Employee Society 2.0
As what has become known as the “Great Resignation” goes global, people are reevaluating their priorities and quitting their jobs in droves.[1] There are heightened levels of burnout and shifts in identity. Everywhere, people yearn for more prosperity and meaning at work.[2] In search for solutions, decision-makers are soliciting feedback and creating retention campaigns.[3] However, this merely scratches the tip of the iceberg. To solve the root cause of the problem, policy makers will need to rethink the purpose and premise of our economy.
There are many lessons to be learned from this current upheaval in our economy which are quite different from what many economists assert. In the 17th century, there was no consensus on what caused poverty or unemployment. The phenomenon of management was then unknown.[4] Some, such as the Quakers in Britain, believed that these were the outcome of unorganized labor.[5] Even if the assessments were somewhat logical, the solutions offered were errant by the standards of today.
To help the disadvantaged find employment, Quakers appealed for the creation of modern-day labor exchanges and further education where people could learn a trade, such as spinning or sewing. Moreover, it was all to be run for profit by capitalists which was to be a profound error, according to later socialist thinkers.[6] Under the guise of “labor,” capitalists could universally buy and sell workers at a price: thus “wages,” was born. Well-being, family, and happiness were shoved aside by money, and as a result people became no more than tools and machines.[7]
As socialists did then, people today look uneasily at corporations and the profit-motive, blaming them for all our current economic upheavals. But, profit is the prerequisite for any working economic system, be it capitalist or communist. The purpose of profit is to cover costs as well as potential risks that may arise in the future. The opportunity Quakers and many others missed was to define how profits must be used to cover the costs of labor, capital, and pensions; the risks of exploiting nature, degrading housing, and eroding family life.[8] Or, put differently, employment creates a cost on society and the environment; nobody knew how to measure it and everybody thought it was safe to ignore.
In the 19th century, Robert Owen - the father of personnel management - accurately pointed out the consequences.[9] In his book, “Observations on the Effect of the Manufacturing System,” he criticizes the Quakers' plan and recommends “legislative interference and direction.”[10] Owen contended that this devised economic system was devastating communities and degrading nature. If the government did nothing to counter the raison d‘etre of so called profit-seeking enterprises, enterprises would irrevocably worsen the character of society.[11]
This became evident in the insurance business, where interests intertwined and dependencies grew. Organizations such as the New York Life Insurance Company (NYLIC) not only created jobs, but also amassed a fortune, using their profits to influence the highest echelons of government. By means of Life Insurances, corporations were assigning a cash value to life. Their statistical life tables stripped death of its individual and qualitative aspects and made it statistically predictable.[12] Businesses as these might have come to control every aspect of political and economic life, had they not been caught by the The New York investigation of insurance practices in 1905. NYLIC had made large financial contributions to different presidential campaigns. At that time, the gifts of the NYLIC to Republican Campaign purposes aggregated to roughly $150,000.[13]
By the turn of the 19th and 20th centuries, large-scale organizations emerged creating a new way of life and work. At large, this was due to the contributions of Scientific Management, the systematic study of work. Scientific Management conceived the matrix organization and eliminated the concept of the “boss” by making them servants of workmen. It introduced productivity, brought about higher wages, shortened working hours, and improved profitability.[14]
Increasingly, people thought of their employer as the agency responsible for education, security, and well-being. Government and the media gradually recognized the power of large organizations and dubbed them as unmanageable. They tried to break them up, but it was too late, as in the case of the United States Supreme Court who in 1911, tried to split up the mighty Standard Oil Trust. Every one of the successor entities of the company would become larger than the parent corporation, financially and by number of employees.[15]
Following both world wars, Professor Peter F. Drucker found a new societal phenomenon. He saw that the “traditional employer” had almost disappeared. People no longer worked as dependents for a boss they knew. Instead, as Drucker put it, their relationships were now based upon a “strictly impersonal, objective, abstract thing, the “organization””.[16]
Business was no longer in the hands of individuals, but in the clutch of intermediaries. Dubbed by one leading historian as humanity’s most ingenious inventions, large-scale organizations reshaped all concerns and perspectives in society. In addition, people who were beneficiaries of these intermediaries, began deriving their identity and purpose in life from them.[17]
In the “Employee Society,” as Drucker labeled it, people’s aspirations are molded by contracts. Contracts obligated the individuals to contribute to the organization's goal defined in terms of property interest. And this goal was defined entirely outside all employees' interests, even though they were cooperating towards its fulfillment. Peter Drucker also claimed that the employee society was no longer ruled by capitalists, but by managers, who derived their authority solely from relationship to the organization, rather than by “property, birth, inherited magical power, or military force.”[18]
In hindsight, society sees that this causes low self-esteem and stifles creativity with employees.[19] For people, purpose that is solely based on property interest, leads to burnout and depression.[20] It fosters principles unfavorable to the individual and their well-being. To revert this situation, these self-imposed chains need to be discarded so people can be liberated from their irrational needs.
