A New Contract is being Born
The 1990’s were characterised by much change. Political, Social, Environmental and Business. On a business front the most significant was possibly the destruction of the employee/employer contract. An understanding that had served both parties well for many years, was destroyed.
Until the 1990’s the advice most people received from their parents was, “Get a job in a big company, stay there, and work your way to the top.” This advice was built on an understanding that most companies offered security (in the form of long term/life time employment) in return for loyalty (you literally became the company man or woman once you stepped through the office doors).
In the 1990’s this understanding was put at risk as shareholders met with the directors of companies and asked for greater returns. In order to fulfil this new objective, a massive drive toward increased efficiency was embarked upon. Consulting companies the world over made large amounts of money preaching the new paradigm. Of course when you’re looking for efficiency gains, rationalising your people compliment is always a large win. And so it was. Retrenchment in every country, in every industry, across every level of every organisation.
The Employee/Employer Contract was torn up and set aside. A new contract was being born.
In spite of this happening in the 1990’s many companies are still struggling with the results of this event. Often foolishly so. They are still spending large amounts of time, energy and resource trying to stem the tide of the emergence of less loyalty, less passion for the brand, less alignment to the strategic goals and vision, less commitment to the strategy and action plans – in short, less pre-90’s behaviour.
When the basis of your engagement with someone is built on a foundation of one set of variables, and then you suddenly change those variable, surely you can’t expect that the engagement is going to stay the same?
Today’s younger set grew up in the 90’s. They watched their parents, who had given their lives to a company, lose those jobs over-night. They walk into your organisation and their message is simple, “You can’t commit to me for the long term, do not expect that I will commit to you for the long term either.”
And the new contract begins to gain momentum.
Organisations will need to identify and explore the new set of variables to understand the emerging new contract. Attempting to claw back to the ‘old way’ may not be the best way to spend time and resources. We may never see that contract of engagement within a business context ever again?
As Peter Cappelli, in The New Deal at Work suggests,
“While employers have quite clearly broken the old deal and its long term commitments, they do not control the new deal……… its hard to see what could make employees give that control and responsibility back to the employer”
The emerging new contract is, in my opinion, going to be centred around the full experience of both the organisation and the worker. Essentially, each one of them offering up full engagement and commitment to each other, during the time period each individual contract is in place.
Long-term loyalty will mostly be a thing of the past. Even if an employee spends a large chunk of time within an organisation, they will be working to shorter contract periods around stimulating projects, and not simply committed to the brand, vision, values, etc of the organisation ad infinitum.
Return on investment/energy will be a measure both parties use to assess how effective the relationship is, and whether it needs to be pursued or terminated?
We will see the emergence in far greater numbers of talent/labour agents and not recruitment specialists as we have now.
Perhaps Jim Jannard of Oakley understands this when he says,
“I want our people when they walk in to be so stoked they can hardly stand it. I want them to be dying to come back tomorrow. I want them to be desperate to find a place where they can use their own particular talents to add to us and make us great.”
There is no doubt that a new contract is being written as you read this. It will take courage and commitment to leave the old ways behind and venture into this new world to try and test a new way of engagement between organisation and worker.
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I am 27 years old and have had many challenges in my working career because I never felt at ease with companies merely just trying to enforce the old contract. I am an idealist and want to see things change.
With all the dramatic changes that are happening at the moment and all the different challenges that come with those changes it is important to be positioned correctly to make a difference. I believe a lot of people will be more devoted to a cause rather than an organisation. If the company can be the organisation with a cause it will serve as motivator for people to stay on and make a difference.
This is what Graeme was saying 12-15 years ago, Whats next? What new trends are becoming relevant in the changing environment? Are we still trying to grapple with this change among the 39-59 yr olds or are new trends emerging among the millennial generation who love older people to talk to them and inspire loyalty – but in what form?
P
Very true! We need to take strides forward. What about social entrepreneurship? I know it has been coming along for a while but hasn’t really had the impact it can. I am referring to work done by people like Muhammad Yunus…
I believe that the problem with organisations is that they are organisations. The centralised mentality can certainly anchor down creativity and the human spirit that should be exploring and taking risks to ensure we do not stagnate! Too many people are programmed to sacrifice their identity in search of security and fear keeps us from going into the dark places where our talents should lead us.
Wow, Jan-Derick I think you are very wise when you say people will want to join a cause rather than an organisation and also when you say we must be willing to go through the dark places where our talents should lead us.
All the best with your career. By the way – have you ever read Dan Pink’s book called ‘A whole new mind’? I think you will enjoy it!
Cheers
Julie
Hi Julie
Thank you so much for the compliment and best wishes! I have just written down the title of the book – thanks for the tip.
I think that in many ways the ‘new contract’ era has alredy been embraced by organisations. organisations have been forced to rethink the way they engage with employees for many reasons in addition to the generational issue raised in your article. We are also dealing with skills shortages and grapling with how we address equity issues in a commercial and practical way.
This ‘new contract’ seems to me to be geared mainly, if not exclusively, at the skilled employee. The real benefit for organisations is taking the lessons learned in how to make these employees more engaged in the business to the rest of the workforce.
I agree withJan-Derick that organisations will engage these individuals better by appealing to a cause that motivates them, but lets be honest most people always balance the cause and economic reward. The dark places and the causes can be found just as easily outside the organisation.
There can be no doubt that employees need to find rewarding useful work to do, but that does not mean that causes and dark places need to be found in the workplace. As outllined in ‘The making of a Corporate Athlete” by Jim Loer and Tony Schwartz in the harvard Business Review, effective companies are addressing their employees’ cognitive capacities as well as their physical, emotional and spiritual well-being.
Todays organisations understand that employment contracts are not for keeps. Organisations recognise that skills are on loa to them for a season and in some cases hopefully a couple of seasons…
Employees need to recognise that as they engage the ‘new contract’ they perpetuate the new way of “cult like cultures’…if you don’t fit the organisation the organisation believes it is doing the best thing for you if it exits you…