“All hands, brace for impact!” That is what Captain Picard of the USS Enterprise would cry out upon an incoming torpedo that he couldn’t dodge. Faced with a similar situation, what would CEO of Acme Capital Pte Ltd, Mr Rob Ruby would say? I’ll bet it will be along the lines of “Times are tough but the future is promising” while behind the scenes he’ll be throwing people out of the airlock “to reduce payload and improve maneuverability”.
Now you might be thinking, what is the relevance of this hypothetical situation involving fictitious people with your life? For one, the world’s economy is passing through a metaphorical asteroid belt and we’ve seen some vessels that took one too many hits and went under – the likes of Bear Stearns and Lehman Brothers. Personally a few of my colleagues got the airlock treatment and I can’t be too confident myself. Since most of us aren’t working inside an expeditionary spaceship lead by a wise captain like Mr. Picard, the rest of this article will be about the starkly difference between Captain Picard and Mr. Ruby and what us mere mortals can do should our vessel lies within a collision course with an asteroid and you only have Mr. Ruby as captain.
First of all, USS Enterprise is an expedition starship which goal is to obtain knowledge for the betterment of its crew and entire humanity. The primary shareholders of the ship are the crew themselves and thus the captain serves to protect the crew along with the ship. At perilous times, he’ll be the last person to abandon the ship after all crewmembers have safely evacuated.
On the other hand, Acme Capital Pte Ltd is more like a Ferengi trade vessel which seeks the most margin at just about any expense. A Ferengi captain serves primarily the checkbooks of the ship’s benefactors even at the expense of the crew – as worker exploitation is viewed as benevolence in Ferengi culture. When times go bad, the cargo will take precedence over the crew. Sadly, often the same goes in real life.
Thus a captain’s role is to lead the crew and protect the ship with its contents whereas the CEO’s role is to protect and grow shareholder value. That is, in an ideal world. There is always the so-called “principal-agent problem” that happens whenever someone hires someone else to do the former’s bidding. In many cases the CEO will protect his own interests first before looking after shareholder value. This flaw in capitalism theory is even admitted by Alan Greenspan in his October 23 (2008) congressional testimony  in which he acknowledged that financial institutions didn’t protect shareholders and investments as well as expected. I guess the same issue may as well plague starship captains, if Captain Picard weren’t an idealized Hollywood character.
A fairly recent example is with Yahoo’s former-to-be CEO, Jerry Yang. Yahoo is already in heavy fire from Google and began losing it’s competitive edge since Google starts becoming more than a search engine company . Microsoft on the other hand is looking to enter the Internet-advertising business and a few times offered to buy Yahoo at significantly above the market value . Mr Yang rejected and said it was undervalued in a very uplifting e-mail to employees in February 2008 . Yet in the same time frame there was a plan for some retrenchments  and in October the same year, the company shed 10% of its workforce .
What was Mr Yang’s motivation? We can only guess as the depth of the ocean may be measured but the depth of someone’s heart is unfathomable. My opinion is that he simply doesn’t like to take orders from Steve Ballmer, CEO of Microsoft. When your net worth is already greater than, say for example, US$ 1 billion, money probably won’t be a high priority for you.
Similar stories of over-optimistic leaders at the expense of foot soldiers unfolded at Lehman and AIG. Richard S. Fuld Jr, former CEO of Lehman Brothers, was under questioning why he painted a rosy picture of the company’s future yet it was deeply exposed to sub-prime mortgages . AIG’s chief executive demanded a $5 million bonus and a $15 million golden parachute award in March 2008 and we all know that the government had to bail out the company for $85 billion with taxpayer’s money later in the year .
One clever tactic of dampening the news and financial impact of layoffs is by hiring “temporary full-time workers”. That is hiring a full-time employee without full-time benefits and the company can get rid of them without needing to tell anyone. The US Securities and Exchange Commission requires changes in permanent employee to be reported, but not so for temporary employees – even when the temporary employee in question have been with the company for several years. Furthermore in many cases letting go permanent employees require giving some sort of severance compensation (as per government regulation) whereas the same doesn’t normally apply to those classified as “temporary workers”. Among others, Google did this and recently laid off almost a third of its workers without much coverage since most of them are “temporary employees” . This relatively popular technique was also recently used by BMW  and Sony .
So facing this harsh reality, what should we do? There are three advises that are actually pretty old but might worth regurgitating.
- Be skeptical. Remember that it is in the CEO’s interest that everyone under him works at 110% capacity with zero downtime. Thus he’ll do just about anything to ensure that, including painting pretty false pictures and saying half-thruths. Therefore, try not to be too gullible. Imagine yourself as manager and owner of You, Inc and your day job is just another client that you happen to be serving right now. You wouldn’t want to give out the store for just this one client who might abandon you for another vendor, would you? Remember to take care of your own interests first before taking care of Mr Ruby’s interest as he is also doing the exact same thing.