Governments need to intervene. They must set clear boundaries as to why organizations exist, determine what costs their profits must cover in society, and how they should treat workers. To create a new kind of Employee Society, policy makers can fill in the gaps for different industries and aid in the creation of purpose statements. That is, help organizations express why they are needed by people and which promises citizens expect them to fulfill. Best practices that combat inequalities and create a better life for as many as possible need to be researched and shared. Profit, which Quakers quabbled about in the past, needs to be understood in terms of covering costs and strictly coupled to future well-being.
There also needs to be transparency around purpose. Policy makers cannot rely on self-reporting alone. Many companies will most likely be guilty of conveying a false impression or providing misleading information about how their establishments are lead. Accordingly, it is vital that policy makers provide tools and empower employees to ethically rate their employers and the implementation of their purpose statements.
Policy makers will need to rethink employment contracts. Rather than enabling organizations to obligate individuals to contribute towards property interest, they can pressure corporations to covenant social interests. Work must be secondary to well-being. Social benefit should be maximized over shareholder value.
In addition, policy makers can also foster a spirit of cooperation among employees. This can be written into their contracts. Status and identity thus can be derived from personal relationships and the community, rather than position and corporate function. People need empowerment to plan for the improvement of society. Non-financial incentives must be determined to enhance prosperity, health, and citizenship.
As early as in 1909, Frederick W. Taylor’s harbinger showed how forests were vanishing and human efforts undervalued. He proposed the answer was scientific management with solid rules and principles.[21] We still face the same issues. Employees are more organized than in the past, but most of the world’s three billion workers still lack purpose.[22]
In low income countries, where large organizations industries are yet to emerge, management practices can be introduced. This is no easy feat. Such an initiative would be similar to the “Technical Assistance” Marshall Plan where almost every Western country sent thousands of handpicked businessmen to America to study the cause of the country’s prosperity. For several months, European employees toured the likes of American car companies, business schools, and textile mills. Each team came to the same conclusion: American prosperity was not based on machines, capital, or lack of wartime destruction, but flourished due to social organization and moral values underlying their industry.[23]
Sources:
Bellers J., Proposals for Raising a College of Industry of All Useful Trades and Husbandry (London: Printed and sold by T. Sowle, 1695)
British Library, “Robert Owen”,
https://www.bl.uk/people/robert-owen#:~:text=Robert%20Owen%20(1771%2D1858)%20was%20an%20early%20industrialist.&text=Owen's%20strength%20was%20that%20he,a%20father%20of%20personnel%20management (accessed December 04, 2021)
Brooks A.C., “A Profession is not a Personality”, The Atlantic, September 30, 2021, https://www.theatlantic.com/family/archive/2021/09/self-objectification-work/620246/?utm_source=pocket_mylist (accessed December 04, 2021)
Cook I., “Who Is Driving the Great Resignation?”, Harvard Business Review, September 15, 2021, https://hbr.org/2021/09/who-is-driving-the-great-resignation (accessed December 04, 2021)
Cohen A., “How to Quit Your Job in the Great Post-Pandemic Resignation Boom“, Bloomberg, May 10, 2021, https://www.bloomberg.com/news/articles/2021-05-10/quit-your-job-how-to-resign-after-covid-pandemic?sref=BGQFqz7Xv (accessed December 04, 2021)
Crone L., Brunel L. and Auzoult L., “Validation of a Perception of Objectification in the Workplace Short Scale (POWS)”. Front. Psychol. 12:651071 (2021), https://doi.org/10.3389/fpsyg.2021.651071
