Old Man Cap

It seems to me that lots of people I know are either getting laid off or are in a death march of some sort. Whatever happened to the happy middle where people worked regular hours and weren’t punished for it? This is likely due to the crowd and industry I’m surrounded by but even people from back home I know are having trouble with their workload, whether it’s a lack of or an excess of.

This recession has, no doubt, been hard on businesses across the spectrum. That being said, it’s being used an opportunity to shock workers into accepting marginally higher levels of productivity and a lowering of wages across the board. Businesses everywhere are telling their workers that times are tough, they’re tightening their belts, and expecting more out of their workers.

The increase in productivity from workers during this time is short term at best as they put in more hours as they essentially fear for their job. While this is making them do more, it’s not necessarily improving the quality of their work. If people are spending their time worrying about their job security, they’re not spending their time producing better work, being creative, or taking risks.

There is a theory in psychology titled Maslow’s heirarchy of needs. It contends that there are different levels of needs that all humans have and that higher levels of needs can not be met until lower levels are met successfully. Below is an image (from Ambrand.com) that shows these different levels.

The most productive, creative, and effective people are those that have all of their lower level needs met so they can concentrate on the highest level, essentially being all that they can be. Once one of the lower levels’ needs is not being met, all of their concentration and thought revert to that lower level and making sure it’s being met so they can return to the higher planes of thought. People constantly reprioritize upwards and downwards the scale based on the satisfaction of these needs.

Companies that put the fear of layoffs into their employees (on purpose or indirectly by laying other workers off) scare and stress people into their safety level of need as they fear for their financial security. The added stress does not produce great work and also can cause health problems over time, lowering them down another notch. Companies in a stable position would likely do better at getting more for their labor dollar if they spent the time supporting the workers and making them feel like their job is the calm oasis in this sea of worry.

Now, onto the next part of the puzzle, lowered wages. The lowered demand of workers has driven unemployment up, that’s obvious, as well as driven wages lower. The higher amount of available workers has increased competition for available jobs. This essentially drives the amount down that employers are willing to pay as they have a larger pool of workers to draw from. After all, a lower paying job is better than no job at all. The externality of this is that workers who do have their jobs are willing to take pay cuts to keep their jobs, are far less likely to ask for the amount of money that they’re likely worth, and are less willing to search for potentially better work, in pay and/or quality.

What we’re left with is people who are performing worse for less money, the double whammy of lower productivity coupled with lower demand for labor. If you really want to succeed in this market, concentrate instead on making sure your workers are operating at the top of their heirarchy, not the bottom.