TIME: Almanac 1995

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<text id=89TT2350> <title> Sep. 11, 1989: Where Did The Gung-Ho Go? </title> <history> TIME--The Weekly Newsmagazine--1989 Sep. 11, 1989 The Lonely War:Drugs </history> <article> <source>Time Magazine</source> <hdr> BUSINESS, Page 52 Special Report: Working Scared Where Did the Gung-Ho Go? </hdr><body> It has been eroded by fear and anxiety on the job as employees endure an era of layoffs and turmoil By Janice Castro The back-to-work season has begun, but for millions of Americans, the gung-ho is gone. A Chicago ad-agency executive who lost his job in a corporate cutback last month bitterly quips, "This may be a good thing to happen in August. It's a good time to beat the Christmas rush." Another Chicago manager says his boss told him he'd be laid off in a few weeks, then warned him, "Don't slack off just because we've let you go." Even a beer-company employee whose position seems secure and who ought to be in a good mood on Labor Day is sad-hearted when he thinks about work. "It's just a job now, just a job. It used to be fun. When you made deliveries, you were `the Pabst man' or `the Schlitz man,' and it made you proud," says Joe, who worked his way up from truck driver to middle manager at a Milwaukee brewery. "Now it's dog-eat-dog. The only things that anyone cares about are volume and money." If many U.S. workers are not observing Labor Day this year with any chest-thumping pride, it is because the dominant mood in a lot of American companies is one of fear and anxiety. Loyal corporate soldiers used to believe their employers would reward good work with job security, full benefits and decent pay. Now they have serious doubts about whether they can expect anything beyond the next paycheck. Says Rudy Oswald, chief economist for the AFL-CIO: "Workers have a right to be upset and angry. They've been bought and sold and have seen their friends and relations fired and laid off in large numbers. There is little bond in many companies between employers and workers anymore." Why the change? In industry after industry, U.S. companies have carried out drastic cost-cutting programs and massive layoffs. Employers are struggling to cope with ferocious global competition, unfriendly takeovers and unprecedented new levels of corporate debt. Determined to slash labor costs, companies have discarded traditional notions about job security, compensation and seniority. Like drowning men shedding layers of clothing, they have closed thousands of factories, moved manufacturing operations overseas and eliminated entire levels of management and lines of business. All that leanness and meanness has left companies more profitable, but management experts fear that in the process, businesses may have sown the seeds of a more enduring and costly problem: company loyalty is dying. Even as American business seeks to inculcate a new corporate credo of worker participation and involvement, it is confronting a shell-shocked, apathetic and risk-averse labor force. Some business thinkers fear that the cost-cutting binge of the 1980s may depress corporate creativity and competitiveness for years to come. Says Madelyn Jennings, senior vice president of Gannett Co.: "Employees are running so scared that there is a whole culture that says don't make waves, don't take risks -- just at the time when we need innovation." A TIME/CNN poll of 520 workers conducted last week by Yankelovich Clancy Shulman shows a sharp decline in perceptions of corporate loyalty on both sides of the manager's desk, as well as an expectation of future job hopping. Among those surveyed, 57% said companies are less loyal to employees today than they were a decade ago, while 63% said workers were less loyal to their firms. Asked whether they trust their employers to keep their promises to workers, 48% said "only somewhat." While 60% of the workers said they would prefer to stay in the job they have now, 50% said they expected to change jobs within the next five years. It is hardly surprising that workers are anxious. Since 1983, according to the Department of Commerce, 4.7 million workers who had held their jobs for at least three years have been dismissed. About a third took pay cuts of at least 20% in their next position; a fourth have yet to find new jobs. While the U.S. unemployment rate remains relatively low -- the Government reported last week that the August figure was unchanged at 5.2% -- the job market is racked by a constant churning, along with a tumultuous shift from full-time jobs to part-time and temporary labor. Says Bernard Brennan, chief executive of Montgomery Ward: "Every time I go to a party, I get several resumes from guests the next day. It's not always wise to ask people what they do for a living anymore." Many employers, in fact, view an accordion-like staffing policy as appropriate long-term strategy, hiring workers to meet demand and shedding them just as quickly to trim costs. Even the term downsizing is beginning to give way to "rightsizing," a reference to the constantly shifting needs of employers. In the past two months, five major corporations -- Chrysler, Kodak, Campbell Soup, Sears and RJR Nabisco -- announced new cutbacks totaling 13,000 jobs. Some companies have cut enough people from their payrolls to populate a city. At General Motors alone, 150,000 jobs have been eliminated since 1980 (current U.S. payroll: 431,000). At many firms the practice of laying off longtime workers has taken on a harsh tone. Steve Snow, 36, went to work for R.J. Reynolds right after college. The son of a tobacco farmer, he worked as a Reynolds manager for 14 years. He was dismissed last month, along with 1,640 other workers, as part of the restructuring of the firm following its $25 billion leveraged buyout by Kohlberg Kravis Roberts last November. Called into the product manager's office and given the word, he recalls, "I went numb. I could not say anything for a minute. I felt like I had always done a good job and that this could not be happening to me. They decided I could not go back into the working area. I had left my dress shoes under my desk. They sent someone to get them for me." Most frightening to many workers is the thought that they may be jettisoned after 20 or 30 years at a company. People who draw their sense of identity and self-esteem from the companies for which they work often suffer a huge psychological blow when they find out they are no longer of much value to the enterprise. Says Gannett's Jennings: "I don't think we have any idea of what we've done. There is a view that people are as dispensable as Kleenex." The corporate campaign to unburden payrolls of highly compensated workers has brought a wave of semivoluntary early retirement. According to the Bureau of Labor Statistics, the