Drucker P.F., “Management and the World’s Work”, Harvard Business Review, September 1988, https://hbr.org/1988/09/management-and-the-worlds-work (accessed December 04, 2021)
Drucker P.F., “Management in the big organization”, The Claremont Colleges Digital Library, July 16, 1967, https://ccdl.claremont.edu/digital/collection/dac/id/7276/rec/3, 1-2, (accessed December 04, 2021)
Drucker P.F., “Productivity is an Attitude”, Nations Business, April 1952, https://digital.hagley.org/nationbiz_041952#page/1/mode/2up, 34-36, 66-67
Drucker P.F., “The Employee Society”, American Journal of Sociology 58, no. 4 (1953), https://www.jstor.org/stable/2772357
Drucker P.F., “The Unfashionable Kierkegaard”, Global Peter Drucker Forum, 1933, https://www.druckerforum.org/peter-drucker-texts/the-unfashionable-kierkegaard/ (accessed December 04, 2021)
Drucker P.F., “The Delusion of 'Profits': A company that loses money is socially irresponsible.”, The Wall Street Journal, August 3rd, 1976, https://www.wsj.com/articles/SB122721184362045243 (accessed December 08, 2021)
Financial Times Editorial Board, “Making sense of the Great Resignation”, Financial Times, November 26, 2021, https://www.ft.com/content/9fd3c498-1014-47ee-8e25-865a91efd594 (accessed December 04, 2021)
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New York Times, “The Campaign Fund Scandal.”, September 17, 1905,
https://timesmachine.nytimes.com/timesmachine/1905/09/17/101760035.html?pageNumber=8 (accessed December 04, 2021)
Owen R., Observations on the Effect of the Manufacturing System (2nd Edition) (London: Printed for Longman…1817)
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Schwantes M.,”Why Are People Really Leaving Their Jobs? The Whole Reason Can Be Summed Up in 4 Words”, Inc. Magazine, October 19, 2021, https://www.inc.com/marcel-schwantes/why-are-people-really-leaving-their-jobs-whole-reason-can-be-summed-up-in-4-words.html (accessed December 04, 2021)
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Footnotes:
[1] “The Great Resignation” was coined by Anthony C. Klotz, an associate professor of management at Texas A&M University. See Arianne Cohen, “How to Quit Your Job in the Great Post-Pandemic Resignation Boom“, Bloomberg, May 10, 2021, https://www.bloomberg.com/news/articles/2021-05-10/quit-your-job-how-to-resign-after-covid-pandemic?sref=BGQFqz7Xv (accessed December 04, 2021)
[2] See Financial Times Editorial Board, “Making sense of the Great Resignation”, Financial Times, November 26, 2021, https://www.ft.com/content/9fd3c498-1014-47ee-8e25-865a91efd594 (accessed December 04, 2021)
[3] See Ian Cook, “Who Is Driving the Great Resignation?”, Harvard Business Review, September 15, 2021, https://hbr.org/2021/09/who-is-driving-the-great-resignation (accessed December 04, 2021); See Marcel Schwantes,”Why Are People Really Leaving Their Jobs? The Whole Reason Can Be Summed Up in 4 Words”, Inc. Magazine, October 19, 2021, https://www.inc.com/marcel-schwantes/why-are-people-really-leaving-their-jobs-whole-reason-can-be-summed-up-in-4-words.html (accessed December 04, 2021)
[4] See Peter F. Drucker, “Management and the World’s Work”, Harvard Business Review, September 1988, https://hbr.org/1988/09/management-and-the-worlds-work (accessed December 04, 2021)
[5] See Karl P. Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (2nd Beacon Paperback ed.) (Boston Massachusetts: Beacon Press Books, 1944), 108-111
[6] See Thomas Lawson, An appeal to the Parliament concerning the poor that there may not be a beggar in England (London: Printed for Robert Wilson, 1660), 1-4; See John Bellers, Proposals for Raising a College of Industry of All Useful Trades and Husbandry (London: Printed and sold by T. Sowle, 1695); See Karl P. Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (2nd Beacon Paperback ed.) (Boston Massachusetts: Beacon Press Books, 1944), 108-111; socialist thinkers that opposed this notion included Ferdinand Lassalle, and Charles Fourier, to name two examples.
