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Corporate world has its free agents

As in baseball, so in the workplace

Financial Post
Wednesday, September 20, 2006
Mark Surette

The professional baseball world changed dramatically in 1975 to free agency (allowing a player to move from one team to another after a single season). That change was important as it gave the players more power than the teams or the owners — especially talented players.

Today, corporate Canada faces an interesting dilemma: How to deal with a shrinking pool of talent in an ever-increasing marketplace? The War for Talent, as McKinsey dubbed it in the late 1990s, is rather similar to what happened in baseball.

For people who worked in the corporate or public sectors before 1980, things were predictable. Most joined an organization after completing some schooling and gave the bulk of their working life to that company, or maybe two companies. These organizations determined their pay grade, vacation allotment, incentive plan, pension, hours of work, location and almost everything they did during the working years between the ages of 20 and 65. In return, employees were expected to be timely, do good work and show appreciation for all the good things the organization provided.

If employees were transferred, they were expected to embrace it gratefully. Any unilateral change in a benefit or pay plan was to be silently accepted. Any training offered was to be cherished. Simply put, employees belonged to the organization and the organization was expected to look after them, just like being a member of a baseball team in the early days.

At age 65, employees retired, drew their pension and began to enjoy the golden years of post-employment. Then the recession of the early 1980s hit — with downsizing, restructuring and outplacement. Employees were unprepared for this: How could 20 years of loyal service be dismissed so quickly, with a brief meeting and a severance cheque? What about retirement? What about being looked after?

After the recession came explosive economic growth, which spawned a merger and acquisition frenzy. Long-established firms were swallowed up by highly leveraged opportunists. Financial engineering took centre stage and synergies were aggressively pursued after merger. Streams of forty- and fiftysomethings headed for the doors. Dreams were shattered, families disrupted, some even torn apart. All in the name of profit.

In the early ’90s recession, downsizing became an established part of our culture. Businesses were created to facilitate firing people. Outplacement became part of the vernacular. Firing people became part of the managerial toolkits. Meanwhile, employees became less loyal and job changing became an accepted practice.

When I started in the recruiting business in the early 1980s, length of service was considered a significant asset. If someone had stayed with a company for many years, it showed loyalty, commitment and stability. By the late ’90s, employers were looking for individuals who had experienced multiple jobs. It was a sign of contemporary thinking, the ability to manage change and adapt, to think outside the box. Long-service employees were viewed less positively as they would be harder to retrain. Long-service employees who faced being fired found an unwelcoming marketplace because they were considered too ingrained with their organization’s manner of doing things.

Yet the one constant for everyone, but not recognized at the time, was an oversupply of talented workers. Most companies had their choice of employees. So without much thought or concern, organizations made decisions that reinforced the wariness of the emerging workforce: Organizations were not to be trusted; they expected commitment but gave little in return. Companies believed if someone left, there would be many others lining up for the job.

“In less than a generation we saw loyalty turn away from the firm toward the individual. And something else happened: The emerging workforce was learning skills their managers knew nothing about. All of a sudden they knew much more than their bosses, and yet the bosses continued to manage them in a style learned in the 1960s and ’70s.

Furthermore, for the first time in decades, there was more work than individuals to do the work. Employees had lots of choices: They could go to Toronto, New York or Paris, or they could stay home and work remotely. And corporate Canada was not ready. So a recipe for free agency was derived: a disenfranchised emerging workforce, proprietary skills that were very saleable, lots of creative options for work and a generation that wanted to control their own time and destiny.

These free agents seek interesting and challenging work; a flexible, enjoyable, compassionate work environment; competitive and comprehensive compensation and a great location.

The concept of a sports-like free agency in corporate Canada will grow enormously in the next decade, and companies better wake up and re-orient its recruiting and retention processes to deal with it.

Major league baseball players Andy Messersmith and Dave McNally challenged the reserve clause and brought about free agency in professional sports. Who would have guessed Canadian workers would have followed their lead.