Tell me if you have heard this before. “In the old days jobs were different. My grandfather could count on working for one company his whole life and then retire with a gold watch and a fat pension.” Of course you have, it is a common narrative to explain why Boomers, Gen X and the Millennial crowd are all struggling with ever being able to retire. And it is true to some extent but you might be surprised to know that even as early as 1950, the height of the pension era, only about half of the private sector employees in the United States were covered by pension plans. But half is still a lot higher than the 14% of private sector employees who have access to a defined benefit pension now.
And that is a big change. My dad, a member of the Greatest Generation, and my mom, a public school teacher were both covered by pensions. And it really mattered. In fact, even when they were running up bills as high as $8,000 per month at the nursing home they were still seeing their net worth go up each month due to their pension and investment income. It was an amazing deal to keep getting paid after you stopped working, plus they also got Social Security. Wouldn’t that be great? Well, suck it up Buttercup, odds are you aren’t getting anything like that from an employer when you leave the company. Neither am I. And that’s one big fat change in what it means to be an employee. But wait, there’s more!
In addition to pretty much zero benefits from your employer after you retire there is also a change in the employer/employee contract while you are working that has just as big an impact on life. And this one is much more subtle than losing a pension plan. It is a little hard to define, but as a guy who worked at one company for well over thirty years before slightly early retiring, I’ve seen some stuff and I think I have a handle on this. So please bear with me. When I started working at the chemical plant as an intern I was adopted by several experienced mentors. I did not have to seek them out, they saw bringing the next generation into the “family” as part of their job description. They invited me to their houses to eat, they even put my girlfriend up at their place when she came to visit me. It was very much a family. We all went to each other’s weddings and funerals. If somebody had a house fire we took up a collection and people reached deep to make it meaningful. If you were moving to a new apartment you had more offers to help than you could use.
I remember being told that the reason they were very picky in who got hired was that they felt that they had to be sure you were someone everyone liked, because firing people was not an option. And they did not want to hire some dead weight or someone who was a jerk because they’d be a dead weight jerk for forty years before they could get rid of them. I’m serious about this, firing people was not an option, it was a last resort that was only available if someone was stealing or careless about the safety of others. If they were just lazy or untalented, they were not at any risk of being terminated. I’m not saying this was a good system, I’m just saying that was how work was back in the day.
It was a family model. Think about it, you do not get to pick family. If you have a child, that kid is yours no matter how he or she turns out a few years later. And if your uncle is a cretin, he is still your uncle and will still be there for Thanksgiving. That’s what our company was like. And it shaped everything we did. We stretched ridiculously around the unmotivated or incapable employees to make sure the work got done in spite of their lack of productivity. And the family model got abused over time. Once someone figured out they were not going to go any higher in the organization or see much higher pay they often just started mailing it in. About the worst they could expect was a stern talking to but everyone knew, we did not fire people. On the plus side, if you got sick the company would go to crazy lengths to preserve your job and the owners would even write personal checks to help you pay your bills while you were off work. As a junior employee, just one unknown worker out of hundreds, I remember the top guy in our company giving me a toaster oven when I got married. I was probably six levels below the man, I’m not sure even how he knew I was getting married but I suspect he did that for every employee. And it felt good to be noticed. I would have done anything for him after that, not for a toaster but for the recognition and the feeling of belonging that came with it.
And we had parties all the time. The big boss would rent a local restaurant at least once a month and the drinks and the steaks flowed like water. There were cook outs and departmental get togethers, just like one giant family staying in touch with each other. I am struggling to convey how this felt because things are so different now. Maybe the best way to say it is when I got up on Monday morning to go into work, I was happy to be going there. I loved my weekends too, but I did not see going into the plant on Monday as a chore. It was more like going to see family.
