For years, there have been changes in the work environment. The changes have been big and yet, not quite discernable. You knew that something had taken place, but you only saw pieces of the puzzle and never the whole picture. Well, at least I could never put a tag on the process or in what led ultimately to the environment we have in 2006.
Some say that this Dilbert-like envrionment started with cublicles, focusing on the interpersonal impersonal and political context of work. Yet, I remember cubicles way back in 1968, and backstabbing and front-stabbing politics were as prevalent then as they are today. Getting bumped off is just quicker today which makes for much more transient relationships. So Dilbert existed long before this "thing" took over the workplace.
Downsizing as Symptomatic: Changing the terminology from "layoffs" to "downsizing" certainly put me on the right track. A specific incident comes to mind when the CEO of AT&T, Robert Allen, laid off 40,000 and saved the company millions on paper. It didn't matter that productivity was negatively affected, he was rewarded with a $10 million stock option and a phenomenal bonus to boot for the simple single act of downsizing 40,000 employees. This led to a spate of downsizing for bonuses like dialing for dollars.
In May 1997 Faireconomy.org reported that, "In 1996, the layoff leaders enjoyed an average increase in total direct compensation of 67.3 percent--far above the average increase of 54 percent for executives at the top 365 U.S. firms." and "Of the 12 top job-cutting companies for which data were available, the average gap between the top executive's salary and bonus (not including stock options) and the wage of the lowest-paid full-time worker was 178 to 1." Which is by most estimates now 300+ to 1.
Congress came up with the Income Equity Act which would have prohibited salaries and bonuses that exceeded 25 times the lowest pay received by employees. That never went anywhere, and it shouldn't have because reactionary bills don't deserve any serious consideration until they've been fully thought out, a daydream I know.
Outsourcing: Actually, downsizing was the first of the three foundation stones for this "thing," this process that has changed the workplace, but at its core, not work. Most work is affected by how it is and can be done. The easier it gets, the more downsizing (we don't hear much about retraining anymore, do we) becomes justified.
The second block was outsourcing. (Funny how we come up with innocuous terms for what can become life-altering events.) Outsourcing became offshoring, even though NAFTA was supposed to create the jobs of tomorrow in America. Long term, perhaps it has, but what kind of jobs?
I remember attending an HR conference in the late 80s when the managers present said that their primary responsibility was to retrain those who might be outsourced. But soon after, outsourcing took on new meaning when it also meant bringing in consultants who charged on an hourly basis to do the jobs of managers! Not only customer service, payroll, and insurance, but HR itself could be outsourced. And in some weird progression, even medical technicians and soon doctors will be outsourced as well.
Fortunately for those who can afford good customer service like grossly overpaid sports figures and CEOs, it and tech support can be had without talking to someone in India or the Philippines or Egypt (yes!). Kidding? No. One of the newest things is "boutique doctors." Want your doctor to be on call at least eight hours a day, five days a week, then pay and extra $1,500 to $5,000 a year. (Go ahead. Google it.) Want really good customer service from Dell? Then register your computer as a corporate entity rather than as an individual. You'll pay an extra $300 to talk to someone in Austin or Memphis (and it's worth it).
Flipping, Acquisitions, Mergers: No it wasn't downsizing. No it wasn't outsourcing. It was the third factor that led me to say, "By George, I think I've got it." That third factor is flipping. Flipping is the process of buying an asset and then quickly reselling it for a profit. Because flipping is the ultimate non-personal form of mergers and acquisitions, I'm using it singularly although all three are so related that in the context of this article, they can be treated the same (if the word "ruthless" precedes the M&As).
Tthe most common practice has been in real estate especially during the bubble when people would buy a house before it was even built and then sell it to someone else at a profit of $100,000 to as much as a million. It probably happened to companies during other bubbles, but sure enough, it began in the late 20th century when companies bought or took over other companies for no other purpose than to sell them at a profit. The final entity was rarely as good as the initial two, but it often made investors very happy.
