New Social Contract

By Larrywomack.com

“Each of us puts his person and all his power in common under the supreme direction of the general will, and, in our corporate capacity, we receive each member as an individual part of the whole.” —Jean Jacque Rousseau

Eighteenth century French philosopher, Jean Jacque Rousseau was one of the leading figures of the Enlightenment. Rousseau and his colleagues held that in the state of nature people are good, but that social institutions corrupt them. One of the tenants of the period of Enlightenment was the desire to construct governments free of tyranny through social contracts. The Declaration of Independence is a social contract between the people and the government of the United States that guarantees “life, liberty and the pursuit of happiness for all citizens.”

The old, albeit inferred, social contract in the workplace ensured the worker continuity, compensation, and opportunity for advancement. That is, if the worker was loyal, punctual, honest, and if he or she performed assigned duties with some degree of proficiency. In a time, when each business year was primarily an incremental advancement of the previous year, the promise of continuity was easy for employers to keep. The postwar sellers’ market years of the 50s, 60s, and 70s provided employers with a dependable workforce and workers with implied lifetime employment. In the 80s and 90s all that began to change.

The years of complacency, under the old social contract between workers and employers, had also created high-cost labor systems, with insufficient incentives for producing quality goods or providing quality services. In many work environments, the old contract required that blue-collar and clerical workers check their brains at the door and simply follow orders.

Though this old contract between employer and worker was never universally followed, it did provide a characterization from which most employer-employee relationships were formed.

When the advancements of technologies began to shift the control of the marketplace away from the producers to the consumers, the old social contract began to crumble. Buyers instead of sellers began determining markets, products, and services. To compete, businesses were compelled to produce better goods and services at lower cost or higher value. Machines (technology) then, began to replace workers. And, machines could be programmed to be loyal, punctual, honest, and to perform assigned duties with a high degree of proficiency without complaint or condition. As the demand for better products with greater value changed, the strategies of companies and the requirements from worker, shifted from busywork to brain work. This shift took many managers and most workers by surprise.

Many, who worked in the promise of continuity, discovered their procedures and skills had become irrelevant to the production of the quality goods and services now demanded by customers. Because the workers were adding cost to and taking value away from the very products and services they were charged to produce, the only choices available to management were to retrain workers, let them go, or continue to operate under the old social contract to the detriment of the company.

Enter downsizing. Downsizing became the buzzword for eliminating unnecessary workers—white collar, blue collar, or no collar at all. The real purpose of downsizing, however, is to eliminate unnecessary work, not unnecessary workers. Effective downsizing is the result of a strategy to eliminate non-value-added activity or costs. Downsizing was never meant to be a goal.

Though in most cases, there is no enmity in an employer or company owner eliminating people for the good of the company, many try to paint responsible leaders who eliminate non-value-added work as ogres—uncaring, selfish, and driven solely by greed and the bottom line.

Admittedly there are business leaders, driven by pure greed and avarice, who indiscriminately eliminate people for unjust reasons. There are also those so benevolent and caring, who actually destroy companies by keeping nonproductive workers on the payroll for purely altruistic reasons. But as you read articles and see television pundits’ exposés on the evils of eliminating workers (jobs), remember that for every person who is eliminated, there are scores of others who remain, because the company views their work to be relevant to the success of the enterprise. There still are leaders and managers who make promises of employment continuity based on loyalty and hard work . Those promises are like whistling in the wind. The old contract of continuity-for-loyalty has long been dead. It no longer works.

Every company or enterprise has two parts: It’s business and its organization. Business is the function. Organization is the form. Form follows function. First decided the business and then create the organization required to be successful.

During the early stages of downsizing craze, my youngest daughter was hired as a customer service representative for a large office automation company. At the beginning of her third week with the company, she attended an all hands meeting—conducted by the founder and president of the firm. He directed most of his remarks to the new employees, saying that he was proud to have them “on board.”

“We don’t have employees here,“ he said. “We have associates. This company is a team.”

The president then read the company mission statement and told them that if they worked hard and followed the mandate set forth in the mission, they could advance in the company.

“All you have to do to have a career path at this company is to be loyal, work hard, and become a team player.”

Two weeks later, the head of the service department called my daughter in and let her go. The president had, without giving advance notice, decided that the expenses of the department were too high and must be cut 15 percent immediately. My daughter was the last one in, first one out. So much for a career path. So much for loyalty to the employees.

Realistic, relevant, and workable expectations of a company and its workers require a clear and lucid workplace social contract. Under this social contract, leaders and managers will mean what they say; workers will participate in the risks of business; ethical and honest behavior will be demanded from everyone; continuing education will become a routine part of work; and the new social contract will include a third party—the customer.