Things were like that for a very long time. I guess the family feel of work waned slightly over time but not greatly. Things stayed warm and fuzzy at work until late in my career when “it” happened. Our owners sold us to a Fortune 500 corporation and it changed our world. I went along as part of the sale, it was actually part of the contract. By that time, I was the senior guy and they did not want to lose the institutional knowledge I carried. I was actually pretty excited at first, because the pay got better and there were added bonuses like compensation tied to the price of our stock. When that stock took off like a skyrocket, we had a lot of happy employees who saw their compensation double overnight. But it was not all good, because the world of publicly traded companies did not follow the old family model. They had a new paradigm, I call it the professional team model. In a family think about how loyalty runs. Blood is thicker than water, even siblings that don’t get along have each other’s back if an outsider pushes them around. You stick by family because you are stuck with them, they stay your family forever. But not so with the professional team model.
I like football so let me use the New Orleans Saints as an example. They are a great team, they win more than they lose but who do you think the New Orleans Saints owners and management is loyal to? They are loyal to Drew Brees, arguably one of the all-time great quarterbacks in football, aren’t they? No, they aren’t. The day Brees is no longer the best quarterback they can put on the field he’s history.
Management is loyal to the team, not the players. They treat the players great as long as they are on the team but the second they feel like they can replace a player with a better one they will. And then that replaced player, well, he’s basically dead to them. And I’m not picking on the Saints, I could have picked any professional or college sports team in the country in any sport. Teams are only loyal to the team, not to the individual players, if they lose a step. And that’s not illogical, teams are about winning and you can’t win if you carry a bunch of worn out has-beens on your team. It makes perfect sense. And it is what most modern Fortune 500 corporations use now as their model. Hire the best you can and weed out inferior talent constantly. And it works for them, usually. Having a bunch of Drew Brees types at your company is going to make you money. As for the people that get cast aside? Those people aren’t your problem any more, they are no longer on the team, so they no longer matter.
I’m not going to weigh in on the morality of the family model versus the team model of business. There are pluses and minuses to both. I enjoyed being part of a family company more but I made a more money working when we switched to a team model. I also fired more people in my first year on the “team” than I fired in thirty years of being part of the “family”. And that part was awful, but I did it so I have to take responsibility for it. I do think it helps explain why the millennial generation generally views the corporate world with distaste and explains a lot of the impetus behind the FIRE movement. I never considered trying to get out of my family style corporation as early as possible. It was a warm, safe and entertaining place where I felt at home. But after a couple of years in the team style company I was ready to go. I did not like the fact that I was only worth what I offered the company today. No matter how well I had done yesterday, only today mattered. I will give the team model credit for my slightly early retirement. If we had stayed a part of the family model I would probably still be happily working and would have missed the last three years of my retired life which I now know to be much better!
If you are part of the 9 to 5 world, or have been, does your company feel like a family or a professional sports team?
If you are a “senior” member of the workforce have you seen a transition from being part of a family to something that has lost most of its loyalty to you as a worker?
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I do feel like family as a teacher at my school. I work at my old high school and with some of my old teachers. I also have two former students working with me now too. I know I have to do a good job not because I’m a good hire but because I am part of a community of people who care. We want students from our school to be successful. We care about our town and we all have our history and family names in town. I know I can teach here until I retired because of this. There are still pockets of the old ways in America, but there are hard to find. We also get a pension too!
Nice thoughts, and I know my brothers struggle with job security and 401k worries in the business world.
Josh, I think that there are still opportunities for jobs like yours that have a family feel to them but there are less every year. The junior college I serve as trustee on even dropped having a pension plan for all future employees so I think while you’ll be grandfathered in that even public sector jobs will lose the pension in the next few years for new employees. They simply cost too much with the longer lifespans people now have. I’m glad you like your job and I’m glad there are good teachers like you, it is a job that changes lives, thank you for your service!
Night and day difference between those two models. If given a choice I would prefer to work for the family model as it sounds like there was a lot of perks and benefits and a higher sense of belonging. Even if I got paid more with the Profesional model, the family model would still have greater appeal.
