Thursday, November 11, 2010

...and Private Business is NOT inefficient?

By Tom Kando

We are incessantly reminded that much of the government consists of inefficient, featherbedding, useless job-retention programs. And you mean to tell me that the private sector is different? Ha! Go tell that to someone dealing with an insurance company.

I recently had a minor fender bender. So I first called my insurance broker, who had signed me up with my insurance company. I don’t know why I need a broker. The first and last thing Roberta, one of the broker’s assistants, told me when I called, was to get in touch with the insurance company directly.

Which I did. I called them, in Seattle or in Dallas, or some other far away place.

Okay, so I file the minor claim (for a repair of a few hundred dollars). Debbie in Dallas tells me that my claim will be forwarded to the adjuster in the San Francisco office - Susie so-and-so. She is the one with whom I will have to deal.

So for the next couple of days I exchange e-mails with Susie in San Francisco.

Then, I get a call from Bill, a local Sacramento adjuster. He is the one handling my claim, wanting to look at my car, etc. Again, we talk on the phone and e-mail each other for a while.

Today, I get an e-mail from Susie that my case is now in the hands of Mary, another gal in the San Francisco office. So I call and e-mail Mary. But her answering machine tells me that if she doesn’t get back to me within a day, I should talk to the head of her team, Linda.

See what I mean?

People say that, unlike government, private business has an incentive to be efficient, because it must make a profit.

American business has been working on improving its productivity for years. We have all experienced the massive job outsourcing, each time we talk to someone in New Delhi or in Manilla when we call customer service. Such outsourcing has caused a great deterioration in the quality of service. Getting to talk to a human being on the phone has become difficult, and when you are dealing with someone on the other side of the globe, you can’t drive to the customer service counter to air your complaint.

Do the seemingly unnecessary and bureaucratic duplications which I just described mean that even more American employees should be laid off?

I don’t think so. The problem is not “featherbedding.” It is inefficiency. Companies already fire people at will. Unions have lost 90% of the clout they enjoyed half a century ago.

Efficiency is not a prerequisite for profits and fat CEO compensations: Those can be achieved by (1) jacking up premiums (or the price of whatever you sell), (2) denying claims (or treatment, or whatever your product is), and (3) outsourcing jobs, i.e. making things more inconvenient for the customer. Efficiency, my foot! leave comment here