Magazine article Workforce Management

Deal or No Deal? 'Employee Value Proposition' Evolves

Magazine article Workforce Management

Deal or No Deal? 'Employee Value Proposition' Evolves

Article excerpt

To celebrate Workforce's 90th anniversary, we're running a series of articles looking at important workforce-related issues with a then-and-now theme. This month, we look at the evolution of the "employment deal" between employers and employees. In December, we will switch gears and look toward the future workforce. To read the full version, go to

IN HER 20 YEARS in the human resources field, Maureen Paradine has seen the "employment deal" take on new terms.

Paradine, who is senior vice president of HR at gift firm Inc., says companies used to focus on maximizing the performance of workers. Now, it's more of a two-way street, where employees--especially younger ones--expect guidance and recognition in exchange for their efforts. Paradine, for example, gives her five direct reports coaching on a weekly basis, and the company is trying to offer the same combination of supervision and support to all of its workers.

The "social contract" surrounding work--sometimes called the "employment deal" or the "employee value proposition"--continues to change. The era of lifetime employment for loyalty prevalent in the '50s, '60s and '70s gave way to a less paternalistic, more profit-focused corporate mind-set and reduced worker allegiance in the '80s, '90s and '00s. But now signs point to a possible middle ground.


The "employment deal" refers to the generally agreed-upon rules for the bargain struck between workers and organizations. During the Industrial Revolution and the post-Civil War period, that deal was often turbulent, marked by hazardous working conditions, strikes and sometimes violent clashes. In 1920, the so-called "Battle of Matewan" took place when West Virginia miners sought union membership, which ultimately led to a deadly gunfight between private detectives and workers.

However, it wasn't all labor conflict in the first part of the 20th century. In 1914, Henry Ford famously more than doubled the pay of autoworkers to $5 a day under the theory that a wealthier working class would be able to buy the cars he was making. After World War II, still greater harmony reigned as labor reforms provided basic protections around workplace safety and unemployment benefits and a kind of unspoken pact emerged. In return for enduring allegiance, organizations offered a near-guarantee of job security.


But this paternalistic approach, with its emphasis on "employee satisfaction," was flawed, says Kevin Sheridan, senior vice president at consulting firm Avatar HR Solutions. "Shiny, happy people holding hands" do not necessarily get the job done well, he says. Attention to quality and productivity sometimes suffered in organizations, symbolized by clunker cars made in the United States, such as the AMC Pacer.

Partly because of quality problems and pressure from international competition, U.S. companies in the 1970s began moving away from their worker-satisfaction focus. In fact, employers took things to the other end of the spectrum. Companies in recent decades have treated employees to a greater degree as costs to be minimized. This shift also had to do with the rise of what might be called "shareholder capitalism" and a concentration on short-term results. Layoffs became widespread not only as a response to dire financial straits but also as an ongoing management strategy.

But this focus on business performance also had shortcomings. …

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