What’s Wrong with the World

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What’s Wrong with the World is dedicated to the defense of what remains of Christendom, the civilization made by the men of the Cross of Christ. Athwart two hostile Powers we stand: the Jihad and Liberalism...read more

Work is a treadmill, and the speed doubles every ten years

Lydia has an interesting post up about the seeming oddity in corporate life, in which with few exceptions every employee in a large firm is required to have a 'development plan'. At most large corporations, at least in the white collar world, you (and sometimes your supervisor) are penalized if you don't change jobs often enough.

I don't think this is a result of a distortion of market forces and capitalism though: I think it is intrinsic. I've argued before that I think that PC tyranny has been adopted by corporations because it is profitable to do so, and I think a similar observation applies here.

I made the following comment in the thread:

You can't think of a company as a 'fixed' entity like a car, or even like a cow (a "cash cow" company will get a low market value even if it has high profits, while a growth company will get high market value even with relatively low [current] profits). It is a false analogy. Every 'human resource' in the company is an asset, and assets that do not appreciate in value over time actually lose money for the company when measured against inflation; so they have to be gotten rid of. Just because they store some value 'in place' doesn't mean they are worth keeping around: storing value 'in place' is money in a mattress, worth far less than productive, growing capital. (The only time this ceases to be the case is when economic hard times hit. Then everyone wants to store value and doesn't care if it is growing as much as that it isn't losing value. Usually cash is the hedge against downturns though, since cash is far more flexible than less fungible human-units. PC tyranny helps with the fungibility of the human-units though).

An engineer who does the same job for forty years is a dead asset. We have to keep putting money into him, usually increasing amounts over time, and get some marginal benefit from his increased experience but no true upgrade in his productivity which translates to the bottom line. Rather he needs to be constantly thinking about how to obsolete himself, replace himself with machines and cheaper less skilled labor so he can move up to the next thing. Upward mobility pressure on employees is not pointless. Growth-oriented ambitious people will do well in an environment of continual upward pressure. People who enjoy what they do and want to do it for the rest of their careers and live like human beings may be made miserable by that situation, but they aren't the ones who will contribute large leaps of growth to the business anyway, so they don't matter. It is more profitable to get rid of them and staff with the other kind of people.

Step back for a second and think about the logic of earning profits from capital. If you invest your money and earn 10% simple non-compounding interest, your money doubles in ten years. At the end of that ten years you can invest it again and earn twice as much for the next ten years. The same asset now has to be twice as productive. This upward pressure applies to all investment assets, and employees are investment assets: it costs money to acquire them and keep them around just like anything else. It is true that many assets depreciate -- lose value over time. Obviously a company in the business of making money (which is reflected in share prices) wants all of its assets to depreciate in real terms as little as possible, and to appreciate in value if possible.

So an employee who produces X today had better produce 2X ten years from now, just to keep up. Why, you ask? Because they can. And if they can't, someone else will replace them. Every asset in a company has this upward bias against depreciation and in favor of appreciation.

The reason PC tyranny and continual upward pressure are features of modern capitalism is not because they are irrational liberal prejudices or mere tastes. The reason they are features of modern capitalism is because they are profitable, at least in the time frames that matter to modern capitalism. PC tyranny improves workforce liquidity; continual upward pressure improves workforce value. This is how capitalism-qua-capitalism ideally should work, and does work absent adult supervision. That this results in an inhuman nihilistic existence for the actual human beings involved isn't something that enters into the 'logic' of it.

I think it is wrong to take an idealistic view of capitalism, either in the positive or in the negative. Capitalism is not an angel, and it isn't a devil. It is more like a Golem, and we should beware the lesson of Eliyahu of Chelm.

Comments (42)

Zippy says "An engineer who does the same job for forty years is a dead asset." But the assumption behind this statement is that the engineer's productivity declines over the 40 years. What if this is not true? And what does Zippy mean by "the same job"? If your job is designing a better elevator then at day one you are thinking about design improvements and 40 years later you are still thinking about design improvements (I have a friend whose immigrant father worked at Otis for about 40 years and was awarded numerous patents along the way...when I would go over to his house I always admired the patents which were displayed on the wall like hunting tropheys). Along the way, you probably have to learn some new ideas and get some training, but for 40 years you are essentially doing the same thing -- designing better elevators.

I guess I'm really objecting to the assumptions embedded within Zippy's analysis -- it isn't clear to me that "upward mobility pressure on employees" means that there are large swaths of individuals in corporate America that will never be able to "enjoy what they do and want to do it for the rest of their careers" or that productivity increases two-fold every ten years for every worker in corporate America ("So an employee who produces X today had better produce 2X ten years from now, just to keep up.") I confess I know much more about the world of small business (which employs more Americans than corporate America if you include self-employed individuals with no employees) than I do about corporate America, so this may skew my thinking. But I'd like to see more data before getting behind Zippy's theory. For now, I will keep my positive idealistic view of capitalism. For more on this idealistic viewpoint, see this book: http://www.deirdremccloskey.org/pubs/books/virtue.php. I think just reading about the book might cause Maximos' head to explode, so be warned, as despite our contentious debates here at WWWTW, I wouldn't wish any harm to come to an esteemed intellectual opponent.

