Whether
the companies emerging as the new stars of
corporate America will add jobs as quickly as some
of
the old-line giants are shearing them is doubtful. But
a certain amount of turmoil is part of the
natural
renewal cycle that is inevitable and ultimately
healthy
in a market economy, though it is undeniably painful
for
the workers affected. --Stephen
Lohr
"It used to be you had
a contract, now you're virtually working on a per-diem," said a displaced senior
vice president of one of the major broadcasting companies. He and I were in a three-corner
conversation with another ousted executive from the same network. "We used to have careers, now we settle
for jobs," said the other man. The
first speaker continued: "The contract with corporate America is a thing of the
past. If you're joining the
corporate ranks today (1993), you have to understand that you won't be there
with one company more than ten years. Your guiding concept has to be: the corporation doesn't get me; I get
them. There was an innocence about
it in the past; now that innocence is gone." This man is probably the most cynical
person I encountered in the course of this study; he was not burned out, just
burned up as he exited the executive suite.
I asked him what advice
he would give his son, if that young man were entering the corporate ranks
today. "Fake the niceties, feign
the loyalty, and keep your eye on them because they're going to take you
out!." In the matter of
compensation, his counsel would be: "Go for as much as you can get at the front
end, and don't count on much being there for you at the back end." There was a substantial amount for him
"at the back end" of his own corporate career, however. Given that security (full benefits based
on 30 years on the payroll) and the fact that he was just 55, he became actively
involved in television production ventures. "I feel good, whatever I'm doing now is
me, not the network."
At the beginning of his
career in the 1950s, this "Organization Man" had a contract and the expectation
of orderly progress up the ladder with increasing responsibility and
compensation along the way. It was
a "contingent" contract, of course, with no guarantee of permanence. But that
was never really made explicit, at least it was not at the forefront of the
consciousness of either party to the contract. Both sides took the long view.
They just assumed they would grow old
together. This was
particularly true in banking. Many
bankers I met spoke of the normal
expectation of "womb to tomb" security in that industry. Their own American Bankers Association
sponsored a book, published in 1992, that would have been unthinkable when the
"Organization Men" settled into banking careers several decades earlier. Its title: "Career Alternatives for
Bankers: How to Use Your Background in Banking to Find Another Job."
What was once presumed
to be a long-term "relational contract" can no longer be relied upon to sustain
an uninterrupted employment relationship over time. It is now more of a "transactional
contract" that brings managerial employees and their employers together in
corporate America; the "transaction" and the concomitant employment may be
short-lived. Both parties to the employment transaction (the new corporate
"contract") negotiate the arrangement in a new way. The manager, wanting to be hired, says,
in effect, "If you hold me contingent, I'll hold you contingent." He or she will settle in, but not too
comfortably; other options will always be explored, front-end financial
considerations will be more important than they were in more stable times, and
severance packages will be filled and neatly wrapped before the job begins.
Not only will other options be
considered as the ink is drying on the new employment contract, but actual
offers will be entertained at any time, although this, too, will be negotiated
by many opportunity-seeking managers in a new way.
The broadcast executive
I quoted above explained the new way of proceeding. First, he said, wherever you are
working, be serious but quiet about building up your own skills bank. Then, at any time, "when expressions of
interest come your way, act surprised and flattered. Regard the inquiry as an invitation to
dance with the prom queen; you've always wanted to dance with that girl. It doesn't make any difference if you
want the job or not, just make up your mind to get it. And once you get it--a bona fide
offer--then sit back and ask yourself if you want to take it. Be careful, though, and look both
ways--to the source of your present paycheck and to potential employers
outside. Your body throws off
vibes; people smell that you are thinking about moving on. But don't be too cool, and coy, and
'laid back' about it, or you'll lose the offer. Let them think you'd kill for the
job. Only when you get it, then decide if you want to take it."
Free Agency Attitudes
Another word for this
approach is "Free Agent Management," an idea borrowed from baseball and used as
the title of an article by Paul Hirsch in the National Business Employment
Weekly (May 29, 1988). "Whether
they lost jobs or watched others lose theirs, smart workers from the CEO down to
the clerical staff, are investing less ego and self-esteem in any company or
position," writes Hirsch. "These
managers are now thinking like free agents. They're beginning to look out for
themselves, find out how much they are worth and consider offers from other
teams.... Free agents make it a point always to know their alternatives, to have
a clear idea of where they could jump if unexpected roadblocks arise in the
present job. They work hard at
their current jobs but never take them for granted. They direct much of their energy toward
shaping and securing their futures." The free agent will not "jump" unless a safe landing is assured; he or
she is well aware that the best way to get a new job is to be effective, and
appear to be content, in an old one.
