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Morals and Layoffs
Radical changes in modern institutional structure have ushered in an era of short-term, contract, or episodic labor, writes economist Richard Sennett in his book The Corrosion of Character. Corporations have sought to remove layers of bureaucracy, to become "flatter and more flexible" organizations. In place of pyramid-style organizations, management wants now to think of organizations as networks. This means many more layoffs, writes Sennett, and also that promotions and dismissals tend not to be based any longer on fixed rules, since tasks are fluid, and the network is constantly redefining its structure.
Executives are paid more and more to re-shape companies, and work becomes less stable in direct proportion. Workers have never been more powerless, their tenure more fragile. Tech workers, many of whom came of age in an era of growth and full employment, are learning the lessons of the real world quickly. Tasks and missions are temporal, the people employed to execute them highly disposable. Work and workers are both flexible and expendable.
One of the most shocking and widely accepted tenets of the new techno-workplace is that the well-run company, the one that wants to compete in the global economy, has to be so fluid, evolving and responsive to change that thousands of employees can get dumped at one whack and it's not even controversial. That's a pretty long trek from the capitalist ethic that only a few years ago valued corporate loyalty as much as profits, and touted the company-employee bond.
And it raises all sorts of new questions -- especially for a generation of tech workers experiencing layoffs for the first time.
In the Corporate Republic, where corporations fund the political system, control most mass media, write legislation, and now dominate entertainment and culture (and soon, much of technology, from bio-tech to Net access), there are few agreed-upon rules about layoffs. Hardly any would get far in Washington, the world headquarters of corporate lobbying. (Congress, allegedly the public's lobbyists, are scrambling to get campaign funds from corporate donors.)
Unions, already on the wane, have never gained much hold in the Tech Nation, populated by educated, mobile, skilled and independent-minded workers. Some tech companies are comparatively generous -- extending health plans beyond the federal requirements with some benefits extending past a layoff date.
Cisco has offered to pay its laid-off workers for an additional year if they work for charities the company supports. It's nice, but it isn't the same as job security. And even that kind of moral responsibility is rare.
Under COBRA (The Consolidated Omnibus Budget Reconciliation Act) passed by Congress in l985, some laid-off or terminated workers (those fired for reasons other than gross misconduct) are entitled to continuation of health benefits for extended periods of time. COBRA doesn't cover companies with fewer than 20 employees, and it doesn't cover all workers terminated under all circumstances. If the company goes bankrupt, for example, COBRA doesn't apply at all. You have to check and see if you're eligible.)
Corporations have no particular incentive to be generous, or even ethical, to terminated employees. Most answer to boards of directors and demanding shareholders expecting maximum profits. Generosity towards workers doesn't serve the bottom line, even when it might serve the company's long-term interests. One of the reasons Cisco treats laid-off workers well, company officials have conceded, is to keep morale high among remaining employees, who feel better about the company and the work they do for it.
All sorts of class issues are roiling the new, techno-driven workforce, amid the thousands of layoffs being announced weekly.
The layoff was once the more or less exclusive province of the working class. but in recent years -- and especially recent months -- it has become a fixture of the white-collar and managerial universe, and of skilled, educated, tech workers. U.S. employment figures show the number of workers on nonfarm payrolls plummeting.
Now lawyers and journalists are getting laid off as well as tech workers, and when reporters started hitting the sidewalk, layoffs became a big story in a hurry.
Yahoo, Dell, AOL Time-Warner and scores of other companies have collectively let go of hundreds of thousands of employees (soon, probably to be followed by layoffs at the new company formed by Hewlitt-Packard's acquisition of Compaq). A generation of tech workers, for the first time, is feeling the impact of a workplace in which corporations seem to feel virtually no moral obligation to the employees they let go.
So just what moral obligation does a company have to laid-off workers?
Some possibilities:
- Maximum warning. Employees ought to have between three and six months' notice before they're laid off, time enough to look for other work in a sane, secure way.
- Continued health benefits. Employment used to be a contract: you worked hard for the company, the company took reasonable care of you. Employees who have been with a corporation any length of time at all -- I'd say six months -- ought to keep their health benefits until they find new work, a guarantee not even COBRA provides.
- Innovative responses. The layoff has become almost a corporate reflex, a statement to analysts, boards of directors and stockholders that management is lean and mean. When the market drops, capital gets squeezed,or takeovers occur, employment gets slashed. This often seems short-sighted. Tech workers are skilled and valuable. It's difficult to predict the nature of technology, and of consumer attitudes towards technological products and innovation. People laid off today might be urgently needed in six months. Shouldn't they at least have a chance to come up with other tasks, products, functions or ideas before they're booted out?
