the Components (Bill of Materials) and of course the Product, the Result.

If the Process is Standardized it is very easy to get rid of the Waste in the Process (Process Improvement). When this happens the process becomes more Efficient (now called Sustainable).

Standardization results in a Decrease of the Workers, a Lowering of the Waste (Costs) and an Increase in Rules. The Process Rules are implemented in Machines and Software.

What are Knowledge Workers Really Doing?

The Designers and Implementers of the Rules, the Knowledge Workers, are the people who are Destroying the Work of the Blue and White Collar Workers in a Factory. They are also the Creators of New Factories (Business Development) and connect Old Factories (Value Chain Integration).

How to Measure the Productivity of Knowledge Workers.

Knowledge Workers are part of the Business Cycle. They Analyze Work Processes to minimize Waste, Evaluate the Results of the Consuming of the Result of a Work Process (the Product) , Imagine and Test new Ways to Satisfy the Needs of the Consumer, Design New Work Processes or Change Existent Work Processes.

The Business Cycle is Self-Referring. This means that you can organize the Work Processes of the Knowledge Workers just like the Work processes they Analyze.

If you measure the Productivity of the Work Process of the Blue and White Collar Workers in a certain way, it must be possible to measure the Productivity of the Knowledge Worker in the same way. Knowledge Workers also have to make plans and have to evaluate their own products to Learn and to Improve their Performance.

This approach has a great advantage. If you treat the Knowledge Workers just the way you treat the Blue and White Collar Workers they will understand that some day the Controller will Standardize Knowledge Management, Reduce the Waste, Focus the Process on a Clearly Defined Target, Eliminate the Knowledge Workers and Replace them by a Very Intelligent and Creative Software Program.

These Software-Programs are already there (Expert Systems, Artificial Intelligence, Pattern Recognition) and are constantly improving their behavior. One of the most interesting examples is Wolfram Alpha.

When the Fractal Pattern Recognizers are fully operational the Knowledge Workers will Realize that the White and Blue Collar Workers are also Humans. They will know that every Human has the ability and the need to Control his own Process of Life.

They will see that Every Human has Desires, Emotions and Imagination.

They will become Aware (Consciouss) of the Fact that every Human is Able to Improve his Own Work Processes.

fractal

Why I have Decided to Leave ABN AMRO

Monday, September 29th, 2008

I am a customer of ABN AMRO for more than 40 years. Last Friday I received a letter from ABN AMRO. They told me that the local branch office of ABN AMRO will be closed and integrated into a local branch office of Fortis.

 One day later negotiations started to save Fortis from bankruptcy. Today I read that ABN AMRO has to be sold to another bank. This will not solve the problem at all. It will speed up the Process of Desintegration of the Banking Industry that has started ten years ago.

 Just one year ago I wrote three blogs about the Merger of Fortis and ABN AMRO. Based on my own experience with the Merger of ABN and AMRO I predicted a possible failure of this merger. I predicted a possible failure because I did not believe the Technical Infrastructure and the Culture of both banks could be easily matched. I was Right. The Credit Crunch was the Cause of the Downfall but the Culture and the IT-Systems were the real reason. The Aim of Management was to make Big Deals (to get Big Bonusses) and the Systems were unable to provide the Right Data.

I have been working in the Money Market for a long time. In my opinion the biggest problem in the Banking Industry is the relationship between the Accountable, Bookkeeping, Systems and the Activities of Dealers. A small part of the Dealers are and were taking Enormous Risks by creating very complicated financial constructions (Derivatives). The Auditors (and the Management) of Banks have lost Oversight a very long time ago. This problem increases in severity when banks are merged.

Every time when a New Technology is implemented the Quality of the ICT-systems deteriorates. This has happened so many times that nobody really understands what the IT-Systems are really doing. Every time when a merger is accomplished the financial data of a bank (or other company) deteriorate. Two of more deteriorated systems are connected creating a bigger mess. Every time when a merger is accomplished the people who have an understanding of the ICT-systems know less about the Systems.

