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The 47 Percent and You

Romney's recent remarks reflect a version of the deal that is outdated and doomed.

September 18, 2012
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Related Topics: Top Stories - Frontpage, Employee Engagement, Motivating Employees, Compensation, Staffing Management, Talent Management, Workplace Culture
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Let's leave aside for a moment whether Mitt Romney just sank his campaign by calling 47 percent of Americans moochers. There's a workforce angle in his remarks, related to the employment "deal." It boils down to this: Romney's remarks reflect a version of the deal that is outdated and doomed.

As you've probably heard by now, Romney made striking comments about Obama supporters that were secretly recorded at a fundraiser earlier this year. The Liberal Web site Mother Jones published the video and transcripts from it. The crucial passages:

"There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax…[M]y job is is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives."

What does this have to do with the employment deal? Most of the 47 percent of people who pay no income tax are people who nonetheless pay payroll taxes. In other words, they are workers, who contribute their share to Social Security and Medicare. Employees at lower wage rates who may qualify for earned income credits or child tax credits.

In effect, Romney reveals contempt for these folks. For people that often are the ones delivering the company's customer experience as clerks or servers or working as support staff.

Implied is a view of a company where employees are costs to be minimized rather than assets to be valued and developed. It is a management mindset that reigned in the 1980s and 1990s. The corporate raider ethos, eager to lay off employees in the pursuit of quick profits. In fact, there's evidence Romney embraced or practiced this philosophy as head of Bain Capital.

An employment deal that offers employees little in the way of security and treats them as necessary evils may have led to higher bottom lines for a while. It also may have served as a correction to the overly paternalistic compact around work in the 1950s, 60s and 70s: the one that saw companies give nearly guaranteed employment for life in exchange for employee loyalty.

But companies can no longer be dismissive about their employees. Research shows that layoffs generally are not a strategy for success, that companies that are better to workers and to their stakeholders overall outperform peers in the stock market. Consumers increasingly want to do business with kind companies. And this just in: 75 percent of Americans would not take a job with a company that had a bad reputation, even if they were unemployed.

Romney may not realize it, but reciprocity and interdependence are on the rise. What's needed now is an employment deal that blends the performance mindset of the 1980s, 1990s and 2000s with the protective attitude toward workers found in the post-WWII period. Companies that have struck such a balance include Ultimate Software, The Container Store, FedEx and Google.

Romney's comment about the 47 percent miscasts Americans and American workers. As an Obama supporter I took it personally—a rare thing as a reporter covering public affairs for more than 15 years. And I suspect that other Americans of varying political stripes will not forgive him come November 6.

Whatever the outcome of the election, though, Romney's remarks imply a variety of the employment deal that is dated and likely a dangerous strategy. Executives, owners and managers should be wary of it.

Ed Frauenheim is senior editor at Workforce. Comment below or email efrauenheim@workforce.com.

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