Sunday, August 03, 2014

A Call For Change In Business

It wasn't so long ago that businesses recognized people at their local levels as having something to contribute.  That individual employees have a meaning greater than the "bottom line".

That was before the Internet and globalization.

In 1990, as a new graduate from University, I started working for what was then a small, but growing company of people that was doing some pretty amazing things.  Over the course of the next couple of decades, I saw the company grow, go through numerous acquisitions, eventually ending up as part of an enormous conglomerate with thousands of employees, billions of dollars a year in sales ... and absolutely no soul.

Large companies become so focused on the "bottom line" (aka "profit") that they lose sight of the fact that they wouldn't make a wooden nickel of profit if it wasn't for the effort of the people who make up their companies.

Over the evolution of the company I witnessed firsthand, I saw it go from being a small operation where everybody knew each other, and people came together to make things happen - both at work and in their personal lives.

Things like local celebrations were more or less entire days where very little "business" got done, but all of our clients made a point of trying to be in town to take part in the fun.  The staff at all levels participated, and generally speaking all of it was an excellent opportunity for everybody to engage.

As the company grew, things changed.  Subtly.  Each change was a small one.  A degree of balkanization emerged as the company grew.  Certain leaders carved out their own fiefdoms; then celebrations were cut back, with "costs" and "liability" cited as the primary reasons.

A few acquisitions later, and everybody in the management tier was suddenly being measured not on whether their people were happy, but on their ability to bring things in "under budget".  Soft measures like the ability to motivate their teams, or to deal with difficult personnel issues effectively got replaced by numbers.  Experience and skill became secondary to costs - senior staff would be marginalized and let go to save money.

We have seen this across the board in business.  The largest businesses have come to view their staff not as skilled contributors to the company and its objectives, but as expenses.  Expenses, as any accountant will tell you, are a cost of doing business that should be minimized in order to maximize the profits being accrued by the business.  In retailers like Wal-Mart, there is a conscious effort to keep wages of sales floor staff as low as possible.  Why?  For no better reason than to "maximize shareholder value" (a line of reasoning in the world of the executive boardrooms amounts to "make more money").

Businesses no longer recognize the contributions of their staff below the management tier, and even there middle management (supervisors, department managers in particular) are often squeezed out of this, their responsibilities increased and the latitude to make decisions ever dwindling as those above them try to make everything "quantifiable", and "help make better business decisions".

The results of this?  In North America, we have seen businesses gut their local manufacturing base in order to make a "more efficient" business.  In the world of IT and technology, everybody thinks that "outsourcing" (code phrase for sending the work to cheap labour in India) is the way to get things done because it's "cheaper".  The skills of craftsmen (and I include knowledge workers like programmers, writers and graphic artists) are seen as increasingly irrelevant locally.  ("Oh, we'll just hire someone off Guru.com to do that")

The result of all this?  Nobody trusts anybody.  Companies don't trust their employees with their real strategy and goals (employees quit and go work for the competition, you see);  employees don't trust companies with their careers (layoffs are everywhere, all the time); employees don't trust each other (because there is always someone scheming to get ahead of the rest by stabbing their colleagues in the back), and so on.  There is nothing that motivates staff to give their best efforts to the company, and the company undermines the very people that should be the base of its success.  The net result?  Large organizations are doomed to hollow themselves out and fail catastrophically.  If the 2008 meltdown of GM (and the subsequent 2012-13 recall crisis) told us one thing it is this:  GM has gutted itself to the point that the people with the most to contribute have either been pushed out or are straightjacketed by management processes focused entirely on profits.

Big business has shown us one thing:  That money is sociopathic.  It has no ethics, no morals and no empathy.  When you run your business solely by the numbers, you guarantee that it will fail eventually.  In the meantime, workplaces will become hostile environments where people will be afraid of each other and scheming for their own respective survival rather than the good of the company.

It is time for a major change in our business world.  We must move away from the multi-billion dollar trans-national model.  Yes, a company has to make money.  But it cannot do so at the expense of the well being of its workers.  Smaller companies need to learn to collaborate, but the day of "mergers and acquisitions" as a means of growth must end.  Businesses need to recognize that at the end of the day, they are made up of people and that their responsibilities are to their customers and staff first, shareholders second.  The only way this can happen is when local management are free and able to look after their staff as people rather than solely as expenses.

The mantra for business in the coming decades has to become about local talent, trust and growth.  Not growth for growth's sake, but growth where you reach your customers, and where your talent is.  Trust, between the business and its employees as well as its customers.

Make it worthwhile for people to work for you, and they'll stay.  Let it become a hostile workplace where the only thing that matters is the bottom line and your company will fail, because your best and brightest will leave - hollowing your company to a shell.

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