Magazine article Management Today

Hard Times: Contracts

Magazine article Management Today

Hard Times: Contracts

Article excerpt

A new reality has seized business by the throat giving rise to an employment charter where the relationship is a contractor one with a short-term feel to it.

I'm staring at two different headlines. One from the front page of the Financial Times reads: 'Threats to 400,000 jobs in EC auto sector'. The second preceded the first by about 10 days. It reads: 'Ford workers seeks jobs for life'. Are we all living in the same world?

'Terms of employment' can mean two different things. It can refer to the stuff in the personnel manual, to what you need to do to remain employed: you know the sort of thing - don't get caught stealing, keep your hands off other employees in the workplace, don't strike the boss, and the like. But 'terms of employment' can also refer to the underlying employment charter that is not ordinarily published. Although in recent years this charter has changed dramatically, few can name its current provisions. For those who believe in the adage, 'If you are not in charge of your career, then no one is', it is time to bring it out of the closet.

The old charter, though itself unpublised, was simple and clear: 'If you put in a decent day's work and keep your nose clean, then you can expect to stay with us either until you want to leave or until you retire.' Now, however, a new and more complicated--and for many, more ominuous -- charter is emerging. The reasons for the new charter are clear. The 'global village' that Canadian guru Marshall McLuhan talked about years ago has become the global economy and marketplace, both battered by global forces. Global competition and fast-changing global marketplaces have sent rigid, slow-responding players such as GM and IBM reeling.

In more tranquil days, there was a certain disconnect between the covert terms-of-employment charter and the business itself. The environmental soup in which both float provided enough slack to allow for it. Many companies could laze along and their employees with them. Those days are gone. 'Getting by' is just a step away from 'going down the tubes'.

But a new reality has seized business by the throat: 'We might not survive and we certainly won't thrive unless we are lean, flexible, and responsive to the realities of the marketplace'. And thus the current tide of closings, downsizings, permanent rightsizing, restructurings, and re-engineerings we read of in the business press every day. The employment consequences have been grim for many. Companies like Delta Airlines and IBM used to pride themselves on their unofficial nolayoff policies. In one downturn Delta's employees, even though working shorter weeks, chipped in and gave the airlines a new Boeing jet as a sign of their appreciation. But now we have layoffs at Delta and massive downsizing at IBM with more to come.

These new economic forces have given rise to the 'contingent employee' phenomenon: the part-timer; the forced entrepreneur -- employee turned self-employed worker; and a new breed of migrant worker, now white-collar and managerial. These phenomena tell us a great deal about the emerging employment charter. There is a movement from an implicit longer-term employment relationship to an implicit 'contractor' relationship with a shorter-term feel to it.

While some companies such as Johnson & Johnson still prefer a long-term employment contract, others such as Apple Computer and General Electric seem to have moved toward contractor charters--some call these 'social contracts' -- which have provisions like the following:

* Since we now live in a global, highly competitives, fast-moving, and uncertain environment, we must move from a longer-term employment to a contractor contract.

* We will contract for your services and you will commit yourself to give your best for as long as that relationship is mutually beneficial.

* When the economy and competition and other forces outside the control of the company get tough then your job might well be in jeopardy because the business itself might well be in jeopardy. …

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