It isn’t quite that clear to me. There was a certain urgency and speed to the team model, it is fun working with thoroughbreds. Plus the competition made me better at what I did and I loved winning. It was kind of harder to define winning in the family model. And the money wasn’t just better but substantially better, ranging from 50% to 125% more annual compensation. It was almost at the golden handcuffs stage when I left. I’m glad I did, what good is more money when you’ve got enough. But it was still hard to walk away from.
If I had a choice, I would 100% prefer to work for the family model. When I started in real estate I worked for a builder that was the family model and it was awesome. I would have stayed there for my entire career happily. That builder was bought and it quickly turned into the team model. I doubled my sales goal in third quarter and everyone loved me. I missed the goal in fourth quarter (but made the year goal) and got met with a formal write up that threatened my job if I didn’t meet an impossible goal the next quarter. This while I was buying a house from them.
For me, the family model wins any day.
You do a good job of pointing out the “what have you done for me lately?” pitfalls of the team model. A little sense of competition is healthy I think but when it grows to the point of threatening even the top performers regularly, as happened at my job, then I think it has become counterproductive. Unfortunately it seems to be difficult to prevent either model from going to the point of excess. Excess tolerance with the family model and excess demands on the team model.
You paint an interesting picture.
My view may be coloured by having run a consultancy business for 20 years, but I’m yet to see a client who views their staff as any more than interchangeable cogs in a machine. Expendable, replaceable commodities.
The worst of them have been brutally Darwinian, seeking higher skilled/lower paid replacements from the moment an employee signs on. The first question asked when someone falls ill or gets injured is seldom “are you ok?”, more commonly it is “how long is your notice period?”.
The benefits packages on offer, both for new and incumbent staff, have been steadily hollowed out. The “zero hour contract” model (think Uber driver) is becoming increasingly popular.
Having painted that somewhat bleak picture, despite all that I have run a few very tight knit teams who are like family. Years later we still regularly catch up, share life milestones together, sometimes even vacation together.
It is the people, not the workplace or benefits package that make up a family. And as in real life, often times families can be complicated or dysfunctional.
That’s a good point, I stay in touch with some of my family company coworkers to this day. Even go on trips with them from time to time. There is nobody from the team era that I spend any time with now. It just wasn’t really encouraged there. Thanks for commenting in.deed.a.bly!
i miss the loyalty of the family company. i’ve done both and the best word that comes to mind is “disappointed.” i went to all of the happy hours and company dinners and picnics in the 90’s and still consider the younger and older folks from those days as friends. we even had board of director members come to our group christmas parties my friends and i threw for about 10 years. even that company changes, although they didn’t go public.
i can’t pinpoint the transition but it seems to be accelerating the past 15 years towards the employee just being a fixed cost. that’s fair enough if the goal for the owners is to get as much from me for as little as possible in return then i give them just enough. they get what they pay for if that’s the new playing field. it’s not a satisfying way to come to work so just get the money (GTM) and go home and enjoy the other 16 hours of your day.
i swear having seen the other side of it like you did makes it worse than had i never known loyalty which went both ways.
Well said Freddy, most millennials may never see the old style company, and maybe that is for the best because it is something that you really missed when it was gone.
Such an interesting post, Steveark! After almost 20 years in education, I’ve seen a shift towards more of a business model—as in principals running the school like a business, and where parents are the customers. This has given more empowerment to the parent, which might be good in some ways, but this has made teachers low on the totem pole, at least that’s how it felt like for me.
And that isn’t a good feeling I’m sure. I am a trustee at a community college and the business model for education just doesn’t work very well when it is run like a business, or at least you have to use some kind of hybrid. Having good budget controls and fair employee practices can be modeled after businesses but the mission of the organization is so different when you are not in the for profit world. I think both business and education should share a common commitment to their employees and to their clients and stakeholders but that generally looks very different for a school and a business.