By the way, since I already brought McCloskey into the conversation, I should note that I wrote her awhile back when Maximos and I first got into an argument about capitalism. Back then, Maximos cited some left-wing historians ("You've never read The Servile State? It is not as though I'm imploring you to read The Origin of Capitalism or The Invention of Capitalism: The Secret History of Political Economy)" for his argument that the "capitalist class must be created, or it must create itself; in the case of England, that class called itself into being by abolishing, over time, the customary and common law, and dispossessing the yeoman class, reducing them to wage-earners."

I don't want to hijack this post with an arcane discussion of economic history, but I think it is worth sharing McCloskey's response to my question to him as to whether or not the authors Maximos cited knew what they were talking about. Here is his answer:

"No, they did not. [The authors are] reflecting a very elderly notion in R. H. Tawney, or indeed at the time in Sir Thomas More, that sheep in the 16th century ate men, that is, a new middle class gobbled up traditional lands and made them into grazing. Not so, and anyway even if true it would be two centuries off for explaining the industrial revolution. The enclosures of the 18th century, by contrast, had even less to do with expropriating yeomen. It was cottagers who were expropriated, though many were in fact well paid for now more valuable rights; and the cottagers were not, as Marx supposed, the new industrial proletariate. It has long been known that southern English villages that were enclosed showed increasing populations. And anyway these were in the south---not in the northwest where the Industrial Revolution happened. In general, left-wing economic history, unless it is confined to the issues that really good modern scholars like E. P. Thompson explored, is shaky in the extreme, dating from Marx---the greatest social scientist of the 19th century, but writing before the professionalization of history, so getting a great many of his facts wrong. See the enclosed paper."

A long version of the paper she is referring to can be found here for those who want to do some further reading on this subject matter: http://www.deirdremccloskey.org/pubs/books/towns.php. You may now return to your regularly scheduled debate on whether or not work is a treadmill.

McCloskey's argument is oblique to my own, inasmuch as I'm not conflating capitalism and the industrial revolution; the enclosures stand in no necessary relationship to the latter, as capitalism both did exist, and can exist, in the absence of industrialism. As for the bit about the sheep, it is both true and merely one aspect of the period. The critical factor was the conversion of commons to privately-held lands, and the imposition of the system of competitive rents, regardless of the employment of any given parcel of land. Moreover, population increases are largely irrelevant; Irish populations increased in the generations preceding the famine, and yet so also did poverty, leading to increased reliance upon the single crop; this fact was what so incensed the Manchester folks, who argued that supplying aid to the Irish (by diverting to poor relief some of the crops that did not fail) would only encourage their 'improvidence'.

It was cottagers who were expropriated, though many were in fact well paid for now more valuable rights;

This seems to be emblematic of the type of analysis I deplore: it's acceptable to steal, cheat, and oppress, as long as one can claim that the victims, if they engage in some other activity after the fact, might possibly be better off. More, I cannot offer, inasmuch as the links do not function for me.

But the assumption behind this statement is that the engineer's productivity declines over the 40 years.

No, the assumption is that the engineer's productivity stays the same within some reasonable band, not that it declines. Staying the same is a recipe for a very low price to earnings ratio, and being the cause of a lower price to earnings ratio is the capitalist equivalent of death.

Very quickly (don't know how much I"ll have time to say this afternoon), Jeff, the impression I get both from the conversation I mentioned in the earlier post and from other anecdotal evidence is that we are really talking about *not doing the same job*, not just about designing better and better elevators. Literally having to have your job title changed, move to a new type of work in some important sense. And they are looking for that, I gather. GE was cited as "worse than" the company my friend worked for. He stated that at GE the job change requirement was every two years.

I still don't think I've seen enough examples as to how this actually causes the company to become more productive, though, in the sense of making more widgets, making them faster, selling more of them, as opposed to their stock price doubling, which may not be the same thing.

One example Zippy did give, which can't possibly apply to all the cases in question, though, is of an engineer's being expected to find a way to mechanize his own position, put himself out of a job, at which point he must move up. I suppose I can see that if this worked it might actually be connected to at-the-bottom productivity. But of course it can't always be done. People aren't all replaceable by machines. I tend to think that human engineers will always be with us, thank goodness. At least some of them. But again, although I could reconcile myself to that example as being less perverse than the picture I was given, that can't apply to all cases. If you tell your corporate employees that _everybody_ has to have an advancement plan, then it sure sounds to me like a lot of them are advancing to no particular purpose in terms of real productivity. And that's what bothers me.

