5 ms·

The Strategic Imperative Not to Hire Anybody

17 points by coolnewtoy 16y ago

pw0ncakes 16y ago
Since 1975, the upper class has done a great job of making sure the proceeds of economic growth and progress go mainly to them. Increased productivity is good only when the benefits are shared.
- petercooper 16y ago
  By "upper class," are you referring to the rich? If so, you're noting that the rich are doing a good job at staying rich. That's unsurprising because they can take bigger risks without losing their shirts due to their wealth buffer. In the recent Sunday Times Rich List (of the top 1000 richest people in the UK), 751 were "self-made" with only 249 having inherited their wealth. Most of the billionaires had humble beginnings. There is no defined "upper class" or level of wealth that's impossible for people born into the least economically beneficial situations to attain.
  - pw0ncakes 16y ago
    No. Rich does not mean upper class, and upper class does not mean rich. The two factors are strongly correlated, but not the same thing. The upper class is a tightly-connected group of people who work to consolidate power, social resources, and wealth within their own ranks. Most of them are parasites and a lot of them are criminals whose politics are regressive. Most rich people are technically upper-middle class. In fact, if you weren't born upper-class, upper-middle is as high as you can go (your children and grandchildren have a shot, though).
    - petercooper 16y ago
      No. Rich does not mean upper class, and upper class does not mean rich. I had to ask (and semi-assume) because, generally, "upper class" is based significantly on wealth and fame: http://en.wikipedia.org/wiki/American_upper_class http://en.wikipedia.org/wiki/American_upper_class Your definition seems to cover a more conspiratorial and political superclass (perhaps in an old European sense of "upper class"), and while I believe an insidious old-boys network of sorts exists, it can't be confused with the typical rich "upper class" that isn't inaccessible to newcomers.
      - starkfist 16y ago
        From other posts I've surmised that pw0ncakes lives in an Edith Wharton "Age of Innocence" version of New York with the scenes and characters updated for modern readers.
    - wrs 16y ago
      > if you weren't born upper-class, upper-middle is as high as you can go (your children and grandchildren have a shot, though) Therefore one can be born upper-class to upper-middle parents? Otherwise that doesn't make sense.
emmett 16y ago
Very similar to the arguments of the Luddites: The power loom is putting workers out of a job! Some attempt to do something which gets the unemployed back to work could be good, but trying to create make-work by using more people than a job requires is not.
- CodeMage 16y ago
  The article is not about trying to "create make-work by using more people than a job requires". It's about cutting costs by not hiring all the people a job requires as full-time employees. Full-time employees are entitled to better treatment and benefits than temps and contractors. Also, offshore full-time employees cost a fraction of US employees. That's what the article is about. Personally, I think the article is refreshing because of its no-nonsense and no-bullshit approach. I've been in too many corporations that keep telling us employees how much they love us while creating an increasingly hostile environment at the same time.
- kg 16y ago
  I'm definitely not in favor of creating needless jobs, and companies that can be creative and do more with less in a sustainable fashion (without creating a poor quality of life for those doing it) should be rewarded. That being said, overworking people and pushing them aside when they fall out of fashion is short sighted and will create long term problems for society as a whole.
  - ovi256 16y ago
    will create long term problems for society as a whole. Even worse, it creates an externality, a debt that society will pay for the corporation.
    - yummyfajitas 16y ago
      What externality does increased productivity cause?
  - vl 16y ago
    >I'm definitely not in favor of creating needless jobs Most jobs are already needless. Consumerism helps to keep wheels turning. As the time goes, situation is going to get worse. The question is how society is going to get restructured if 80% of its workforce can't produce anything viable anymore (i.e. produced cheaper without involving said workforce)?
ovi256 16y ago
>My clients were amazed by how much productivity they could squeeze out of their people in the downturn. Overworking only works for a few months, after which people's health will start to suffer. All these managers are deluding themselves if they think this is going to keep on indefinitely. OTOH, if some people were underworked and they are just starting to pull their weight, that's another matter.
- robrenaud 16y ago
  If you can make your employees more productive, I would think you would want more of them, to capture more of the market. That is, if employee output increases, but the cost per employee are constant, you are better off hiring more employees until the marginal output of the next employee reaches the cost of that employee. But what do I know, I am just an engineer ;).
  - btilly 16y ago
    You're assuming a far more direct relation between consumption and production than actually exists. If I can sell 10,000 widgets for $100 each that doesn't mean that I can sell 1,000,000 widgets at the same price. And if I try to produce that many widgets in the hope of selling them, I'm liable to drive the price of widgets down so far that I'll lose money on all of them! In other words while the auto industry could produce more cars than anyone wants to buy, it would be a really, really bad idea for them to do so. In production there is a point of diminishing returns. And after you're at that point, increased productivity frequently results in cutting back people to return production to an optimal level.