- Diversify. A blogger once wrote, “It is better to have fifty people paying you one dollar a month than one guy paying you fifty dollars a month. If out of a whim that guy decides to stop paying you, you’ll lose all your income whereas in the latter case you’ll still have $49.” Obviously administrative issues and overheads makes this advice impractical to be implemented in its strictest sense, but the blogger has a point there. Large companies doesn’t value worker loyalty as much now as they were before – ever since IBM, a company that was known for it’s lifetime employment values, began laying off people back in the early 90s. Keep in mind that if you don’t own a voting share in the company that you’re working in then there is nothing to stop it from viewing you as an expendable resource. Because of this we’ll need to diversify, that is have alternate sources of income. Have a second job that you can do in your spare time or a hobby that makes some money. Even better if the alternate income may potentially be just as profitable as your full-time job should you decide to kick it in high gear. Passive income will be best, unfortunately the current macroeconomic condition is keeping financial instruments from being a viable option for the short term. But do invest if you have some spare cash lying around – just choose your investments wisely.
- Have a fallback plan. Management has fancy words for this, including “disaster recovery” and “business continuity management”. For corporate pawns this simply mean to have emergency funds ready in case they lose their day job. This also mean keeping your leverages in check so that you don’t have to declare bankruptcy and lose your home and your shirt in case you got sacked. In normal times this emergency funds should be at least about three months’ worth of living costs, in which case you should be able to secure another primary source of income after that. But when there is a serious oversupply in the job market like now, that amount may be far greater.
One of my idols that implements all these advises successfully is Scott Adams, author of the Dilbert comic series . A minor celebrity often invited to various talks and speeches, he developed Dilbert for six years “on-the-side” while he was working for Pacific Bell. Even after the success of Dilbert, he continues diversifying and reaching further beyond Dilbert-related works (including having vegetarian food businesses). Those who read his works and blog should know how skeptical he is – often to the extent of being satirical.
As for myself, currently I develop and market software for the Apple iPhone and iPod touch “on the side”. The money isn’t great (yet) and currently not a viable replacement for my day job, but it’s still better than not diversifying. Furthermore I personally know a few people who have side gigs. A colleague of my girlfriend has a band and available for hire in weekend events such as weddings and the like. A more senior UK colleague of mine co-owns and operates an Indian restaurant in London apart from his day job as a Development Lead. (Shameless plug: iPhone and iPod touch users, please buy my products at http://basilsalad.com – free copies available for reviewers).
So there you have it: the difference between Captain Picard and Mr Ruby the CEO and what do about it. This topic may be familiar and even old story for Generation X and Generation Y individuals, but to my surprise this is a foreign idea to a lot of my fellow worker bees. Then again, it could be just a non-conformer’s rants and raves. But I do hope this is useful for you and got you thinking.
- Bloomberg. Greenspan Concedes to `Flaw’ in His Market Ideology (Update2). 23-Oct-2008. Retrieved on 28-Dec-2008.
- Microsoft. Microsoft Proposes Acquisition of Yahoo! for $31 per Share. 1-Feb-2008. Retrieved on 28-Dec-2008.
- CNET. Yang’s e-mail to staff on rejecting Microsoft. 11-Feb-2008. Retrieved on 28-Dec-2008.
- LA Times. Google, Yahoo Face Off Over Ads. 24-Jan-2004. Retrieved on 28-Dec-2008.
- LA Times. Yahoo may lay off hundreds. 22-Jan-2008. Retrieved on 28-Dec-2008.
- CNET. Yahoo profit drops; at least 1,430 to lose jobs. 21-Oct-2008. Retrieved on 28-Dec-2008.
- NY Times. The Road to Lehman’s Failure Was Littered With Lost Chances. 5-Oct-2008. Retrieved on 28-Dec-2008.
- Boston.com. Cuomo calls for end to AIG’s ‘party’. 16-Oct-2008. Retrieved on 28-Dec-2008.
- Webguild. Google Layoffs – 10,000 Workers Affected. 23-Nov-2008. Retrieved on 28-Dec-2008.
- Spiegel. Despite High Profits, BMW Cuts 8,100 Jobs. 27-Feb-2008. Retrieved on 28-Dec-2008.
- CNET. Sony to lay off 8,000 full-timers, 8,000 others. 9-Dec-2008. Retrieved on 28-Dec-2008.
- Wikipedia. Scott Adams. 7-Dec-2008. Retrieved on 28-Dec-2008.
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