Lydia,

In the long run it really doesn't matter what employee development strategy a company uses -- the only question is whether it works (in the sense of ongoing profitability). Whether or not you can understand the use of telling all "your corporate employees that _everybody_ has to have an advancement plan" is irrelevant. This strategy will either work or not work. But, if you can run a successful business with all your employees content to never advance and/or never learn anything new, then there will be companies that use this "static" strategy. GE seems to have done O.K. over the past 10 years or so: http://www.usatoday.com/money/companies/management/2006-09-07-ge-5years-later_x.htm; but it is always hard to speculate whether they would have done better or worse with a different employee development strategy.

Maximos,

I'm not sure why those links weren't working for you, but you can try her home page and check out the published articles section for her work on enclosures: http://www.deirdremccloskey.org/. I'm not sure what your argument against capitalism is really about, unless you are opposed to private property, in which case it is a strange position for an Anglo-American conservative of any type to take.

I'm not sure what your argument against capitalism is really about, unless you are opposed to private property, in which case it is a strange position for an Anglo-American conservative of any type to take.

This is truly baffling. Opposition to the enclosures, and, by extension, to other, more contemporary forms of primitive accumulation, does not a communist make. There is nothing in the nature of property rights, to the extent that one even accepts the discourse, to suggest that the rights of individuals in property are the only rights that exist, or that, in certain domains, common rights and claims cannot be recognized. In any event, property relations are always artifactual, and of necessity will vary from time to time, and place to place. Acknowledgment of this reality, along with the concomitant fact that not everything can be transferred to private ownership, is merely expressive of the anti-ideological impulse of conservatism.

I still don't think I've seen enough examples as to how this actually causes the company to become more productive, though, in the sense of making more widgets, making them faster, selling more of them,

Here's how it could be -- if you run your company on the assumption that an emloyee will spend his or her entire career performing one portion of the current widget-making process, then you have an enormous constituency for that widget-making process. If a superior widget-making process is discovered, then there will be resistance to implementing it, since the employees have banked their livelihood on that process. Thus, it will be harder to implement a process to make more widgets.

If employees move around and work on different things, then they are not as invested in the way things are done now, and likely to be more accepting of change.

I still don't think I've seen enough examples as to how this actually causes the company to become more productive, though, in the sense of making more widgets, making them faster, selling more of them, ...

Echoing John McG's comment, it should be pointed out that making (for example) hot dogs today is a radically different process from what it was 40 years ago, involving radically different processes, machinery, and employee tasks. And that is by no means all bad: the thing to realize is that these - both the 'everyone must have an advancement plan or face attrition at the next layoff' shibboleth and the adoption of uniform PC tyranny as the de-facto corporate culture everywhere - are not some irrational feature imposed from the outside on industrial capitalism. They are intrinsic to it, and if we treat industrial capitalism as self-justifying rather than as existing for the sake of and subordinate to other ends it is utterly dehumanizing. Capitalism exists to serve man, not to serve man.

It's one thing to say to an employee, "We want to put you in charge of, among other things, finding more efficient ways of making widgets/hot dogs, etc." Or even to expect employees to be willing to learn new ways of making those things or to be willing to make or work with entirely new products and processes *if and when they come along*. And I can certainly understand that you might hire somebody whose job is to develop new product ideas for the company.

But it seems to me entirely a different matter just to tell everyone in a white-collar job in your corporation, "You _all_ have to have an advancement plan, or you will be fired." "Nobody stays in the same job with us for more than 2 years/3 years/5 years." Or, "If we find that you've been doing the same job for us for 5 years, we are going to want you to start developing yourself more, where 'developing yourself' just _means_ moving to a different role in the company." I am highly skeptical about John McG's statement that making people move around all the time like that on general principles is useful to the company's productivity because this will somehow make them in a highly general sense more open to learning new things. It could also just make them exhausted, or make them do nothing terribly well, or put somebody less well-qualified into the job left behind, or any number of other contingencies. The connection between automatically, as a matter of course, and as required by the company, changing your position in the company every 2 years and learning new processes that do happen to come along seems to me quite indirect and unclear.

Jeff,

In the long run it really doesn't matter what employee development strategy a company uses -- the only question is whether it works (in the sense of ongoing profitability).

Are you including in profitability both actually making higher profits in terms of sales of the company's product or service and, on the other hand, having one's stock valued more highly by potential stock buyers? Because I'm getting the strong impression that these can come apart.

Zippy you wrote: "This upward pressure applies to all investment assets, and *employees are investment assets*" (my emphasis)

In your above post, ironically enough, you had provide justification on why employees should be treated as "fungible productivity units"; the question I have is why then did you previously protest against such a concept when, on the contrary, you seem to very much understand (and to some extent agree) with its place in the corporate world?

