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The Rot at the Corporate Center, Part II   (September 25, 2006)


Friday's entry on the book Bait And Switch (by Barbara Ehrenreich) and the U.S. corporate culture generated several noteworthy responses. Reader M.P. describes an environment in which increasing corporate profits seem to trump all other considerations-- including the long-term profitability of the company:
I have been a design engineer for about 15 years, I believe that I am a pretty good engineer. In 2000 I decided to change jobs. Since then, I was laid off and almost laid off. I know a platoon of engineers that have been forced to look for work since 2000 for the sake of corporate profits and shareholder value.

I have been fortunate to work for four fortune 500 companies, in a variety of industries. All of these companies have had one common denominator, the shareholder... There is very little concern for the future of any of these companies, just the results from quarter to quarter to make the shareholders richer.

I know for a fact that the companies in the APAC (Asian Pacific) region and their employees look toward the future. They are willing to invest the time and energy for the future instead of profit for today only. It is only a matter of time before our industrial sector is completely hollowed out and all of our good jobs have been outsourced.

At my current employer (one of the best for their employeers that I have worked for in years) my job is to outsourse design and commercialization to our India division or subcontractors. Last year we had record profits!! This year we are under tight fiscal constraints to meet our "plan". Based on my experience, I would suspect that we will be having a layoff soon, even though we are currently hiring new engineers.

During my years of employment, I have seen about 8 layoffs in all of the companies that I worked for (excluding the current one). Most of them occured while the overall corporation was profitable.

Where is my career going to end...I don't know, but it probably won't be in engineering and not before I have to change jobs a few more times in the next 10 years.
Since we have many friends in Japan, China, Korea and Thailand, I can report that working conditions are far from ideal in much of Asia; employees are expected to work what are fundamentally inhuman hours (sometimes until midnight, with work starting early the next morning, etc.) and rewards such as stock options and huge bonuses simply don't exist.

On the other hand, the Korean and Japanese global companies do maintain a very long-term perspective, and they have (and will) sacrifice profits for years in order to take market share or establish dominance in a field (tiny motors, robots, etc. etc.) If you lay off employees with little regard for the morale of the survivors, or for the depth of the talent pool you have just thrown away, then perhaps you have also weakened your long-term competitiveness or even survival as a global company.

I think it is also fair to say that the "shareholders" of the top U.S. corporations are no longer stakeholders in the companies' long-term success. They are massive investment and hedge funds whuch may hold shares of a company for a matter of hours, days or weeks. The rising turnover rate of the major stock exchanges suggests that on average "shareholders" only hold shares of a company for a few months.

What these speculators (let's be honest, they are not investors) demand of management is not dominance in a field or superior R&D with an eye on profits five or ten years' hence but a catalyst which will drive the stock up 15% by next quarter so they can sell out and move their billions into some new quick-turnover deal. This "shareholder" adds absolutely nothing to the company nor to its customers, employees or indeed, profitability in the long run.

For another view of Ehrenreich's work, we turn to correspondent Michael Goodfellow:
It's been years since I read Nickel and Dimed, but I remember thinking that her whole problem was not salary or working conditions, but the rent she pays. Without that high rent, her budget would have been fine (except for health insurance, which is another issue.)

But, she makes the rent situation far worse than it has to be in two ways. First, she wants to live alone, which a lot of people in low wage jobs would not. Second, because she expects to move on to another area soon, she pays more than she has to. There's a point in the book where she's staying in a motel room to avoid signing a lease on an apartment! If she were really living on her income, she would find a roommate and split the rent and security deposit, and probably a car as well. And she'd stay in one area more than a few months.

I can't get too excited about the working conditions argument either. None of the jobs she described required working horrible hours or anything strenuous enough to do damage. The waitressing and retail jobs are boring and annoying, but not exactly slaving away in the salt mines!

I haven't read her most recent book (and won't, since I was pretty unimpressed by Nickel and Dimed), but I've read reviews that point to a similar problem with her latest experiments -- they are not realistic. In the old book, it was living conditions, and in the new one, her "networking" and resume. If you come into the job market with no friends to give you references and no recent work experience, you are at a huge disadvantage. Even a made up resume with some fake references isn't the same.

You write that she "spent months networking with in an endless string of 'executive' seminars, 'networking' mixers, church 'networking' functions'. Although this does not mean she meets only "losers", it does mean she's dealing with people who have exhausted their personal networks of friends, former coworkers, etc., either because they've been out of the market too long, are changing fields, or weren't that highly regarded in the first place. That would tend to select for people who are going to have a hard time finding a job.

I've seen friends go through this exact situation, especially after the tech bust in 2000. They let their networks fall apart or changed fields and then have no one to use as a reference. Some of them also have a real attitude problem - they expect to get a job as good as the ones they had back during the boom, and are unwilling to compromise. If they just did a few short-term contracting projects to build up their resume and meet new people, they could get back into the market for the high end jobs. But they won't do that, out of pride, and basically unrealistic expectations.

In my industry (software), the resume hardly counts anyway. For one thing, people reading them expect them to have a thick coating of BS. For another, they really don't tell you anything important about the person. Companies want people who educate themselves (and stay current), take responsibility and complete tasks. You can't tell that from a simple list of jobs they've been involved with. They base their decision first on the interview, and then on reference (and other people named by your references), and lastly on the resume.

In several interviews I've been on in my career, the resume sat unread and unmentioned until they had already decided you were a good guy. They did this by asking you to solve problems during the interview. Sometimes, it's just "what's your opinion of this or that product in the industry", other times it is "how would you handle this problem", or even "write this simple program for me right now." Some have little math problems that they ask you to solve, not only to see if you can solve it, but also to see how you handle the pressure, and what approaches you take to the problem. And of course, they want to see if they like you and think they can work with you. A lot of the interview is just chit-chat about your life experiences.

In that kind of interview anyone who is hiding things about their background, or is reserved, or nervous, or doesn't speak English well is at a real disadvantage. Although I haven't read the Ehrenreich book, she could easily raise red flags just by the nature of her experiment. After all, employers are looking for people hiding things and BSing their way through an interview. Their biggest fear is of hiring someone incompetent and untrustworthy, not lack of specific qualifications (they expect you to learn, after all.) And here she is, hiding something huge about herself and covering that with BS. So I wouldn't be surprised if no one hires her.
Thank you, M.P. and Michael, for your comments on this critically important topic.


For more on this subject and a wide array of other topics, please visit my weblog.

                                                           


copyright © 2006 Charles Hugh Smith. All rights reserved in all media.

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