Bent bosses, fat cats and wage slaves

How did this happen? Why do people no longer trust, or even like, business? Corporate scandals and executive greed have played a large part. Over recent years there has been a constant stream of senior managers being found with their fingers in the till. The difficulty for businesses' already tarnished reputation is that these people don't look very repentant. When you perform even a brief analysis of the outcome of most of these cases, the number of mistrials and acquittals through lack of evidence conjured up by the million-dollar lawyers makes wrongdoing look like a smart thing. As one Wall Street lawyer told me, ˜If you've got the money - and these guys have - you can work your way around any legislation, given time.'

We're in a crisis, bring me sushi!

My favourite story of corporate hubris concerns a leading financial services firm in London. Job cuts affecting 3,000 people were announced at 12 noon on a Friday. At one in the afternoon the head of strategic planning's assistant was instructed to take the chauffeured black Mercedes across town and pick up & pound ;400 of sushi (on the company account) as she was having some friends over for dinner. This news travelled the corridors like wildfire and you can imagine the reaction of staff still grieving over ˜lost' colleagues. The nice part of this story is that the strategic planner finally got fired too. Sadly she got paid as well.

 

Of course a few corrupt executives could be written off as the one or two bad apples. Far more damaging has been the growing gulf between the pay and benefits offered to senior management, and the deal available to everyone else. If you recall the heady last years of the 1990s when the dot coms were booming and fuelling other industries too, senior managers were in very short supply and firms were offering just about anything to just about anyone to come and join them. I remember being in Silicon Valley in California and the then head of recruitment at Oracle saying that if they found someone lying in the street outside their offices ˜if he could fog a mirror' they'd hire him. So when it came to hiring senior management the salaries and bonuses became stratospheric. What's worse , they weren't even required to do a good job - it became standard practice for board-level managers to be awarded two years' salary even if they were fired for incompetence !

But what was happening while the fat cats at the top were getting richer? Well the economy stalled and down below in the engine room suddenly things weren't quite as much fun. While some companies managed the sudden downturn well, many did not.

Wholesale redundancies became the order of the day, followed by factory closures and the cutting of all non-essential expenditure.

For those left behind doing two, or even three, people's work, life wasn't going to get any better anytime soon. With levels of trust already at an all-time low and a constant feed of bad corporate news and more financial scandals, many thought that it couldn't get much worse. But it did:

• Training and development vanished.

• Corporate share schemes went underwater.

• Bonuses disappeared.

• The management tinkered with the benefit plans.

Let's look at these a little more closely. It is important to do this, because it places our current position into the real-life context. Because most organisations are at an-all time low as far as company morale is concerned . However, it is useful to remember what many firms did - and are still doing - and to appreciate the uphill fight involved in reintroducing successful employee engagement once again.

Training and development.

Truth to say I know many good quality people who haven't received any kind of personal or professional development in three years. Not a good thing when lifestyle employees see development as one of the keys to career fulfilment. What happened in many firms was that the top performers - the stars - continued to be developed on the theory that ˜if we make the top 10 per cent better we can survive.' It might have worked short term but it has left a bitter taste in the mouths of the other 90 per cent. My view - and it is shared by many - is that the majority will vote with their feet when the opportunity arises. Crazy thing is, so will the top 10 per cent. So anyone who adopted that theory is going to lose out, big time.

And then there was the spurious new employment contract, lauded by countless senior managers and business school professors. You will, I have no doubt, recall that before the last recession - when we were in a hiring frenzy - what we said to new recruits was, ˜come and join us. We will develop you, we will train you. We will keep you up to speed with the latest developments in your field.' The theory was repeated over and over. In place of trust it was mooted that there was now a new work contract between employer and employee. ˜We guarantee to keep you up-to-date, so that when we don't need you there will always be someone who does.' It all fitted so neatly into the theory of the portfolio career. You wouldn't have one job, you'd have many. You would get them because you were being constantly honed to a fine pitch by each employer. And the smart employees went along with this, because it fitted in with their personal lifestyle/workstyle aspirations.