The change in the
corporate contract, which left countless managers jobless as the calendar closed
out the 1980s and opened up the decade of the 1990s, reflects shifts in the
corporate culture in America. Culture as defined by the theologian Bernard
Lonergan is "a set of meanings and values informing a common way of life, and
there are as many cultures," said Lonergan, "as there are distinct sets of
meanings and values." Anthropologist Clifford Geertz views culture as a "pattern of meanings
embodied in symbols." There is a
new search for meaning in business; there are also new symbols defining the
business environment.
Cultures change as
values change, as convictions shift about the meaning of life and work. Symbols change too; this becomes
noticeable, for example, when bosses are called by their first names, and casual
dress creeps into and around the executive suite. Values like "participation" change the
composition and style of the typical business meeting when such values begin to
dominate a given business culture. And when they do, management styles shift toward more delegation and away
from tight control.
Loyalty is a value that
means different things to different people these days; it is now expressed
differently or not at all in corporate America. Under the "old" contract, loyalty went
from the employee to the employer; no one questioned that. Security was received in return, but
those who did not own the enterprise seldom thought of this security in terms of
the company being loyal to them, just being fair to them. The company, like
Gibraltar, was just there--dependable, reliable, predictable. Employees at all levels were loyal.
Employers, some of them unapologetically paternalistic, were simply there.
One of my respondents,
an executive in a small consulting firm saw his "situation" as "somewhat unique,
although it seems to be happening more and more." He was part of a small enterprise that
was downsizing, "when all of a sudden, a very senior person--in order to save
himself--decides to leave the company. The other loyal employees and shareholders decide to do what is best for
those who remain. After a period of
analysis, the decision is made to wind down the firm and seek new
opportunities.... Our former partner and CEO decided he would be more secure
elsewhere. We were left holding the
bag. However, life goes on and so
do we." He viewed this as "morally
wrong and shameful conduct on the part of one individual toward his partners and
employees."
It is not unique,
however. It is happening in large and small organizations, throughout the
employment ranks--top to bottom--and has become, regrettably, a sign of the
times. At the corporate board
level, there is little evidence that this sign is being read. Few if any board
committees have exclusive oversight responsibility for the organizations's human
resource function; I know of no board committee whose chief concern is human
dignity and human values within the corporation.
Another participant in
my study, a chief operating officer who turned successfully to consulting after
his ouster, explained: "My view is that corporate America--and all
industrialized countries--will face a new revolution as the 'corporate contract'
disappears. Loyalty is a vanishing
commodity. When the employer has no
integrity or sense of responsibility, then the employee merely works and doesn't
give any loyalty in return. This
failure of mutual commitment will continue to reduce our industrial giants to
has-beens. What effective,
innovative people will continue to work in a culture like this? What kind of employee will agree to
exist in this environment?" He sees
this, however, in terms of "a generation of change. The whole thing will re-settle in the
form of smaller companies, not so impersonal." Smaller companies, nimbler
managers--this appears to be the wave of the future. The old corporate "battleships" are
yielding to new, more maneuverable corporate "cruisers," with corresponding
adjustments in crew.
One of the participants
in my study, a 44-year-old president of a small technical services company,
warns that managers should be alert to "early signs" that a separation is on its
way. "I was actually more concerned
about the company than the owners were. The owners, only concerned about themselves, were all-too ready to sell
the business. Early signs--in my
case, character problems with ownership--are real warnings to get out. Several years before I was fired, I knew
my long-range plans did not include this company."
Be loyal to yourself
first, is the free agent mentality. Downsize and outsource when the numbers (shrinking margins and earnings
declines) tell you to, is the corporate mentality; be willing to outplace
managers, but don't think you have to carry them when they are no longer adding
value or carrying their own weight.
Many middle managers
are finding that top management really regarded them all along as conduits; they
are now being replaced by better information systems. They are also the victims of downsizing
and delayering strategies that spread their work over fewer remaining
people. Repeatedly, middle managers
told me they will never again put the company's interest ahead of their own;
they join in a chorus of rejection of the notion of company loyalty. One of them
said he would advise any manager, "Don't
turn down an opportunity to put yourself in front of a CEO; you never know where
it will take you." Another added:
"The days of 40-year, one-company careers are over. If you stay with one company, you will
not have a broad enough range to take the top job. The one constant in the workplace today
is change."
The Economist of
London headlined "The Death of Corporate Loyalty" in an article (April 3, 1993)
reporting that "big firms are shedding jobs not merely to cut costs, but also to
change the very way they are managed....[These firms] are tearing up the
implicit contract they have always had with managers and other professionals:
security of long-term employment in exchange for dogged loyalty." The Economist sees this crumbling
of the contract and erosion of
loyalty happening throughout corporate America and in Europe as well. And no new contract, particularly no new
psychological contract is emerging to humanize the relationship, to set the
ground rules that might reduce uncertainty and clarify expectations between "the
company" and what we used to call "company men" and, more recently, "company
women."
