It is not breaking news that business paradigms are shifting significantly. The difference, in historical terms, is that the shift is taking place on a global scale never seen before. Thomas L. Friedman, in his seminal book The World is Flat, describes how our world is being flattened by historical events and forces that in the last 15 years have resulted in the globalised, connected, speed-orientated world we live in.
Many factors contribute to these changes – the advancement of the internet, outsourcing, production techniques, and many more. Although the global economy is a product of the cumulative efforts of local economies, many countries are finding themselves in precarious positions where some are forerunners and some are being left behind. Emerging economies are challenging the way we operate significantly. It is a defining time in history that no country is exempt from.
Many countries are finding themselves in do-or-die situations where global shifts need to be embraced to remain competitive in a context where local forces resist these changes. A typical example of such a shift lies in the employment contract between employee and employer. The global trend is the emergence of what Tom Peter’s calls the Professional Service Firm (PSF) where individual entrepreneurship is the sign of the times. Working for BigCo for life is no longer that status quo. Talented individuals are creating a world of work dependent on themselves, their skills, their networks and their own attitude.
Whatever the view, a new employment contract is emerging where the traditional parameters of the employment are being destroyed and revisited. The old contract was based on loyalty – BigCo would pay an employee a market related salary and expect performance and long-standing loyalty in return. The Employee of BigCo would expect a job for life in return for their salary.
The emergence of the PSF is contextual as many baby boomers found themselves being retrenched in “right-sizing” efforts as corporations faced economic challenges in the 1980s and 1990s. We realized that jobs for life did not exist, and that survival in such a world is left up to our individual talent.
This is a specific challenge in South Africa for companies, HR practitioners and entrepreneurs alike. Our historical lines between blue-collar and white-collar employees are being challenged in such turbulent times. It is the trend though that our traditionally blue-collar workers still operate on and expect the old loyalty employment contract, while super-talented white-collar employees are changing the way in which employment operates.
The distinction between employees who embrace the global shift and those who do not is evident in the events surrounding the June 2005 Metrorail strike. Although it was an all too typical situation in 2005 when mass union mobilisation occurred, the Metrorail deadlock characterized how the blue-collar sector is resisting the global forces.
In a monumental strike that brought the country to a virtual standstill by limiting commuter mobility the Labour Court ruled that the strike was legal in a precedent setting ruling. The central issue in the strike, as with most in South African union disputes, was over wage increases.
The Union was demanding a 6.5% increase across the board while Metrorail was offering a 5.5% increase. And so, we had a deadlock. Neither party was prepared to move on the issue, let alone compromise. The Union claimed that anything less than a 6.5% increment was unjust and underserved, while Metrorail claimed that any increase beyond 5.5% would severely cripple its financial viability.
The rationale behind demanding annual increases that please the represented unionized employees lies in a socialist belief that the employer exists for the benefit of its employees. This position is starkly contrasted by the capitalist beliefs held by decision makes and shareholders. In this orientation towards employment annual increases are seen as a right.
To a capitalist mindset, these issues ring true in frustration. But under interrogation from a community mindset, these questions represent resounding issues. Many an employee believes that a company should be a steward of the employees and the community in which those employees find themselves. In this way the company ceases to be a company, but becomes the parent the employees never had – the parent who has seemingly sufficient resources to significantly improve the lot of its employees. This should be a company’s 1st priority. The question is asked, “Does my company look after me?” “Does my company put money where it is needed?”
So what is the solution for the conscientious, caring employer? This debate rages on, and will continue to rage on. Owners will argue how much they look after their employees, and the majority of employees will argue how little they are looked after.
By and large South Africa still operates within the belief that the company should look after the employee, to the standards expected by the employee. It is a situation typical of that found in the USA where employees of corporations were proud to have a job for life. They left for work at the same time every day. They delivered the same levels of performance every day. They received their pay every month, and made retirement plans based on consistent and regular increases in remuneration. Does this situation accurately reflect the employment contract? No. A company merely pays for a person’s time and talent. An employee receives remuneration for this effort.
And so South Africa is in a position where at one moment it is doing its best to contribute to the global shifts on operating, but at the same time is being left behind due to resistant forces that do not see the value of competing on a global stage. Reverting to the old loyalty-based contract is hindering the development of new opportunities that incentivize and favour the talent inherent in our blue-collar workforce.
In industrialized countries, this problem will be more prevalent, whereas “knowledge” driven economies will suffer more from talent retention and attraction. In the tough and volatile Brazilian setting, Ricardo Semler and Semco set the precedent for dealing with unions and blue-collar workers (read my book summary on Maverick here – http://www.tmtd.biz/2005/09/30/maverick-ricardo-semler/). Semler managed to win over the unions in an unprecedented way. He gave the employees democracy in ways that make traditional business folk cringe. For example, the recruitment process is entirely democratic as interviews are open events i.e. anyone from the organization can sit in on any interview. This places the locus of control in the employees hands as they can interview the people who might end up being their direct managers.
It did not stop there! He let the employees set their own salaries. The typical response when I share these stories with executives is, “That’s great in an ideal world … but it won’t work here (in our company)!” Good point. A point I’m sure that kept Semler awake on numerous nights. However, Semler gave it a go and it worked. I know very few companies who would even attempt such an “innovative” strategy. Perhaps the solution lies in the attempt. But not just any attempt. Churchill is quoted as saying, “Success is the ability to move from one failure to another with no loss of enthusiasm.” Perhaps tenacity is the mark of success for companies who wish to adequately deal with the challenge of blue/white-collar differences.
As we move into an economy based on connecting with our customers, suppliers, shareholders and employees we are learning that our businesses will succeed or fail on their ability to connect, and to connect well. One wonders what lessons the Union leaders have to learn as they reinforce the old contract mentality in a competitive world that has no patience for such resistance? How do you lead a group of semi-skilled employees to a place where they don’t beckon over one percentage point increase in salary, but rather use that fervour to re-invent themselves and skills sets? And yet, what work needs to be done on a global scale in order that employers connect better with their employees?
