July 30, 2009

Guaranteed employement

There was an incident during the management of change module about whether or not it is appropriate to make "promises" to employees like guaranteed employment, benefits and so on. This is a real situation that happened to our company Flexipart during the business simulation.

In real life, the same dilemma is faced by well known companies. Like everything in life, there appear to be two sides to the story. While some argue guaranteed employement is Good for the company because  employee are more likely to be loyal and hence less turnover costs. I remember reading this from Deming's book where he cite the example this in Japanses business practice. 

However, contradicting evidence include the likes of General Motors, well known for the deal it made with the union worker for 'sweet' pension and retirement benefits. According to an article from the Economist, such employee benefits was a major cause for General Motor's collapse (because it can't meet its pension obligations) . So this make the following question relevant and interesting

Should organisations offer guaranteed employment to employees?

Well Argyris provide an interest take on this question, from a different perspective from above, I will just quote him i think

He writes in an interveiw with Acme CEO, the CEO wrote

"If the employees express fear about the new plan because the  'old' company guaranteed employment, say: "The new organization will do its utmost to guarantee employment and better prospects for growth. I promise that."

and

"If the employees express fear that they are not used to dealing with the market approach, say: I promise you will get the education you need, and I will ensure that appropraite actions are rewarded."

 

Now if I recall correctly, when this happned during the MOC business simulation, the tutor said to our managing director (I paraphrase) "Making false promises to your employee that they will always have their job is not doing them good, it is an act of cowardice". The rationale behind this is that when under pressure , the MD approached the employee's fear by offering a simple no brainer solution "I give you job no matter what happens", thinking this should eliminate sense of fear and enhance commitment. But the MD in fact have no control over the external environment. By simply asserting that he will guarantee jobs is a momentary attempt to regain legitimacy using his positional power while having no concrete plan to ensure his promises can be fulfilled. (He was treading on thin ice basically)

Now the three argumentsI mentioned above, all have a very anti-management bias (I didnt invent this term, Argyris did). Basically it first assumes the responsibility of job security rest in the top management while it completely ignores and removes employee's own personal responsibility for ensuring job security. Argyris wrote

"But look at the confusion of messages and roles. If the CEO means to give these employees a sense of theri own power over their own professional fate - and that was his stated intent - then why emphasize instead what he will do for themEach time he said, "I promise you," the CEO undermined his own goal of creating internal commitment, intrinsic motivation, and genuine empowerment."   (p105)

 Argris's example again illustrate the point that each and everyone of us has our own hidden unsaid assumptions about they way we behave. In the CEO's case, he assumed the management has the full responsibility for employee's job security. But we often don't realise these assumptions are inconsistent with our espoused  (publicly stated intent and behavior).  When we don't realise these two are inconsistent, we produce actions that are inconsistent with are stated beliefs. To others, we appears inauthetic (Dee Nicholls) in our words and actions.

Now what should one do if he/she was in the CEO's shoe? Well I won't bore you with all the same words about leadership and communication. But I will leave you with an story from Mathew (co-tutor in the module). Instead of using fear to motivate , which is the opposite of guaranteeing job security (saying If you don't work hard , you and I will be both out of a job!).  I think he said "I want us to be the best in what we do". Now I don't know if saying this is actually better than the other approaches mentioned above. I 'd happily welcome your thoughts and comments. :)

To quickly sum up. It is clear hopefully from my description that Guarantee-ing employee job secruity is NOT a good idea. For two main reasons. Firstthe external environment will dictate organisational action beyond management control (i.e. recent mass layoff from financial crisis), you end up shoot yourself in the foot. Second, it removes that sense of urgency from the very people you try and expect to change their behavior.

 Argris, C (2001). Good Communications that Blocks Learning. Harvard business Review Paperback on Organizational Learning


- 4 comments by 1 or more people Not publicly viewable

  1. Amar Shah

    I do feel that that guaranteed employment is not a good idea. Doing this will never leave you in a good situation when times are hard.

    31 Jul 2009, 11:50

  2. Yes exactly, but those hard times are also when it’s the most tempting to offer it. From the manager’s point of view, it often seem like the most obviou solution. But the apparent harmony is only superficial, when the time comes, it is easy for the manager to say “okay I resign”, but the actual damage done to the organization is irrecoverable.
    p.s. I removed your first, “rg” comment , okay?

    31 Jul 2009, 15:47

  3. front door

    WHAT ! This is totally foolish you have to work for job and work either harder to keep them.. with the best getting promoted no one shold be guaranteed work.. it defeats the object

    24 Aug 2009, 15:38

  4. seo london

    Again another example of people being too soft ..what wrong with working for stuff

    24 Aug 2009, 16:41


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