Cuts to resources increase inefficiency - what is this called?
June 5, 2023 6:33 AM Subscribe
Staff cuts/layoffs/redundancies create a leaner, more efficient workforce, right?* But what if staff cuts cause increased administrative burden and more work at the same time as decreasing the quality of service? Help me figure out the name of this effect and where I can read more about it.
*(Wrong, obviously, but that's management's premise, so stay with me.)
An imaginary example:
Imagine you are a doctor at a medical service, and the manager of the service decides to cut the staffing of the service for budget reasons. They justify this decision by noting that sometimes appointments don't get utilised, and opine that it will not be a problem for patients to wait a little longer for appointments.
As time goes by, the doctors start getting emails and phone calls from patients pleading to be seen sooner for various reasons, and responding to those emails and calls starts to become a burden. Patients who don't feel they can wait to see their usual clinician end up booking with whoever has a cancellation, which means that doctor isn't familiar with that patient's history, and doctors have to spend a lot more time reading charts than they previously did. And patients are frustrated with the extra waiting time, of course, but more frustrated with having to explain their medical situation over and over, and feeling that going to the doctor is less helpful than it used to be.
The questions:
An imaginary example:
Imagine you are a doctor at a medical service, and the manager of the service decides to cut the staffing of the service for budget reasons. They justify this decision by noting that sometimes appointments don't get utilised, and opine that it will not be a problem for patients to wait a little longer for appointments.
As time goes by, the doctors start getting emails and phone calls from patients pleading to be seen sooner for various reasons, and responding to those emails and calls starts to become a burden. Patients who don't feel they can wait to see their usual clinician end up booking with whoever has a cancellation, which means that doctor isn't familiar with that patient's history, and doctors have to spend a lot more time reading charts than they previously did. And patients are frustrated with the extra waiting time, of course, but more frustrated with having to explain their medical situation over and over, and feeling that going to the doctor is less helpful than it used to be.
The questions:
- Is there a name for this effect, where a cut in resources makes the system paradoxically less efficient?
- Do you know where I can read more about it? (FWIW I have access to a university library, so if you know of a really apposite journal article, I can probably access it).
There can, of course, be legit cases in which the existing staffing level is higher than would be needed to service the actual rate of incoming work. Those would be the cases that those C-level types have in mind as justification for their cuts.
Obviously, any given case may or may not fit those circumstances. If the staffing level is already too low, or is just about right, then staff cuts are going to lead to the kind of queuing effects that you mentioned - which certainly wouldn’t help with efficiency (although they might still cut costs, overall).
posted by Puppy McSock at 6:57 AM on June 5, 2023
Obviously, any given case may or may not fit those circumstances. If the staffing level is already too low, or is just about right, then staff cuts are going to lead to the kind of queuing effects that you mentioned - which certainly wouldn’t help with efficiency (although they might still cut costs, overall).
posted by Puppy McSock at 6:57 AM on June 5, 2023
Is there a name for this effect, where a cut in resources makes the system paradoxically less efficient?
It's not a paradox. Typically speaking, we give higher return employees support to free them up to do the thing that generates the most return. In your example, if the doctor spends some of their time booking appointments or handling patient relations - they aren't able to see as many patients and maximize revenue. So it's an expected result and not a paradox.
In general HR theory, the person who should perform a task is the lowest paid one who is qualified to do so - in my travels, this typically is called workforce optimization.
posted by openhearted at 7:15 AM on June 5, 2023
It's not a paradox. Typically speaking, we give higher return employees support to free them up to do the thing that generates the most return. In your example, if the doctor spends some of their time booking appointments or handling patient relations - they aren't able to see as many patients and maximize revenue. So it's an expected result and not a paradox.