Why the Change?
The change in
management style that has made the axe a prominent management tool is not easily
explained. In part, it is a move
toward delegating authority, granting autonomy, and fixing responsibility at
lower levels. The discovery that
"half our management team is writing reports for the other half to read,"
strengthens the will of those who think a weight-reduction program for the
elimination of middle-management spread, may be overdue. They are willing to try it to see what
happens. Delayered managers, or "redundant
executives," as they are known in England," have to wait to see what happens
from an observation post on the outside. Something could happen that would re-engage, but not re-employ them with
the former employer. Once out, it
is a short attitudinal step, but a large one entrepreneurially, to stop thinking
of yourself as an outsider--a former employee--and to begin seeing yourself in
an "outsourcer" capacity (one who supplies resources to the company from the
outside); you become a new entrepreneur who can provide a needed service to the
company for which you used to work. You can, in fact, from the outside, provide the service you used to
provide from within, as an employee. Now you do it for a fee. Your former employer "outsources" the need; you meet it--for a fee.
You do it for other firms too. This is your new business. The firms pay you more on a per-diem
basis but less in total compensation (no benefits) than they would if you were
on their payroll. You make it up on
volume and take care of your own benefits. You also have independence and the challenge of being your own
boss.
For well over a decade
now, most of the job creation in America has happened in small businesses, and
most of these businesses are in the service sector. If you are at work today in a large
corporation, said one of my respondents, "you should have an exit strategy." He was the victim of a hostile
takeover; he now runs a small company for less than he earned heading a division
of a large publishing conglomerate. His advice to the young MBA just entering the employment market: "Think
small and think services. Realize
that an employment offer is just an invitation to take your first job. Don't trip over yourself in negotiations
because this is just the first in a series of jobs you will hold. Get this one, but go into it with full
knowledge that you will be moving on."
One of my respondents,
a former CEO just over 50, is my guide to the new world of downsizing and
outsourcing, and the new opportunities for self-employment in an
information-based, service-driven economy. His separation from his last formal tie with an organization--Chairman
and CEO of a medical management corporation--was not really involuntary; at his
recommendation, he and his partners liquidated the company. Nor did he lose his earlier chairmanship
of Diners Club, a subsidiary of Citibank; he left it. His career, says James R. Emshoff, has
never been "the standard corporate stuff." He has blended the academic (Wharton School faculty) with business
(notably Campbell Soup and Diners Club) and the consulting world where he now
works (from his home in the Chicago suburb of Lake Forest, Illinois). Author of
The New Rules of the Game:
The Four Key Experiences Managers Must Have to Thrive in the
Non-Hierarchical 90s and Beyond (Harper Business, 1991), Emshoff writes "to
help middle managers through tough career decisions." In order to advance and
hold onto their positions in the 1990s, says Emshoff, middle managers will have
to show evidence of "people relationship skills, customer orientation,
leadership, and risk-taking." He is
very big on the idea of getting close to your customers, a concept that can be
applied within large organizations by top management who should regard those at
work on lower levels in the same organization, as "customers" who should be
seen, known, talked to, and heard from on a continuing basis. Wisely, Emshoff warns senior managers
that they have one important quality that is absent in the ranks of middle
management, namely, "enthusiasm for your job and a commitment to your
company."
Whether retaining or
replacing middle managers, top managers are dealing with free agents, or at
least with elements of the free agent mentality. This idea should not be too difficult
for them to grasp because more and more senior executives are showing signs of
free agency themselves--witness the lineup of CEOs willing to be considered to
replace John Akers as chairman of IBM in 1993. Although some who were approached
declined, it is clear that other fully-employed, highly-effective, and
apparently satisfied executives were ready and willing to make the move.
It would be a good
thing for both parties to the new corporate contract, whatever form it takes, to
regard the exit mentality as symptomatic of a new and acceptable way of
corporate life. Both sides should
plan for it. Employers should
encourage it. Managers in
particular should acknowledge, at least to themselves, that there is something
wrong with them if they have no plans at all for future moves.
Another way of
imagining what the corporate culture will be like in years ahead, as free agency
spreads and the entrepreneurial spirit is embodied within managers who work for
large organizations, is to look at the Congress of the United States. Just for purposes of illustration,
imagine that there are 250 Democrats in the 435-member House of
Representatives. Absent meaningful
campaign reform--i.e., no change in the present necessity of never-ending,
personal, political fund-raising in order to be re-elected every two years--we
have 250 individual political entrepreneurs who call themselves Democrats,
instead of 250 members of the Democratic Party who view themselves as
Representatives, working together in the U.S. Congress. They are individualists.