When a Merger takes place the motivated and skillful employees leave the “sinking ship”. The people that remain become “apathic”. They perform their duty in a “nine to five”-mode. Innovation stops. External advisory companies (or worse) outside outsourcing companies take over the maintenance and the development of the software. The quality of the software deteriorates again. The problem increases when packages or software layers are implemented. This happened in every bank around the world.

When I worked with ABN AMRO the biggest mess in IT was always created in the US. The main reason was the “opportunistic” attitude of the Management or the entrepeneurs attitude of the Management. They experimented with everything they could find but never finished anything. The US Financial System was far behind the Dutch Financial System in terms of Products and Supervision. Everybody believed the US was the most innovative in everything but they were certainly not the most advanced in Banking and IT.

 ABN AMRO was one of the bad performers in the Consumer Banking Industry in the Netherlands. The personnel of the Bank were not motivated for a long time. The main reason was the Management. Everything was decided at the top in big Staff Departments. The Branches were forced to implement what they had designed.

 The Management of the Bank loved to do Big Deals with Big Companies. ABN and AMRO were Deal-Making companies and were forced to move into the Consumer Market when the employees of all the companies in the Netherlands were forced to open bank-accounts. The Customer was never priority number one.

The decision structure of the Bank was highly complex and changed all the time. Employees at the branches were not allowed to take initiative. When they had taken initiative it took a long time before the decision was made. Most of the time the answer was negative.

The forced merger with Fortis decreased the motivation of the employees. It increased the complexity of the IT-Systems and the decision structure.

Fortis needed money and many parts were sold to other banks. Every time the Organization and the ICT-systems of the bank had to be divided in many parts. Before this process was even settled a new split was announced. This process was repeated until today.

The Consumer Banking Division of ABN AMRO, the “beautiful pearl” Fortis was after, was carefully protected. The integration of this part with Fortis proceeded. Many people moved to Brussels to create and implement a plan. Many outside advisors earned a lot of money again. Nobody had any oversight. A few weeks ago somebody finally decided to merge the branch-offices. They created new organization structures, appointed new managers, talked with the employees and send an announcement to their customers. This announcement was received last Friday! Two days later all the projects have been stopped and the employees of Fortis are leaving ABN AMRO. Nobody knows what to do!

The financial people were constantly trying to understand what the Risks were. Everytime a new problem arose and the Board had to take action. The message to the outside world changed all the time and the investors lost their faith in Fortis. The End of the (Credit) Line was reached last Friday!

A few days ago somebody decided ABN AMRO had to be sold to another bank to create enough cash to pay the current debts. The process of integration has to be reversed and a new process of integration has to be started with another Bank.You don’t have to be an expert to understand what will happen. The end of this process will be Total Chaos.

I am not afraid I will lose my Savings. The Government will take care.

I am not afraid to lose my shares. I have sold them a long time ago.

I am not afraid the bookkeeping systems of the Bank will finally break down and ABN AMRO will deny I am a Customer or present completely different data about my savings-account.

I am sure many things will go wrong. During my time as a customer of ABN AMRO the amount of mistakes that were made increased. Most of the mistakes were small but some of them really cost me a lot of time and money.

I am afraid  nobody will be able to help me when things go wrong. I just want a little bit of Service. Nothing More. I have decided to leave ABN AMRO. I am moving to RABO-bank.

I hope they will not buy ABN AMRO or merge with another bank. If this happens I have to find another Bank but I really don’t know where to go. At that time I probably have to buy Gold or another Object that keeps its value a long time ago. I really don’t know what will be valuable in the future.

Perhaps I have to start a farm and grow my own food at a place that will not be affected by the rising of the sea-level or big tornado’s or big earthquakes or heavy rain or intense drought or intense cold when the Ice-Age starts.

LINKS

 About the Merger of Fortis and ABN AMRO (Culture)

About the Merger of Fortis and ABN AMRO (Software)

About the Merger of Fortis and ABN AMRO (The Bank of the Heart)

About the Crisis in IT (About Software Layers)

About the Crisis in IT (About Outsourcing)

 About the Crisis in IT (About ERP Packages)

About the Crisis in the Banking Industry (Avalanches)

About the Crisis in the Banking Industry (Fraud)