[7] See Karl P. Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (2nd Beacon Paperback ed.) (Boston Massachusetts: Beacon Press Books, 1944), 108-111
[8] See Peter F. Drucker, “The Delusion of 'Profits': A company that loses money is socially irresponsible.”, The Wall Street Journal, August 3rd, 1976, https://www.wsj.com/articles/SB122721184362045243 (accessed December 08, 2021)
[9] See British Library, “Robert Owen”,
https://www.bl.uk/people/robert-owen#:~:text=Robert%20Owen%20(1771%2D1858)%20was%20an%20early%20industrialist.&text=Owen's%20strength%20was%20that%20he,a%20father%20of%20personnel%20management (accessed December 04, 2021)
[10] See Robert Owen, Observations on the Effect of the Manufacturing System (2nd Edition) (London: Printed for Longman…1817), 5
[11] Ibid, 4-6
[12] See Peter F. Drucker, “The Unfashionable Kierkegaard”, Global Peter Drucker Forum, 1933, https://www.druckerforum.org/peter-drucker-texts/the-unfashionable-kierkegaard/ (accessed December 04, 2021); see also Charles Babbage, The Assurance of Lives (1826), which was a pioneer in proposing a new set of life tables in the insurance business.
[13] See New York Times, “The Campaign Fund Scandal.”, September 17, 1905,
https://timesmachine.nytimes.com/timesmachine/1905/09/17/101760035.html?pageNumber=8, 8 (accessed December 04, 2021); see Morton Keller, The Life Insurance Enterprise, 1885-1910: A study in the Limits of Corporate Power (Cambridge, Harvard University Press, 1963); Today $150,000 from 1905 has a relative project worth of $120 million. See The Measuring Worth Foundation, “How much is a dollar from the past worth today?”, December 06, 2021, https://www.measuringworth.com/dollarvaluetoday/?amount=150000&from=1905 (accessed December 06, 2021)
[14] See Walter Kiechel, “The Management Century”, Harvard Business Review, November 2021, https://hbr.org/2012/11/the-management-century (accessed December 04, 2021); matrix organization: see functional or divided foremanship in Frederick W. Taylor, The Principles of Scientific Management (New York and London: Harper & Brothers Publishers, 1919)
[15] See Peter F. Drucker, “Management in the big organization”, The Claremont Colleges Digital Library, July 16, 1967, https://ccdl.claremont.edu/digital/collection/dac/id/7276/rec/3, 1-2, (accessed December 04, 2021)
[16] See Peter F. Drucker, “The Employee Society”, American Journal of Sociology 58, no. 4 (1953), https://www.jstor.org/stable/2772357, 358
[17] See Yuval N. Harari, Sapiens: A Brief History of Humankind (New York: HarperCollins Publishers, 2015), 20 ff.
[18] See Peter F. Drucker, “The Employee Society”, American Journal of Sociology 58, no. 4 (1953), https://www.jstor.org/stable/2772357, 359
[19] See Arthur C. Brooks, “A Profession is not a Personality”, The Atlantic, September 30, 2021, https://www.theatlantic.com/family/archive/2021/09/self-objectification-work/620246/?utm_source=pocket_mylist (accessed December 04, 2021)
[20] See Lola Crone, Lionel Brunel and Laurent Auzoult, “Validation of a Perception of Objectification in the Workplace Short Scale (POWS)”. Front. Psychol. 12:651071 (2021), https://doi.org/10.3389/fpsyg.2021.651071
[21] See Frederick W. Taylor, The Principles of Scientific Management (New York and London: Harper & Brothers Publishers, 1919), 5-7
[22] See International Labor Organization, “World Employment and Social Outlook: Trends 2020”, January 20, 2020, https://www.ilo.org/global/research/global-reports/weso/2020/WCMS_734479/lang--en/index.htm, 12 (accessed December 04, 2021)
[23] See Peter F. Drucker, “Productivity is an Attitude”, Nations Business, April 1952, https://digital.hagley.org/nationbiz_041952#page/1/mode/2up, 34-36, 66-67