For that matter, tech workers could seek out companies with humane policies towards their workforce, making the companies more valuable and competitive. They could also begin demanding contracts and codified job security when the seek and accept positions -- especially when the economy is in their favor.
Regulatory agencies consider the impact of corporate decision-making on the environment, the consumer, and on anti-trust issues. Why aren't consideration of layoffs and job losses a factor in mergers like that between AOL and Time-Warner, or Hewlitt-Packard and Compaq? Maybe the loss of thousands of jobs isn't worth the short-term savings of some mergers.
Let's not kid ourselves. In the Corporate Republic, we can't expect companies, governments, unions or regulatory agencies to strengthen a sense of corporate morality or humanity. Corporations are more powerful than any of these entities, as tech workers are discovering by the thousands. Workers are on their own. Companies will demonstrate loyalty when they re-gain a sense that it's more efficient, ultimately more profitable, to keep experienced loyal workers than to employ insecure short-term ones. That's possible. But it isn't likely.
C'mon, Jon, i've come to expect a certain "knee-jerk" response from you on these posts, and frankly I'm a bit disappointed that I didn't see it here. Actually, I'd like to see some answers. After the events of the past two weeks, I think that all of us are rethinking our job stability.
John
Many times "company loyalty" only goes one way with the employee giving it and the company giving the employee "the shaft." I have been there. However, I find it silly to expect that I can walk away from my job anytime, leaving my employer with ruined plans and wasted money but they must give me advanced notice before letting me go.
Don't get me wrong, an employer treating me right before letting me loose would be great! As an employee I should be willing to do the same for my employer should I start pursuing a career path away from them.
No, the employers caused this when they did the mass layoffs for "downsizing" in the early nineties. Anyone who even watched that from afar should have learned that loyalty ain't worth shit, and you should always (a) keep your skills up; and (b) keep your eyes open for better opportunities. Since job-hopping is more accepted in the tech business, this naturally led to people switching more oten during the boom. Now that we're almost certainly in a recession, it's more difficult - but that doesn't mean that we should all turn into starched-collared Organization Men again.
sulli
RTFJ.
This thinking came because of the reverse...
Most companies haven't been thinking in terms of engendering employee loyalty for well over a decade now. I know, I've been in two of the downturns in the economy now- they (corporations) tend only to think of that bottom line. And worse, they think of it in only short-term thoughts. All this bloodletting they're doing to their staff makes them look good on paper, but they just got rid of at least part of the people that were needed to make their projects they have in progress go- they're butchering their medium-term and possibly their long-term profitability to look good in the here and now.
This all came about from the last downturn in the economy some ten years ago when there were...wait for it...mass layoffs not unlike now, etc. The companies showed absolutely no loyalty then- why should the employees show them any loyalty when they're going to keep doing it over and over and over...
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
I believe that this is just one aspect of a very frightening shift of accountability and responsibility in the United States that has occured over the past 120 years. Abraham Lincoln once said that this "government of the people, by the people, for the people, shall not perish from the Earth." Well, we've proven him wrong. The US is a government of the corporation, by the corporation, and for the corporation.
Look, for example, at the Anti-Terrorism Act that would make hacking a terrorist act, punishable by life in prison and subject to RICO statutes. I'm not going to claim any support for hacking, but there is something fundamentally wrong with a nation where financial crimes against a corporation are considered far more serious that violent crime against an individual, yet corporations cannot be held criminally responsible for their actions. If you break in and deface Union Carbide's web site, you could have all of your possessions seized just on suspicion, and spend the rest of your life in prison if convincted. When they killed thousands of people in Bhopal, they got a slap on the wrist.
This situation is nobody's fault, and yet everybody's failing. Our governent is based on popular support, and the will of the people. The way our politicians gauge such support is based on who they hear from, and what they hear. They hear from individuals, and lobbying groups that represent individuals. And under modern US law, corporations are very large and very powerful people, capable of shouting far louder than anyone else.
Abraham Lincoln also said, "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. ... corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." -- President Abraham Lincoln, letter to William F. Elkins, Nov 21, 1864 (from The Lincoln Encyclopedia [MacMillan, 1950]) (Quote reference thanks to Hank Kalet)
Where do you want to go today?
I don't see the problem.
"Do they owe anything to the people they dump? "
Sure, they owe what the contract promised, no more no less.
Corporations' disregard for their employees is equal to employees' disregard for their employers. Should companies give 3-6 months warning of layoffs? Why the hell should they? How many employees have to give that much notice if they feel like leaving?
Sure, people (including me) can lose a job at short notice. But, we can get a job at short notice. Even 15 years ago, if you left a job voluntarily for no reason better than to have 6 months unpaid chilling out with your family, it would make you unemployable in the eyes of many. Now, you are free to do that kind of thing.
