Triangles, Rectangles and Workaholics: Who's Minding the Work Force?

An edited transcript from the April 4 [1995] edition of CBC-Radio's Morningside, with host Peter Gzowski and guest David Foot, economics professor at the University of Toronto.

Peter Gzowski: I welcome back to Morningside David Foot, economist and demographer, whose work has illuminated the patterns behind everything from mortgage payments to immigration to downsizing. David, good morning.

David Foot: Good morning, Peter.

Gzowski: Tell me about downsizing and your view on it, because it's certainly the buzzword of the current economy. Everybody's cutting back, sometimes dramatically as we've seen, and you have profound reservations about it.

Foot: Well, I do. Just stand back for a moment and understand what's driving some of this: The people at the front end of the baby boom, born after the Second World War in 1947, are now 48 years old; so we've got a whole lot of front-end boomers now in their forties. And most of our corporate structures look like triangles, so there's a limited number of positions for ever more people moving up the corporate ladder. This is the reason we now find far too many people in middle-management positions in the old triangular corporate structure, and that's what's driving this whole downsizing.

But downsizing is not the way you build a loyal and competitive work force. Increasingly, my more recent work concerning Generation X has been arguing that there are a lot of people in their 50s who are now beginning to understand why their 29-year-old sons and daughters are still living with them. They're in the back end of the baby boom and have had one heck of a tough life. In addition, there are a lot of people in their 40s trying to run what Faith Popcorn calls 99 lives.

I believe that if you want to downsize the federal government by, say, 20 per cent, you should go to all the employees and say, "You're going to work 20 per cent less time for 20 per cent less money, and you've all got guaranteed job security." At least you've then committed to your people and you can start to get a loyal response back from them. If you do this sort of, "Well, we're going to get rid of 20 per cent of you and we don't know which 20 per cent," don't be surprised if computer viruses start appearing in all the important programs.

Gzowski: Or people start working to rule, which is what they're talking about now.

Foot: Well. working to rule is minor compared to what else can happen.

Gzowski: And you have reason to believe that if you make that offer to people in a certain segment of the population - 20 per cent less work for 20 per cent less money - they'll take it, or a large percentage of them will.

Foot: I'm saying there are a lot of people in their 40s and 50s now who, if you gave them the option and explained to them why it was necessary to create jobs for their sons and daughters or to give them a better quality of life, would take it. And it will be the more highly paid people, because they're the ones who can afford to take it; you don't want to force it on the lower paid people. And you get much bigger savings if it's the higher-paid people who take it.

But you've got to offer them true flexibility. You've got to truly empower them. You've got to give them the option of working nine months a year for three-quarters salary, or having every other weekend as a long weekend for 90 per cent salary. They've got to be able to tailor it to their own needs and make it a voluntary program, and then I think people will buy in.

Gzowski: Why is management not listening to you more? I read a thought of yours somewhere, that it's because too many corporations or too many institutions are run by workaholics.

Foot: I have said that, and I think it's largely true. But to give you the mild response before the strong response: The mild response is, I think management are beginning to listen, but they're still not doing anything with any of this material. The real trouble is that we're far too short-term in our thinking. We don't think more than a year ahead, or even a quarter ahead, and the idea that next year's efficient output may depend on this year's employee loyalty is beyond the comprehension of most of our senior executives.

The stronger response is that, in both the public and private sectors, the people who get to the top are the workaholics - and that's true in unions as well as in management. They're very, very challenged by people who don't want to adopt the same lifestyles that they have, and therefore they're not about to let people work less for less money.

Gzowski: They can't understand that a person of common sense might say, I'll take 20 per cent less money.

Foot: Yes, they just can't comprehend it. I've given presentations to quite large and reputable organizations where a senior executive vice-president has said, "Look, my employees are too committed to ever do that," and I've said, "Do you want to take a vote?" And 60 to 70 per cent of the audience - often 80 per cent of the women, 50 per cent of the men - put up their hands and said, if you give me this option I'll take it. And the senior executive vice-president was just stunned: he couldn't believe his employees were so disloyal in his view of the world, or not so committed to their careers.

Gzowski: You mentioned Generation X. Is their economic future still as gloomy as it appeared to be?

Foot: Let's again strike a quick definition of this from my perspective. I define them as the back quarter of the baby boom, those born between 1961 and 1966, and now they're 29 to 34. They are not twenty-somethings: They're in their late 20s and early 30s, and they've suffered through two recessions, and they suffer from being in a very, very big group. They're the people who are going to pay the taxes in future, they're going to pay the pensions, and it's in all of our interests to get them well-established on a good working career, and not allow them to be on a heap of shattered dreams.

Gzowski: What about the changing nature of the workplace, though? We seem to have agreed that very few of them will hold one job through their working life. They will change jobs numbers of times. Is there not some future in elasticity or in mobility for them?