As you stated above: "Every 'human resource' in the company is an asset, and assets that do not appreciate in value over time actually lose money for the company when measured against inflation; so they have to be gotten rid of....An engineer who does the same job for forty years is a dead asset. We have to keep putting money into him, usually increasing amounts over time, and get some marginal benefit from his increased experience but no true upgrade in his productivity which translates to the bottom line."

A ham-handed policy of forcing every employee to change jobs every two years does indeed seem counter-productive. And my suspicion is that the actual policy is a bit more flexible than, "change jobs every two years or get laid off."

But having a constituency of employees whose value and livelihood are bound to the current process for doing things is counter-productive to both the company and the employee. If all I knew how to do was use an electronic typewriter, I'd be in a heap of trouble. And if that was all I knew how to do, and my company wanted to move to a computerized system, then I'd have to fight it like anything because how else am I going to feed my family?

I'm finding it difficult even to understand how being able and willing to learn new things has come into this conversation. I never expressed any opposition to that. A smart office employee would _of course_ be willing and able to learn to use a computer to do office work. Heck, I can think of one elderly employee I know of, recently retired, who adamantly hates computers but knew that, since office work was the only kind of work she could do, she would have to be willing to learn to use one. So she did. She eventually retired only because she was ill.

But that isn't at all the same thing as sitting around saying, "Gee, I've been in procurement doing projects for five years now, and I'm coming under pressure to develop myself, which being interpreted simply means change to some quite different role in the company. I wonder what the heck I'm going to switch to." This isn't a person who is being asked to learn new methods because they are there to be used and are better and more efficient in the very area he's already working in. This isn't a person whose job has become obsolete in the course of time. Someone else will presumably take his position, doing the same things he now does, when he "develops himself" by leaving it. This is someone who is being pressured to move to a different job just for the sake thereof, because that's what everyone is expected to do. Indeed, I gather the five years is itself considered rather suspiciously long at the one thing, _not_ because one is refusing to learn to do procurement in some new way, but just because everyone is supposed to move to something new for the sake of doing so.

And I'm being told that this is not at all uncommon but rather is the norm in many companies, with some being even less tolerant of non-movement.

If my livelihood is based on my ability to do a certain task in a certain way, then human nature dictates that I will act to preserve that way of doing things, even at the expense of my company.

Perhaps there are saintly workers who will welcome the opportunity to do something different than what they have been doing for 15 years. But for most people, the tendency is to defend their turf rather than adapt. So, companies proactively (there's another lovely corporate-speak word) prevent this by encouraging people to move around.

Now, I don't think I agree with this as a general rule. But to take one example, in public education, people are pretty much guaranteed that if they perform their current duties at an adequate level, they will keep their jobs. And thus there is an entrenched resistance to any kind of innovation or improvement, which I don't think has done the children any favors.

Not that this would be improved by forcing fourth grade teachers to teach seventh grade, but I think it does make sense to de-couple people's source of value from their current job description. And I would also argue that it is more humanizing -- these are developing, growing people, not cogs in a machine.

"Not that this would be improved by forcing fourth grade teachers to teach seventh grade..." ...or kindergarten...

Or to force them to be the school secretary for a few years, to be the janitor for a few years, to force someone hired to teach algebra to switch periodically to teaching P.E. instead, and so on and so forth.

Right. Exactly. The "solution" of constant, milling, motion for the heck of it seems to me only in the vaguest and most unreliable, even senseless and silly, way connected to the perceived problem of possible rigidity.

Aristocles:
Although the post is far from the well thought out and carefully articulated article I had hoped to write (I just wasn't able to take the time today, probably wouldn't be able to for another few days to a week, and I wanted to engage the discussion while it was happening), my intention - well, other than the last bit about the Golem - was to be mainly descriptive, not prescriptive. So it shouldn't be taken as justifying the treatment of persons as things, but rather as describing what actually occurs and why.

Lydia:
...or to be willing to make or work with entirely new products and processes *if and when they come along*.

In business things never just 'come along'. Either we do them, or competitors do them to us.

Yes, a GE-style policy may seem ham-handed. But any generalized policy across a vast corporation is going to be, well, generalized: it won't be optimized for every single individual situation that arises, and really exceptional circumstances no doubt have their way of working 'around the system'. But making continual, mandatory upgrading of every single GE employee a corporate policy drives real profitability. It isn't someone's job to find new products and processes to cannibalize and replace the present ones, it is everyone's job to do that. Why? Again, because they can, and because nobody knows better how to obsolete a job than the guy currently doing it; because you can put human beings into this accelerating-treadmill situation, many will adapt at least until they burn out (at which time they can be replaced), and those who don't will attrit more quickly, and (from a profit standpoint) good riddance.

