Changing the Corporate Structure

Your average, law-abiding John Q Citizen wakes up early every morning in the suburbs of a major metropolitan city where he commutes an hour to his job each way, and works 40 hours per week in an office building in the financial district.  His MBA, in combination with his politicking, luck, and years of experience, has earned him the position of Level III Supervisor.  When he is not checking email he is finding ways to simultaneously justify his role while minimizing the amount of work he needs to accomplish each day.  Once in a while after a curiously motivational meeting, John Q will roll up his sleeves and remember how important his role is in carrying this firm forward.  The feeling wears off quickly and he backslides into his usual routine of passive indifference.

The next time you drive by the skyscrapers in Boston think about the army of John Qs who transplant themselves from their bedroom communities surrounding the city and claw and elbow their way through traffic and weather to spend their contractually obligated 40 hours per week performing various duties.

While observing these towers and pondering the lives of the people inside them, ask yourself, "How actively engaged are these people with their jobs?  To what extent are they using their skills to their maximum potential to increase profitability, maximize shareholder value, create a greater good for society, all while providing for their families?"

Based on my limited experience in the corporate world I  hypothesize that the majority of these employees care very little about their jobs, their companies, its shareholders, or its customers.  Their interest in the firm is one of self-preservation.  The apathy results in only a fraction of the 40 hours being used for quality work. Productivity does happen because of the inherent motivation in each human being to see the results of a job well done.  It prevails in spite of the bureaucracy, politics, distractions, meetings, and everything else that fills the work week.  It prevails in spite of the specialization of labor. It prevails in spite of the chasm that exists between the outcome of the tasks performed and the final product the company advertises to its customers.

Levels of productivity vary from firm to firm, role to role, industry to industry, and sector to sector.  And it is unrealistic to be 100% efficient 100% of the time.  Everybody needs down time for their own sanity. We are human beings after all, and not machines.  And I would not claim this is a new phenomenon.  As long as man has worked there have been different organizational structures filled with workers with various roles.

I am critical of the current structure because it is what we have inherited during our lifetimes in what will be a long evolution of labor organization that will continue after we are dead and gone.  It is important to investigate it because too many take it as a given.  We must not be so presumptuous to believe we have reached the perfect model of capitalism, which has prevailed over the communists after a long fought cold war!

The organization to which John Q Public belongs was started in order to meet a specific need.  When the workload of the founder of his business, who ran every aspect of it since its inception, became too heavy for one person to bear, the founder added more people to help with the operation.  The firm passed through the various stages of a business from sole proprietorship to multinational public corporation.

Let us call the founder Max Affect.  Max is a middleman between primary life insurers and reinsurers we will call a Facilitator.  Reinsurers insure the policies life insurance companies underwrite so as to minimize the risk to any one insurance company.  If too many customers die in a period of time there could be hundreds of millions of dollars in liabilities for the primary insurer.  Reinsurers assume that risk in exchange for premiums from the primary insurance company that has underwritten the policy.  Max becomes well known as an honest businessman so more and more insurers use him for his services.

The workload becomes too great.  Max Affect is losing sleep because he is stressed out.  He is unable to meet the demands of all of his customers so he decides to hire two employees who will be Junior Facilitators while he remains Head Facilitator.  More business means more employees.  Eventually a building must be purchased to house every worker.  In order to raise funds for the building, the banks want to see a formal business plan, corporate structure, profit and loss statement, balance sheet, and limited liability.  Max decides to incorporate to minimize the exposure he and his workers have in case they make a mistake and to allow for easier access to financing.

One day Max wakes up and realizes he has not facilitated a transaction himself for 5 years.  His Junior Facilitators have become Vice Presidents.  He does not even know a Junior Facilitator by name any more. His days are full of meetings, trips, legal briefs, and more meetings.  Max pays more attention to what his team is doing in Washington DC to stay ahead of legislation that he barely has time to ensure the quality of work being done by his Level III Managers.

The Level III Manger like John Q has never met Max Affect.  He has seen the founder on TV screens and has seen his name attached to company emails, but the two have never met.  John's primary duty is to ensure his Level II Mangers are doing their jobs, who in turn must tell the Level I Managers to do theirs, who in turn tell the front line workers to do theirs.  As John has progressed up this ladder he has done less and less actual work and attended more and more meetings.  He is constantly keeping track of various projects that have other groups of Level IV, III, and II Managers on them.  The work day is full but somehow nothing ever really seems to gets done.

The question is at what stage of this business evolution does the effectiveness of each employee significantly break down?  We have all been a part of a small business and have seen first hand how significant each employee is.  Each worker is an extension of the owner.  In fact, the only reason there are employees beside the owner in in the first place is not in order to hire people with specialized knowledge, but simply because the owner cannot perform all the tasks himself.

When firms get to the size of Max Affect's Reinsurance company, the impact each individual employee has on the final product is so minimal that any small number of employees could be out for a short period without any significant impact on the bottom line.  Furthermore, as each manager progresses through the ranks they become cut off from front-line workers and forget how to do the jobs they began doing.  Their jobs become a project managing, babysitting, information facilitating, meeting attending blur where follow up is rare, nobody takes ownership of anything, and everyone is assuming someone else is moving things along.

The state of the US corporate structure is castrating the brains of smart, reasoning homo sapiens.  Instead of allowing an individual to flourish into the brilliant mind that changes the course of history through his contributions, the structure turns men into weak, politically correct, complaining babysitters, who spend more time responding to emails and listening to conference calls than using their minds to create something excellent.  Not to mention the psychological and physiological side effects of screen time, wifi signals, employee tracking, notification signals, climate controlled offices, etc, on the slowly evolving species that just 100 years ago used to till the soil with its bare hands.

I am not suggesting for a minute we need to return to another era.  We have created the best system given the circumstances, but we cannot quit.

Ask yourself, "Is the American corporation operating in a mixed economy of capitalism and federal spending under the government rule of a democratic-republic in 21st century North America the pinnacle of workforce progress?"  We have found a way to relieve ourselves of physical labor by becoming a service-oriented economy in which we are small service cogs in the giant machine called the corporation.  We give our time and efforts to mundane computer work in exchange for the comfort and security of that bi-weekly paycheck. The corporations are worshiped by workers, because we depend on them; by owners, because they created and control them; and by politicians, because they create jobs and pay for their re-election campaigns.

The corporation is a powerful machine living in a wondrously mysterious era of freedom in which it can say what it likes because, like a person, it has freedom of speech; but it will not be put in jail, because at the end of the day, it's not really a person. Its owners and managers are people but they have limited liability. Laws are written by the lobbyists that are the extensions of the corporations.  Corporations sell to other corporations.  We have become apathetic to the monster because we benefit from its security.  But in our security and comfort we are selling ourselves short of what our minds, and thus our collective minds put to a purpose, maximizing its full potential, could create.