In general HR theory, the person who should perform a task is the lowest paid one who is qualified to do so - in my travels, this typically is called workforce optimization.
posted by openhearted at 7:15 AM on June 5, 2023
Best answer: Yes, a guy named Fred Brooks at IBM noted in a famous mid-century management book called The Mythical Man-Month that sometimes adding people to a project may slow it down, especially in the short term, but it's not paradoxical at all that cutting resources may reduce efficiency.
posted by praemunire at 7:19 AM on June 5, 2023 [2 favorites]
posted by praemunire at 7:19 AM on June 5, 2023 [2 favorites]
Best answer: I see what you're saying. Yes, it's obvious from the beginning of the "cut staff" plan that _service_ will get worse, but what you're focused on here is that the business doesn't actually even save money or time in the long run: the decrease in service leads to not only customers, but also the company itself expending more resources.
Yes, there may be cases where the additional work generated is done by less expensive employees - but you're focused on the bottom line here, where even if that is done, the overall expense outweighs any expected savings from the initial staff/hours reduction.
I don't think I know an exact term for the situation you describe, but here are some that may come close:
Yes, there may be cases where the additional work generated is done by less expensive employees - but you're focused on the bottom line here, where even if that is done, the overall expense outweighs any expected savings from the initial staff/hours reduction.
I don't think I know an exact term for the situation you describe, but here are some that may come close:
the law of unintended consequencesposted by amtho at 8:42 AM on June 5, 2023 [2 favorites]
short-sightedness
foolish economy
Is there a name for this effect, where a cut in resources makes the system paradoxically less efficient?
This is literally the point of capitalism - minimum expenditure in pursuit of maximum profit.
As others have said, there is no paradox here. In a bloated organisation resource cuts can increase efficiency but there comes a point after which your cuts stop increasing efficiency and, as you point out, start decreasing efficiency (aka increasing inefficiency).
A lot of bad business people think less resources = greater efficiency (A=B), and greater efficiency = greater profits (B=C), and end up thinking that less resources = greater profits (A=C) without understanding that the "greater efficiency"part (B) requires a careful balance of enough resources, and the right resources, and suitable contingency, in order to be maximally efficient and therefore maximise profit. A, B, and C are related, they are not the same.
So to circle back to your original question: it's a combination of greed, ignorance, and stupidity in different measures depending on the person in question.
posted by underclocked at 8:45 AM on June 5, 2023
This is literally the point of capitalism - minimum expenditure in pursuit of maximum profit.
As others have said, there is no paradox here. In a bloated organisation resource cuts can increase efficiency but there comes a point after which your cuts stop increasing efficiency and, as you point out, start decreasing efficiency (aka increasing inefficiency).
A lot of bad business people think less resources = greater efficiency (A=B), and greater efficiency = greater profits (B=C), and end up thinking that less resources = greater profits (A=C) without understanding that the "greater efficiency"part (B) requires a careful balance of enough resources, and the right resources, and suitable contingency, in order to be maximally efficient and therefore maximise profit. A, B, and C are related, they are not the same.
So to circle back to your original question: it's a combination of greed, ignorance, and stupidity in different measures depending on the person in question.
posted by underclocked at 8:45 AM on June 5, 2023
I think the relevant term here might be "ideology", even if management would not be able to hear it. They believe in a neoliberal capitalist ideology (see David Harvey) of cuts and efficiencies so blindly such that what the workers experience as an obvious truth would strike them as paradoxical (which is really to say "a controversial revelation").
I can't see this helping much but Marx would probably argue that you can't win this argument on the plain of reason as ideology isn't reasonable. You can only organise against it.
posted by spibeldrokkit at 9:18 AM on June 5, 2023
I can't see this helping much but Marx would probably argue that you can't win this argument on the plain of reason as ideology isn't reasonable. You can only organise against it.
posted by spibeldrokkit at 9:18 AM on June 5, 2023
I'd call this "penny wise, pound foolish".