Also, I don't think I've made the business about stock prices clear. It is most emphatically NOT a matter of whimsy or taste with no connection to profits. Wall Street values companies based on expected future performance. Today's actual numeric performance informs analyst's judgments about what to expect in the future, of course, but it is only one rather small factor. This idea that you have that a GE-like policy is all about shuffling people around for no reason does not reflect reality. When you whip your slaves and keep them fearful and on their toes, constantly off-balance, they will build the pyramids for you. This actually works in the real world we live in, it isn't the mindless thing you seem to have the perception that it is.

You can't think about capital or companies as static things. They aren't. There is no 'become the best hot dog maker and do that well for the next century', because the definition of what it is to be the best hot dog maker is a constantly moving target.

Oh, and cross-functional moves help an employee see where he used to be from an outside perspective and see a different part of the operation - both of which equip him to work the layer he is in out of a job, re-working it and farming it out to cheaper less-skilled labor and even cheaper machines.

It isn't irrational, and it isn't disconnected from financial performance. It is ruthlessly rational (within the profit-driven logic of capitalism itself) and financially lucrative. It just happens to result in an environment of inhuman nihilistic materialism rather than human flourishing. PC tyranny and the accelerating treadmill aren't irrational abberations: they are drivers of the bottom line.

"Again, because they can, and because nobody knows better how to obsolete a job than the guy currently doing it..."

But it sounds like they are moving them when the previous role is not obsolete. If it's a matter of wanting to pay someone less for the _same_ work, it might make some sense to offer people the option of getting fewer raises and staying where they are, versus pricing themselves out of a job and being forced upward by getting more regular raises.

Zippy:

Aristocles:
Although the post is far from the well thought out and carefully articulated article I had hoped to write (I just wasn't able to take the time today, probably wouldn't be able to for another few days to a week, and I wanted to engage the discussion while it was happening), my intention - well, other than the last bit about the Golem - was to be mainly descriptive, not prescriptive. So it shouldn't be taken as justifying the treatment of persons as things, but rather as describing what actually occurs and why.

It's not that you had meant to justify such treatment of employees; however, you can't deny that what you had written above nevertheless provides a sort of justification of such treatment in the "profit-driven" context of the corporate world. That's not your fault; these are inescapable aspects of this reality which you rightly described.

I guess what I would be very interested in reading (in addition to the "well-thought out and carefully articulated article" you had meant to write) is a post from you (if at all possible) how a Christian in the corporate world can actually reconcile his beliefs with certain business practices found necessary for the advancement, if not, the very survival of a going concern in the modern world today.

I am particularly interested in your take on this given your background.

Example: Imagine a man in procurement for a food company. He buys some of the stuff that the company uses to make its food products. He's been doing that for, say, four years, and according to the common wisdom, he needs to "develop himself" by doing something different. So he reluctantly moves into sales.

He hasn't made his old job obsolete. He's just gone and done something else, something which (let's say) pays a bit more, and is considered by the company's designation an "upgrade." But somebody else now has to do the same procurement job he was doing the day before he moved into a different office in the building. He isn't making procurement more efficient by going into sales. Nor does his sales job involve meditating, from the safe distance of a different department, on a way to mechanize procurement (whatever that would look like) or get it done more cheaply. He's just moved on and up to something totaliter aliter. And he breathes a momentary sigh of relief because he's gotten the hounds off his tail for a few more years, because he did his tri-decade-ly "upgrade." Phew. Now he has to set about learning sales, which he's never done before. And somebody else has to set about learning procurement, which _he's_ never done before.

How has this shuffle-cum-mandated-new-learning-curves, which sounds prima facie darned inefficient to the uninitiated, made the company more profitable? Just saying that the guys who moved "upgraded themselves," and just pointing out that now each of them is (let's say) making more money than he was before, doesn't mean that the company is actually doing or selling any more stuff than before.

I'm not trying to be a smart aleck. It's just that I'm losing my childlike faith in the business world always to be sensible, even by the lights of increasing material productivity.

But it sounds like they are moving them when the previous role is not obsolete.

Jobs are like computers: they are obsolete the day you start them.

Aristocles: I am not ignoring the question, I just don't (as you might imagine) have a pithy answer. Heck, I don't have an "answer" at all, though I hope to write more on the subject over time.

He's been doing that for, say, four years.... He hasn't made his old job obsolete. He's just gone and done something else, something which (let's say) pays a bit more, and is considered by the company's designation an "upgrade." But somebody else now has to do the same procurement job he was doing the day before he moved into a different office in the building. He isn't making procurement more efficient by going into sales.

