Time To Get Back To The “We” Era

The last several blogs have focused on unions and how they have helped the U.S. both socially and economically.  We also looked at unions themselves and what they need to do for any future comeback.  This week, we’re going to flip to the other side and  look back at corporate America.  We’ll give corporate America a to-do list just like we did last week with unions.

A new book looks at corporate strategy from post World War II through today.  The book, The End of Loyalty: The Rise and Fall of Good Jobs in America, is written by Fortune magazine writer, Rick Wartzman.  The Aspen Institute recently had Rick discuss his book with New York Times economic correspondent, Neil Irwin.  The book discussion provides a good explanation into the income inequality problem facing the U. S. today.

In his new book, Rick says corporate America, following the end of World War II, was very concerned about another financial disaster occurring.  They believed that if they increased pay and benefits it would help to prevent another depression.  In addition, corporations had a greater concern about taking care of their employees, and for those that didn’t want a union shop, there was increased pressure to provide good pay and benefits packages.

But once the 1970s hit, corporations changed their focus based on a prevailing economic theory that continues today.  Nobel prize winning economist Milton Friedman came up with the free market capitalism theory which stated the only concern corporations should have is to the return on investment for their shareholders instead of to communities and employees.  Corporations that once wanted to take care of their employees saw things differently and shifted their loyalty.  Rick said it was the end of the “we” era in corporate America and ushered in the “I” era.

There were also other problems at that time according to Rick.  Corporations became lazy and production quality was sloppy such  as in the auto industry.  Global competition was increasing, too, which created additional pressure on corporations especially with inferior products being produced.   Another problem Rick cited was the emergence of corporate raiders who would take what they could from a company for maximum investment and profits and then sell it off usually leaving it for dead.  This created massive layoffs.  Layoffs, themselves, were a problem as companies were rewarded on the stock market for having cut costs for shareholder gain.

In addition, executives were rewarded as they increased shareholder return.  As executives worked to increase greater returns for shareholders they also discovered they could increase their own pay either by additional salary, bonus, stock options or all the above.  This only weakened or diminished the incentive to take care of workers because increasing employee wages and benefits would  only decrease any return for shareholders which in turn decreased the paychecks of executives.  It also hurt development of new products because that, too, was viewed as an additional cost.  Entire companies lost out and closed as less and less development was done.

Other things also have not helped with employee wages.  Rick mentions the increase use of technology has not helped and the pounding on unions by corporate America has caused them to be almost non-existent.  Unions threaten the cost cutting measures executives want that can provide greater profits, shareholder return and increased salaries.  Public policy changes, too, have been extremely weak or non-existent that would counter some of the activity stemming from this and the 1970s.

But now, a lot has changed in the 40 years since the theory of free market capitalism was introduced.  It’s  means corporate America must change also.  Last week, we listed some things unions need to do within their structure.  This week we have a list for corporate America.

  1. Stop the war on unions.

Overall opinion of unions is growing stronger.  Younger workers prefer unions over corporations, and not just by a little, quite a bit more.  Attacking the other side or trying to weaken unions will not continue to benefit corporate America with anybody, and in particular, younger workers.  Millennials and generations younger Identify with union causes.  These younger workers also prefer working together on outcomes that satisfy everybody, not just a few.  Labor-management committees definitely will suit this group.

  1. Unions can help if you create a partnership.

We have blogged over and over how labor-management committees have helped reduce costs, looked at new processes that were more efficient and identified ways to improve customer service.

  1. Capture the enthusiasm of your workforce.

As corporate America continues to look for workers, all workers and younger workers will be looking at them and how they treat employees and society.  Any age group, millennials or any other are enthusiastic when included in the day-to-day decisions of the organization and all want to share in the responsibility of success in an organization.  That enthusiasm needs to be captured, not discouraged.  There are lots of great ideas that can bring about new products, new ways of doing things and maybe even with less cost and waste but they have to be listened to. Don’t provide lip service!  Walk the talk!  We all know sincerity when we see it.

  1. Turnover expenses can be high. Avoid it!

As jobs become more plentiful, people will look for better places to work.  Millennials and younger generations have very little patience.  They’re more used to the instant gratification of technology.  If workers see a workplace based solely on shareholder and executive paybacks, they will quickly leave.  This will only add increased costs on those seeking to reduce.  Even though a lot of organizations prefer not to do training, there still is an element of training as new employees must adjust to the workplace.  It’s much less expensive to maintain employees than to constantly look for new ones.

  1. Invest in employees.

Rick Wartzman suggested employers need to go back to training employees.  Each organization is unique.  Expecting to find employees doing a specific skill just exactly the way the organization does it will not happen!  Don’t just train to train.  Train smartly and use it.  If you train employees  yourself, it can quickly provide some return on the bottom line plus build some loyalty back into the organization.  There are some workplaces that provide their own training and see benefit from it.  Quit blaming others for not having skilled workers and don’t rely on everybody else to do it for you!

  1. Look to European counterparts and see what they’re doing, especially in Germany.

This was a suggestion Neil Irwin provided.  Companies in Germany are doing quite well and they see stakeholders as not just shareholders but customers and employees, too.  All are seen as equals and have something to offer.  It doesn’t mean that everything needs to be done like the Germans but it doesn’t hurt to look into it.  Be open to new ideas and new ways of doing things!

  1. Return to the “we” culture.

Show employees you actually care for them.  Quit treating everything as a cost!  Just this last week, a story in the news was GM was outsourcing jobs to Mexico because of cost.  Stop that!  It demonstrates that  “us vs them” culture or that continuing “I” culture.  Some companies have created a  “we” culture and are getting a tremendous return with  everybody receiving a share!  Get to know some of the communities you reside in and help out.  Some smaller communities need your help desperately.  It’s good corporate responsibility.  It might increase business!

  1. Finally, encourage public policy that helps everybody, not just corporations.

Encourage Wall St. to embrace hirings more than lay-offs.  Look for new economic theories instead of those that emphasize, cut, cut, cut!  Expenses need to be watched but they don’t need to be cut so much that puts more money back in the pockets of some and less to none for others.

Not all corporations are bad.  Far from it.  There are some very good companies out there who are doing very positive things and treat people with the respect and dignity they deserve but the overall corporate message that comes out must be the one that changes and it must emphasize the loyalty that once prevailed.

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About CALMC Blog

Columbus Area Labor-Management Committee is a not-for-profit organization dedicated to involving employers and employees to preserve jobs, resolve workplace issues, and promote labor-management cooperation. Visit our website at http://calmc.org
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