I have been pondering since reading Steve Denning’s on Fighting the Kool-Aid of Stock Based Compensation and Umair Haque’s Harvard Business Review’s The Economic Roots of your Life Crisis about perilous journey that we might be on. Take a step back for a moment and consider some cause and effect.
When my parents worked it was pretty much considered a job for life. Most of my friends around the same age had similar experiences for their parents.
When I entered the permanent workforce in 1997 this mentality was beginning to peter out. Big organisation after big organisations that I worked for all went through regular retrenchment periods. Some were as short as every six months, others in two yearly cycles.
They called them different names – offshoring, outsourcing, departmental restructure, voluntary reduced hours; but the intent was always the same – cut the bottom line.
Thankfully I have never been directly impacted by such acts but it has led me to a feeling of constant insecurity. I have never felt safe in a job.
Does anyone else think that this is crazy? What is the point of ever being a permanent employee if you cannot feel safe (naturally excluding performance issues)? At least a contractor knows when their date is going to end. The rest of us that were after secure jobs to pay our mortgages and support our tribe of kids wanted something that we could depend upon. But we cannot depend upon it. We are like a character of “In Time“, our clock is ticking down, but we have no idea when the timer is going to reach zero.
Because of my parent’s experiences within companies I was raised with the belief “You look after your company because your company will look after you.” Extra hours was sometimes part of that deal. Towing the company line as well. But what I was experiencing was something considerably different. It didn’t appear like the organisations cared about its most long term employees (they were commonly the first ones to go). It shattered my illusions. It left a void in my belief system.
I am not the only Generation X person who has been left feeling like they are in the Matrix. Companies no longer care about their people, they care about the almighty shareholder seemingly above and beyond any other competing priorities.
So as anyone with a dysfunctional belief system does, they find a new belief to fulfill this empty hole. We believe that if the company doesn’t care about us then we need to care about ourselves. What behaviours and patterns emerge from this?
We appear selfish. It is all about what we can get right now. We want recognition right now. We don’t feel obliged to have to stay at an organisation for too long (especially if the organisation loves to retrench frequently). We see no problem with being headhunted. We see no problem with doing the work for the hours that we are meant to be paid and no more. This makes us look lazy.
Does this sound familiar? Take a look at the wikipedia definition of a Generation Y:
Studies predict that Generation Y will switch jobs frequently, holding far more than Generation X due to their great expectations. The UK’s Institute of Leadership & Management researched the gap in understanding between Generation Y recruits and their managers in collaboration with Ashridge Business School. The findings included high expectations for advancement, salary and for a coaching relationship with their manager.
Is this singularly minded focus on shareholder value turning us all into Generation Y thinkers?
10 thoughts on “Organisations are growing the Generation Y mindset”
I started in the workforce in mid-’95, and had similar experiences to you – mind you, I think this started in the ’70s and ’80s in manufacturing, and only started to get around to the white-collar jobs in the 90s. Certainly the off-shoring of manufacturing counts as examples of companies valuing shareholder return over employees.
Personally, I’ve never felt that I should place my employer’s interests ahead of my own. That sort of attitude – the expectation of a job for life – has never struck me as natural, or even something I wanted. Which is a little odd, because that’s what my parents had – they were both teachers, and worked first for the Federal Education department, then transitioned to the NT department after self-government – my mum until she retired, my dad until they divorced and he moved to Queensland (where he now works for Education Queensland) Mind you, they did change schools a lot – my mum worked at 10 schools, my dad at 9, and both had stints doing ‘office jobs’ in the Department. So they probably averaged a significant job change every 4-5 years. Their job moves were part of their career progression, and from this I got the impression that it was perfectly normal to change jobs to get promoted, and get pay raises, and so forth.
So, nearly 17 years later… in my first 10 years, I went through 5 employers: NT Education (DBA and stats work, which I took on as a favour to my dad), a small consulting company called Crosslink, Mincom, QSI/Dialect/TNS/whatever they call themselves now, and Suncorp, ending up at Wotif for the last 7 years. The government job was the only one where I didn’t feel disposable – which is odd, because my entire aim in the year I was there was to be disposed (I was automating a previously very manual job – they made my position redundant after I left). Yes, governments do layoffs as well, but at least you don’t feel like your boss is prepared to sacrifice you.
All my jobs in the corporate world have demonstrated very clearly that the company’s first and only loyalty is to the bottom line and the shareholders. Even companies that treat their employees pretty well (and Suncorp was the best in my list) do so because they believe that’s the most cost-effective way to get value out of their employees. And I, in turn, don’t feel particularly loyal to my employer.
I do hard work, I put in long hours, and I have an extremely good work ethic – but that’s because _I_ care about those things. I enjoy the respect and recognition from my peers, and it has enabled me to progress my career – by changing employers. In those first 10 years, my salary increased by over 300% from the bottom (Crosslink – not the govt job) to what I entered Wotif at. I got at least a 10% increase with each change in employer. But when I’ve stayed in a role, I got no significant progress – and that includes the last 7 years. (I did get pay raises at Mincom, but that came from promotions – again, job changes). The lesson gets rubbed in – if you want progress, you’ve got to get promoted, and that often means leaving your employer. It’s just not in your employer’s interests to promote you, after all.