This is going seem like a flippant response, but please do not take it as being so out of ill will on my part... I'm trying for the 'humorous' but 'pretty darn accurate' view:

In the Real World(TM), if he's been in a job like that for 4 years, chances are profits of his company have fluctuated between flat and growth at least a couple times. By this time, they've been through at least one re-org, perhaps two. Same with new presidents... one, maybe two for that business unit. His boss isn't his boss any more, working at corporate headquarters or, more likely, they've gone through a middle management reduction in a previous quarter to cut bottom line and make good numbers. A few months later, he's been replaced by someone who is twice as expensive, half the age and doesn't know the job at all, but has an MBA and a professionally edited resume that makes trivial accomplishments look like amazing management milestones.

The guy who has been in the same job for 4 years has received one beaming review (making sure he's highlighted as a good hire) and then decent reviews for the other 3. Even then, even when the company is doing well, his salary increase has gone from 4% to 3.5% to 2.5%. He's told that everyone is getting the same percentage (they're not) and that no one in the department got above a certain mostly-average ranking on their review scale (they have).

His entire department is now under the oversight of a completely unrelated department whose director couldn't give 2 ... er, you know whats... one way or another if this new department with which he is charged is doing anything right.

His co-workers, the one there for 5 years and the one there for 2 years have been eliminated, not based on performance reasons, but their names were essentially drawn out of a hat to reduce headcount or maybe their salaries "sort-of" dictated it. This has left a gap in both knowledge and manpower, and some duties go completely untouched now. The members of the department are so swamped that they haven't been allowed to take vacation in the last 9 months.

But that doesn't matter because, in the departmental merger, they've managed to lay off both secretaries of the merging departments, too, so the department, while still functioning, is grinding to a halt when it comes to interfacing with the rest of the company. Also, no one gets their mail, and no one is coordinating vacation schedules or requests.

Then at an all-hands-on 8am meeting they get applauded for their ability to do more with less resources. Except he doesn't hear this because he's trying desperately to figure out how to get the fax machine working to send off a final order contract... because the IT folks have been turning over like there's no tomorrow and the fax machine is dead.

He sees the sales job and thinks 'wow, maybe things aren't as messed up over there'. Except now that he's doing the work of 3 people, they can't afford to lose him, so he's pigeon holed for another year until they get the sense to get Bob from Account-temps to sit in or they, by some miracle, get allocated an additional 'headcount' (these mythical things rarely appear when you need them).

He's also looking at the sales job because he's been in job for 4 years and now other companies are considering him 'stale' when they look at his resume. Had he looked for a job a year earlier in another company, the lateral move would have likely earned a 12.5-20% increase in salary (over the 4-or-less percentage staying in the same position at the same company).

Sorry for the length of this tangent... the names have been omitted to protect the innocent, and the amount of time spent in a single job reduced significantly to fit in with the original scenario.

So in Todd's version, they're doing things pretty stupidly anyway, and the guy in procurement is happy to move in the hopes of finding some part of the company where things aren't done as stupidly. I can certainly understand that. But I gather then in that version the company isn't urging it on him. That might just leave his old department more understaffed than before, and there certainly isn't any obvious connection between his making the move and the company's working any better. It's just that he's hoping it might help him to get out of some of the craziness and get a long-delayed raise.

To your original point, Lydia, there's a saying that people are promoted to their level of incompetence. Show that you're good at what you do and you get promoted until they find a position you're not good at any more and then they lay you off or you go stale.

But maybe it's just what I've witnessed, but unless you were in a very few specific departments that have their toes in the core business, it was difficult to advance at all and no one was looking to move you anywhere, regardless of your desires and ambitions. This was only exacerbated by the other things going on. You'd have people occasionally add a 'senior' title (while keeping many of the same duties), but for the most part, you were hurting your employability elsewhere outside the company if you stay in a single job too long.

Moving 'up' was rarely an option. Promoting from within was seen as a morale killer as, of course, moving one person from a grunt job to a management job meant that other people would feel bad. It's just easier to hire someone from the outside.

When promotions did occur (as opposed to lateral moves or moves out of the department), they weren't opened up for application, you were just promoted, pretty much against your will like your friend had mentioned. Often times these were title changes only, with no increase in benefits, but like Zippy says, looks good on paper. Mostly, you stayed in the position you were in and you got more and more piled on your plate as you became, theoretically, more efficient.

I haven't been at my current employer long enough to really have a good bead on how things are going to work out in the end but they seem sane and well-put-together and they honestly listen to their employees (this is part of the reason I'm there now). Beyond that, any large corporation I've worked for has either been the 'promote for the sake of promotions' type or they've got this carryover from the matrix-management craze where everyone pretty much gets stuck in their position and can't go anywhere, even if they want to. My experience has been the later has been more common, but I've got a small sample size.

Cash cows don't just get thrown away -- they still have value, and nobody throws away money. (A really smart CEO might fire sale them though, even though that sounds like throwing money away. One-time large balance sheet writedowns can be much easier to deal with than falling growth rates and contracting PE ratios). Cash cows just get squeezed for every nickel that can be gotten out of them. What that looks like from the inside is that those employees are locked in the box and provided the absolute minimum of resources necessary to keep the milk flowing, until the cow starves to death.

