Avoiding Another Dumb Management Mania-The Disposable Worker
Filed under: Crisis Leadership, Current Affairs, Performance, Social Commentary
Note from Art: my rant is dedicated to helping keep what is in some circumstances a reasonable business tactic from becoming the latest value-destroying mania.
I wrote last week on “Thoughts on Leading and Managing in the Era of the Disposable Worker.” The post was prompted by an article in BusinessWeek, outlining this latest gem of management wisdom that has organizations of all types rethinking the need for employees and shifting to contract workers. Positions from the CEO suite to those types of roles that we’ve become accustomed to outsourcing, and everything in-between, are fair game.
I’m traditionally leery of fads of all sorts, as they tend to be driven by hysteria, causing normally sane and rational people to act in a manner that defies explanation. I’m fearful that we are on the brink of another horrendous, value-destroying mania as we embrace the short-term cost convenient fad of creating disposable workers.
A Few Examples of Manias Gone Horribly Wrong:
It wasn’t’ so long ago, that almost everyone wondered for just a moment whether the laws of economics had been suspended as the internet gold rush began. Those of us on the sidelines were left to wonder why we weren’t as smart as everyone else and still valued profits over clicks and eyeballs. For a short period of time, our world was one where gobs of money flowed to people with ideas that included losing all of it and then some, and market valuations for firms without a single customer exploded from here to Jupiter. Anyone that dared to question this environment ended up running away from a bunch of options-toting visionaries lest they be trampled in the stampede of outrage. How dare we not understand that clicks and eyeballs were the new replacement for profits and that anyone that could throw around the phrase “data aggregation” was worth funding.
Eventually, the laws of physics and economics reasserted themselves, the dot come bubble burst and we spent a decade creating a new mania in the housing market. Once again, the rules of common sense and gravity won out, yet tens of millions of normally rational people succumbed to the mania and many have lost much more than paper options.
As a wise teacher once indicated, “There is no such thing as a money machine.”
Opinions, Thoughts and Irreverent Observations on this Potential Next Mania:
All of this brings me back to the latest rage of firing your employees and hiring contract workers to staff your business. For those of you new Management Messiahs that are leading the charge here, I have a few questions, observations and answers for you:
- Opinion: Turn core, value-creating roles into contract workers, and you will be selling your soul to pay the number crunchers and analysts.
- Opinion: You cannot sustain any form of business performance excellence with a transient workforce.
- Question: How will you replace that invisible but palpable thing called culture and how will you build a high performance culture around nameless, faceless drones?
- Observation: Once your competitors identify all of the talent that you’ve alienated, it will be open hunting season and you’re what’s for dinner.
- Observation: your global competitors are not foregoing their futures by emphasizing the numbers in the present. A short-term time orientation is a powerful dimension of U.S. business culture and thinking, and it is a weakness.
- Question and Name Calling: Why is this your BEST answer for competing? Is that all you’ve got?
- Double-Dog Dare: Study firms that have made a near religion out of valuing the employee. Start with SAS Institute. There is another way if you have the courage.
- You’ve Been Served: in case “maximizing shareholder value” is driving your decisions, consider Drucker’s rebuke of that modern rationalization for the organization: “the purpose of the firm is to acquire and keep customers.”
The Bottom-Line for Now:
The future of business and any company and perhaps of America is based on finding, cultivating and keeping the best talent. There are no circumstances that I can imagine where shifting core value creation roles to contract workforces will help you succeed in this increasingly complex world. Resist the urge to follow the herd and challenge yourself and your team to focus on solving vexing customer problems and building value in meaningful ways.
Comments
9 Comments on Avoiding Another Dumb Management Mania-The Disposable Worker
-
David Locke on
Wed, 20th Jan 2010 1:07 pm
-
Art Petty on
Wed, 20th Jan 2010 1:10 pm
-
Bret Simmons on
Thu, 21st Jan 2010 7:37 am
-
Robert Comer on
Thu, 21st Jan 2010 3:45 pm
-
Patricia Comer on
Thu, 21st Jan 2010 3:57 pm
-
Pat on
Mon, 25th Jan 2010 4:21 am
-
Art Petty on
Mon, 25th Jan 2010 6:33 am
-
Mike O. on
Mon, 25th Jan 2010 2:10 pm
-
Art Petty on
Mon, 25th Jan 2010 2:27 pm
Places that use temporary labor do have a culture where the full-timers are better than the temporaries. The temps are fired at the drop of a hat. Temps are hired to be fired, instead of losing the few full-timers. It is a culture of discrimination and entitlement.
Given that bodyshops don’t provide benefits, and still charge their clients as if they did, the only reason to take a temporary labor position is fear. The whole situation is one that limits the worker’s ability to focus.
It comes down to this, if management can’t create value via their companies, they create value by laying off, buying back shares, etc. These tactics should trigger fire sales on Wall Street. Eventually, that fire sale does happen, because these companies have thrown away their futures. The CEO engaging in these means will be long gone. The only upside is that that CEO’s kids and grand kids won’t have jobs. These things do bite back.
Thanks for adding your valued perspective, David. They do indeed bite back. -Art
As Seth Godin correctly points out, any company that pursues a strategy of replaceable workers is in a race to the bottom. Thanks for calling this what it is – bad advice. Bret
I agree with your perspective, contract workers may work well for the short term or for temporary projects; but any one looking to build a sustained business for the long term will find that contract staff will give them a underdeveloped workforce that won’t be able to compete with a seasoned team.
I keep thinking it can’t get any worse, that some day we will wake up and decide as a collective that the time-proven adage that ‘our employees are our most valuable asset’ will prevail once again. It appears I am wrong on both accounts…or maybe it is my impatience…
Pat
There is a more subtle problem here:
1) Temporary workers have no motivation to IMPROVE the business. They just do what they are told.
2) Temporary workers end up working for multiple businesses. At some point, one of those businesses will decide that they rather hire the person full-time. At that point, the other businesses will discover the music has ended and a key person has disappeared with *no* notice ( there is no standard “2 week” notice with a contract person )
3) IRS auditors can decide that the “temporary contractor” is really an employee. Then the business has all the expense of an employee – but none of the benefits.
4) Hourly employees have no motivation to be efficient.
Excellent points, all Thanks for adding in here, Pat. -Art
Great Stuff! Your points play an important role in our current economic climate. Contract workers might solve your short term problems, but will only hurt your organization in the long run. An organization’s greatest resource are the people involved. Mike
Thanks, Mike! Agreed. -Art
Tell me what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!
My Book
The desktop reference to leadership success whether you are starting out or starting over.
Art Petty
Welcome to Management Excellence where the focus is on building better leaders and creating high performance organizations.Building Better Leaders
Art Petty's Building Better Leaders programs in Leadership, Management and Developing as a Senior Contributor offer powerful and practical guidance for motivated professionals.
All programs available on-site in group format and select programs available in a distance learning PLUS personalized mentoring format.
Visit Building Better Leaders to find a program to help you or your team move forward. And don't forget to subscribe to the Building Better Leaders Leadership Tip of the Day.
Management Excellence Tools
Download the Management Excellence Guide to Effective Trade Show Marketing. What's Your Strategy & Execution (STREX) Quotient? Download and use the survey to help you gauge your organization's Strategy & Execution effectiveness and identify areas for improvement.e-book-Leadership and the Project Manager - Developing the Skills that Fuel High Performance Download the pdf or go to the e-book pages on this site and contribute to the conversation
Blog Subscriptions
Connect With Me On
E-Newsletter Mailing List
Join my e-newsletter mailing list and receive the latest in best-practices content for leadership, sales & marketing and strategy.