They owe their loyalty not to the Party,
but to those who support their re-election efforts. And this kind of loyalty may, or may
not, coincide with what is best for the nation the Congress is there to
serve.
Imagine now the large
business corporation. Even though
the large corporation now exists in an era of consent--large organizations exist
because others allow them to--the empowering relationship from shareholders
cannot be relied upon, as was the case in an earlier era of proxy passivity, to
keep top management securely in place. Nor can boards of directors be controlled by the
primus inter pares who holds the combined office of chairman and
CEO. Outside directors are now a
force to be reckoned with. In one week in early 1993, newly assertive boards of
directors in three of this country's major corporations--Westinghouse, IBM, and
American Express--invited their chief executive officers to pursue other
interests. General Motors led the
way in 1992, first by announcing a massive "restructuring" plan, and then
ousting the chairman. Too big,
perhaps, to be taken over by hostile suitors, these corporations are not too big
to be immune to pressure from major institutional investors, chief among them
the California Public Employees' Retirement System (Calpers).
There has always been
turnover at the top of American corporations; it is now more frequent and thus
more noticeable. Now, however, when turnover occurs, it is presumed that new
leadership will follow a "lean and mean" strategy, cut costs by reducing
employment, and bring a smaller, more efficient organization into closer contact
with its customers. "The Axeman
Cometh" was the headline over a feature in The Economist of London when
Louis Gerstner replaced John Akers at IBM on April 1,
1993.
Managers, therefore,
are living in a new corporate world in America. At the very top, they are less secure,
although much more generously compensated. At lower ranks, managerial men and women are less inclined to rely on the
corporation for their security, more inclined toward entrepreneurial behavior
within the corporation (as are partisan politicians within the Congress), and
always open to new opportunities that match their developing ensemble of
managerial skills. This is a new
entrepreneurial age within well-established corporations, not to mention
the creation of new entrepreneurial opportunities outside the old corporations
that now turn to outsourcing as a necessary, post-downsizing business
strategy. If you are inside and
cannot show that you are responsible for value-added, you will not be there
long. If you are outside, ready to
meet outsourcing requests but unable to deliver value to the downsized
corporation, you have a new business idea that is going nowhere. In this new world, the managerial
posture of preference, inside or outside the large organization, is "heads up!"
and "on your toes!"
An interesting
perspective on this is taken by an executive manager for systems, who was
separated involuntary from a large computer manufacturer at age 46. He still thinks "you should make a
substantial commitment to your employer, because without that commitment you
cannot expect career and compensation progression." "However," he adds, "you should always
leave a piece of commitment for yourself. This will ensure that you are properly postured and have the resources,
contacts, and skills necessary for a change of jobs or a career
transition." You should, at all
times, in this manager's view, "be at least semi-positioned to change employers,
so that you can hit the street running when and if it becomes necessary."
When I discussed these
changing attitudes with Jim Herget, then managing director of Korn/Ferry, the
executive search firm, in his Cleveland office, he commented that top executives
should make a point of empowering their employees and staying in touch with
their suppliers. And, as for a
manager's personal stance in the new corporate environment: "Be highly flexible
around an inflexible set of core values--God, family, country, job." Persons looking for security and
long-term satisfaction in the corporate world will often be disappointed, said
Herget; the organization of the future will be "smaller with more rolling,
contingent relationships." He
reminded me that today's young adults are more hesitant and cynical in
approaching the corporation because of what they have seen happen to their
fathers. This explains much of
their interest in benefit negotiations, a matter often taken for granted in days
gone by.
As I indicated above, I
learned a lot from Jim Emshoff to whom I was introduced by Ted Jadick, a veteran
executive recruiter with Heidrick & Struggles. Much of what I learned
relates to the new corporate contract and changes in corporate culture.
For openers, Emshoff
pointed out that "the 1980s turned out to be a decade when American companies
made a 180-degree turn in their operating philosophies. The 'bigger-the-better' principle that
drove conglomerate growth at the start of the decade is dead. Today's downsized company is focused on
niche markets with a 'good-things-come-in-small-packages' orientation." He sees
new options opening up for the delivery of management services. Outsourcing is the way to go for
supplies and services once delivered from within the corporation. "Properly managed independent suppliers
are generally more effective than in-house functions," in Emshoff's view. He visualizes a time "when companies
won't have any infrastructure functions; they will be replaced by very flat
operating units that are supported by variable cost suppliers of management
services." These, of course,
represent new business opportunities, and those best positioned to respond to
the opportunities are often the persons who once delivered the services from
within. They and their function may
now be "out" as a result of downsizing, but the function is still needed and
someone will have to provide it. Why not the person who knew both the function and the company well before
downsizing rearranged the players in this game?
