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Leadership Thought #208 – The Employer-Employee Model is Broken

September 1, 2011

Leadership Thought #208 – The Employer-Employee Model is Broken

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believe there has been a significant shift in the employer-employee relationship during my lifetime. These days, talented employees see themselves as free agents and will move at “the drop of a hat” for more money or responsibility. Careers have evolved into resume-building exercises, accompanied by the expectation or hope of moving forward or finding a new job if things don’t work out. The interests of the company are secondary to your own self-interest and will provide the greatest short-term gain. The millennial generation takes this to an even higher level, with no tolerance for paying their dues or working their way up the corporate ladder. There is a laser-like focus on the present with very little consideration of the future implications of their actions on themselves and/or their co-workers. There is definitely a “get what I can get and live for today” mentality.

Employers now, more than ever, tend to see their employees solely as assets to be managed and reallocated as needed. To the greatest degree possible, they want to turn labor into a variable expense and minimise employee-related overhead. With unemployment so high, the mindset is that if you don’t perform as I want, many others will take your place. There is a minimal appetite for investing in people development because it’s expensive and time-consuming, and employees ultimately leave, taking those skills to your competition. Moreover, if we can close operations here and relocate them to a cheaper location, then the decision is a “no-brainer” and should be implemented as soon as possible, regardless of the consequences. Finally, the gap between executive and average employee pay has become extraordinary, with the creation of a small and extremely wealthy aristocratic leadership class, while everyone else struggles to make ends meet and save for retirement. At times, it feels like we are reverting to a “Banana Republic.”  Does anyone else perceive that we are headed towards an inevitable collision?

What made American industry great was that we had a solid, albeit often informal, contract between employer and employee. If you show up, pay your dues, and do a decent job, we will take care of you economically and provide a sense of security around your professional and personal well-being. Hang in there, stay the course, and opportunities for advancement will arise. We will also create a safety net to catch you when you fall and/or encounter challenging life issues. The overarching theme is that we are all in this journey together and should make the best of it. It is also why we created the largest middle class ever known to mankind and put a great distance between ourselves and other economies in the world.

Some companies, such as Google, Apple, and Disney, still understand this concept, but they are becoming increasingly rare. The good news is that their results speak for themselves. There is no secret formula for achieving business success. The key to success has always been the same: create high-quality products and services that customers value, deliver them efficiently and effectively, and take care of your employees, who will, in turn, take care of you. The evidence is in plain sight for all to see and has always been. Business should be a Win-Win-Win proposition for the company, its customers, and the employees. I wish more company leaders were paying attention.

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