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December 2007 Newsletter

Free Agency in Corporate Canada
Mark J Surrette

The professional baseball world changed dramatically in 1975 in one of the most significant ways in its history. The change to Free Agency (allowing a player to move from one team to another after a single season) was important as it gave the players in baseball more power than the teams or the owners. Especially talented players.

Today Corporate Canada has an interesting dilemma on its hands. How to deal with a shrinking pool of talent in an ever increasing marketplace? The War for Talent, as McKinsey dubbed it in the late 90’s. But it is much more complex than that. Rather similar to what happened in baseball. Let me explain.

Reflect for a moment on the working lives of our parents and grandparents. For those that worked in the corporate or public sectors, the days prior to 1980 were quite predictable. You joined an organization after completing some schooling. You gave the bulk of your working life to one, maybe two organizations. These organizations determined your pay grade, your vacation allotment, your incentive plan, your pension, your hours of work, your location of work and almost everything you did during the working years of 20ish through 65. In return you were expected to be timely, do good work and show appreciation for all the good things the organization was providing.

If you were transferred, you were expected to embrace it gratefully. Any unilateral change in a benefit or pay plan was to be silently accepted. Any training offered was to be cherished. Simply put, you belonged to the organization and you expected them to look after you. Rather sounds like being a member of a baseball team in the early days.

At age 65 you retired from the organization, drew your pension and began to enjoy those golden years of post-employment.

Almost sounds like a story from a fairy tale.

Then the recession of the early 1980’s hit. With it came downsizing, restructuring, and outplacement. For those of us already in the workforce, we were unprepared for what was happening. How could 20 years of loyal service be dismissed so quickly, with a brief meeting and a severance cheque? What about retirement? What about being looked after? What about the future? Many of us saw our parents reeling from this body blow of termination.

Following the recession came explosive economic growth which spawned the merger and acquisition frenzy. Long established firms were being swallowed up by highly leveraged opportunists. Financial engineering took centre stage and synergies were aggressively pursued after merger. Streams of 40 and 50 somethings headed for the doors. Dreams were shattered for many people. Families were disrupted. Some even torn apart. All in the name of making more profit.

Next the early 90’s recession hit. Downsizing was an established part of our culture. Businesses were created to facilitate firing people. (I was one of those who advanced the cause and art of firings). Outplacement became part of our vernacular. Managers learned how to fire people and these skills became part of their managerial toolkits. Organizations had lost their luster as entities concerned for their employees well being. Employees started to become less loyal and job changing became a much more accepted practice.

When I first started in the recruiting business in the early 1980’s, length of service was considered a significant asset. If someone had stayed with a firm for many years, this showed loyalty, commitment and stability. By the late 90’s our clients were looking for individuals who had experienced multiple job changes. It was a sign of contemporary thinking, the ability to manage change and adapt, the ability to think outside of the box. Long service employees were viewed less positively as they would be harder to retrain. They were too ingrained with their organizations manner of doing things. So long service employees who faced being fired found an unwelcoming marketplace and a work environment that was forever changed.

All of these changes were brought about by organizations that were facing a dynamic and somewhat schizophrenic marketplace. Things were changing all around them and they needed to change in order to be competitive. Organizations believed they had to make the restructuring decisions, in order to survive. Employees needed to understand what was happening. In order to survive and be competitive, these decisions had to be taken.

However the one constant for all, but not recognized at the time, was the over supply of talented workers. With maybe the one exception of IT workers leading up to Y2K, companies had their choice of employees. It rarely dawned on firms that supply of workers might be an issue. So without overt thought or concern, organizations made decisions that reinforced the wariness the emerging workforce held. Organizations were not to be trusted. They expected commitment but gave little in return. They believed that if someone left, there would be many others lining up for the job. Just like it had been for years and years and years ….

But something happened. The less than appropriate treatment we saw many firms give our parents conditioned the emerging workforce to not trust organizations. The cavalier manner in which firms downsized despite record profits, caused individuals to look after themselves first. Over less than a generation, we saw loyalty turn away from the firm and towards the individual.

And something else happened. The emerging workforce was learning skills that their managers knew nothing about. All of a sudden we had employees who know much more than their bosses. In fact, their bosses knew nothing about what many of their employees did. But they still managed these newly minted workers in a style that was learned in the 60’s and 70’s.

And something else happened as well. There were not quite enough workers to go around. For the first time in decades there was more work than individuals to do the work. This meant employees had choices. And they had lots of choices. They could go to Toronto, New York or Paris. They could move to Alberta or Texas. They could simply stay home and work for a local firm. They could stay home and work remotely via the web. Many, many options appeared before them. And corporate Canada was not ready.

So a recipe for Free Agency was derived. A disenfranchised emerging workforce, proprietary skills that were very saleable, lots of creative options for work and a generation that wanted to control their own time and destiny.

This brings us to what we have today, the early stages of a highly mobile workforce that is able to sell their skills to the highest bidder. And many are willing to do this for short term assignments, be they 6 months, a year or 5 years. In fact, many do not want full time permanent employment at all.

So what are these Corporate Free Agents looking for? As far as we can tell the top four items they seek are interesting and challenging work; flexible, enjoyable, compassionate work environment; competitive and comprehensive compensation and a great location.

We believe that the concept of sports free agency in Corporate Canada will grow exponentially over the next decade. All the ingredients are present. Now Corporate Canada has to wake up to this reality and re-orient its recruiting and retention processes to deal effectively with this new dynamic. A heady task for many organizations that still treat their employees in a cavalier fashion.

So thank you Andy Messersmith and Dave McNally. As the two major baseball players who challenged the reserve clause which brought about free agency in professional sports, you have an entire generation of new workers applauding your courage and thanking you for showing them the way.

Batter up.

Based in Halifax, Mark Surrette is the President of Robertson Surrette Limited, a leading human resource consulting firm having national partnerships with KWA Partners and Ray & Berndtson.