    - robrenaud 16y ago
      I was talking about behavior of employers on the margin, not about increasing employment by an order of magnitude. Certainly I agree that my argument is limited by changes at scale and also only applies to individual companies within an industry rather than entire industries as a whole. On the other hand, if Chevy gained a competitive advantage and could produce cars say, 10% cheaper than they used to be able to, it would usually make sense for them to produce more cars, potentially selling them for cheaper. The car industry as a whole still couldn't sell many more cars, but the Chevy would still be better off, taking some market share their competitors. On the other hand, I think the implicit assumption in the article is that the recession shocked the economy and there was a significant drop in demand. Even if Chevy realized some efficiency gains during the recession, they are still better off cutting production and letting those efficiency gains limit workforce size because the demand curve changed.
j5eb6ach 16y ago
We have a situation of 'haves' and 'have nots'. A corporation of 100 employees has every reason to prefer that those employees work at 120% (50 hrs/wk). Our society would benefit if instead the corporation hired 20 additional employees, and everyone worked at 100%.
- ryanwaggoner 16y ago
  Only if you assume that there are a fixed number of jobs available. And even if you do believe that, why is 40 hrs the optimal number? Just think, rather than 100 people accomplishing 5000 hours of work per week, we could hire 5000 people and then they only have to work 1 hour per week! Everybody wins! On the other hand, perhaps everyone is better off if those 20 people go out and start companies that create jobs?
  - potatolicious 16y ago
    > "why is 40 hrs the optimal number?" This number was determined during the industrial revolution to be the general maximum working hours for productivity to remain constant over a long period. Which is to say, over 40 hours it was observed that factory workers' productivity decreased over the long term. Without scientific evidence, I would say it's a pretty good estimate for software work also.
- btilly 16y ago
  Your math ignores retraining costs. A corporation of 100 employees that hires 20 more will in fact temporarily have just created extra work for the existing 100 for some time before they see a benefit from the hires. And given normal turnover, retraining would become a higher portion of that corporation's costs permanently, resulting in permanently decreased productivity.
  - petercooper 16y ago
    It forgets wasted time, too. In most situations that are not manual labor, you can't just trim 10 hours from one person's schedule, give them to someone else, and expect equivalent or better performance. In most clerical positions, time is spent accumulating knowledge, socialising, and waiting for process related bottlenecks.
nkassis 16y ago
We you can't fight them join them. I guess the best option is to own a company instead of working for one. I'm pretty much preaching to the choir here but it's worth mentioning
- kirill_blazhko 16y ago
  Unfortunately not everyone is carved for the entrepreneurship. The end of the article mentions this very category of people and I agree with the author: something must be done to provide jobs to those people.
j_baker 16y ago
Doesn't seem to be working for me, but the mobile version does: http://m.hbr.org/12763/show/c66232388036dd9da4780e91b5bbdb0c&t=54114d0202b0d5685a50248ba19888bb http://m.hbr.org/12763/show/c66232388036dd9da4780e91b5bbdb0c...
j_baker 16y ago
"For about five years now, particularly after dinners that featured wine, human-resources executives have been telling me, "We've come to realize we don't really want most employees for the whole of their careers. We want their particular set of skills when we need them — but then things change so fast, we don't need that particular skill set any more." And many of these are companies famous for being good at H.R. " Maybe I'm just old fashioned, but the solution would seem to be not hiring people based solely on short-term requirements. In other words, hire people that are good no matter what the requirements are. But then again, this is HR departments we're talking about.
karzeem 16y ago
Is 0% unemployment a good end in and of itself? Sometimes industries go through changes that reduce the number of people required to get the work done. It seems like if you're too aggressive about driving unemployment to 0, you end up with all your companies looking like GM. That isn't to say that unemployment is desirable, and at current levels, it's almost certainly destructive. But the measures required to take unemployment from, say, 2-3% to 0 may cause more harm than good.
- petercooper 16y ago
  Total employment is certainly bad from a productivity POV. For a better overall level of production, it's necessary for any system (even one as large as the entire labor market) to have some idle capacity to cope with growth and expedition. That said, this is an economic standpoint, rather than a social one, but hopefully I'm not being too opaque with my bias :-)
gamble 16y ago
"We've come to realize we don't really want most employees for the whole of their careers. We want their particular set of skills when we need them — but then things change so fast, we don't need that particular skill set any more." But job-hoppers are still evil, right?