percentage of workers retiring between the ages of 55 and 64 rose from 13.2% in 1960 to 32.7% in 1986. Since 1980 about one-third of all U.S. firms have used early-retirement plans to trim senior workers. Since pension and benefits payments are smaller for workers who retire early, many youthful retirees must seek new jobs and often settle for less pay. One Chicago-area sales manager, forced to retire at 53, has held four jobs in the six years since then. Says he: "You'd be amazed at the number of people my age who were arbitrarily let go." Besides trimming workers, companies are cutting back on the benefits they offer as a way of dealing with rising costs. A study by Hewitt Associates, an Illinois-based benefits-consulting firm, found that the percentage of large U.S. firms paying the full cost of hospital room-and-board charges for employees declined from 53% in 1984 to 29% in 1988. While some progressive companies are offering new benefits to help two-income couples cope with the stresses of raising families, they are still in the minority. According to the TIME/CNN poll, only 10% of the workers surveyed said their companies offer day care, and just 20% offer family leave for fathers. Sometimes the last cut is the deepest: a group of GM retirees filed suit against the automaker in Los Angeles last month on behalf of more than 80,000 retired GM workers, claiming that the company cut their benefits and imposed new co-payments and deductibles. The most disturbing trend of all is the rise of a new lower class of workers. While American business has created 17 million jobs during the current 6 1/2-year economic boom, as many as 3 million of those openings are temporary positions. And though most temporary workers are employed full-time, they generally labor without benefits or any sort of job security. Once dominated by clerical workers, the temp ranks are now swollen with thousands of engineers, designers, accountants, marketing specialists and other skilled workers. Massachusetts-based Digital Equipment, for example, employs about 3,200 temporary workers on its manufacturing payroll of 32,000. In addition, company payrolls are now studded with a variety of such categories as part-time, informal and contract workers. Generally described as contingent workers, these employees are often paid less than full-time, permanent employees for the same work. Richard Belous, a vice president of the National Planning Association, a Washington group that studies workplace issues, estimates that as many as 36 million Americans -- more than one-fourth of all U.S. workers -- are contingent employees. The ranks of such workers are growing half again as rapidly as total U.S. employment. Companies are just beginning to appreciate the damage that these changes can do to morale and productivity. After massive layoffs, for example, firms go through a period of grieving. When employees are resentful over the loss of their colleagues, work often grinds to a standstill for weeks. Anxiety runs high; mistakes are made; deadlines are missed. Charles Munro, an officer for E.F. Hutton in Chicago for 17 years, lost his job at the failing company when his department was eliminated in 1987. Says he: "People see a company slowly disintegrating. They keep their heads down and become part of the furniture." Resentment can flare when contingent employees work alongside permanent ones, doing the same work. Full-time staffers treat part-timers and temps as second-rate interlopers whose presence threatens their own status. For their part, contingent workers refer scornfully to permanent employees as "tree huggers." Demographics have played a role in the decline of worker morale. The baby-boom generation is both better educated and 60% larger than the one before it. Education spurs higher expectations, yet the sheer size of the generation now approaching its mid-40s ensures that millions of top-quality workers will never find places near the apex of the corporate pyramid. Donald Kanter, a Boston University professor of marketing, and Philip Mirvis, a consultant, report the depth of this growing worker pessimism in a new book, The Cynical Americans (Jossey-Bass; $22.95). Many managers and professionals, they note, "have become `free agents' in the business world, selling their services to the highest bidder. . . These cynics believe that only saps and suckers are loyal to their companies today." In the lower echelons, the lack of corporate commitment to longer-term workers may produce a less competitive work force, economists believe. Most Japanese workers still enjoy job security under a system that virtually guarantees lifetime employment. While Japanese and European firms spend 4% to 6% of expenses on training their workers, U.S. companies are investing only about 1.5% of payroll costs on improving employee skills, according to the American Society for Training and Development, a Virginia-based research group. As global competitive pressures intensify, companies will have to find ways to inspire new levels of commitment and productivity. Some firms are making special efforts to rebuild long-term relationships with their employees. PepsiCo now offers a special stock-option plan to all its 100,000 full-time employees, from senior managers to Frito-Lay truck drivers and Taco Bell chefs. Says D. Wayne Calloway, PepsiCo's chairman: "If they see that their hard work can make them wealthy, they might be more inclined to stay." More companies are expected to establish incentive-pay systems, which many employees prefer. Such systems typically yield productivity increases of 15% to 35%, according to Edward Lawler, a professor of management at the University of Southern California. Such efforts may pay especially big dividends for employers in the coming years. Reason: a shrinking pool of workers. An average of only 1.3 million people will enter the labor force every year in the 1990s, down from 3 million during the 1970s. Employers who have known only labor surpluses will soon be bidding for the services of skilled workers. Other firms are seeking to restore the ties that bind in more subtle ways. At Polaroid, to reinforce a sense of community and corporate citizenship, teams of employees are put in charge of deciding how the company's charitable contributions will be distributed. The Pittsburgh-based Heinz company revived its annual picnic this summer after a hiatus of several years. Hard-pressed executives are beginning to learn that employees need to be motivated by more than fear. Even in an era of tight budgets, companies must figure out how to make their workers feel like part of the team. If they do not, productivity is likely to fall -- or another company will find a way. --Jerome Cramer/Washington, Joyce Leviton/Atlanta and William McWhirter/Chicago </body></article> </text>