You might be wondering what's wrong with this picture. Well, I'm here to tell you that industry has lost sight of a basic principle: That the way to be successful is to treat your employees as a valuable resource, instead of as a commodity. Take care of them, train them, and stick with them through thick and thin. Companies that treat their technology workers like disposable robots are finding out that nobody wants to work for them anymore -- but that plenty of people are happy to work for them as consultants, for twice the money they were making on salary before they were laid off.
It used to be that companies laid off workers when times were tough -- when they were losing money and the only way to stay in business was to cut costs to the bone and tighten the belt as far in as it would go. This isn't how it works anymore.
During the past few months, highly profitable companies have been laying off workers. For example, Xerox recently announced that it's in the process of axing 9,000 people. A necessary austerity measure? This is a company that made $927 million last year, or $4.66 per share. Eight out of 12 analysts on Quicken's Quote Plus page rate Xerox a Strong Buy.
Intel -- a company on a roll, if ever there was one -- says it's going to reduce its workforce by 3,000 people over the next six months. The company, which earned $6.9 billion last year ($3.87 per share), is rated as a Strong Buy by 11 of Quote Plus's analysts, with 11 others rating the company a Buy and 13 a Hold -- not a single analyst is saying "sell."
Meanwhile, AT&T, which made $4.6 billion last year ($2.84 per share), is in the process of cutting its payroll by 15-18,000 workers over the next two years.
Each of these companies has what sound like good reasons for cutting the payroll -- usually, that it's "restructuring" its operations, "re-deploying" people, and generally increasing corporate "productivity." But while these layoffs and "restructurings" are going on, technology companies from coast to coast are screaming to high heaven about a supposed "hiring crisis." At many software companies, job openings are going unfilled, often for months at a time. This is largely the result of their hair-trigger behavior when it comes to laying off employees for the sake of short-term profit -- which results in workers being less likely to jump at a job offer, because they know the company that's so eager to hire them today will be equally eager to let them go tomorrow. There are also two other factors: (1) Inadequate salaries and benefits, and (2) corporate unwillingness to train workers.
American companies love to pay their chief executives huge salaries. According to the AFL-CIO's Executive PayWatch, CEO pay rose 500% from 1980-95, while factory workers' pay rose only 70% during the same period. PayWatch doesn't have comparable figures for technology workers -- probably because most technology workers are non-union -- but the same trend applies.
Meanwhile, the same companies expect their salaried programmers, writers, and other software workers to work 50, 60 or more hours per week, without receiving overtime pay and while receiving the measly two weeks' vacation a year that's long been a standard in this country. (Contrast this with Europe, where most white-collar workers get about six weeks off every year, while still managing to get their work done.)
Software companies hate to train people -- they want someone with 5 years of Java experience, 10 years of Cobol, 15 years of C++, and 20 years of Unix system administration; never mind that Java hasn't even been around five years, anyone who's been writing Cobol code for ten years is probably in a funny farm by now, anyone claiming 15 years of C++ is probably a scam artist, because C++ wasn't around 15 years ago, and anyone with 20 years running Unix systems... well, you get the idea. So the jobs go begging.
Meanwhile, each layoff hardens people to the reality of what it's like to work in today's software industry. They've heard companies' hiring pitches about how "At Acme Technology, we put our people first," how they'll be offered exciting opportunities for advancement, using the latest state-of-the-art technology, yada-yada-yada. What they've really learned is that management fads take precedence over loyalty -- and the management fad of the '90s has been downsizing, just-in-time hiring, and treating labor as a commodity -- it's money first, people last.
As a result, no one wants to be an employee anymore. Everyone wants to be a consultant -- because consultants make much more money, work in a wider variety of environments (and stay current with technology much more easily), and have more control over the kind of work they do, whom they do it for, and how many weeks a year they work. Also, a consultant's meter is running, every hour he or she is on the job -- no more unpaid weekends or all-nighters!
There's no "staffing crisis" in software. There are plenty of eminently capable workers out there -- it's just that they're insisting on being paid what they're worth, on an hourly consulting basis. The industry's lack of loyalty to its employees has been painfully obvious, and now that the shoe is on the other foot, with workers having some bargaining power, managements respond with a temper tantrum about a supposed shortage of workers. There is a shortage -- but it's a shortage of people willing to put in long hours for low pay and no job security.
Copyright © 1998 John J. Kafalas