Mr. Emshoff has begun a
new company, based at home. The name of the venture--IndeCap Enterprises,
Inc.--is a contraction of the services he can provide, namely, helping companies
develop Independent Capability Enterprises to serve the
parent company, but stand alone as profit-making independent businesses. He sees
downsizing as only a partial solution to the broader problem of corporate
restructuring; of itself, downsizing does not produce better financial outcomes
for a company. "The danger is not
that we will overshoot the restructure target, but that we will use only one
tool--the downsizing hammer--when there are many other options available. My fear is that when we see poor returns
from a particular downsizing program, we will inappropriately conclude we've
gone far enough and freeze off any other strategy options for
restructuring." What he sees as
certain is a movement away from traditional functionalized organizations
separated by rigid communications barriers. Some of those functions will be spun off
into independent enterprises, but the barriers to communication will have to
fall first, if this is going to happen with most efficiency and least pain.
Typically, spin-offs will retain some
relationship to the parent company. But as outsourcing becomes more of a normal business practice, new,
completely independent and autonomous firms, established by the new
entrepreneurs, will emerge to meet market demand.
I first heard the term
"outsourcing" many years ago in the context of automobile parts production.
Now, according to Jim Emshoff, "there
are legitimate outsourcing options for every in-house function." That may sound like an exaggeration, but
after reading "How Continental Bank Outsourced Its 'Crown Jewels'" (Harvard
Business Review, January-February 1993), I'm not convinced that it is. Richard Huber, vice chairman of
Continental, explains in the article that his organization is in the banking
business, not the business of managing information systems. Therefore, it made
sense for Continental Bank to give up complete internal control of its
information technology and enter into a ten-year contract with the Integrated
Systems Solutions Corporation.
The operative concept
here depends first on an accurate identification of your "core competency,"
followed by a determination to become world class in the practice of that
competency. And instead of thinking in terms of vertical integration, the
corporation should be thinking of forging customer-supplier linkages--horizontal
networks of business partnerships.
Mr. Emshoff now writes,
edits, and publishes the IndeCap Newsletter, which, in Issue No.2,
1992, outlined the IndeCap position on outsourcing, noting that it will play a
positive and rapidly increasing role in corporate restructuring strategies.
"Functions that would never have been
considered as candidates for Outsourcing will be evaluated as a Make or Buy
decision on very pragmatic grounds--'Can I support the success of my core business capabilities better through a captive or through a purchased
supplier relationship in each non-core function?'" When such evaluations are made
objectively, the IndeCap position is that "purchased services will mushroom from
today's levels." The future looks
good for outsource suppliers. Companies, meanwhile, will be separating out what Emshoff calls their
"core competencies" from their in-house "support functions," and mentally
classifying their internal support functions "as winners or losers if they had
to compete for the internal business and sell services to external clients."
If outsourcing is to
become a tool for restructuring the American corporation, downsizing is the
reduction-in-force lever that, once thrown, makes outsourcing indispensable for
the maintenance of services and functions needed to operate the core business of
the downsized corporation. The
restructuring question as it affects the future of the corporate contract is:
with whom will the downsized corporation contract to supply the function,
service, or even material, previously provided from within? The supplier may be a more
"entrepreneurial," quasi-independent group within the corporation, but now
functioning as a supplier to other divisions or groups in the corporation, while
"competing," at the level of price and quality, against any and all outside
suppliers who may want the business. Or, the supplier could be an outside group, founded or strengthened by
displaced employees of the downsized corporation. In either case new entrepreneurial
energies will be prerequisite for success. And, in either case, entrepreneurship will involve risks and rewards that
were not part of the old corporate contract.
The Change is "Discontinuous"
During his own
transition from corporate payroll to self-employment, Jim Emshoff was influenced
by the British management thinker Charles Handy, whose The Age of
Unreason (Harvard Business School Press, 1990) rests on the assumptions that
discontinuous change is now affecting corporate life, that changes in the
organization of work make a big difference in the way we live, and "that
discontinuous change requires discontinuous upside-down thinking to deal with
it, even if both thinkers and thoughts appear absurd at first sight"
(pp.5-6). Among the many
propositions produced by "upside-down thinking" is one that suggests "we should
stop talking and thinking of employees and employment" (p.25). Organizations are
going to have fewer, but better qualified, people inside, and more people
outside "who are contracted, not employed" (p.52). The book is well worth
reading.