Employees have far more information about the companies they join and work for. They are far more able to determine their employer's health for themselves. They have much better access to their managers. No more big boss on the top floor with the oak desk; most managers, while just as focussed on the bottom line, are far more approachable and forthcoming.
These days, few people would want to go back to the old paternalistic model. The quick hire quick fire culture was spawned as much by tech workers jumping for better pay every 12 months as it was by businesses jiggling their structures every 12 months.
It's the modern world, deal with it.
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Microsoft isn't innocent. They'd rather that it hadn't happened, but they aren't innocent. When a single company takes that large a chunk of the finances of an industry, then it's not innocent when the industry tanks.
But that's a long way from saying that they intended things to happen this way.
In a way, Microsoft is rather like Yahoo and Amazon. They used ballooning stock prices to create a speculative bubble. When the bubble popped, so did most of the industry built around it. And most of the "fault" should go to the stock speculators who blew that bubble so insanely large. Most of them have already been subjected to heavy fines for their part in the fiasco. In this spot I include the employees who were paid in stock options.
One of the groups that should be faulted is the accountants who wrote the rules that allowed taxes to be deferred for employees being paid in stock options. And who allowed the stock being paid to not be charged against the company immediately. Those *** got off scot free, and they certainly didn't deserve to. That was a reasonable benefit for a small company, say with fewer than 50 people. It should have been phased out as the size of the company increased.
I think we've pushed this "anyone can grow up to be president" thing too far.
What everyone seems to be missing in all the layoff paranoia is the same thing that makes it easy for a company to hire you, makes it easy for them to fire you. America has a very dynamic work force. They transition jobs very quickly. What this means is that jobs are almost continually being created and destroyed. A company can feel free to hire a bunch of people in hopes the demand will be there, because they know if the demand isn't there, they can fire them. Compare this with Europe, where layoffs are extremely discourged by the governments. You have less jobs created, because they know that once they hire people it is extremely hard to fire them. This is what causes the American economy to creat more jobs than most other economies. That is why the American unemployment is typically lower than other countries. So as we lament the ability of companies to lay off American employees, let's not forget that that same ability is what got a large portion of those employees hired in the first place.
"Information wants to be expensive" - Stewart Brand, the same guy who said "Information wants to be free"
Some possibilities:
Maximum warning. Employees ought to have between three and six months' notice before they're laid off, time enough to look for other work in a sane, secure way.
Continued health benefits. Employment used to be a contract: you worked hard for the company, the company took reasonable care of you. Employees who have been with a corporation any length of time at all -- I'd say six months -- ought to keep their health benefits until they find new work, a guarantee not even COBRA provides.
Innovative responses. The layoff has become almost a corporate reflex, a statement to analysts, boards of directors and stockholders that management is lean and mean. When the market drops, capital gets squeezed,or takeovers occur, employment gets slashed. This often seems short-sighted. Tech workers are skilled and valuable. It's difficult to predict the nature of technology, and of consumer attitudes towards technological products and innovation. People laid off today might be urgently needed in six months. Shouldn't they at least have a chance to come up with other tasks, products, functions or ideas before they're booted out?
This would be best done in a collective bargaining situtation which is almost non-existant in the IT sector.
Plenty of professionals have unions (teachers,professors, nurses for example). There is no way this would pass into a law without being so watered down as to be completely ineffective. Don't like the idea of unions? Then maybe you might want to give up your weekend and 8 hour work day, without unions we'd have neither of those.
You say that "laws should spring forth from society and not be sent down from above."
That's a vague word, however, "society." You seem to be speaking of the society of the corporation itself. That society is definitely not codified in law. The society that is codified in law is the society of shareholders. Namely, it's not against the law to do something for the worse of the members of your corporation, but it _is_ against the law to do something for the worse of the stockholders.
I agree that this is a problem. Passive shareholders should not have more control over a company than the people who make up the backbone of the company. The two remedies I can see for this are 1) change the law so that stockholders aren't the end all be all, and 2) keep more stock inside the company so that the needs of the shareholders ARE the needs of the members of the corporation.
A great contrast to the American stockholder-centered corporation is the Japanese corporation. If you're interested check out Stock Market Capitalism by Ronald Dore. It shows a very interesting contrast between the American mega-merger mindset that's fostered by our stock market and the Japanese loyalty mindset fostered by their corporate structure.
Btw, IANAL, so please point out any errors I've made.
I don't think that's it. I think the government favors big corporations. I've worked in big companies and small, and there's no way the big ones were efficient. They waste almost all their money.
Local governments give huge tax breaks to attract big corporations so they will 'create jobs'. They don't care if the additional burdens kill some small companies that could create tomorrow's jobs.
Every layer of government regulation benefits the big players over the small ones because the cost of compliance can be amortized better. (OK, that's an economy of scale).