Foot: Again, I think we ought to understand why this is happening now, and not a decade ago and not a decade in the future. The baby boom started in 1947, and the peak of the baby boom was born around 1960; so the people in the front part of the baby boom are now basically 35 to 48. They look a bit like a rectangle, and our corporate structures look like triangles. What we've been trying to do over the decade of the eighties, and into the nineties, is promote a rectangle up a triangle.

Well, it's pretty hard to push a rectangle up a triangle. And one of the consequences is that the dumber organizations are trying to get rid of all these people in their 40s, because they've got too many front-end boomers looking for management positions. Bell Canada would be a prime example of another organization this week trying to do that; and I fear the same thing coming at CBC, but we probably shouldn't be talking about that this morning.

Gzowski: Well who's thinking about it? [laughter]

Foot: The smarter organizations know the only way to fit a rectangle up a triangle is to flatten the triangle, and that's why we are talking about flattening corporate structures today. But once you flatten the triangle, there's not nearly so much vertical movement, and vertical movement means getting promoted within the career of your choice.

There's far more lateral movement; but once you start moving around an organization, you're changing your occupation - and that's why we're talking more and more about education as a life-long process. The way you motivate the baby boom is to give them new challenges in areas related to their current jobs and give them the training to go to those new areas. The last thing you want to do is cut back training programs, as the federal government is now doing.

The second part of it is that you often set out on your own in your mid-to-late 40s. This is after you've had 20 or 25 years in a career. You suddenly realize you're not going to be the deputy minister or the president of the company, you're trapped in a junior vice-president position or a director position. You've largely paid off your house, you're fed up with working for someone else, you've still got 20 years of your working life ahead of you. This is when you have your career crisis, in your mid-40s: What am I going to do with the second half of my life?

Quite often people go out and start their own companies. Well, we've got the whole front end of the baby boom in those age groups now; of course they're going out and starting their own companies. And this is the reason we've had the great growth of small business. Once again, this is nothing new, perfectly predictable, would have happened regardless of the economy, would have happened regardless of globalization. It's being driven by demographics.

Gzowski: We ponder changing value systems. You argue that they're not changing. It's demographics.

Foot: We have different values at different times in our life. The values when we're in our 20s are very different from our 30s. When we're in our 30s we're raising a family, so family values tend to dominate the horizon. The peak of the baby boom, born in 1960, now are 35. They've all moved out to the suburbs, they've all bought their mini-vans, they're all raising their kids. Of course family values are a dominant part of our landscape, because most of the baby boomers are in those age groups, and that's when those values predominate.

But family values have always predominated for people in their late 20s and 30s; what we've got is a re-weighting of traditional values, not new values out there.

Gzowski: Now: Wal-Marts are not as solid as they appear?

Foot: Well, I am always very reluctant to get into talking about an individual corporation -

Gzowski: Well, superstores then.

Foot: -no, no simply because I don't know the financial foundations of individual corporations. But my general point would be that when you're in your early to mid 30s, and you're up to your eyeballs in mortgages, and you've got two kids, you've got to save a dollar wherever you can find a dollar to save; so you'll go to the big stores to save a dollar. But when you're 50, you're not going to spend half an hour walking across the parking lot of a superstore.

Gzowski: You're right.

Foot: And you know, there's going to be more and more 50-year-olds out there and fewer and fewer 30-year-olds. If you take the natural logic of that, you're much more willing to pay $1.19 for a really good cup of Colombian coffee in the morning than 69 cents now. Quality and service matter to you. Saving your time is crucial when you're in your 40s and 50s, because you're trying to juggle 99 lives. You're trying to be a good professional, a good parent to your kids, a good kid to your aging parents, and you're at the peak of your career, and you're trying to build up that nest egg for retirement. You're running 99 lives; don't waste your time walking across a big parking lot into a megastore.

Gzowski: Talk for just one minute to the Generation X person who's listening to you, and has been reminded once again what a tough roll of the dice she's had. How do you react to this gloomy future if you're now 26?

Foot: The real problem are our senior executives today, those born in the 1930s. The 57 year-old father of a 30 year-old Gen Xer was born in 1938, and basically he believes that if you work hard you'll be recognized and promoted. Well there was hardly anyone born in the mid-30s, and so it was very easy: They got to the top because they were in short supply, not necessarily because they're any good.

My concern is not with Generation X so much as it is with getting to the chief executives of our country, whether they're in the private sector or the public sector, and saying: You know, these poor students today, it doesn't matter how hard they work, there's simply not the same future for them as there was for you, and we've got to be proactive and make the future look much more rosy for them. The Gen Xers, the 20-somethings, my students today, they understand the world extremely well. They understand they had a poor draw on their birth year, and the trouble really is with senior management today, which are making all the wrong decisions for a work force they don't understand.

Gzowski: Thanks very much for coming by. David Foot teaches economics at the University of Toronto.