Company man takes a dive

We've all heard that jobs for life no longer exist. But have employers taken 'rightsizing' too far?
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The Independent Online
Middle-class angst is in fashion. Opinion pollsters tasked with seeking out the elusive feel-good factor have identified it as a new and critical feature on the psycho-political landscape.

Political commentators have all met a redundant middle manager, or at least talked to a taxi driver who has. They are at one in attributing part of the Government's unpopularity to the growth of white-collar job uncertainty, as hitherto stable companies downsize, rightsize or capsize. The "flexible labour market", presented as a rather healthy and bracing discipline for the workforce, has elbowed its way on to the executive floor, where it seems, somehow, less obviously appealing.

And yet more trouble is in store. There will be no return to the old days of stately progress up the incremental scales. Womb to tomb employment is a thing of the past. The US management guru Tom Peters has said it, John Harvey-Jones has said it. I have even, in search of a fine phrase, said it myself. It's "official".

Oddly, though, labour market statistics fail to support the more extreme version of this hypothesis. The average tenure of employees in employment has not fallen very far in the last two decades. A typical employee today has served five years with their employer. Twenty years ago she had been there just over five and a half years (tenure for males has fallen by rather more). And while the proportions of part-time and temporary employment in the total workforce have grown in the last two decades, the most recent recovery has, against expectations, generated more growth in full-time employment than we saw at the same stage in the Eighties cycle.

So the more apocalyptic predictions about the death of middle management and the end of the corporate "job for life" are certainly overstated. Nevertheless, there is a significant change under way. Company after company has announced restructuring programmes, shedding layers of management in the process. In the 1980s the main casualties were the head office staffs of major manufacturers; today clearing banks and oil companies are in the firing line. The old corporate bureaucracies, in Britannic House, Shell Centre or Millbank, are in the process of being dismantled.

The market is not shocked by these headcount culls. It draws no negative conclusions. Indeed the announcement of a large staff cut is typically followed by a jump in the company's share price. The fewer employees, the better.

This is not solely a British phenomenon, of course. US corporates have been through exactly the same mill, typically somewhat earlier, and often with even more dramatic effects. Now the re-engineering wave is beginning to wash over Continental Europe, though giants like Siemens and the Swedish- Swiss engineering combine ABB have tried hard to resist. Even Japanese corporations are finding it hard to maintain lifetime employment on the traditional model.

Is this a fundamental shift? Are we witnessing the beginning of the end of the large corporation - the dominant form of economic life since the formation of the East India Company? Or is it simply that rapid technological change is dramatising the usual process of destruction and renewal? Perhaps for every contracting IBM there is a booming Microsoft, for every Swan Hunter a Rentokil; maybe it is just that the transitions have been speeded up.

In his new book, Company Man, the Rise and Fall of Corporate Life, Anthony Sampson is sure that we have indeed passed a turning point, and he does not like what he sees round the corner. He believes that the process of globalisation and re-engineering may already have gone too far, attacking the foundations of corporate excellence. For Sampson, "the greatest danger in the wave of mergers, lay-offs and restructuring of company men is the destruction of the continuity on which that quality depends."

Gary Hamel and CK Prahalad in Competing for the Future - this year's management best-seller - make a similar point. They maintain that over- aggressive pursuit of headcount reductions, particularly at head office, may lower the cost base, but simultaneously reduce the company's ability to think ahead, and react effectively to a changing environment.

There may be some truth in this argument, though strategic thinking can of course be outsourced to management consultancies, just like office cleaning - even if the hourly rates are a little different, and the outcomes not always as satisfactory.

What is more important is that some companies have, as a result, generated high anxiety among their existing employees. People may be proclaimed to be "this great company's most valuable resource". But warm words are little consolation if you suspect that your job may be rightsized into oblivion very shortly, or if the pyramid above you has been delayered and flattened to such an extent that you can see no upward path away from the ledge on which you now precariously perch.

While cost-cutting programmes have been, and will continue to be essential for short-term survival, they may put the long-term success of the company at risk if those who remain are not given a new sense of corporate direction, a new set of personal targets and the means to achieve them. As Brian Corby, who retired last week as Chairman of the Prudential, said at his farewell: "We may not be able to offer long-term employment, but we should try to offer long-term employability." That is the task on which many re-engineered companies are now engaged, with mixed results so far.

Sampson's "Cook's tour" of yesterday's and today's great corporations is, in a sense, a search for the shape of the company of the future. He does not find it. And while I travelled hopefully with him through fascinating early chapters describing Toyota's company town and Microsoft's eerie Seattle campus, the concluding analysis is uncertain and pessimistic. None of the new models is attractive to him. Outsourcing, tele-working and all the rest seem soulless and unexciting. Sampson is more at home among the corporate dinosaurs. Most of us are; they were gentle, herbivorous creatures. Unfortunately, there are aggressive meat-eaters in the East whose time is coming.

'Company Man: The Rise and Fall of Corporate Life', by Anthony Sampson, is published today, Harper Collins, pounds 20.

The writer is director general of the Confederation of British Industry.