Organizations are
changing shape, says Handy; they are taking on a shamrock configuration. The first leaf represents core workers,
the essential people. The second
leaf represents work contracted out (the outsourcing solution). The third leaf is "the flexible labor
force, all those part-time workers and temporary workers who are the fastest
growing part of the employment scene" (p.93). Since services cannot be stockpiled as
factory products can, the preponderance of third-leaf activity will be in the
service sector and the come-and-go providers of those services will often be
highly skilled professionals. In
the good old days of those good old employment contracts, these workers would
have been on corporate payrolls as full-time employees. Now they are flexible, self-employed
free-lancers, paid in fees, not wages or salaries, who can draw little comfort
from Handy's observation: "Self-employed people cannot by law or logic be
unemployed, only broke."
If the "Organization
Man" carried an attache case into corporate America and remained there for full
careers in decades past, Handy sees "portfolio people" (those on leaf-two and
leaf-three of his shamrock) moving in and around corporations in the decades
ahead. The "work portfolio" will
not be filled with just one thing--The Job; rather it will have compartments for
wage and salary work, fee work, homework, gift work (pro-bono, community
service), and study work. "As more and more people move their paid work outside
organizations, or are moved, they are pushed or lured into becoming small
independent businesses. They are
paid in fees, not wages, and have to develop their own portfolios of customers
and of activities." And unlike the
"Organization Man" of the past, who was hand-cuffed to his attache case and
wedded to his job, these new-age managers will demonstrate a higher regard for
leisure.
Call it free agency,
free-lancing, being-in-business-for- yourself, or being the manager of a
personal portfolio filled with (1) paycheck-related work, (2) fee-for-service
work, (3)
consulting-contract work, and (4) a mixed assortment of entrepreneurial risks
and rewards--whatever you call it, you are talking about the other side--the
new-age side--of the corporate contract.
Other changes will have
to accompany this shift in corporate culture, this new configuration of the corporate contract.
Prominent among them will be some form
of universal healthcare insurance coverage, not directly linked to an employment
relationship, and complete portability of pension benefits from one job to
another.
In order to retain some
semblance of psychological stability amid the uncertainties of this new
corporate context, managers will have to become accustomed to, not threatened
by, change. They will have to
be self-starters, committed to
productive activity that matches their interests and talents, rather than
committed to a particular corporation for both employment and self-identity
(they will no longer depend on being "with the XYZ Corporation" for purposes of
easy self-identification). As Paul
Hirsch put it, "Whether they are ball players or corporate managers, free
agents' satisfaction is rooted in what psychologists call their 'internal locus
of control.' Their motivation is
not controlled by a coach or boss they wish to please. Even though they may work at a company
for many years, they always retain some emotional distance from the office ties
that bind and potentially blind them to better opportunities elsewhere. In this sense they act like
free-lancers, even if they are based inside the corridors of a particular
corporation." Within the flattened corporation, there will be more of the
entrepreneurial spirit animating managers who remain to work there full
time. Not that thousands of
individual entrepreneurs will be pitted in competition between and among
themselves under one corporate roof, but there will be teams, competing units,
guided by competing managerial groups, all under the same tent and all with an
eye to the outside, not so much to discover "what the competition is doing," as
to survey the landscape of opportunities for them "out there." And from time to
time, teams will break away together to form new business organizations.
It should surprise no
one to discover that the "emotional distance," now emergent in the wake of the
death of corporate loyalty, spans a two-way street between the corporation and
its managers. "Never let yourself
become emotionally dependent on an employer," said a manager who had done just
that with IBM. "An employer may in
good conscience seem to offer lifetime employment and benefits, but that will
only last while the margins allow it," he told me. "Employer loyalty decreases in direct
proportion to lower margins."
Calling the late-1992,
early-1993 turmoil in corporate America "healthy but painful," Stephen Lohr was
prompted by the upheavals at IBM, Westinghouse, Sears, Boeing, McDonnell Douglas
and other corporate icons to write in The New York Times (January 28,
1993): "Whether the companies emerging as the new stars of corporate America
will add jobs as quickly as some of the old-line giants are shearing them is
doubtful. But a certain amount of
turmoil is part of the natural renewal cycle that is inevitable and ultimately
healthy in a market economy, though it is undeniably painful for the workers
affected."
I saw a lot of that
pain in the course of this study. The best form of pain-relief, of course, is a new and satisfying
job.
Some readers of this book are men and women who
wonder if they are ever going to work again; they are still in pain. Others will be managers pausing from new
employment routines to read this--some motivated by standard reader curiosity,
some just interested in seeing their own transition experience in a better
interpretative framework. The
danger for repositioned managers in the 40-to-55-age bracket is that they will
think they are starting over again in a familiar corporate world. If their new surroundings are so
familiar and predictable as to give them cocoon-like comfort, they have probably
hitched their careers to the wrong corporate engines. Things have changed.
