Thursday, February 09, 2012

The Human Side of Enterprise: Redux

Back in the time of Dickens
Slim were the pickins
As enterprise owners
Enforced a servitude
Without benefit or bonus
For the emerging multitude
By trimming the wages
For workers in cages
While claiming piety
So that they held the wealth
And much better health
And we had anxiety

Back in 1960, there was a brash business professor at MIT who looked at the world of work and saw something fundamentally wrong with the assumptions often made by those in power as managers and owners of enterprise in the developed world. Douglas McGregor wrote The Human Side of Enterprise mostly as a cautionary tale of motivation gone wrong. He postulated that the assumptions made by those leaders in business (or politics or the military) were critical in enabling the motivation of the followers and workers. Essentially, he said that if you make “Theory X Assumptions” about workers; that they are lazy and untrustworthy and must be coerced or coopted into working, then motivation is largely extrinsic and fleeting at best. By demonstrating a lack of trust in workers, the leader risks failure and potentially increasing costs for doing business. On the other hand, if the leader adopts “Theory Y Assumptions” that work is as natural as play and that people can enjoy their work and can be trusted to complete tasks and be productive, then motivation becomes more intrinsic and less monitoring and enforcement is required. Trust is exhibited in specific ways, including how rewards are applied and how decisions are made. A manager who appears to be playing favorites erodes motivation and a manager who constantly monitors employees and demonstrates distrust destroys motivation.

Fast-forward to the 1990s and the ability of mega-firms to create and destroy organizations without input from employees and you have the perfect brew for anxiety. Romney and Bain Equity, through its equity management have repeatedly entered organizations and stripped assets including pension funds and have cut jobs or shipped jobs overseas as the employees were merely onlookers to the process. Protective unions were long gone and even management was helpless in the downsizing and seizure of assets. Clearly, the first casualty of the process was trust, but close behind that injury was the generation of anxiety in workers losing, not only their jobs, but their dignity, self worth and optimism for life. Men or women responsible for providing nourishment and shelter for their families were then subject to the whims of an arbitrary system where they were made to feel bad by applying for unemployment compensation or even food stamps. Remember that the cause of their predicament is not of their doing, but imposed by a legal form of enterprise that immediately sets up winners and losers and creates stress and pain in powerless workers.

Picture the typical layoff. “This is nothing personal. You have been a good and loyal employee, but because of circumstances beyond my control, we have to let you go.” Immediately, there is nothing more personal. Your hopes, dreams, your way of living and concept of self are smashed and your very life is threatened by a legal but destructive ploy over which you had no control. Many of us have had this experience, and frequently, it was due to mismanagement by senior executives who gambled with your security and future and lost. I recall heading the training department for a bank that suddenly decided to enter international lending. They threw out all the safeguards of domestic lending and opened an office in London that quickly lent money to international shipping. Worse, they lent money for oil tankers. Still worse, all the tankers were from one country, Greece. Soon, the oil market collapsed and my employer was stuck with a bunch of tankers sitting in the port of Athens. I got the “nothing personal” speech along with my entire department and my bank was purchased by a bigger bank that soon met the same fate for similar mismanagement. I am certain that bank conveyed the same “nothing personal” speech.

Have we changed materially since the days of Dickens? No, not really, but the methods have morphed and the stakes have become higher since people believed the rhetoric about becoming participants in this ownership society and invested in homes when prices were high and banking treachery was higher. So now, being laid off also means losing your home instead of being kicked out by your landlord. If you call that progress, you have a high threshold for pain. Bain or its counterpart just ate your lunch by confiscating your pension, but it was nothing personal, thank god. You are reduced to standing in line to get unemployment compensation and soon you are further embarrassed to show your food stamp card at the supermarket. In a few states, you also have to pee in a bottle to prove that you are not on drugs before you qualify for food stamps because you are getting “government” money (much like the conservative politicians on the government payroll except for the peeing in a bottle part). So far, only 2% of these recipients have tested positive for drugs while 9% of the general population tests positive for drugs, yet the assumption continues that people are lazy and that they WANT to get food stamps to avoid work. Could things be any worse? Of course, you could have the House of Representatives cut off your unemployment compensation. Once again, conservatives there are claiming that paying unemployment compensation will be a disincentive for you to find work. I guess that they assume that you enjoy peeing in a bottle and living on the street, losing your pension and begging for food. How could I have missed the joi di vivre?

Simply listen to the conservative candidates in debates and speeches and you will discover that “people on welfare WANT to be there.” “They DON’T want to work.” The assumptions are both incorrect and dehumanizing. How humiliating it must be to lose your job because Romney crushed your company and grabbed your pension and then you have to apply for food stamps. Gingrich follows with his invective that blacks especially should learn to be school janitors so that we can bust unions and hire kids “who don’t have good role models.” Unfortunately, many black kids live in homes or on the street where their parents have to work two and more part time jobs without healthcare simply to buy food and shelter. Rick Santorum specifically mentioned blacks receiving welfare and then denied it despite the clear video where he pronounced it for perpetuity. Their assumptions drive their heartless and brainless policies. Fundamental assumption: The poor are causing the problems in our society.

Tax policies are the most interesting. “Everybody should pay some taxes.” Now that sounds fair, doesn’t it? Except for the fact that even the poorest pay local taxes although they may not pay federal income taxes because they have no income. Sure, Mittens Romney pays taxes like a good boy, and although it is less than 15%, it is all legal, right? While true, it is also true that Bain and other equity and investment companies lobbied Congress directly and forcefully to qualify dividend income and “carried interest” income at lower rates than any worker on a paycheck. Romney helped write the law. Mittens was also able to contribute a $100 Million gift to his sons in one year without the usual tax. In fact, he paid no tax on that gift. Now this may have been some sort of special trust arrangement, but limitations exist for each of us who may not have a crew of attorneys and accountants. Recently, we were restricted to $11,000 and, since 2011, that has been raised to $1 Million annually in gifts. I guess Mittens could not wait a hundred years and surely, he could not afford the taxes. Every proposed tax scheme of conservative candidates will increase the taxes paid by lower and middle class citizens and reduce the taxes of the highest economic class. The rationale for trickledown has not changed, but neither has the reality. The “job creators” need the tax breaks to create jobs so that others can pay taxes. We have enjoyed ten years of the lowest tax rates for “job creators” in over 50 years and they have created no jobs, but continue to amass wealth so they can continue to influence tax legislation. Do you feel the trickledown? Maybe you spilled something from that bottle you had to pee in.

George Giacoppe
10 February 2012

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