Tuesday, June 23, 2009

A letter sent to the retirees of a large company ends with
[The company] reserves the right to change, amend, modify, suspend or terminate its employment practices, policies, employee benefit plans or programs at any time…

One can easily understand why this company includes such warnings in its employee communications. Over the years they have been sued many times.

But consider the message this sends to salaried employees: You can’t count on any future benefits from the company. Forget about all the enticements we offered you to join us. They aren’t worth the paper they’re printed on. It’s no wonder people graduating from college today often go into business for themselves. There’s no point working for someone else for 30 or 40 years if he fails to keep his promises.

Eventually this trend will take its toll on large companies. People involved in design and engineering are salaried, so they don’t have the protection of a union contract. The absence of any guarantees that would entice such people to stay on board long term will lead them to job hop or work as independent consultants. But design, engineering, software development and other technical functions need continuity, and continuity is lost when the work force is constantly shifting.

One solution might be for these people to unionize, but professionals are generally too independent to work under the constricts of a union, and experience has shown that most unions are not good for the employer, either. Another solution is 401(k) programs that don’t require employees to invest in their employer, and medical savings plans. In both these programs the money contributed to date is under the employee’s control – within the strictures of the laws governing such programs.

It’s clear that some solution is needed if our large companies intend to remain competitive and in business.

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