Yes, this is a very mercenary attitude. But that is what I am – a mercenary. I sell my talents and skill for cash, knowing that my employer is getting more value out of the arrangement than I am. Possibly considerably more – for example, you only have to look at the annual reports of public companies to see how they reward staff over shareholders. In the case of my current employer, it’s roughly 2:1 – they give shareholders $2 for every $1 they give employees. Having a mercenary attitude is the logical response.
But a mercenary attitude is not incompatible with wanting satisfaction from my work, or having a desire to do a good job and work with good people. These are rewards as well, and in many ways they are more important than financial rewards – money is a privative, and stops becoming relevant when you get enough (so they say – I’m not at that level. ;), but pride-in-work is something you can never get enough of. I want the joy of knowing I did a good job – which means my biggest sources of dissatisfaction tends to be obstacles to that. Things like short-sighted project management decisions which make what appear to me to be incorrect tradeoffs. I want to do the best job I can, and that’s in the interests of my employer, but it’s still a selfish want.
The thing is that none of this is incompatible with trying to maximise shareholder value. In fact, I believe that shareholder value is maximised, in the long term, by happy employees and satisfied customers. I think it’s more a “short-term” vs “long-term” view that causes problems.
I believe shareholder value *should* not impact employee engagement. I find that it often does – especially when you put offshoring/outsourcing into the mix.
Organisations forget that offshoring/outsourcing not only impacts those directly loosing their jobs but the attitudes of those that remain behind. That is the core point of my post above.
It could be seen that the decision is a short-term view and hence your perspective is valid. I will keep my mind open to it.
This blog was really a precursor to an idea that I wanted to float, hence why it is shorter than your reply 😉
Another aspect to this is: what exactly is shareholder value?
Shareholders make money off their shares in two ways: selling them (or using them as collateral for loans), or from dividends. Dividends are a very slow rate of return – assuming a price-to-earnings ratio of 10:1 and 100% of profits going back to shareholders, it takes 10 years to get ROI – that’s an average of 7%, which isn only marginally better than putting the cash into long term deposits. But very few companies return _all_ of their profits (they do need to invest to grow, after all), and many companies have a higher P/E than 10:1.
According to Wikipedia, the average P/E ratio in the US is 14:1, or 16:1, depending on wether you use geometric or arithmetic means. The dividend yield of the Dow Jones as a whole has a historical low-water mark of 3.1% (at the peak of the pre-1929 collapse) – until the 90s. In the 90s, investment companies shifted from using dividends as the primary source of valuation, and started focusing on price appreciation (in response to market shifts – this was a reaction, not a cause). By 1998, the dividend yield was down to 1.4%!
Between the 50s and 90s, the average dividend yield fluctuated between 3% and 7%. Since 1992, the dividend yield has been consistently lower than 3% – it briefly popped up to 3.5% during the GFC (the dividend yield goes up as share prices go down), but is back in the mid 2%. This is consistent with the idea that shareholders are not looking for dividends to get return.
Instead, shareholder value now is a very short term proposition. In order to get shareholder value, what you look for is volatility: ways to create short-term spikes in the share price to allow shareholders to sell. Investors with this mindset have no interest in the long-term future of the organisation – they are trying to offload it! So when you have groups with significant influence over the company focused on share price manipulation for gain, you’ve got a problem – and that happens with venture capital investment and when you pay your executives with stock (linking back to Denning’s campaign against stock-based compensation).
Pondered the short term vs long term more. Why do you think organisations go for short term solutions more often then not?
To me, it comes down to that ingrained desire to keep the share price happy. This has institutionalised a culture that focuses on this quarter’s results, or this year’s annual report – a culture that has spread beyond public companies, BTW. Over the last twenty years, it’s simply become the way things are done, by default.
There’s also the fact that it’s human nature to downplay future costs – heck, that’s how the entire credit card industry survives. 😉
There are some pragmatic reasons to focus on the short term, of course – the Agile literature is full of stories of trying to solve the problems of now instead of the problems of tomorrow. But the “short-term focus” of Agile is meant to be about avoiding uncertainty, not trying to maximise today’s profits at the expense of tomorrows.
Interestingly, Charles Handy in his various books, has argued for a long time that, whilst we should have some allegiance to our employer, it is more important to have a stronger allegiance to our professional groupings and an even stronger allegiance to our project team members. The growth of social networks and Communities of Practice have enabled this to happen.
No gold watches anymore!
Thanks Derek I will have to have a look into Charles’ work. That framework definitely feels right. I wonder – if you are a “manager” whether from a neurological perspective your “team” is the one you are managing or your peers (or both).
My take is that high frequency (relatively) stock trading has driven the short term nature of everything.
In the old days, if you had stock in Boeing, it was a physicial certificate that was kept and held.
This allowed companies to embark on long term new product development.
Today, shares can be sold daily or even hourly.
Everything is driven on quarterly results; it is nearly impossible to create, release and monetize things in one quarter.
The only thing one can do in one quarter that affects the numbers much is fire people or otherwise reduce costs.
Hence the drive to outshoring and other short term solutions.