Technological and legal changes over the last generation have dealt employers an increasingly strong hand in setting the terms of their relationships with the people they hire. Regardless of whether you think that this is a good thing or a bad one, it’s hard to deny employers’ clout.
What’s less easy to see is the costs of exploiting that imbalance in power. They are worth considering. First, though, some background.
Evidence of the aggregate power shift can be easily seen in the changes to the conditions under which employment takes place today. In the U.S., wages have been largely stagnant for three decades, though productivity has risen. That means virtually all the benefits of higher worker productivity have accrued to employers.
Meanwhile, employers have reduced the financial burdens of providing employee security. The percentage of people in the U.S. working as contingent workers had risen to 40.4% of the U.S. workforce by 2010, according to a study by the Government Accounting Office, which also concluded that the contingent workforce level had been at 30.6% in 2005. (Admittedly, the so-called Great Recession fell in the years between those two dates, but 10 percentage points is a very large shift.) And obligations to the full-time workers who remain have been reduced as well. We’ve all seen how guaranteed pensions have been replaced by defined contribution accounts such as 401(k)s.
In IT, outsourcing continues unabated. And, as Computerworld’s Patrick Thibodeau has been reporting, some particularly aggressive companies are exploring new ways to press their advantages even in the terms under which their replaced workers depart.
Every manager walks into the office each morning holding some of the power that flows from just being an employer. You, as a manager, may not feel so powerful in your day-to-day interactions with your staff, but when it comes to dictating the terms of employment, you are. And you are probably under constant pressure to use that power to:
- Produce results
- Reduce short-term costs
- Minimize long-term obligations
The question for a manager of technical people is, “When and how should I use that power?” Because you have the power, you can use it whenever you want, but it may not be such a good idea to push too often or too hard.
That’s because exercising power is not a cost-free activity. You can coerce people into submitting to the conditions of employment (“It’s $10 an hour, take it or leave it.”), but you can’t control how they respond to being coerced. If you’re negotiating a one-time transaction, such as buying a new car, you may not care that the dealer’s sales manager will be offended by the tactics you use to squeeze an extra 1% out of the price. With luck, you’re never going to see him again.
But when you’re exercising power in an ongoing employment relationship, you should care a great deal about how the terms you dictate and the tactics you use make people feel. Their attitude toward the organization and you, their manager, directly affects the value they deliver as their part of the bargain.
This is especially true when you’re dealing with geeks. The work they do requires engagement, creativity, dedication and commitment. It follows, then, that negative feelings can cost a great deal in productivity and quality. A developer who feels that she is being paid less than her equally capable peers is unlikely to think creatively day and night about how to better architect your system. A support technician who fears that his job may be converted to a contract position is thinking more about where to get a new job than about how to make a user feel good. A contract project manager who has had his hourly rate cut may quit or do something even worse: tell everyone who will listen about his resentment and rage, spreading discontent like a virus among the staff.
This is not to say that you need to pay people outrageous, above-market salaries to avoid offending them. But you do need to think carefully about the consequences of dictating significant or frequent changes to the employment relationship. The value you lose may far exceed the costs you cut.