Until recently, US tech companies were pretty good about taking care
of employees from new hire to retirement. Many Fortune 500 companies had
explicit no-layoff
policies: Hewlett Packard, Motorola, General Motors, McDonnell Douglas,
Lincoln Electric, American Airlines, Delta. IBM never laid off a single
worker until 1993. This
tie clip is a tiny slide rule that IBM gave to retiring employees. Do
they still give these out? Do employees even make it to retirement age
anymore?
At some point, the employer-employee relationship fell off a cliff.
Corporations used to value the loyalty they gained by promising lifelong
job security. Now they don’t even want real employees: Nearly all of the 10 million jobs created since 2005 are temp positions.
Does this disprove the Theory of the Firm?
According to Ronald Coase, organizations form long-term relationships
with employees to eliminate the transaction costs of constant market
exchange. Sourcing candidates, negotiation, hiring with incomplete
information, making sure contractors don’t run off with a USB stick full
of trade secrets – that’s all really expensive!
The Sovereign Individual
predicted that technology would eventually automate the firm away.
Information systems and AI could seamlessly coordinate a two-sided
marketplace. Offices equipped with surveillance devices would measure
workers’ output, obviating the need for employee trust. Isn’t that
basically Uber? With the help of services like LinkedIn and Gigster and
Foundry and Fiverr, we can already reduce transaction and coordination
costs to the point where full-time employment makes no sense at all.
