Part Two: Corporations’ Treatment of Employees
Dehumanizing Pressures in Corporate Life
In addition to the insecurity of employment experienced by so many employees, many suffer from discrimination. Despite important exceptions, including those noted above, on the whole corporate culture in the United States reflects, and sometimes exacerbates, the sexism and racism of the wider society. Women and persons from minority backgrounds remain badly underrepresented in the boardroom and in the upper echelons of management. The “glass ceiling” has not disappeared. Despite laws against sexual harassment and broad social agreement that it is unacceptable, such harassment continues to be widespread. Similarly, more or less overt racism often makes life within the corporation uncomfortable for persons from ethnic minorities, despite laws intended to end discrimination.
Hostile takeovers are an additional source of suffering. Socially responsible corporations are a popular target for such takeovers. A sad example is the takeover of Pacific Lumber Company by Charles Hurwitz. Pacific Lumber was a family owned lumber company that was highly responsible ecologically and committed to the wellbeing of its employees. Hurwitz saw that profits could be made by changing those policies and proceeded to do so.
Humanizing Developments within Corporations
Thirty years ago, retired AT&T executive Robert Greenleaf wrote a pamphlet, The Servant as Leader, to show how executives could contribute to a more caring society. He defines a servant leader as one who “makes sure that other people’s highest priority needs are being served” so that they “become healthier, wiser, freer, more autonomous, more likely themselves to become servants.” The servant leader also asks “what is the effect on the least privileged in society…?” Greenleaf’s work has been influential. In 2001 several hundred corporate executives attended the Greenleaf Center’s Annual Conference to share their experience, challenges, and successes in implementing servant leadership.
Machines vs. People
The Financial Accounting Standards Board (FASB) sets the accounting rules used by American business.[i] The FASB’s rules count “things” as assets (e.g., buildings, capital equipment, machine tools) and expenditures for them as investments. Conversely, expenditures for people are expenses, not investments. The largest single expense for the vast majority of organizations is payroll, that is, people.
The implications of these rules are among the unwritten rules of business:
- Maximize the effective use of assets through investment.
- Minimize expenses by keeping pressure on to keep them low.
Among other things, this means:
- Acquire useful things.
- Squeeze people out.
As a result of the application of this policy a recent study by Walker Information Inc. showed that three fourths of all employees in the United States do not want to be with their present employers two years from now. Gary Kaplan of Kaplan and Associates commented that “we have communicated to the labor market this concept that people are expendable, that people are not much different from office supplies.”
Affirming People
Squeezing people out is called “downsizing,” and there has been a great deal of this in recent years. It is the lemon theory of management: you squeeze them until they are dry, then you throw them away. Nevertheless, the widespread assumption that it increases profits is a doubtful one. People make contributions to corporations that are not replaceable.
During the last business recovery, many large corporations downsized in order to improve their profits and stock prices by “removing the fat.” This strategy is seldom successful in the long term. Most already profitable businesses that downsized to further improve profits found the improvement very short lived. This is easy to understand. Once everyone is used 100%, a company has very little ability to take on new profit making opportunities. It is likely that the only way they can take on a new opportunity is by hiring and training new people, which is very costly and reduces the potential for added profits. Worse, if everyone is used 100%, and anything goes wrong, customer service degrades severely. Degraded customer service means decreased sales, which immediately leads to decreased profits.
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