Fighting the Paper Chase

By Christopher Byron

Companies look to office automation to boost white-collar productivity

The executive is paid to think, to decide and to manage. In fact, he spends much of his time doing anything but that. All too often, he finds himself buried under paperwork, endlessly returning phone calls only to get a busy signal or no answer, or simply waiting for late reports. The struggle to boost sagging American productivity has usually centered on the shop floor and on ways to make men and machines work faster. But businessmen should be spending just as much time looking into their administrative offices and executive suites. There, some of the biggest bottlenecks of all are to be found among the 52 million American white collar workers.

With U.S. business continuing to shift further and further away from basic manufacturing, which now accounts for less than 25% of G.N.P., and toward service-type fields such as law, accounting, tourism and finance, armies of white collar employees have become indispensable to the conduct of business. Last year, workers, ranging from clerks to chief executives, earned more than $760 billion in wages and salaries, or more than 25% of the total output of the economy. Getting control of that skyrocketing cost, and making sure that the money is well spent, has become one of the most critical challenges facing business today. Says Donald N. Frey, chairman of Bell & Howell: "The decade of the '80s is going to be very much concerned with improving white collar productivity."

Measuring the efficiency of office employees is difficult, and trickier by far than merely monitoring the output of a plant making automobiles, refrigerators or shoes. In the world of the white-collar worker, measurements that focus on such things as simply increased output in the office are just not relevant. Turning out more reports that do not get read may decrease rather than increase office productivity. On the other hand, by entering just about any American business office it is easy to see that hours are being poorly used or frittered away.

A 1980 study by the Booz Allen & Hamilton management consulting firm found, for example, that business managers often spend no more than 29% of their time on actual "thought work" such as reading, creating documents and problem solving. More often, the workday gets drained away in such time-consuming and distracting activities as arranging meetings and conferences, searching for information, and waiting for the preparation and delivery of reports and studies.

The basic office structure has changed very little when compared with the rest of U.S. business. Xerox quips in an ad that the businessman of 1981 would feel right at home in an average 19th century office furnished with such "modern" inventions as the eraser-tipped pencil, patented in 1858. The level of capital equipment is also much lower than in a manufacturing facility. A blue collar worker today is backed up by $25,000 in machinery, while a white collar one has only $2,000 in equipment at his or her fingertips.

From this inefficiency is now blossoming a whole new industry, producing a steady stream of exotic-sounding electronic and computer-based office machines. The companies that make and market the gear range from office-product giants as big as International Business Machines (1980 sales: $26 billion) to Altos Computer Systems of San Jose, Calif, an aggressive young microcom puter manufacturer that has been in business for less than five years and already has racked up annual revenues of $60 million in the current fiscal year.

Two weeks ago, the Wang Laboratories of Lowell, Mass. (1981 revenues: $856 million), announced the introduction of a new system that supports as many as 24 separate word-and data-processing terminals and can receive information by actual telephone voice command. Days earlier, the Hewlett-Packard Co. of Palo Alto, Calif., a leading computer manufacturer, announced its own entry into office automation by unveiling 20 new state-of-the-art products.

The firms are storming into a market that last year produced revenues of approximately $4 billion and may increase by 40% to 45% in yearly sales gains through 1985, a rate that dwarfs almost every other sector of U.S. business. Says Sanford Garrett of the New York investment brokerage firm of Paine Webber Mitchell Hutchins Inc.:

"What you are dealing with is a market measured literally in hundreds of billions of dollars on an annual basis."

Already, companies everywhere are experimenting with some form of office automation. Earlier this year, Atlantic Richfield Co. of Los Angeles, the nation's eleventh largest industrial concern, installed an elaborate $300,000 system of Xerox-designed word processors linked to a central memory bank. The system enables professionals in the company's corporate systems department to type and send memos among themselves as well as prepare their own reports and even store and retrieve research. Not only has this saved time and effort by file clerks and administrative assistants, but the entire department of 95 now functions smoothly with only five secretaries, a l-to-19 ratio that compares with a l-to-5 relationship throughout the rest of the corporate offices.

