I have long been fascinated by Joseph Schumpeter's portrayal of capitalism as a "perennial gale of creative destruction." First used in 1942, the German economist's phrase described the inevitable and necessary process of old industries dying off to be replaced by newer ones. "Creative destruction" is a wonderful juxtaposition of images and a powerful reminder that economic growth creates both winners and losers. (A second reason for my long interest is that my father was a student of Schumpeter's in the 1920s.)
At times like these, however, it's hard to casually accept that what we're going through is the inevitable "creative destruction" of economic change, because the destruction of so many jobs almost completely overshadows whatever creativity may be at work in an American economy struggling to get up off its knees. Unemployment is still 9.7 percent, millions more people are now out of work for longer periods or have given up looking altogether. Just today, the Bureau of Labor Statistics announced that real average earnings are still falling for most workers.
That's one important reason why a panel of economists at the National Bureau of Economic Research announced on Monday that it's "premature" to conclude that this horrible recession is over.
I'm hardly in a position to question Joseph Schumpeter or economists at the NBER about whether a growing economy is fueled by "creative destruction." I am convinced, however, that because Schumpeter's phrase and its many modern offspring such as "disruptive technological change" have become common in everyday business parlance, they have nurtured a broad perception among CEOs, their senior managers and management experts that the loss of so many jobs in tough economic times is largely unavoidable and perhaps, even needed to build a better tomorrow. Over the past two years, we've heard so many announcements of huge layoffs justified by the excuse that "we had no option." But what exactly is creative about a layoff?
Consider the burgeoning field of writing and management consulting extolling the competitive advantages of "enlightened employment" practices. You know what I mean .. the outpouring of books which explain how to engage employees, uncover their core competencies and develop camaraderie and teamwork ... the annual surveys which compare employers on the basis of synergetic leadership and client-centered learning practices.
It's all in pursuit of a perfectly admirable goal, to answer the question - "what do you think constitutes a good job?" However, I am constantly surprised that few of these books or surveys focus on an equally important question for employees - "how long will my job last?"
For the vast majority of working Americans, especially in these hard times, a steady job is incredibly important because it determines what kind of future they and their families will enjoy. Good would be nice, no question, but long-lasting is what makes the real difference to most Americans. Lose a "good job" to a layoff and the odds are that you will never again in your working life earn as much as you once did. Yet we consistently downplay the importance of job stability to employees in most discussions of the modern workplace.
Take Daniel Pink's fascinating new book Drive. It's a journey through research in psychology and economics about what motivates us - as human beings and employees - to do our best. And guess what, it's generally not money. According to Pink, it's really about the "three elements of true motivation in the twenty-first century - autonomy, mastery and purpose." He describes how extrinsic motivators (such as financial rewards for good work) have been proven to be far less effective in a modern economy than the intrinsic motivators generated by feeling in control of your work, work that has real meaning to society. Who wouldn't feel motivated in a job where you felt those emotions every day?
But there is little in Pink's book - or in most of the current crop of enlightened workplace guides and surveys - about the equally powerful motivation to do well which comes from knowing that if you work hard and smart, your will always have a job. Why do we think stability doesn't matter to employees? Is it because, sadly, there are so few models of successful modern companies which thrive in part because of, not in spite of, offering guarantees of steady work? (I wrote SPARK, my book about Lincoln Electric's guaranteed employment promise, to highlight one such successful firm.)
Back in the 1990s, when huge layoffs were also common, "employability" was hot in business circles. It meant that although management couldn't guarantee steady work in an increasingly competitive global economy, it would guarantee to keep employees so well trained that when they were laid off - an assumed certainty - they would quickly find other jobs. This bit of workplace realpolitik was seriously touted as a way to motivate employees to work hard and creatively for an employer they knew could let them go at any moment.
There are economic arguments to be made that too much workplace stability can be stultifying, deadening the urge to innovate. Some students of Kodak's decline have argued that the company's tradition of jobs-for-life helped blind it to the threat posed by the birth of digital photography. Point taken.
Focusing on personal autonomy, open communication and respect constitutes good management practice, without question. It's perhaps even more essential in an economy which increasingly must rely on the individual creative powers of every worker. But an equally powerful motivator derives from knowing that your hard work today comes with a guarantee that you can do it again tomorrow, next week and next year.
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