Content provided in partnership with

Establishing rules for the new workplace - Economics

USA Today (Society for the Advancement of Education), Nov, 2002 by John A. Challenger

<< Page 1 Continued from page 3. Previous | Next

Shareholder activism grew unchecked as more and more people started to invest their savings, IRAs, and 401(k)s. Today, shareholders seat members on boards of directors; they scrutinize and second-guess every decision of the CEO and have access to swaths of information about companies that were once hidden; and they dole out swirl punishment to the share price of companies that underperform.

The forces outlined above combined to create a new set of "roles of the game" in the American workplace. In the 1990s, companies stopped thinking about holding onto steady workforce levels during periods of slowdown. Today, when orders and revenue increase, organizations hire more people; when business drops, they are quick to eliminate idle hands and downsize. Companies constantly scrutinize their operations, jettisoning products and services that are losing market share, becoming marginally profitable, or coming to the end of the product life cycle.

Most Popular Articles in News: The Ten Best Laptop bags; Tata plans cheapest-ever car for Indian market; GLOBALIZATION AND THE DEVELOPMENT OF UNDERDEVELOPMENT OF THE THIRD WORLD; Corn is good for you; Corn is not only a tasty treat, but also a cereal that ...; THE 50 BEST STYLISH HANDBAGS TO CARRY; More »

It is no wonder that the term "personnel" gave way in the 1990s to "human resources" which is not a far cry from "human capital" a phrase that is creeping into wider usage today. Companies such as Dell Computer led the movement toward "just-in-time inventory principles," taking the slack out of the supply chain. Now, those principles have filtered into the employment sphere. As leaders of companies began to think of their employees as resources and capital, they realized that people who "sat on the shelf" during periods of order slowdown were an economic liability. The problem was even more apparent to shareholders, who saw that employment costs were the heaviest expense on the balance sheet in a service economy.

In periods of recession, companies do not just shed the bottom performers. They slash and burn. In the recession of 2001, the first one in which the new rules of the game were fully in place, downsizing escalated to nearly 2,000,000 job cuts.

The large number of temporaries, contractors, and consultants at American companies today constitute a "flexible employment system." Not only is a segment of the blue-collar workforce permanently temporary and project-based, but we also have seen the creation and exponential growth of large-scale organizations of highly talented temporary business experts such as Deloitte & Touche, Accenture, and McKinsey. When a downturn hits, companies can immediately cut back on costs by eliminating temporaries, overtime, perks, and various other soft benefits put in place to attract the best workers in times of expansion.

When orders begin to mount, companies can cautiously add man-hours, output, and productivity by hiring the growing army of people who work on a part-time, project basis. As the recovery gets legs, prospering businesses can convert these workers to full-time positions. Business owners can buy time to make sure that another dip is not in the offing as they wind up the recruiting machinery. In past recessions, unemployment continued to worsen as economic recovery began. Enhanced technological ability to detect new orders quickly, combined with flexible workforce options, should act to diminish this traditional unemployment lag.

Establishing rules for the new workplace - Economics

USA Today (Society for the Advancement of Education), Nov, 2002 by John A. Challenger

Find Research Guides for:

Find Featured Titles for: Business

Most Popular Articles in News

Most Popular Publications in News