Smart companies either intentionally cannibalize and obsolete the business of their cash cow divisions/products or sell them off, depending on other factors.

there's a saying that people are promoted to their level of incompetence. Show that you're good at what you do and you get promoted until they find a position you're not good at any more and then they lay you off or you go stale.

Isn't this "The Peter Principle"?


Promoting from within was seen as a morale killer as, of course, moving one person from a grunt job to a management job meant that other people would feel bad. It's just easier to hire someone from the outside.

Also, there are those companies that love to hire from outside in order to shake things up especially for a department that could use a good shake-up by an outsider -- where things had been done the same way day in, day out.

Smart companies either intentionally cannibalize and obsolete the business of their cash cow divisions/products or sell them off, depending on other factors.

A sell-off is especially a big possibility for a particular business in a large corporation where it is no longer in sync with the current business model of the company.

Isn't this "The Peter Principle"

It is. I didn't know it was formalized. :)

Even if the person's productivity barely keeps up with the growth of the company, its still best to keep him rather than hire someone new. If you lay him off, you have to do that paper work and pay out the severence if there is any. Then you have the down time in productivity until the replacement is hired which can include high work loads and possibly overtime for the ex-employee's peers. Once hired, the new worker needs to be trained ($$) and even after training he will probably make mistakes ($$), then he needs to get up to speed to carry his wieght, and all the while collecting a salary or wages($$). So you take a major risk by hiring someone new on the premise of increased margin. That increased margin has to cover the turn around cost and match the old worker's margin just to break even, all in the period of time that the new employee occupies that position before promoting or dismissing him.

But it seems to me that at least some of the costs Josh is talking about would also apply to mandated movement within the company, too. Training for all the people moving constantly, for example.

What it comes to is that I'm not entirely willing to treat this all as a black box. Maybe that's presumptuous of me, because I know so little about it. But I know that in the academic world, I'd rather people followed their common sense sometimes and questioned stuff that sounds silly rather than just accepting that the guys who do it must know what they're doing, so I'm a little more willing to stick my own neck out in fields I know little about, to admit my ignorance, but to express skepticism when it seems warranted.

Suppose somebody told me that Jack Welch of GE made all his corporate workers, on pain of being fired, come in every morning and flagellate themselves until their backs bled. And suppose I learned that during this time his company increased in value some wonderful amount, made big profits, etc. Would I be obligated to accept that this was a sensible policy from the perspective of means-end rationality, that he must know what he's doing, and that having all your employees beat themselves bloody must be a _cause_ of profit increases? If it sounds counterproductive and perverse, and if I can't get anything but a vague, speculative, and implausible-sounding handle on how such a policy could be really increasing basic company productivity, do I just have to accept that it must do so because the company _in fact_ grew greatly in value during the time in question? Isn't this the sort of thinking we criticize in the world of science or medicine? ("My grandmother took snake oil every day and lived to be ninety. It must have something good in it.")

Josh:
If you lay him off, you have to do that paper work and pay out the severence if there is any.

If you do that during a down period Wall Street rewards you with a higher stock price. If you look at the measure 'cost incurred per dollar of increased share value', layoffs often bring a very large bang for the buck, as long as you have the cash to do it.

Then you have the down time in productivity until the replacement is hired which can include high work loads and possibly overtime for the ex-employee's peers.

The replacements are all around you, because people are constantly cross-trained. Losing one person doesn't cause the company to lose the ability to perform that task effectively.

And what is this 'overtime' pay of which you speak? :-)

Once hired, the new worker needs to be trained ($$) and even after training he will probably make mistakes ($$), then he needs to get up to speed to carry his wieght, and all the while collecting a salary or wages($$).

That assumes that we are just replacing someone in a position which hasn't changed in an operation which hasn't changed. But companies are not static. I've said it a bunch of times now: we cannot think of companies as static things like cars or cows. That is not the kind of thing that they are.

Lydia:
What it comes to is that I'm not entirely willing to treat this all as a black box.

I wouldn't suggest that you do. I just don't know what else to say to convince you that these practices - as general policies and tendencies in large companies applied to white collar salaried workers, mind you, not apodictic logical structures which will never admit a contradictory case - lead to better investment returns. But they do.

If you do that during a down period Wall Street rewards you with a higher stock price. If you look at the measure 'cost incurred per dollar of increased share value', layoffs often bring a very large bang for the buck, as long as you have the cash to do it.

It's a well-known corporate tactic -- at least, in our world.

On the other hand, the very few employees that are actually worth keeping are re-hired later on. This could mean some months later or years even.

