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The consequences of the COVID pandemic and the resultant return to work have ensured that the relationship between managers and employees has changed forever. There had been an old contract with employees that employees would give one-third of their day to work for the employer, and in return, the employer would pay enough to help the employee maintain a family, would provide stability till the age of retirement and even help after retirement by providing a monthly pension.
All these seem like a dream of the past. The baby boomers and millennials have been hit very hard in multiple ways. Till the 1990s, employees were considered stakeholders as important as customers or shareholders. With a new generation of tech companies and activist shareholders who emerged during the dot com revolution, employees were increasingly considered the least important. It was now all about the shareholder and making sure that stock boomed no matter what. Executive compensation was tied to share market value. This was done to exploit loopholes in US income tax laws and to give executives extraordinary windfalls once they improve the stock value. Executives started caring only about their own multi-million dollar compensation and ignoring the effects on all the employees under them. Executive compensation was structured in such a way that the stock options and ESOPs were only available starting from the VPs. The EVPs and CEOs got the best packages, and the ordinary employees were not eligible for these stock options and grants.
You have scenarios of top tech CEOs bemoaning that layoffs were the worst decisions in their lives and wishing that they were planned better while simultaneously planning more layoffs and bagging 200 million dollars in yearly compensation. Another CEO had his 56 billion dollar compensation package struck down in a court of law because it was “unfathomable” and unfair to shareholders. Strangely, none of the directors protested because they were also given excellent packages in order to remain silent. It was left to a heavy metal drummer to expose this charade by fighting this case in courts for years. This is what happens when the guardians of ethics do not do their job.
In a previous post, I wrote about how tech companies (especially leaders in AI) are laying off employees in the name of AI enhanced productivity. They are firing employees, making existing employees work harder, and then attributing those productivity gains to AI. The result is that everyone is working harder and getting paid far less for their work than they should. This unrecovered productivity is usurped by AI tech companies to boost their stock values.
In this dystopian world, two terms describe the breakdown of trust between the employee and the employee. They are “Quiet Quitting” and “Quiet Firing.” Quiet quitting refers to the scenario where employees show no interest in work and also do just the bare minimum required not to get fired. These employees are not interested in promotions or compensation increases. They pursue a bunch of passions outside work, and the workplace is among the last in their priorities. Quiet quitting as a practice could work in theory. However, it can only work in a world where the bargaining power is with the employees. This happens in a labour market where the supply is low, and demand is high.
In an economy where the demand is low and the supply is high, like the world we are in right now, “quiet quitting” cannot work. These will be the first employees to get fired. The employer knows that there are lots of talented employees searching for jobs, and getting replacements is not a problem. Similarly, inside a team, other employees will work harder and do additional work to cover for others for the privilege of not being fired. Quiet quitting is a ridiculous strategy in the current labour market.
Instead, managers and employers employ a different model to take advantage of the helplessness of employees. They employ the tactic of “Quiet firing.” This means that the manager makes the work culture and environment so bad for the employees that they are forced to quit. The reason why this happens is because companies do not want to fire employees themselves. Firing employees involves paying them a severance package with extended benefits. If the company wants to fire many employees, severance payments can decrease the profits. However, making the employee quit voluntarily will ensure not only the success of letting go of the employee but also that it will be done at no cost to the employee.
This means that in many companies, one will see the trend of workplaces turning hostile and managers turning nasty. This is the sad reality of workplaces that are likely to be present for the next 1-2 years. When Facebook recorded the biggest stock market increase in the history of Wall Street yesterday by implementing the “year of efficiency” in 2023, other companies will also want to follow suit. They will also want to improve productivity, increase layoffs and get hefty executive bonuses. It may be great for company valuations but not for the employee. Nobody cares about employees not being part of the stakeholder community anymore.
I will conclude by saying that the tech industry has ups and downs. This is a time when the economy is in the bust cycle. Things will improve, and sometime in the future, the boom cycle will return. When it returns, the average employee will have a much better time. Till that time, there is no choice but to grin and bear.
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