How Low Can You Go?

Bidding for your Job


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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