17 points by coolnewtoy 16y ago

Since 1975, the upper class has done a great job of making sure the proceeds of economic growth and progress go mainly to them. Increased productivity is good only when the benefits are shared.

petercooper 16y ago
By "upper class," are you referring to the rich? If so, you're noting that the rich are doing a good job at staying rich. That's unsurprising because they can take bigger risks without losing their shirts due to their wealth buffer. In the recent Sunday Times Rich List (of the top 1000 richest people in the UK), 751 were "self-made" with only 249 having inherited their wealth. Most of the billionaires had humble beginnings. There is no defined "upper class" or level of wealth that's impossible for people born into the least economically beneficial situations to attain.
- pw0ncakes 16y ago
  No. Rich does not mean upper class, and upper class does not mean rich. The two factors are strongly correlated, but not the same thing. The upper class is a tightly-connected group of people who work to consolidate power, social resources, and wealth within their own ranks. Most of them are parasites and a lot of them are criminals whose politics are regressive. Most rich people are technically upper-middle class. In fact, if you weren't born upper-class, upper-middle is as high as you can go (your children and grandchildren have a shot, though).
  - petercooper 16y ago
    No. Rich does not mean upper class, and upper class does not mean rich. I had to ask (and semi-assume) because, generally, "upper class" is based significantly on wealth and fame: http://en.wikipedia.org/wiki/American_upper_class http://en.wikipedia.org/wiki/American_upper_class Your definition seems to cover a more conspiratorial and political superclass (perhaps in an old European sense of "upper class"), and while I believe an insidious old-boys network of sorts exists, it can't be confused with the typical rich "upper class" that isn't inaccessible to newcomers.
    - starkfist 16y ago
      From other posts I've surmised that pw0ncakes lives in an Edith Wharton "Age of Innocence" version of New York with the scenes and characters updated for modern readers.
  - wrs 16y ago
    > if you weren't born upper-class, upper-middle is as high as you can go (your children and grandchildren have a shot, though) Therefore one can be born upper-class to upper-middle parents? Otherwise that doesn't make sense.

emmett 16y ago

Very similar to the arguments of the Luddites: The power loom is putting workers out of a job! Some attempt to do something which gets the unemployed back to work could be good, but trying to create make-work by using more people than a job requires is not.

CodeMage 16y ago
The article is not about trying to "create make-work by using more people than a job requires". It's about cutting costs by not hiring all the people a job requires as full-time employees. Full-time employees are entitled to better treatment and benefits than temps and contractors. Also, offshore full-time employees cost a fraction of US employees. That's what the article is about. Personally, I think the article is refreshing because of its no-nonsense and no-bullshit approach. I've been in too many corporations that keep telling us employees how much they love us while creating an increasingly hostile environment at the same time.
kg 16y ago
I'm definitely not in favor of creating needless jobs, and companies that can be creative and do more with less in a sustainable fashion (without creating a poor quality of life for those doing it) should be rewarded. That being said, overworking people and pushing them aside when they fall out of fashion is short sighted and will create long term problems for society as a whole.
- ovi256 16y ago
  will create long term problems for society as a whole. Even worse, it creates an externality, a debt that society will pay for the corporation.
  - yummyfajitas 16y ago
    What externality does increased productivity cause?
- vl 16y ago
  >I'm definitely not in favor of creating needless jobs Most jobs are already needless. Consumerism helps to keep wheels turning. As the time goes, situation is going to get worse. The question is how society is going to get restructured if 80% of its workforce can't produce anything viable anymore (i.e. produced cheaper without involving said workforce)?

ovi256 16y ago

>My clients were amazed by how much productivity they could squeeze out of their people in the downturn. Overworking only works for a few months, after which people's health will start to suffer. All these managers are deluding themselves if they think this is going to keep on indefinitely. OTOH, if some people were underworked and they are just starting to pull their weight, that's another matter.

