America’s slow
long-term employment recovery, one possible source is the Fungible Employee and
their increased use.
First a little
definition is required. A good is
considered to be fungible if one unit of the good is substantially equivalent
to another unit of the same good of the same quality at the same time
and place.
Having sat in on a great many
management meeting where one of the major topics was reduction of operating
cost as a means to increase profit, it became clear that many of my much
younger managers had a complete and utter lack of sensitivity to or for our
employees.
Many of these B school
graduates were on a quest, for something more holy than the grail. They were on the quest of the fungible
employee. These managers wanted to
replace as many of our current employee with as many fungible employee as
possible. We were in the business that
was quickly gravitating to what many in our industry considered to be a
commodity. So profit margins were being
hammered every quarter. Our competitors
were pushing for market share just as we were. Product pricing was being
squeezed. Competitors are trying to
differentiate his or her commodity from the other guy’s commodity in an attempt
to justify their products cost.
It just like I remember from
air combat training once you are in the merge it quickly becoming a knife fight
to the bottom, both side losing energy as the fight spirals closer and closer
to the ground as each side expends energy in an attempt to gain an advantage until
some become a smoking hole. Some of the
competitors have deeper pockets and other revenue streams so that they could
stay in the fight longer, others were not so fortunate.
Never in any of the discussions
did I here an utterance about competence or quality, or what would it do to our
product, or for that matter what it would do to the company’s reputation. Almost every single discussion concern cost,
and those that did not concern cost concerned plans to acquire these fungible
employees.
The have many names, the most
common being temp worker, and they did not have to work for a temp agency. To some extent contract employees can be
considered fungible in that they also have some of same endearing qualities. I do not remember any discussions about reduction
in demand for our products. When I asked
once about this, after I pulled all of the arrows out, I knew not to ask again.
I am no longer with that
company, for even my position was determined to be fungible. Funny thing is that for a significant percentage
of the individuals in those meeting many also found that their positions were
fungible. I am much luckier than many of
them I could afford to retire, and so I did, many of the others are still
looking for the next Eldorado, to them I say Bonne Chance.
The following is a list of the
endearing qualities of the fungible employee.
It is not meant to be exhaustive, but it does contain what I consider to
be some of the more important elements that senior management finds attractive.
1.
Fungible employees have no hidden cost, all
their costs are known.
2.
You do not have to find work for them when your
contracted tasks are completed, they can be released.
3.
They are no long term or reoccurring commitments
of corporate or company resources (Sick Leave, Retirement Contribution, Health
Insurance).
4.
No employment taxes owed to the government.
5.
Reduced Human Resources department.
6.
Reduced or elimination of training costs.
7.
No Unemployment payments or claw backs.
8.
Can be released at any time for any reason, no
justification required.
9.
No expectation of increased costs as they gain
mastery of their tasks.
10.
Short term commitment
11.
Cost can be renegotiated at the end of term.
For the employer it is a really
great deal.
For the employee it is a really
sucky deal.
Here is what the fungible employee
gets out of the deal, and what a deal it is.
1.
No employment stability in your life (The
company has no plans to bring you on full time no matter how good of job you do).
2.
Your earnings can be highly variable, depending
on employment situation (You will work only when you are needed and not a
moment longer).
3.
You could or will be responsible for all of your
employment taxes.
4.
You could or will be responsible for all of your
retirement contributions and or programs.
5.
You could or will be responsible for all of
health insurance cost.
6.
You are responsible for your own training.
7.
Your ability to borrow from financial
institutions is questionable. (Your employment history is pretty shaky).
8.
Get sick at your own peril.
9.
Take a vacation at your own peril.
10.
Slack off just a little at your own peril.
11.
Get injured at your own peril.
12.
If you do not like the deal, do not take it, we
will find someone else.
13.
You are a commodity get use to it. (Welcome to
the Brave New World).