posted by Mitheral at 9:38 AM on June 5, 2023 [3 favorites]
posted by Mitheral at 9:38 AM on June 5, 2023 [3 favorites]
I have recently learned that many companies talk about productivity in a very specific way that means "how can we do the same amount of work with fewer people" and googling business productivity and management productivity might give you more insights into this concept and words for how you see it going wrong
posted by ch1x0r at 10:17 AM on June 5, 2023 [1 favorite]
posted by ch1x0r at 10:17 AM on June 5, 2023 [1 favorite]
Best answer: I don't know a name for it but have several ideas from queuing theory (which I was most exposed to when calculating computer performance) and a few other places
1. Many managers measure efficiency as output (widgets, patients seen, customers served in a bank) divided by the number of employees. Note that this does _not_ take into account the variability in the queue of things coming into the system but assumes a steady rate. So in your example, it might seem there are too many doctors on average over the year, but the number of patients coming in is a lot larger in flu season than in the summer for example. This measure of efficiency does not handle peaks well at all
2. They think, unless they have 'come up through the ranks' that each activity takes the average amount of time, yet that also is variable. Again for your example, prescribing a medicine for acid reflux may take a lot less time than setting a broken leg and putting a cast on it. So, even if you have enough doctors to handle peak periods, each doctor will not always be able to handle the same number of patients per day, every day.
Both of these situations will add wait time for the incoming queue, and when the system gets to be about 33% busy, wait time will double. There's a definite 'knee of the curve' affect. When that happens, complaints will increase. Think of complaints as the input queue to management and you can see that management's burden will increase (and go through the same sorts of queuing affects as I mentioned above)
posted by TimHare at 11:07 AM on June 5, 2023
1. Many managers measure efficiency as output (widgets, patients seen, customers served in a bank) divided by the number of employees. Note that this does _not_ take into account the variability in the queue of things coming into the system but assumes a steady rate. So in your example, it might seem there are too many doctors on average over the year, but the number of patients coming in is a lot larger in flu season than in the summer for example. This measure of efficiency does not handle peaks well at all
2. They think, unless they have 'come up through the ranks' that each activity takes the average amount of time, yet that also is variable. Again for your example, prescribing a medicine for acid reflux may take a lot less time than setting a broken leg and putting a cast on it. So, even if you have enough doctors to handle peak periods, each doctor will not always be able to handle the same number of patients per day, every day.
Both of these situations will add wait time for the incoming queue, and when the system gets to be about 33% busy, wait time will double. There's a definite 'knee of the curve' affect. When that happens, complaints will increase. Think of complaints as the input queue to management and you can see that management's burden will increase (and go through the same sorts of queuing affects as I mentioned above)
posted by TimHare at 11:07 AM on June 5, 2023
It's about meeting targets while keeping the headcount as low as possible. Sometimes there is so much green in the data that they can sacrifice a few staff and still stay in the green. The experience of individuals doesn't matter unless it impacts some metric that they can see.
Some people might also think that cutting numbers would force people to be more efficient with how they work. To that I would say maybe. Or maybe people cut corners that they shouldn't cut.
posted by kinddieserzeit at 9:03 PM on June 5, 2023 [1 favorite]
Some people might also think that cutting numbers would force people to be more efficient with how they work. To that I would say maybe. Or maybe people cut corners that they shouldn't cut.
posted by kinddieserzeit at 9:03 PM on June 5, 2023 [1 favorite]
Response by poster: Thanks for the answers so far. I appreciate the point that it's not actually a paradox (unless you make assumptions about efficiency that are ideological rather than factual). But I do think there's an effect to be described here - that cutting the number of staff not only divides the work between fewer people but also increases the total amount of work, and the client experiences not only reduced access but a poorer quality service. My partner, a management type, was sure this was a recognised phenomenon in some sphere of management, but it's been a while since he read about it so he couldn't remember any more detail.
posted by Cheese Monster at 10:35 PM on June 5, 2023
posted by Cheese Monster at 10:35 PM on June 5, 2023
I'm wondering if looking at the concept of lack of slack in the system - this is what is currently happening in the NHS in the UK which is running in some areas at close to 100% capacity https://www.bmj.com/content/375/bmj.n2456 and it is essentially broken across the board. The fact that the slack (or "fat") in the system is gone means that the the pipeline is completely broken and people end up waiting for 24+ hours in A&E or spend 2+ years on waiting lists for necessary surgery.
posted by coffee_monster at 1:47 AM on June 6, 2023 [2 favorites]
posted by coffee_monster at 1:47 AM on June 6, 2023 [2 favorites]
Best answer: I usually see economists frame this in the positive direction, i.e. "economies of scale," where the bigger you get the more efficient you get. There's also diseconomies of scale, where you get worse as you grow. Every firm likely has some of both.
