If your employees are a company’s most valuable asset to ensure that the business runs smoothly, efficiently and constantly improves then why do we continuously fail to put people to good use?
Perhaps we can tie that question to another:
Why and How Did American Work Force Become Disengaged?!
Employees who have or will become disengaged, employers in the United States will not receive their creative, innovative and entrepreneurial power. It goes further than just the creative ‘juices’. Without employee engagement employers are looking at high turnover and absenteeism and low productivity.
During the past three decades, corporations have reaped record profits, CEO’s and COO’s are making record salaries (notice I did not use the word –earning). However, employee wages have both declined or languished.
Disappearing are the positions in middle management of all types of companies – jobs paying between $14.00 and $21.00 per hour with benefits. Why and how did this come about?
There are six (6) reasons for this dearth of employee engagement. They are the following:
- Corporate Re-engineering:
As the U. S. economy became in affected by with globalization many of America’s large firms commenced to reshape themselves to reduce costs. They changed into lean and mean firms with fewer jobs. Complete business functions or departments were either shuttered or outsourced or off shored.
- Decline of Unions:
As of 2013 the American labor force had only 11.3% of the population unionized. This was the lowest percentage in almost 100 years. A similar event took place in the private sector as the union force amounted to a mere 6.5% of the population. This is a dramatic turn of events as in the 1950’s it was 35% of the population. American firms made a determined effort to eliminate or weaken union grasp. It is quite evident how successful they were.
Due to the great movement overseas resulting in massive downsizings, manufacturers have made investments in automation. Automation has been successful beyond belief – eliminated millions of blue collar jobs and the internet has allowed companies to outsource and offshore many white collar jobs.
- Two-Tier Pay Systems:
One of the most subtle strategies created to reduce wages was the Two-Tier System. This strategy rewards long time employees with keeping current wages and benefits but reduces those of all new employees. The sinister side of this is that it encouraged older workers to vote against younger workers in order to sustain their status. As these older workers retire and replaced by newer and younger employees the overall wages are reduced. The larger picture is that this system breeds disunity, fosters unhappiness and produces low morale because the younger employee is performing the same work as the older employee but only receiving two-thirds of the pay. This system has been used in a host of industries – airlines, construction, chemical, printing, petroleum, food, textile, insurance, aircraft production, tire production and retail.
- Temporary and Part-time Workers:
Most of the jobs created since 2008 have been part-time or temporary ones. Part-time positions have grown from 1.9 million in 2009 to 2.7 million in 2013. There are several reasons for this increase in part-time jobs. A few of them are the following. Some businesses are not convinced that recovery is here to stay, so why hire. Another reason is that consumer demand is still too low and many companies have too much inventory-on-hand. Additionally, it appears that many firms will intentionally keep their headcount under 50 so as to be affected by Obama care. Furthermore, these people are hired without health benefits but that only perpetuates the problem – people do not make enough money to support their families unless they have ‘relief’ I n the form of food stamps or other government support.
- Contract Workers:
Contract workers are a relatively new and increasing category of employment in this country. These are full time workers who are self-employed, but not part of a company’s head count. Thus, there are no benefits and pay their own taxes. It is safe to say that contract workers are the future as employers continue to reduce head count.
This relentless effort to reduce labor costs over the last 40 years has been quite successful, but it has created huge economic problems. Low and dormant wages have led to less consumption which has kept the GDP at a trivial 2% growth rate. In addition, there is not enough consumption to purchase all the goods that America can produce. It is clear that this economic model will continue into the future without any recognition to what has happened to the middle class.
The irony of this story is in view of decreasing wages and benefits are the continued rise of CEO compensation. Per the AFL/CIO report, corporate profits, salaries and benefits to CEO’s have risen 331 times as much as average employee.
American corporations can become more competitive if they release the creativity, innovation and entrepreneurial spirit of employees. Motivating them to give their utmost must start with a discussion on wages, benefits, security and equality.