Some point to Oracle's hostile takeover of PeopleSoft as flipping, but that is not a good example at all. This was more a matter of getting rid of ones competitor and represented an Ellison ego enhancer than of reselling Oracle. No, not Oracle. Not eBay purchasing PayPal. And PayPal's purchase of Verisign is more along the anti-trust lines than flipping. Don't leave them out of the turmoil created by mergers though.
When I was a consultant to the small banks and S&Ls in California in the 80s, the whole idea in forming a new bank was to sell it to a larger bank. And that they did until California had over 1,100 banks and S&Ls. I was the secretary to the smaller S&Ls, a group that numbered 380 in 1985. In 2006, the last one was gone, but by 1990 the number was already down to about 100. The game rapidly changed as did the rules and outcomes.
Flipping comes primarily from equity funds, and equity funds are as impersonal as any entity that stands to make a killing from buying and selling a company or downsizing or outsourcing. The employee is of least concern. I suggest that you look at Mergers and Acquisitions Report and you'll get a true understanding of the process.
I Get It: Jim Collins and Jerry Porras published Built to Last in 1994. They studied and analyzed the principles that yielded and could yield enduring companies. Their examples were HP, Wal-Mart, Disney, Merck, Boeing, Intel and Motorola. It's sad that those companies have had the turmoil that they've had, their endurance at times in question. Remember the days when Seattle's entire economy rose and fell with the fortunes of Boeing rather than MicroSoft?
Their book was on the "Business Week" best-seller list for a full year. The culture of 1994, a scant 13 years ago, was very different than it is today. In the blink of an eye, not only corporate but the whole country's culture has changed. Perhaps the whole world (today, China exported its first car to the U.S.). This was private equity's big year to the tune of $125 billion in targeted takeovers. A simple example: Albertson's, a supermarket chain, was targeted by SuperValu, CVS, Cerberus Capital Management for $11 billion. Albertson's is no more worth $11 billion than Barry Zito is worth $126 million. In fact, they're both mediocre. (Everett Dirkson is now shouting from the grave, "I was right!")*
Any company is for sale. Employees are expendable. Everything has a price. Those are now more truths than simple adages.
And that's "what I get." Anytime a company says, "Employees are our most important asset," I look at that with jaundiced eye. Then again, I haven't heard that phrase in years, even though some 15,000 companies still say it in their handbooks or advertising. When I do see that, I can't help but think that the company is about to sell their employees. I certainly used to believe that, but as a personnel manager I also knew that employees were also our most important liability. Other than salaries being the second largest expenditure next to debt or interest, employees used to like to sue or go to their unions or form unions.
With fewer than thirteen million members, and five million in public service where they can't strike, unions may well be dead before I am. As for suing, most attorneys won't take a case on contingency, and it's getting so much tougher to get a class action suit going. Employees have few protections or protectors or advocates.
I get it, but I'm not too sure that I like it. There used to be a balance. Even employer advocates like a balance. The game had rules.
The employer-employee relationship has been somewhat cyclical: adversarial, cooperative, laissez-faire... Where does it go from here? Well, so long as there are small companies with fewer than 100, or better, 50 employees, we should be in fairly good shape. Smaller companies have years to evolve, and there may even be time for those in their twenties and thirties to have careers. HR managers can help companies keep on the ethical, growth-oriented, positive path that some of us remember fondly and others will embrace.
It would probably do us all a world of good to stop reading the newspapers, dismiss all surveys and statistics that don't support what we believe (everybody else does), and don't watch the news. I wish I had thought of that in December 2005. Then I wouldn't be so disturbed by the downsizing of Pluto or finding out that they weren't talking about Mickey's dog.
From now on, if something really important happens, I'll learn it through my son-in-law's blog.
*I suppose you deserve an explanation: Dirkson was a Senator from Illinois who in 1964 said, "A billion here, a billion there, pretty soon it adds up to real money." What would he would think of a $450 trillion deficit?
But when it comes to the past six years (and no you still don't know my political mind), my favorite Dirkson quote would be, "But the basic difficulty still remains: It is the expansion of Federal power, about which I wish to express my alarm. How easily we embrace such business."
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