Then it all went horribly wrong. Sure the top people continued to make annual pilgrimages to INSEAD, Ashridge, IMD, Wharton and Harvard (although their summer schools did take a bit of a hit), but the rest, who had signed up for an exciting portfolio career found out all too quickly what a cold bucket of reality splashed all over you feels like. If they did survive the job cuts, they were too busy doing the jobs of their former colleagues to take time out for development. The entire concept of a new social contract for the information age between employer and employee collapsed like the share prices on the stock exchanges of London, New York, Paris and Frankfurt.

But it was still quiet. There wasn't a lot being written about this huge sea change. Main reason? Smart employees in bad times keep their heads down below the parapet. Stick it up to have a look around and you just might attract the attention of the corporate sniper, who's looking for the odd body or two to even up the headcount. Yes, it was very quiet indeed. Those with jobs did them. They didn't enjoy them very much, but they just got on with them. Meanwhile resentment and anger were bubbling just under the surface.

The reason that there is anger and resentment bubbling away under the surface of many corporations is that we lied. Collectively, in the euphoria of the good times, business dealt itself what it thought was a winning hand. ˜We are not going to be responsible for your future any- more. No Jim, you manage your own career. But, in return we will give you all the tools you need to be a winner, to stay up-to-date.' It was a good idea. The theory was great. But, as I said earlier, perhaps the only company that ever got the whole thing right was GE (and then they only did it for a select group ). What went wrong was the economy tanked and there was no money left to do what we said we would do. So we reneged on our side of the deal. We stamped the new social contract for the information age into the ground. Only we didn't tell our new-age workers that did we? It had to slowly dawn on them that things were not working out. Management - collectively - was not delivering on its side of the bargain. They weren't going to keep Jim's skill set up because they couldn't afford to do it any more.

Corporate share schemes went underwater

This is another of those issues guaranteed to store up long-term resentment. Not to go into this in any great detail, but once again management sold the idea to employees that ˜owning' a share of the business was a good idea, it was what the free enterprise culture was all about. Now the fact that most of these so-called shares were really options is irrelevant. The stock tanked and so did the investment. Again, employees feel cheated and resentful. It was yet another case of working on the basis that the good times would go on forever. This state of affairs has brought about a huge social churn, the impact of which perhaps has not yet been fully revealed.

Bonuses disappeared

Many compensation plans developed in the heady days of ˜hire at any price' frequently had a significant amount of the total consisting of bonus based on individual or team performance. Suffice to say that for many that disappeared too. Now while you can argue that any sensible person would not rely on that bonus to fuel a lifestyle, many did, because no one told them that economic change was lurking around the corner. I was recently on vacation and fell into a conversation with a fellow Brit in a corner caf . We were talking about the shortage of tourists in this usually bustling resort. He said one word, ˜bonus.' ˜What do you mean,' I asked. ˜Bonuses,' he replied. ˜There aren't any this year. So you make the choice, pay the school fees or go on vacation. I guess we are seeing the result of that choice.' So to add to a checklist of resentment and anger, throw in the bonus - or lack of it - and make life a little harder. Just as we were having to work longer hours too.

The management tinkered with the benefit plans

While most consulting firms the world over were desperately trying to find a new groove to sell to the corporate punters, one sector was having a series of banner years - the actuarial firms were on a roll. Reason? Well, they were earning huge fees in redeveloping the pension, health and other saving plans of the employees of the world's leading businesses. Yes, just as stock plans went underwater, training ground to a halt and the bonus ball failed to drop in the corporate Lotto stakes, top management took another swipe at the employees. Although companies have stated that they just can't be competitive by funding these all- singing , all- dancing benefits for employees, I think we will clearly see some U-turns on this one. As the war for talent hots up, reward structures are going to be a differentiator (they already are in some cases). If a candidate has an offer on the table from you that includes a pension plan that she has to fund herself, and an offer from a rival that is either going to contribute or guarantee some long-term savings plan, who will she go for if other terms and conditions are similar? What may well emerge here - and this will bear close scrutiny over the coming years - is a two- or three- tier system, where companies choose to grant better deals to those they really want to recruit (as a temptation ) and for those they want to retain (as golden handcuffs). However, the reason for including the race to cut benefits in our resentment menu, is that it has sent yet another negative ˜we don't care' message. So we have yet another reason for this pent up anger and disillusionment . This one cuts deep. If you didn't have it before, you don't miss it. But this feels like something being taken away. It certainly makes many firms less attractive as places to develop long-term careers.