Procurement isn’t engineering; forced rotations for procurement, accountants, and auditors, etc. to discourage fraud makes sense and is becoming increasingly common; but, I see no reason to compel the engineers to do it.

BTW -- I doubt even GE is that inflexible in its policies. Matt Lauer is a GE employee. He's been at the same job for twelve years. I doubt this means that Lauer is on his way out the door, and I suspect GE would be perfectly happy to have Lauer in that same position in twelve years.

Now, he's obviously an outlier. But

Sure. Another thing about capitalism is that there are always exceptions, especially when profits call for them. I've tried to indicate this in a number of ways throughout the discussion. The 'logic' of capitalism is a logic of maximizing profits, not a two-valued logic of philosophical or technical categoricity. (Management tends to drive engineers and technical people nuts for this very reason, among others).

Understood in that way though we can still talk about it and make true statements about it; and two of those true statements are 'PC tyranny drives profits' and 'the accelerating treadmill drives profits'. They aren't irrational aberrations.

Procurement isn’t engineering; forced rotations for procurement, accountants, and auditors, etc. to discourage fraud makes sense and is becoming increasingly common; but, I see no reason to compel the engineers to do it.

Actually, in addition to the accountants and personnel of other departments, our engineers have recently been doing the same thing -- rotations -- across the company and have, indeed, proven beneficial.

It helps in cross-pollination, among other things, and is especially vital in an organization that had gobbled up various companies in recent years.

In fact, there have been quite a number of NPIs that are being helped by such efforts.

But if things are changing as rapidly as Zippy seems to be implying above, that seems to mean that the rationales Aristocles is giving for moving people about are actually incompatible with the "rapid change" rationale. I hope this doesn't sound incoherent. Let me put it this way: I could perhaps see trying to get people to "learn the business inside and out" by spending (some) time in various portions of the business. But in that case, the parts they left behind wd. have to remain _enough_ similar over time that the experience accumulated would be relevant in their tying things together and understanding the business as a whole or seeing how the parts relate to one another when they have moved on. If their old jobs became obsolete or changed in a radical fashion all the time, perhaps almost as soon as they left them, then their moving around wouldn't really enable them to get that broad picture of all the parts of the business.

There are too many aspects of your post that need be addressed but, unfortunately, cannot be covered in one mere comment, and so you will have to excuse the deficiencies in this one (in addition to the typical deficiencies found in any one of my usual comments ;^)).

For instance, your take on "rapid change" seems to be *too rapid* -- especially where our particular industry is concerned.

Also, when an employee does a rotation in other sections of the company, there should be enough cross-training that others in his/her dept. is capable of taking up the slack (so-to-speak).

(Of course, on the need for a company to remain lean and fit, there is that balance to be struck against redundancies, but, then again, that becomes a whole other topic altogether.)

Incidentally, the rotations that was implemented relatively recently for our company was actually implemented by a principal that came from one of the companies we acquired.

This is another instance where companies benefit from outsiders, as the entrepreneurial spirit and ideas of this person had helped to advance the company further as far as its new product development is concerned and helped rejuvenate some of its stale product lines.

Obviously, many doubted such ideas as, for instance, the rotations of engineers flies right in the face of conventional wisdom and may seem counter-productive in some respects; however, it has proven effective in that it has borne fruit in the latest designs of several new product lines.

Again, you'll have to forgive the scant reply.

Well, I suppose I shd. take some comfort in the statement that it flies in the face of conventional wisdom and may seem counterproductive. At least I know I'm not the only one whom it strikes that way. :-)

I came across this blog post and thought of our discussion here at WWWTW:

http://meganmcardle.theatlantic.com/archives/2008/05/can_management_be_taught.php

I think what this post suggests is that general management skills are transferrable between jobs that may at first blush seem dissimilar (assuming we are talking about white-collar, middle-management positions). So moving your procurement guy into a sales position (and vice versa) does not involve a steep learning curve* and as discussed before, might actually be beneficial for both departments as they both have a better sense of "the big picture".

*Meaning your vision of someone who "perfects his craft" for 20 years is an outdated notion of the skills and abilities needed in a modern day Fortune 500 company.

No, the assumption is that the engineer's productivity stays the same within some reasonable band, not that it declines. Staying the same is a recipe for a very low price to earnings ratio, and being the cause of a lower price to earnings ratio is the capitalist equivalent of death.

A software developer today should be a lot more productive than he or she would have been in 1998 because of the nature of the development tools available to them today. Web software development was extremely immature in 1998, but now there are a lot of very powerful frameworks for quickly delivering a full-featured web application that is reasonably elegant in design. If the software developer in 2008 is working according to methodologies and tools used in 1998 today, then their employer is seeing none of the advantages of using modern web application development processes and tools. Therefore, I can't have that much sympathy for the developer because they are being paid more to deliver the same value.

That's the best example I have, anyway.

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