In hiring and layoffs, the ideal is that management can accurately and correctly identify where the marginal job is, in terms of productivity, and steer that towards "just barely positive." Meaning the income a worker brings is just barely above what they cost. Individual managers probably aren't very good at it but the economy overall seems to achieve this somewhat -- productivity goes up during recessions.
IMO, this largely revolves around specialization. Bigger factories & firms can design highly specialized jobs, while startups have to "wear many hats" and do many of the functions poorly. Cutting jobs should mean less specialization and worse outcomes unless demand also drops.
As time goes by, the doctors start getting emails and phone calls from patients pleading to be seen sooner for various reasons, and responding to those emails and calls starts to become a burden. Patients who don't feel they can wait to see their usual clinician end up booking with whoever has a cancellation, which means that doctor isn't familiar with that patient's history, and doctors have to spend a lot more time reading charts than they previously did.
I'm not aware of any study of this in organizational dynamics but this is a topic of interest in the site reliability engineering community, borrowing the term metastability from the physical sciences. The idea is that even when your resources and requests are matched, you can have two different stable outcomes, if a sufficiently strong trigger to move into a bad outcome and a sufficiently strong sustaining effect exists to keep it there. In your example that would be patient escalations. In my world this is retrying a request after a timeout.
These things ostensibly exist to rescue rare bad outcomes during normal operations, but end up making it worse in unhappy situations. The papers suggest a few techniques, basically around disabling the sustaining effect. In your example that might be "no walk ins" when the system is unhealthy. Or hiring some traveling nurses or something to add capacity for a short while to force the system back into the happy state.
tl;dr: Honestly I suspect the term you are looking for is "death spiral."
posted by pwnguin at 3:44 PM on June 12, 2023 [1 favorite]
In hiring and layoffs, the ideal is that management can accurately and correctly identify where the marginal job is, in terms of productivity, and steer that towards "just barely positive." Meaning the income a worker brings is just barely above what they cost. Individual managers probably aren't very good at it but the economy overall seems to achieve this somewhat -- productivity goes up during recessions.
IMO, this largely revolves around specialization. Bigger factories & firms can design highly specialized jobs, while startups have to "wear many hats" and do many of the functions poorly. Cutting jobs should mean less specialization and worse outcomes unless demand also drops.
As time goes by, the doctors start getting emails and phone calls from patients pleading to be seen sooner for various reasons, and responding to those emails and calls starts to become a burden. Patients who don't feel they can wait to see their usual clinician end up booking with whoever has a cancellation, which means that doctor isn't familiar with that patient's history, and doctors have to spend a lot more time reading charts than they previously did.
I'm not aware of any study of this in organizational dynamics but this is a topic of interest in the site reliability engineering community, borrowing the term metastability from the physical sciences. The idea is that even when your resources and requests are matched, you can have two different stable outcomes, if a sufficiently strong trigger to move into a bad outcome and a sufficiently strong sustaining effect exists to keep it there. In your example that would be patient escalations. In my world this is retrying a request after a timeout.
These things ostensibly exist to rescue rare bad outcomes during normal operations, but end up making it worse in unhappy situations. The papers suggest a few techniques, basically around disabling the sustaining effect. In your example that might be "no walk ins" when the system is unhealthy. Or hiring some traveling nurses or something to add capacity for a short while to force the system back into the happy state.
tl;dr: Honestly I suspect the term you are looking for is "death spiral."
posted by pwnguin at 3:44 PM on June 12, 2023 [1 favorite]
This thread is closed to new comments.
I don't think there's any paradox at play here. There's definitely a paradox in that adding resources to a system with the intent to make it more productive can make it less efficient.
Cuts may make a workforce leaner but arguing it makes the workforce more efficient (without corresponding reduction in scope) is known to be bogus. C-level types may try to push this premise but most people understand that it's just bloviating to create a smokescreen for a shortsighted push to cut costs and increase profits. No paradox detected.
posted by jzb at 6:40 AM on June 5, 2023 [6 favorites]