Take a look at them. They’re all nice guys. But they finish last…
—Leo Durocher, 1939
The beatdown of the American middle class is especially hard on employees of public corporations today. It has not always been so, but it is now, and, until the culture changes, betting on a career with a big company is a high risk proposition. Anyone having a choice in the matter would do well to consider this before going after that cushy job with a Fortune 500 company.
Hugh Macleod draws a brutally honest cartoon that portrays the players in corporate life:
Venkat Rao elaborates on the dynamics that govern the relationships between the various types in The Gervais Principle, a brilliant series of essays in which he uses characters in the television show The Office to make his arguments. The following is my very short take on the matter, based on thirty seven years spent in corporate life:
You’re a guy/gal with a home schooled set of values — a moral philosophy. You go to work for a company, and you are too distant from corporate headquarters to know anything about senior executives, other than the commentary of your immediate superior. She is a sycophant, but that little datapoint escapes you. It never occurs to you that sociopaths run the company.
Busy trying to make your mark, you bring energy and enthusiasm to your job and you expect that if you are honest, loyal and diligent you will be duly rewarded. You expect that, over time, you will be promoted. You harbor faint thoughts, even, of making it all the way to the top floor at headquarters.
You perform well, maintain a terrific attitude, get along with most of your co-workers and, in due course, are moved up on the company ladder. It is said that you are being fast tracked for greater things. Twenty years later, your career has taken you in one of two directions: 1) You long ago plateaued in a minor company outpost, or, 2) You appear to be a star in the corporate firmamant. Either way, you are called into headquarters.
The outcome in both cases is the same: you are put in a room with two of your peers. A senior manager comes in and tells the group that the departments you three manage are being consolidated into one. One of you will manage all three. The other two are to be terminated with their vested pension and a buyout that won’t get them through six months of living. You are stunned to find out you’re one of the separatees. Adios, dream career, and you are now middle aged. You have devoted half of your life to a dead end proposition because you have, all along, been clueless about the nature of corporate life.
You got aced out by a sociopath. Global wage arbitrage and technology is shrinking the number of middle management jobs, and the survivor in the competition for what’s left is the guy whose operating mode is in tune with the goal of senior executives: maximize the numbers for this quarter, no matter how you have to do it.
Quarterly earnings drive stock option compensation. In all too many instances, senior executives of public companies are interested only in these numbers. Ambitious underlings understand this, and respond accordingly. They manipulate clueless employees into actions that massage the short term results, leaving them to clean up the mess when they, themselves have moved on up the ladder. To be sure, not every company in the country is run this way, but many are in the present era. In those instances, the clueless employee works very hard and gets screwed.
This leaves a third category of employee: the loser. The loser figures out early on that to really succeed in the firm, he would have to be a sociopath. He’s not interested in this, and has no desire to be manipulated like the clueless employee. Instead, the loser opts to treat the job as just a paycheck, puts in the minimum amount of work necessary to remain employed, gets a life outside the company, and probably has the last laugh.
A company run by (and for) sociopaths will provide extraordinary compensation to the cohort at the top over the short term. Eventually, the company loses its integrity, its customers and its market share. Eventually, it goes bust, and the senior execs walk with a ton of money. We read about it every day. Macleod’s cartoon below depicts this lifecycle in a clockwise evolution:
Greed, excessive compensation and intense focus on short term results are typical of the corporate culture at market tops. Lax governance, and stockholder complacency are the causes. Three eras have had this kind of cycle: the 1890’s, the 1920’s and now. The previous two were followed by stock market crashes and severe depressions. Here’s the good news: each time it happened, the culture underwent a radical change during the subsequent recovery, and both working for and investing in big companies was once again worthwhile.
If you’re headed for the corporate world, you want to try to avoid the pitfalls I’ve described here. In my next post, I’ll discuss what to look for when you aim for employment with companies of any kind.