Aetna Life and Casualty Co. of Hartford, Conn., the nation's largest diversified financial organization, has already installed upwards of 7,000 desktop word and data-processing terminals for its 38,000 employees, approximately a l-to-5 ratio that the company expects to boost to l-to-2 by 1985. Competitor John Hancock Mutual Life Insurance Co. of Boston has spent $1.5 million on office automation. Company vice presidents now sometimes can be seen using the machines on their secretaries' desk tops during lunchtime and afterhours. Says William Boyan, executive vice president of corporate operations: "You are able to make better-informed decisions quicker. When we get equipment into the hands of people who report to me, filing will be reduced by one-half."

The pitfalls of office automation, though, can be as great as the promise. Companies that automate with planning and foresight enjoy leaps in output, while those that rush blindly into the uncharted world of the office-of-the-future come soon enough to regret it. Adding word processors and an electronic mail system to a department filled with middle managers might simply boost their output of pointless memos or reams of undigested numbers, thereby actually adding to company overhead instead of paring it back. Says a staffer at Apple Computer Inc., a leading manufacturer of personal computers: "We found ourselves generating hundreds and hundreds of pounds of papers until top management decided it wanted fewer numbers and more thoughts." On the other hand, a study by the General Accounting Office on office automation within the Federal Government found only isolated increases in productivity resulting from the purchase of word-processing machines, largely because the equipment was not sensibly and widely used.

The fact is that many firms make the mistake of automating without a long-term strategy and a comprehensive plan of what they want to accomplish. The purchasing department may have needs entirely different from those of finance and accounting, for example, and only after it is too late does the company discover that it has installed different procedures or totally incompatible machinery in the two departments.

Though office automation is already making large strides among clerical and lower-level administrative workers, the real gains seem destined to come from getting professional and management personnel to use the new equipment. And this is likely to take place before too long. Says John F. Cunningham, executive vice president of Wang Laboratories: "Of top management in the FORTUNE 1,000, less than 1/2% today use office automation equipment themselves. By 1991 the figure will probably be 50%." Adds Robert Morrill, vice president for marketing at Prime Computer Inc. of Wellesley Hills, Mass., a leading office products concern: "We sense an explosion of interest from engineers, financial analysts and market planners. We are focusing on the productivity of the professional as opposed to that of the clerical. It is an untapped market where there has been little real productivity gain since the dictating machine and the telephone."

Many managers, though, still resist the idea of a computer terminal on their desks. Some feel threatened by the sheer unfamiliarity of the new technology, while others wonder whether an automated office will really help them to do their jobs better or faster. Says John McCarthy, assistant vice president for office systems at First National Bank of Boston: "There is no device yet on the market that addresses genuine executive functions." A survey of business managers earlier this year by a subsidiary of the Dennison Manufacturing Co., an office products firm in Framingham, Mass., found that many regarded computer-generated planning data as simply too detailed for the sorts of strategic decision making required of executives. Said one insurance executive: "The way computers are applied today is like using the space shuttle for home milk delivery."

Thus the major problem of office productivity is to develop machines that are easy to operate. Many executives are dismayed to learn that a computer is harder to use than a telephone or food processor, and are quickly discouraged when the device does not instantly perform as wished.

Studies show that one effective way to overcome middle-management resistance is for senior executives to take the lead and demonstrate a firm and highly visible commitment to the new equipment. Says Donald J. Gogel of the management consulting firm of McKinsey & Co.: "Behind every change there has to be a product champion. A senior role model is very important." Adds Brian Usilaner, the director of the General Accounting Office's National Productivity Group: "The only way you are going to get office productivity improvement is from the top down. You must hold the managers accountable for the improvement in productivity." After years of urging their employees to work more efficiently, the bosses them selves will now have to step up their own output. -- By Christopher Byron. Reported by Gisela Bolte/Washington and Sara White/Boston

With reporting by Gisela Bolte, Sara White

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