Cold Shower 9: Corporate Greed & Unemployed Workers (Part Two)

Cold Shower Corporate Greed & The Unemployed Worker
(Part Two of Two Parts) Vol. I, Article IX

This is a column by Dr. James R. Fisher, Jr., industrial psychologist and former corporate executive for Nalco Chemical Company and Honeywell Europe Ltd. For the past thirty years he has been working and consulting in North & South America, Europe and South Africa. He is the author of five books and more than 200 articles on what he calls cultural capital – risk taking, self-reliance, social cohesion, work habits and relationships to power – for a changing work force in a changing workplace. He started as a laborer, worked his way through college, and ended in the boardrooms of multinational corporations. These columns will answer questions troubling modern workers everywhere.

Question:

Dr. Fisher, I have worked all my life as an assembler for a major manufacturer. My father and my father’s father also worked in this same plant. I am 38 years old with nearly 20 years on the line, but I haven’t worked in nearly a year as a nonunion shop has out sourced my specialty. I have gone back to school (junior college) to develop new skills, but I want to understand what is happening and why. Otherwise, I think I will go crazy. My note may not sound angry, but I am. I feel executives and corporations live on greed, and at my expense. Am I wrong?

Dr. Fisher replies:

As promised in the previous reply, I acknowledge the rightness of your concern. Greed is symptomatic of the present work climate, but the onus is still on you to do something about it. Having said that, the rise and corruption of the managerial class is indeed real.

Today managerial control is the natural order of things. It hasn’t always been that way. At the beginning of the 20th century, most employees worked in small enterprises where the owner was the boss. As business grew in size and scope, managers were hired to run the day-to-day business, while the owner took care of the books. Frederick Winslow Taylor, the efficiency expert, came along and offered a new gospel of productivity, which he called “scientific management.” It was designed for shop floor efficiency. Elton Mayo followed. He attempted to polish some of the rough edges of Taylor’s approach by introducing what he called human relations into the workplace. He discovered workers had a high need to please and responded to attention. This was all pretty primitive.

What changed everything is that small firms started to explode in growth after World War I. To grow they needed an infusion of capital; to acquire capital they had to issue stock. So, small owners either merged with other small owners or turned to Wall Street. Thousands of investors eagerly snapped up these initial public offerings. By 1930, U.S. Steel had 60,000 stockholders with the single largest stakeholder with less than 1 percent of company stock. General Electric had 200,000 with the largest holding 1.5 percent. General Motors came into being as scores of job shops and tool and die makers combined to form GM. Thus in a gradual progression ownership and control passed from the initial owners to stockholders. Two thirds of the largest corporations were owned by tens of thousands of stockholders. These absentee owners had little or no involvement in day-to-day operations. Power quietly passed into the hands of professional managers. These were hired employees, like everyone else, but came to see themselves as “owners” and separate from workers as a “managerial class.”

This new ruling class justified their authority on the shibboleth that management exists to serve shareholders and the bottom line. Workers were things to be managed. Harold Geneen, the legendary CEO of ITT, once confessed, “There are few checks or balances upon the power of the CEO within our large corporations.” What he was saying is that managers down the pyramid echo and reflect the CEO’s wishes.

Remarkably, for the first seven decades of the 20th century management kept a low profile and generally did not exploit its special advantage. It was the era of the organization man, a corporate hero not unlike the Minute Man of Concord. John Kenneth Galbraith championed executive restraint in The New Industrial State (1979) citing management’s modest pay against their broad power. This all changed in the 1970s and continues to this day. We are talking about corruption, but corruption, which is totally legal. Even small corporations pay CEOs more than $1 million a year, or some 50 to 70 times what is paid the average worker. Business Week reported in 1986 that in 1980 only four executives had incomes in excess of $1 million, but six years later 220 American corporate executives had such incomes. In fact corporate pay increased 26 percent in one year while workers pay failed to increase at all in the same year.

These executives are not entrepreneurs. They start at the bottom of the corporate ladder with MBAs, pay attention to corporate etiquette and protocol, spend hours as dutiful soldiers, and one day find themselves in the executive suite. At no time in this climb is one cent of the aspiring executive’s own money put at risk. Once there, the temptation for more is beyond comprehension to the average worker. Executive salary is nothing compared to the sweetheart deals on stock options, golden parachutes, consulting fees (once executives leave the company), buyouts, and innumerable other legal devices which enhanced compensation.

The payoff is not only power and glory but fabulous wealth, but wealth at a price. Worker performance is enhanced by trust. Egregious executive compensation destroys trust and spreads the seeds of distrust. The greatest corporate disease of the day is displayed in six silent killers, social termites that are destroying the infrastructure of countless organizations, and nobody notices until it is too late for damage control. Suffice it to say here that these silent killers represent the passive behaviors of employees who bring their bodies to work but leave their minds, hearts and souls at home. The day of reckoning is no longer on the horizon. It is here.

Copyright (1996) See Six Silent Killers: Management Greatest Challenge (1998) and Corporate Sin: Leaderless Leadership & Dissonant Workers (2000). Six Silent Killers is available at $40 (shipping & handling included) and Corporate Sin at $15 (S & H included).