Where life in corporate America may
appear not to have changed, there is a good bet waiting to be taken by those who
are sure change is on its way.
A new generation of
workers, inside and outside
large organizations, with a different view of
organizational life, is about to confront the
realities of doing business in a new
America.
The new America is an
environment of economic
uncertainty, global competition, and managerial
myopia. In the new America, old answers no longer
suffice. In the new America,
the economy remains
at risk; the false gods of management still stalk
the landscape, and
foreign competitors continue
to outperform and
outsmart us.
Whatever the problems of
the nations and whatever
their causes, they will not be solved by the organ-
ization man. The
organization man's watch is about
to end.
(Paul Leinberger and Bruce Tucker, The New
Individualists, Harper Collins, 1991, p.
412).
For more on the
implications of all of this for managers, consider what Susan Cohen has to say
in "White Collar Blues," Washington Post Magazine, January 17, 1993. The article appeared as the nation
emerged from the only recession in the past 30 years in which there was more
white- than blue-collar job loss, and where many of those white-collar jobs
would never be seen again. Prompted
by a special interest in middle managers who are, for the first time in their
lives, experiencing a sense of economic vulnerability, the writer attended a
monthly meeting of the Washington chapter of Forty Plus, a nationwide support
network for over-40 out-of-work managers and executives. One of them, age 50, told her there had
been a "social contract" between members of his generation and the corporations
where they thought they would be employed for their entire working lives. "There's an awful lot of people who
wanted to put their life and loyalty into something and were willing to take
less money for the security--it doesn't exist [anymore];" the contract has been
broken. The article goes on to report: "Middle-class
people
are not just losing jobs. They're not getting equivalent ones
back. When they find employment
after being displaced, it's usually at lower pay, and often...it's part-time or
contractual work. Temporary workers
tripled from 1982 to 1990, according to the Bureau of Labor Statistics, which
also reports that some 6.3 million people who work part time really want to work
full time."
This is the situation
Charles Handy explains as the third leaf of his shamrock organization. They probably should get used to the
idea that they will not be working for any single employer full-time, which is
not to say they will not be fully engaged with meaningful work in a diversified
"work portfolio."
In her Washington
Post Magazine article, Susan Cohen passes along advice from Richard Koonce,
who runs the Washington office of EnterChange, an Atlanta-based outplacement
firm. "When his clients are ready
to listen," writes Cohen, Koonce advises them on how to make their own
opportunities but with smaller, newer firms. Or with self-employment."
Here is what he
says:
We're seeing people making
transitions into
contractual employment, interim assignments,
working
on a trial basis for a year or two, consulting,
self-
employment--more creative solutions. Any job-seekers
who limit themselves to thinking about full-time
permanent employment are going to have a hard time.
[This kind of arrangement] can be lucrative. It's
virtually full time. There
are some real advantages.
Working as a contractor gives you some freedom and
flexibility. We're seeing
more and more professionals
do this in banking, law, telecommunications.
Koonce admits that this
is not for everyone. It is chiefly
for people between 30 and 50 who have "the ability to live with ambiguity."
It is for those, "who are willing to
hustle," he says. "I think that's
the name of the game now, being willing to hustle."
Energy and Answers from Within
This is another
reminder to the job-seeker that self-assessment is crucially important. Before a job campaign begins, an
individual has to know how strong are the traces of passive-dependency within
his or her personality. Is there sufficient energy from within for independent,
entrepreneurial-like activity? Is
there tolerance for both risk and ambiguity? Is there enough resourcefulness to
put together a work portfolio that will deliver the income, satisfaction, and fulfillment that match the goals
one sets for his or her working life? It is also important to have the right ensemble of skills and to be able
to post an honest account of achievements. But these questions, which only you can answer, and the answers have to
come from within, are the ones that will be on the minds of those who may be
thinking of hiring you full time, contracting with you for services needed, or
having you stand by for well-compensated short-term work that you can fit into
your portfolio along with additional work you are doing for other purchasers of
your services, or maybe doing just for yourself in this new corporate
culture. "This," in the sprightly
language of Time magazine (March 29, 1993), "is the new metaphysics of
work. Companies are portable,
workers are throwaway. The rise of
the knowledge economy means a change, in less than 20 years, from an overbuilt
system of large, slow-moving economic units to an array of small, widely
dispersed economic centers, some as small as the individual boss. In the new economy, geography dissolves,
the highways are electronic. Even
Wall Street no longer has a reason to be on Wall Street. Companies become concepts and in their
dematerialization, become strangely conscienceless. And jobs are almost as susceptible as
electrons to vanishing into thin air."
