Wednesday, June 27, 2012

Why is middle management on the decline again?

I really hate this subject because it effects me directly. Back when Reagan was President we had a huge recession. As a result middle management was all but obliterated from the middle corporate America as management thought this was the way to survive. And we learned two important lessons from this reaction. (1) recession almost turned into depression and corporate America was almost erased (2) many middle managers spawned successful startup businesses. (the two are not offsetting even with the dot com boom and bust)

Now, it seems, that we are in economic hard times again and whether it's a recession or depression is for future economists, however, I do know that middle management is being erased again; and top managers are calling it lean or agile. As a result the execs are making more money (as part of their "incentive" packages) and entry level positions have become highly competitive as the job market shrinks without rational stimulation. I wish that it was a fair competition but it's not. It favors the young person. Not because they are smarter, faster, knowledgable, malleable, "agile" or even efficient but because they are cheaper. They do not have houses, cars, families, college tuition, electricity, water, heat or A/C. And of course retirement considerations.

Top-down total-agile-management might work in the EU where just about everything is socialized and retirement assured. But here in the US, where every 2 to 4 years we talk about how bankrupt the federal retirement system is, this obliteration of middle management and a genuine career path is paramount. Companies that do not support a middle management risk losing their knowledge base, fail to mentor or apprentice their line of succession, and are only interested in the short term benefits.

So my message to all senior and 'C' level executives. Start thinking about your company as if it were to exist for another 200 years and stop thinking about your own personal legacy. If you take care of the future then the future will take care of you.

4 comments:

  1. Well it's a good point and also the vast importation of labor feeds into that quite nicely.

    The problem is that the incentives are usually stock based, and people cash out before the damage is noticable.

    They don't care if the company goes belly up in 2 years if they can sell their shares for a huge profit before then.

    I blame the rise of electronic stock trading as a huge factor in this.

    In the old days, people bought and held shares -- for many years.. If the company went BK 5 years later, that would be a big deal.

    Now, people can trade 24x7....whatever this quarters results is, thats a boost.

    Payroll is the largest expense of most businesses, the only way to boost profits in the short term is to cut people, or cut salaries, and yes, the boys at the top profit while everyone else suffers.

    Capitalism gone awry. I don't think socialism is the answer, but clearly something must be done to reign in self destructive capitalism

    Jordan

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  2. I wonder what it takes to become an e-Trader (not to be confused with ETrade)?

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  3. I dunno.... if you want to know more about day traders get on the IRC channel #invest on efnet and ask them... a lot of independent day traders on there.. or did you mean something else by e-trader?
    Jordan

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  4. I'm talking about high velocity trading. It cannot be free to join and if it's not then what is the cost? And what is the message protocol? Wouldn't it be interesting to setup a mock exchange that could simulate the various exchanges on the level of a simcity as sort of a training ground.

    I think that this sort of trading is or was as complicated as google's revenue stream before they went public. Now practically anyone can do it if you have the money and momentum... they just have this huge leap ahead of everyone else... but even duckduckgo is giving it a try.

    So why not trading?

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