robrenaud 16y ago
If you can make your employees more productive, I would think you would want more of them, to capture more of the market. That is, if employee output increases, but the cost per employee are constant, you are better off hiring more employees until the marginal output of the next employee reaches the cost of that employee. But what do I know, I am just an engineer ;).
- btilly 16y ago
  You're assuming a far more direct relation between consumption and production than actually exists. If I can sell 10,000 widgets for $100 each that doesn't mean that I can sell 1,000,000 widgets at the same price. And if I try to produce that many widgets in the hope of selling them, I'm liable to drive the price of widgets down so far that I'll lose money on all of them! In other words while the auto industry could produce more cars than anyone wants to buy, it would be a really, really bad idea for them to do so. In production there is a point of diminishing returns. And after you're at that point, increased productivity frequently results in cutting back people to return production to an optimal level.
  - robrenaud 16y ago
    I was talking about behavior of employers on the margin, not about increasing employment by an order of magnitude. Certainly I agree that my argument is limited by changes at scale and also only applies to individual companies within an industry rather than entire industries as a whole. On the other hand, if Chevy gained a competitive advantage and could produce cars say, 10% cheaper than they used to be able to, it would usually make sense for them to produce more cars, potentially selling them for cheaper. The car industry as a whole still couldn't sell many more cars, but the Chevy would still be better off, taking some market share their competitors. On the other hand, I think the implicit assumption in the article is that the recession shocked the economy and there was a significant drop in demand. Even if Chevy realized some efficiency gains during the recession, they are still better off cutting production and letting those efficiency gains limit workforce size because the demand curve changed.

j5eb6ach 16y ago

We have a situation of 'haves' and 'have nots'. A corporation of 100 employees has every reason to prefer that those employees work at 120% (50 hrs/wk). Our society would benefit if instead the corporation hired 20 additional employees, and everyone worked at 100%.

ryanwaggoner 16y ago
Only if you assume that there are a fixed number of jobs available. And even if you do believe that, why is 40 hrs the optimal number? Just think, rather than 100 people accomplishing 5000 hours of work per week, we could hire 5000 people and then they only have to work 1 hour per week! Everybody wins! On the other hand, perhaps everyone is better off if those 20 people go out and start companies that create jobs?
- potatolicious 16y ago
  > "why is 40 hrs the optimal number?" This number was determined during the industrial revolution to be the general maximum working hours for productivity to remain constant over a long period. Which is to say, over 40 hours it was observed that factory workers' productivity decreased over the long term. Without scientific evidence, I would say it's a pretty good estimate for software work also.
btilly 16y ago
Your math ignores retraining costs. A corporation of 100 employees that hires 20 more will in fact temporarily have just created extra work for the existing 100 for some time before they see a benefit from the hires. And given normal turnover, retraining would become a higher portion of that corporation's costs permanently, resulting in permanently decreased productivity.
- petercooper 16y ago
  It forgets wasted time, too. In most situations that are not manual labor, you can't just trim 10 hours from one person's schedule, give them to someone else, and expect equivalent or better performance. In most clerical positions, time is spent accumulating knowledge, socialising, and waiting for process related bottlenecks.

nkassis 16y ago

We you can't fight them join them. I guess the best option is to own a company instead of working for one. I'm pretty much preaching to the choir here but it's worth mentioning

kirill_blazhko 16y ago
Unfortunately not everyone is carved for the entrepreneurship. The end of the article mentions this very category of people and I agree with the author: something must be done to provide jobs to those people.

j_baker 16y ago

Doesn't seem to be working for me, but the mobile version does: http://m.hbr.org/12763/show/c66232388036dd9da4780e91b5bbdb0c&t=54114d0202b0d5685a50248ba19888bb http://m.hbr.org/12763/show/c66232388036dd9da4780e91b5bbdb0c...

j_baker 16y ago

"For about five years now, particularly after dinners that featured wine, human-resources executives have been telling me, "We've come to realize we don't really want most employees for the whole of their careers. We want their particular set of skills when we need them — but then things change so fast, we don't need that particular skill set any more." And many of these are companies famous for being good at H.R. " Maybe I'm just old fashioned, but the solution would seem to be not hiring people based solely on short-term requirements. In other words, hire people that are good no matter what the requirements are. But then again, this is HR departments we're talking about.

karzeem 16y ago

Is 0% unemployment a good end in and of itself? Sometimes industries go through changes that reduce the number of people required to get the work done. It seems like if you're too aggressive about driving unemployment to 0, you end up with all your companies looking like GM. That isn't to say that unemployment is desirable, and at current levels, it's almost certainly destructive. But the measures required to take unemployment from, say, 2-3% to 0 may cause more harm than good.

petercooper 16y ago
Total employment is certainly bad from a productivity POV. For a better overall level of production, it's necessary for any system (even one as large as the entire labor market) to have some idle capacity to cope with growth and expedition. That said, this is an economic standpoint, rather than a social one, but hopefully I'm not being too opaque with my bias :-)

gamble 16y ago

"We've come to realize we don't really want most employees for the whole of their careers. We want their particular set of skills when we need them — but then things change so fast, we don't need that particular skill set any more." But job-hoppers are still evil, right?