To focus on the
"who-is-getting-laid-off?" question is interesting, but perhaps more important
is the question of why layoffs are happening. Market forces are at work, of course,
often in the form of foreign competition. But technological change may be the key variable for explaining what is
going on (and off) in the American economy. In explaining "Why Job Growth Is
Stalled" (Fortune, March 8, 1993), Myron Magnet notes that the
"technological revolution includes all the ways that computer and communications
technologies have changed economic life." He lists examples of computer-controlled manufacturing processes with
their large labor displacement effects, and quotes Peter Drucker's view that
"the labor content of manufactured goods, which has been going down since 1900,
is going to keep on going down, not so much because of automation but because
the new growth products require less and less labor and raw material." Magnet then writes: "Consider
microchips, the preeminent product of our era: Compared with the auto, the
hallmark product of the preceding age of manufacturing, these electronic
components derive a much higher proportion of their market value from intellect
than from either material or labor."
There's the key: the
primacy of intellect over both material and labor as a source of value. As I mentioned earlier, the availability
of computerized management information systems has led top management to
conclude that many middle managers are little more than conduits that can be
replaced by new systems. Magnet
points out that these new systems are powerful enough to knit "global
corporations into unified wholes," and he notes that Milton Friedman sees this
technological revolution as making it "possible to produce a product anywhere,
using resources from anywhere, by a company located anywhere, to be sold
anywhere." This is why U.S.
corporations find it desirable and managerially feasible to export not just
jobs, but factories overseas, and why American labor is deeply troubled by the
prospect of more blue-collar job erosion.
There will be job
growth in the domestic U.S. economy, but at moderate rates and mainly in service
industries, not in manufacturing. The application of intellect will always be needed in a technological
society, and the application of technology to services will be the road taken by
successful new businesses and expanding small businesses. Moreover, providers of human services
and managers of human effort will always be needed. Those most likely to succeed in meeting
the new managerial challenges will, in my view, be persons committed to their
own continuing intellectual and personal development; those who are human, confident,
ambitious, and flexible; those who are sufficiently open to get along well with
others in a more democratized, less hierarchical business culture. As one of my respondents insists, and I
will let him speak for himself in Chapter Nine where job-seeking strategies are
discussed, you should build your employment future on what he calls your "scar
tissue"--your past education, past experience, and present skills--being careful
to nurture the continuing development of all three all the time.
What all this means to
the job-seeker is summed up by one who has been through it himself and
volunteers a lot of his time in counselling others: "There is nothing wrong in
considering yourself to be a 'product' or 'service' that has to be
marketed. Look at bosses as if they
were your customers or clients. Establish your own personal R&D program to keep yourself current. And
no matter where you are working, always act as if you were a self-employed
entrepreneur." These are the words
of Torrey Foster, who says they describe the "new reality" of employment in
America today.
This must not, however,
be permitted to remain a one-sided responsibility, looking only to an employee's
need to stay flexible. There are
responsibilities on the employer's side too. If met, they will create a new form of
corporate loyalty as part of the new corporate contract. Enlightened corporations will put a
higher priority on shared goals--i.e., a sharing of vision, values and
objectives with employees, especially managerial employees. It will, in my opinion, become a
characteristic of the "good" corporation to provide career enrichment programs
that help employees, including senior management, identify and develop their
marketable skills, thus enhancing their employability elsewhere. Whether employees do this on their own
or with the assistance of the corporation, those who are openly considering or
even seeking other opportunities will not be labeled "disloyal," just aware of
the new corporate realities. We are
not there yet in the world of work, but that's the way it will have to be if the
new corporate contract is going to work.
If continuous
employment in a given corporation cannot be guaranteed, it is wise and
responsible activity on the employer's part to encourage those who could become
victims of downsizing (and that includes just about everyone) to maintain their
employablity and marketablity.
There was a time when
the question, "Are you interested in tansferring?" within an organization, could
not be taken at face value as a clear signal that certain advancement lay ahead;
it was often just a test of loyalty. The only safe answer was a non-committal,
"I'm always interested in challenges." Things are changing. True, employees have a personal
responsiblity for their own career development, with or without help from their
employers. But
forward-thinking companies are now
acknowledging a new responsibility to give their employees the tools to expand
their employability, even though those tools may become tickets to opportunities
elsewhere.
Good employers will
provide the tools. Wise employees
(all of whom are potential job-seekers in this contingent employment universe)
will use them well. Actual
job-seekers will find jobs faster and remain reconnected longer if they
appreciate this new understanding of loyalty in the new corporate culture.