August 2005
Thirty years ago, one had to carve a path up the corporate ladder. Now, that is no longer considered the norm. Our generation wants to earn money in leading positions. Instead of developing a product for a large company in hopes of job security, we create products in startups and sell them to big corporations. At the very least, we want to have a choice.
Among other things, this shift has led to a rapid increase in economic inequality. However, in reality, these two examples are not as different as presented in economic statistics.
Economic statistics can be misleading because they ignore the significance of secure jobs. A comfortable job, from which one cannot be fired, comes at a cost; trading it for a second job is one of the most common forms of corruption. (A well-paid position that requires little effort) — is an effect, (or financial annuity — a general term describing the repayment schedule of a financial instrument, the disbursement of remuneration, or the payment of both principal and interest on it). However, sinecures do not appear in economic statistics. If they did, it would be clear that in practice socialist countries exhibit non-trivial inequality of wealth, as they typically have a powerful class of bureaucrats who are paid mainly for seniority and can never be fired.
In the meantime, not the sinecure but the position on the corporate ladder was truly valuable, as large companies sought not to fire people and promoted them primarily based on tenure. The position on the corporate ladder held significance akin to 'goodwill', which is indeed quite often used as a real element in the valuation of companies. This meant that one could expect a high-paying job in the future.
One of the main reasons for the breakdown of the career ladder is the trend of mergers and acquisitions that began in the 1980s. Why spend your time on a ladder that could disappear before you reach the top?
Not surprisingly, the corporate ladder became one of the reasons early corporate raiding was so successful. Not only does economic data disregard the value of secure jobs, but corporate balance sheets do as well. The reason splitting companies and selling them off in pieces was profitable in the 1980s lies in the fact that they barely acknowledged their implied debt to employees who had done good work and were waiting for their reward in the form of high-paying positions when their time came. In the film Wall Street, Gordon Gekko mocks companies overloaded with vice presidents. However, the company may not be as corrupt as it seems; these comfortable vice-presidential positions were likely payment for work done in the past.
I prefer the new model. On one hand, treating positions as rewards seems like a bad idea. Many good engineers have become poor managers this way. The old system implied that people had to face much more corporate politics to protect the efforts they had put into their position on the corporate ladder.
A significant downside of the new system is that it involves greater risk. If you're developing ideas in a startup rather than in a large company, any number of random factors can sink you before you can finish. But perhaps the older generation will laugh at me when I say that the way we all execute more risky projects. After all, projects within large companies were constantly canceled due to top-down decisions. The entire industry my father worked in (breeding reactors) disappeared in this manner.
One way or another, the very idea of the corporate ladder has probably vanished forever. The new model seems more liquid and efficient. But financially, it's not as big of a change as one might think. Our fathers weren’t that foolish.
Source: habr.com
