Decline in job security extracts a price: loyalty

November 10, 1991|By Thomas Easton | Thomas Easton,New York Bureau of The Sun

NEW YORK -- Richard Hoey has maintained a highly visible position, in a successful manner, in a growing industry, since 1974.

Two decades ago, that consistency was the mark of corporate lifers, men who joined a firm after graduation and stayed until retirement. They moved from coast to coast on company whim and tailored their values -- as well as their gray flannel suits -- to the corporate culture.

But Mr. Hoey's career has followed a jagged path. He worked as the economist at four major brokerage firms that closed and was squeezed out of a fifth after it was acquired and new management brought in former associates.

"People have assumptions of stability that are comforting," said Mr. Hoey, who is now the economist with Dreyfus Corp. "But they are not correct. After all, even companies don't know what will happen."

Mr. Hoey's career track illustrates the changing face of corporate America. Throughout the nation, any pretense of lifetime employment is cracking. USF&G, MNC Financial, Westinghouse, Martin Marietta, General Motors, IBM and other giant companies are purging ranks, protecting only a tiny core of employees.

For any worker caught in the tumult, success may mean maintaining a vocation -- not a job. For any U.S. company, the challenge is equally severe: retaining critical employees -- and at least some semblance of dedication from others who may, at any time, be bounced.

Overshadowing the shift, says James Kuhn, a professor of management at Columbia University's Business School, is the way American companies perceive their employees.

Companies began to emphasize employee retention in the 1920s, when they realized that the costs of retraining and replacing workers exceeded retention costs.

In tough times, though, U.S. companies still tend to view employees more as costs than investments. And companies do little to boost the employees' skills or to give job alternatives. A U.S. autoworker, for example, receives less than a tenth of the company-sponsored education that a Japanese autoworker receives, Mr. Kuhn said. And in a sales slowdown, a Japanese company may turn assembly line workers into salesmen; U.S. companies push them out the door.

Safety in numbers?

With little value placed on accumulated skills, even executives with broad experience have become vulnerable. Consider Richard E. Turnau, former head of acquisitions for Westinghouse's Linthicum-based Electronic Systems Division. Mr. Turnau, who had 25 years of experience in marketing, accounting and business development at Westinghouse, was helping the division move away from defense and into commercial products.

But last year, the company's finances were torpedoed by disastrous forays into real estate, leaving little money for new deals.

Mr. Turnau was encouraged to consider an early retirement program, one of many methods Westinghouse is using to cut 4,000 people from its payroll of 115,000. In September, through a Washington executive search firm, he became head of sales for Information Control Systems Corp., a small company in downtown Baltimore.

Long ago, he said, "I told my daughter, a large company was better because there was a path to the top. Salaries and benefits would be better, and they would be more insulated from a downturn, but that is proving not to be the fact. If a company's earnings are down, they'll still just fire.

"Today," he continued, "when corporations downsize at the drop of a hat, an employee has to realize he will be cast aside at the drop of a hat. . . . [Employees] have to take care of themselves."

Garrett Dietz, a Towers Perrin vice president, said that most companies consider only 10 percent of their work force crucial and therefore worthy of retention efforts. "Then," he added, "there is a great mass in the middle, and with those, companies have not done a lot to promote loyalty. What companies believe is [that] most of those employees should be happy to have a job."

Management challenges

The tumultuous workplace also poses challenges for American managers who hold onto their jobs.

Ironically, many major companies believe the recession is a counterweight for persistent turnover. Asked about employee retention efforts, K mart Corp. Chief Executive Joseph Antonini said that the bleak environment means the sales help has few opportunities to move. Resignations are down 8 percent, he said approvingly. "That's a lot."

But turnover could soar in a recovery. Data suggest that the number of people intending to stay with their current company is declining and the desire to leave is rising, according to Hay Research for Management, a Philadelphia human resources consultancy.

In 1985-1987, for example, 63 percent of middle managers surveyed by Hay had no plans to leave their jobs; by 1988-1990, the figure had slipped to 59 percent. Ten percent of middle managers surveyed in 1985-1987 said they planned to leave their jobs shortly; by 1988-1990, the figure had climbed to 15 percent.

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