Why Everyone’s Working So Hard


April 15, 2008

by Marshall Goldsmith

In the early 1980s I had the opportunity to work as a consultant in several of America’s largest organizations. In those days I often thought that corporate managers and professionals were lazy. In most corporate headquarters buildings I could have shot a cannonball down the hall at 5 p.m. and not hit anyone! Professionals and managers were working 35 to 40 hours per week. They were taking four to five weeks of vacation during the course of the year. They enjoyed incredible job security, great benefits, lifetime health care, and guaranteed pensions.

Those days are gone! Today I am amazed at how hard corporate managers and professionals work. What happened?

Five factors have converged to create a new world for professionals:

1. Increased Differentiation in Compensation

Many studies and reports have highlighted the huge compensation increases of CEOs relative to the average salaries of the general population of employee.

As CEOs have enjoyed massive increases in pay, other C-level officers – the next level down – have also noticed large increases in compensation. This trend has continued throughout the organization, from vice-presidents to directors. While mid-managers and staff professionals have not had the relative increase in compensation enjoyed by executives, they have still been moving ahead at a much faster pace than the general population.

Recently, in a conversation with the CFO of a blue chip company, I observed an example of the impact of this increased compensation. One of his direct reports complained, “I didn’t go to work in a major corporation to work this hard. If I had wanted to put in this many hours, I would have worked in a professional services firm.” The CFO replied, “You are getting paid as much a partner in one of the top professional services firms. If you don’t want to work like one, why don’t you either take a demotion or leave?”

Higher salaries come with higher expectations. The bottom-line pressure from shareholders has only gone up. As top managers and professionals are being paid more money, they are subject to greater expectations. Managers expect their subordinate managers and professionals to earn their pay increases.

2. Decreased Job Security

In the early ’80s I did a study of dismissals at IBM (IBM). While IBM would always fire employees for ethical violations, almost no one was fired because of poor performance. If you wore a white shirt, showed up, and met minimal expectations, you had a job for your entire career.

As IBM’s corporate profits began to disappear, then-CEO John Akers faced increased pressure from stockholders to change the corporation. His hesitation to move away from IBM’s full-employment practice was one of the factors that led to his eventual dismissal. IBM’s lack of tough performance standards was not that unusual in the U.S from the 1960’s to the 1980’s. The same story could have been observed at AT&T (T), Eastman Kodak (EK), and many other huge companies during that era.

In today’s competitive world, job security for managers and professionals seems a distant dream. Along with the carrot of increased rewards, managers, and professionals live with the stick of losing their jobs. Overall, the professional work ethic has increased in a world where the value of performing can bring greater rewards, while the cost of nonperformance can bring severe and immediate punishment.

There has also been a marked decline in midlevel work – a “hollowing-out” of the middle class. The lack of midlevel jobs has further increased the distance between society’s economic “winners” and “losers.”

3. Decreased Health Care and Pension Security

The concept of guaranteed lifetime health care and pension has been greatly eroded in the U.S. in the past 10 years. Employees are facing the reality of losing part – or all – of the benefits that they thought were a given. The relative losses in benefits for managers and professionals can be even greater than the losses faced by wage-earning employees. Even companies that are retaining pension benefits are moving away from defined-benefit plans that provide guaranteed, inflation-proof income security during the retirement years.

As the probability of lifetime health care paid for by the company disappears, the cost of health care continues to escalate. The expectations for corporate pensions and Social Security have diminished. These changes have caused many professionals to feel like they are on their own, both now and post-retirement.

4. Global Competition

In the 1950s managers and professionals in the U.S. had a huge competitive advantage. While business was largely conducted in English, relatively few people around the world spoke fluent English. To add to our advantage, an incredibly small percentage of the populations in China, India, or Eastern Europe had professional educations that were competitive with those in the States or Western Europe. Over time this competitive advantage has slowly eroded.

As recently as 10 years ago global outsourcing was largely limited to manufacturing or lower-level service jobs. In the future, many more managerial and professional jobs will be outsourced.

Today millions of highly educated, English-speaking, non-American professionals are flooding the job market. They are willing to work for salaries that are much lower than the wages paid to Americans. They are more than happy to work long hours. Global competition has helped further fuel the job insecurity and job pressure experienced by professionals in the States. The fact that Americans, Europeans, and Japanese workers earn more that workers in developing countries has led to increased pressure to justify their high-paying jobs with significant contributions.

5. New Technology

There was a time when people thought new technology would lead to more leisure time. Instead, new technology has created a “24/7” mindset. Professionals everywhere can be seen using cell phones or PDAs to communicate with their co-workers. New technology has gone hand in hand with globalization to create a world where work never stops. It has also begun to blur the distinction between home and work.

The five changes outlined here have created a new breed of professional employee: more driven and hard-working, yet more insecure, than ever before. Leading these new professionals will be one of the key challenges for the leader of the future. In a future column, I will discuss suggestions for leading this hardworking, yet highly insecure workforce.