Because customer needs now drive business, the social contract must include agreements from customers as well as from managers and workers. Through partnering, the customer, the company, and the employee will put persons and power “under the direction of the general will,” thereby increasing “corporate capacity” and adding value to the products or services rendered, to the bottom line of the company, and to the accomplishments and achievements of the workers.

The new social contract can be viewed as an extension of the Declaration of Independence, in much the same way that “all men” was redefined to mean “all people.” If the intent of Rousseau and his like-minded colleagues was to use social contracts to construct governments free of tyranny, why not use that same philosophy to construct tyranny-free relationships between companies, customers, and employees? A social contract for the workplace that promises “life, liberty, and the pursuit of happiness” for all constituencies makes as much sense as a government/citizen contract.

Under the new social contract for the workplace, management must express its loyalty to workers by providing them with continuing education. In a corporate culture where continuing education is made a part of work, the company creates a better quality workforce and also prepares its employees for their futures, wherever they might be.

Employees are better served by being loyal to themselves and their own dreams and goals than to those of the company. Personal loyalty requires:

Saying what you mean.
Making only those decisions for which you are qualified.
Constantly becoming better qualified to make better decisions.
Respecting and recognizing those who contribute to your successes.
Knowing and responding to the needs of others.

These are also the characteristics of a good citizen, a good parent, and a good friend.

Employees must have a clear understanding that the goal of any commercial venture is to make a profit. If the company focuses on the bottom line, it will provide an economically stable environment where independent, self-loyal workers can flourish and grow in mutual benefit. Integrity is found in systems that are well designed, well built, and well maintained. Ultimate authority comes from respect for others and from a continuous search for truth and knowledge. Loyalty must always begin with oneself.

Under a mandate to ensure the rights and respect for all the participants within a commercial endeavor:

Employees must:

Perform to the best of their abilities.
Make personal continuing education a way of life.
Make the improvement of work a routine part of work.
Exhibit ethical and honest behaviors.
Commit to the objectives of assignments.
Understand that employment is customer-driven, not company-driven.
Serve the company, the customer, and themselves simultaneously.

Employers must:

Compensate appropriate work appropriately.
Establish a work environment free of physical and emotional fear.
Provide honest answers and timely information.
Recognize excellence in special ways.
Make continuing education available as a part of work.
Serve the customer, the company, and the employee simultaneously.

Customers must:

Respect and value the concept of partnering.
Demand the best value, not just the lowest price.
Participate in defining and building the product or service.
Recognize the worth of individuals who serve them.
Make honesty a requirement of negotiation.

A new social contract among all the constituencies that benefit from commerce is an imperative for advancing productivity, and profits, and for providing realistic expectations from the company, the workers, and the customers.

Workplace Expectations

To have a productive, profitable, and pleasant workplace and to address the principles contained in the new social contract, there are conditions and circumstances that we must expect from one another in our roles as leaders, managers, and employees. A primary responsibility of leaders and managers is to ensure that everyone is empowered with the knowledge, information, tools, and culture each person needs to perform his or her duties and assignments.

Social Expectations: Everyone, regardless of position or authority, is expected to:

Be available and accessible at all appropriate times.
Be clean and neat in appearance.
Treat everyone with respect.
Not make the workplace uncomfortable or unpleasant for others.
Follow the policies of the company.
Exhibit honest and ethical behaviors.
Manage the resources of the company wisely.
Understand assigned duties and perform them efficiently.
Be open to learning.

Job Expectations: Each job is different. The company, therefore, sets different requirements and conditions of employment for leaders, managers, and employees:

Leaders are expected to:

Meet all social expectations.
Provide the knowledge, information, tools and culture required for productive, profitable, and meaningful work.
Provide reasonable opportunities for personal growth and appropriate reward for appropriate work.
Ensure workplace safety, mutual respect, and openness.
Provide clear vision, goals, direction, and continuity for the company.

Managers are expected to:

Meet all social expectations.
Translate the goals of the leaders into meaningful work.
Give clear instructions.
Recognize exceptional performance.
Ensure that each employee has the knowledge, information, tools and culture required to perform assigned duties efficiently.
Encourage ideas for improvement from everyone.

Employees are expected to:

Meet all social expectations.
Use the knowledge, information, tools, and culture provided by the company to perform and improve work.
Suggest ways to improve work.
A work environment based on the principles of the new social contract and driven by ethical, responsible behavior will be productive.

Companies that establish a clear and challenging social contract with all its constituency will be better equipped to ride this complex new wave of change. And, are less likely to be lost beneath its swell.