How Low Can You Go?

Bidding for your

Not so long ago, employees of large corporations believed that if they did
their jobs well, they could count on working for the company for the rest of
their careers. The downsizings and reorganizations of recent years have
exploded that premise. Still, some remnants of the old beliefs linger on. Most
people assume that if they continue working for a company, they will at least
receive the same salary.

Now that premise is also giving way. Consider a practice that some
companies have lately adopted: bidding for your job.

Bidding for jobs is typically part of a corporate restructuring--as it
is, for example, at New Jersey's major electric and gas company,
PSE&G, which is itself now bidding for commercial customers in what used to
be a highly regulated and protected industry. According to PSE&G's
corporate planning department, the leaders of each business unit adopt
different approaches to restructuring. One of these is "zero-basing."
After reexamining a unit's work, the leaders might conclude that it
requires, say, only 50 employees instead of the current 80. The new jobs are
posted, and all the employees receive training in writing resumes and selling
themselves. Then they bid for the positions, albeit not necessarily at the
salaries that they used to receive.

I first heard about the practice in connection with a manager at PSE&G
who took a pay cut of $20,000 to keep his job. According to a recent story in
Newsweek, some companies are now cutting pay not just when they are in
difficulty, but even when they're doing well. Mobil, which had $1.7
billion in profits last year, instituted a general freeze on salaries, except
that it's planning to subcontract most of its clerical and support
operations to lower-paying outside companies. (Do I hear financial analysts
applauding?) The Newsweek article shows a picture of Nancy Mudd, who had 11
years' experience as a ticket agent at American Airlines before ticketing
was spun off into a subsidiary, AMR Services. Formerly paid $40,000, Ms. Mudd
was offered the chance to keep her old job at $16,000.

Many observers have commented on the growth in temporary workers, but as
Rosabeth Kanter argues in this issue, the change taking place in employment
relationships is more pervasive. Expectations about regular jobs have changed.
A "good job" used to include a future with the company; now even a
lot of good jobs involve only short-term commitments. It's the economic
counterpart to a life of one-night stands. The old norm of reciprocity--you
work hard for us today, we'll take care of you tomorrow--is going,
nearly gone.

So it's easy to see how bidding for jobs could become routine. I can
already imagine how some consultants will take this to its logical conclusion.
Firms might periodically announce an auction and open particular jobs for
bidding by any other employee willing to take the job for lower pay. Think of
all those managers in middle age and older, with mortgages and kids in college,
eyeing their juniors at the office and wondering, "How low will Charlie or
Ann bid for my job?"

The bidding would be in reverse--instead of rising bids, the bids would
go down. Companies could surely cut their costs. Psychologists could recommend
how to zero in on employees with low self-esteem who would be certain to cut
their own pay voluntarily ("I didn't really deserve that much,
anyway"). Stockholders would approve; economists would explain why
regularly bidding for your own job is desirable, even necessary. (Young
economists might be especially attracted to this idea as a way of underbidding
their elders in economics departments.) As a successor to total quality
management, we could have "total insecurity management."

Maybe we have it already. Michael Useem, who teaches at the Wharton School
and writes about corporate restructuring, says, "I used to teach a section
called the 'high-commitment organization,' and I realized I
wasn't talking about America."

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The issue isn't just business and jobs. Work relationships are a
template for other relationships--indeed, a basis for them. People who
cannot count on secure employment cannot easily offer security to a family;
they're likely to put off getting married, having children, and buying
homes. One of the great paradoxes of contemporary politics is that the
celebrants of traditional "family values" also have such enthusiasm
for unrestrained markets that jeopardize stable family and community life. An
honest conservatism would confront the tensions. Our conservatives just pretend
their economic and moral counsels fit together.

--Paul Starr

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