Saturday, May 09, 2015

Remember The Rug

You can think of business as problem solving. Then businesses are groups of people solving problems together. One of the challenges facing someone who is an employee rather than an owner is how good they are at problem solving. They the employee, not they the team. In a Utopian world you want someone to work themselves into redundancy. 

Solving new problems is fun.  You are on a learning curve and so it is interesting. You only really start adding big value once you have figured out how to solve the problem. That is when the choice gets interesting. Ideally, you will transfer that learning to someone else. That way the problem carries on getting solved but you can move onto new challenges.

This is where trust comes in. If you make yourself redundant you aren't in a very good negotiating position. The people you have transferred the knowledge to can function without you. That is what redundant means. What you are trusting is that you have proven yourself to be good at problem solving and you will be given a new challenge. But that is the problem. You need to be given the new challenge. The decision isn't yours. If instead you don't transfer the knowledge but build yourself into a position where you are irreplaceable, your negotiating position is golden. Clearly this is dysfunctional.

Management and shareholders are normally very aware of this. They avoid key individual risk. If the company has a star employee or even a single client, the rug can be pulled at any moment. Strategically, they will be building up other people with the skills to replace anyone. That idea sucks. We like the idea that we aren't replaceable. That we are unique snowflakes. That we will be missed. But for things to function well, you can't place too much reliance on anything. Seems cold, but a degree of detachment does allow us (as a group) to constantly be solving new problems rather than being defined by old problems.

The big problem is the asymmetry between the business and the employee. A lot of people don't think about key employer risk. Or key job risk. They don't build a buffer that could get them through a rough patch where they need to retrain. A portfolio of ten businesses would be considered very focused. Unless its your business, a portfolio of less than that is more of a bet than an investment. Yet most of us have one job. Most of us work for one company. That is fine. Until it's not. It is a much bigger deal for an individual when they get hired or fired than it is for the company. Our identity, our livelihood, our aspiration, our friendships are wrapped up in our jobs. That is too much risk.

Traditionally 'Labour movements' have fought for working conditions, job security, and fair remuneration. This is great, but this is like fighting for return without considering risk. It is fine when the nature of the problems that need solving aren't changing rapidly. Ideally you want a situation where the playing field is level. Neither the company nor the employee is irreplaceable.

Remember the rug.

Source: Turkish Rug
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