Coming to terms with the new corporate contract - changing responsibilities for employees and employers

Business Horizons, Jan-Feb, 1995 by William J. Byron

"It used to be you had a contract," said a displaced senior vice president of one of the major broadcasting companies. "Now you're virtually working on a per diem." He and I were in a three-way conversation with another ousted executive from the same network, and the topic was downsizing. "We used to have careers, now we settle for jobs," said the other man. The first speaker continued, "The contract with corporate America is a thing of the past. If you're joining the corporate ranks today, you have to understand that you won't be there with one company more than ten years. Your guiding concept has to be: The corporation doesn't get me; I get them. There was an innocence about it in the past; now that innocence is gone."

This man is probably the most cynical person I encountered in the course of a study of mid-career executive layoffs I conducted from 1992 to 1994. He was not burned out, just burned up and disillusioned by the culture shift that hit corporate America around the end of the 1980s.

I asked him what advice he would give his son if that young man were entering the corporate ranks today. His answer was, "Fake the nice-ties, feign the loyalty, and keep your eye on them because they're going to take you out!" In the matter of compensation, his counsel would be, "Go for as much as you can get at the front end, and don't count on much being there for you at the back end." There was a substantial amount for him "at the back end" of his own corporate career, however full benefits based on 30 years on the payroll, in fact. Given that security, and the fact that he was just 55, he became actively involved in television production ventures. "I feel good," he said. "Whatever I'm doing now is me, not the network."

At the beginning of his career in the 1950s, this "Organization Man" had a contract and the expectation of orderly progress up the ladder with increasing responsibility and compensation along the way. It was a "contingent" contract, of course, with no guarantee of permanence. But that was never really made explicit; at least it was not at the forefront of the consciousness of either party to the contract. Both sides took the long view. They just assumed they would grow old together.

This was particularly true in banking. Most of the bankers in my geographically and industrially diverse sample of 150 men and women, 40 to 55 years of age, spoke of the normal expectation of "womb to tomb" security in that industry. Their own American Bankers Association sponsored a book, published in 1992, that would have been unthinkable when the "Organization Men" settled into banking careers several decades earlier. Its title was "Career Alternatives for Bankers: How to Use Your Background in Banking to Find Another Job."

What was once presumed to be a long-term "relational contract" can no longer be relied upon to sustain an uninterrupted employment relationship over time. It is now more of a "transactional contract," which brings managers and their employers together in corporate America; the "transaction" and the concomitant employment may be short-lived. Both parties to the employment transaction in today's new corporate contract negotiate the arrangement in a new way. The manager, wanting to be hired, says, in effect, "If you hold me contingent, I'll hold you contingent." He or she will settle in, but not too comfortably. Other options will always be explored, front-end financial considerations will be more important than they were in more stable times, and severance packages will be filled and neatly wrapped before the job begins. Not only will other options be considered as the ink is drying on the new employment contract, but actual offers will be entertained at any time, although. this too will be negotiated by many opportunity-seeking managers in a new way.

The broadcast executive I quoted above explained the new way of proceeding. First, he said, wherever you are working, be serious but quiet about building up your own skills bank. Then, at any time, "when expressions of interest come your way, act surprised and flattered. Regard the inquiry as an invitation to dance with the prom queen; you've always wanted to dance with that girl. It doesn't make any difference if you want the job or not, just make up your mind to get it. And once you get it--a bona fide offer--then sit back and ask yourself if you want to take it. Be careful, though, and look both ways--to the source of your present paycheck and to potential employers outside. Your body throws off vibes; people smell that you are thinking about moving on. But don't be too cool, and coy, and 'laid back' about it, or you'll lose the offer. Let them think you'd kill for the job. Only when you get it, then decide if you want to take it."

Free Agency Attitudes

Another word for this approach is "Free Agent Management," an idea borrowed from baseball and used as the title of an article by Paul Hirsch in the National Business Employment Weekly (1988). "Whether they lost jobs or watched others lose theirs, smart workers from the CEO down to the clerical staff are investing less ego and self-esteem in any company or position," writes Hirsch. "These managers are now thinking like free agents. They're beginning to look out for themselves, find out how much they are worth and consider offers from other teams .... Free agents make it a point always to know their alternatives, to have a clear idea of where they could jump if unexpected roadblocks arise in the present job. They work hard at their current jobs but never take them for granted. They direct much of their energy toward shaping and securing their futures." The free agent will not "jump" unless a safe landing is assured; he or she is well aware that the best way to get a new job is to be effective, and appear to be content, in an old one.