Search This Blog

Sunday, 12 June 2016

The detached society: why personnel is more and more turning from an asset into 'a drag' for companies and why it is perfectly normal nowadays to run a multi billion euro company without having blue collar workers!

It was a small snippet in an in every respect quite interesting article in ‘Het Financieele Dagblad’ about the new distribution centre of online retail giant in The Netherlands, that really caught my attention while reading.

In a few, well-chosen words, this snippet painted a tell-tale description of the situation on the Dutch and international labour market nowadays: symbolizes a rapidly changing economy.Yet, the construction process of the new distribution centre also shows that companies themselves do less and less. employees never touch a parcel with their own hands. When the distribution centre starts its operation next year, employees of Docdata will put the ordered product in boxes. And parcel delivery service PostNL will bring the products to the customer.

Also Van Wijnen, the main contractor responsible for the construction of the distribution centre, has hardly any of their own people walking around on the terrain. The company guides 50 subcontractors and suppliers, which are all specialized in one particular part of the building process. Project manager Pieter Lammé at Van Wijnen is one of the few people who has a clear view on the big picture during the construction activities. He does that in close cooperation with project manager Joost Poelgeest of

“When I started at Van Wijnen, 38 years ago, we still had masons, concrete workers, painters, crane operators and installers on our payroll”, according to Lammé. ‘Nowadays, we outsource all this specialist labour to other companies and freelancers. We are only directing the project’.

This is really shocking, when you let this text sink in to you: 
  • The largest online retail company in The Netherlands does not have any of its own staff at all involved in what arguably belongs to its key processes: the collection, distribution and transport of sold merchandise?!
    •  And probably neither in its most important process: the arrangement and completion of online sales!
  • One of the largest construction companies in The Netherlands only acts as a director in a feature film, who guides a bunch of leading actors and extras into making a notable performance, but does not feel ultimately involved in the quality of the final result?! 

This means that these huge, multi-million dollar companies are actually liable for the quality of their projects, products and services, but seem not to be responsible for it at all?! 

It is almost like the people of and Van Wijnen are ‘accidental bystanders' in their own business processes: 

‘They just happen to be there when events happen and they happen to be liable for the proper execution of activities. Nevertheless, they cannot be blamed when things go awry, as their suppliers and independently working staff are actually in the lead during the execution of activities. Not them!’

Sometimes it is nearly impossible to explain 21st century businesses to say..., one’s grandfather or great grandfather. Especially, when this person was firmly based in the 20th century.

Would these two companies just be outliers in their own industry with a particularly “innovative” way of running their business, I would sigh and leave it to be. However, these companies are probably front-runners – the “best-of-breed” – who will soon be followed by their less smart competitors.

Just think about this, when companies like or Van Wijnen hardly maintain ‘blue collar’ personnel anymore while carrying out their main business, why would other large online and brick & mortar retail store chains, like Zalando, Albert Heijn, C&A, WalMart, Tesco, Lidl and Aldi do that? 

And why would other Dutch construction companies, like BAM, DuraVermeer or BallastNedam, maintain THEIR blue collar staff, when Van Wijnen shows them that they don’t need fixed staff anymore, except for a few-odd controllers, calculators, supervisors, project managers and foremen. 

This way, running a construction company is turning into running a trading and brokerage company; something that one can do, without ever having experience with bricks and mortar, concrete and steel at all. One just needs to bring together the principal with the chosen architecture, suppliers, structural engineers, freelance building professionals and executive engineers, as well as building materials and other supplies. That's all!

And what about the staff themselves, working for these companies? What will be their part in this deal?

Even though the people in the aforementioned warehouse will work ON BEHALF OF, they don’t work AT And the worrisome part is that this staff probably also does not work at Docdata and PostNL either [the two other companies mentioned in the article – EL]...

Instead, these workers are perhaps (Dutch) people, who are hired via a temporary employment agency to escape from unemployment and boredome or to earn some income as a student. Or they might work at these companies, as ‘not-so-freelancers’ with piece-wages or a zero-hour contract, in order to collect a decent income.

Or perhaps they are foreign workers from Eastern Europe or the Far East. People, who are deployed through (sometimes shady) ‘temporary labour organizations’, whilst hoping for a better future for them and their families.

All these workers have in common that they are only useful as long as they are productive and until the moment that they can be safely replaced by robots, when these have become cheaper, more efficient, more reliable and/or quicker than manual labour.

And the people and companies working on the realization of this massive warehouse on behalf of Van Wijnen?

These are probably either larger subcontractors that let THEIR part of the job do by a bunch of ‘hired guns’ or they are freelancers themselves with a one-man business, being specialized in “something, necessary in the process somewhere”, but not useful anywhere else: working as the ultimate, one-trick pony’s!

What Van Wijnen and ultimately show is that personnel has turned from an ‘asset’ for companies into a ‘drag’, during the last decade: a burden that these companies can go easily short on, while still successfully running their multi billion dollar business.

Instead of having personnel of their own and on their own payroll, large companies like Van Wijnen and can nowadays accomplish the fulfilment of a certain task, service or project, by using a small group of subcontractors and one-man businesses. 

Or they can hire their staff via large, specialized service providers (like DocData and PostNL in the case of, ‘staff brokers’ and temporary labour organizations. In the end, this all can be topped off with an ultimately flexible shell existing of freelancers and zero-hour contract workers, who receive no warranties and a one-month time horizon for their labour efforts.

And probably everything will be secured and warranted with ironclad contracts and ‘service level agreements’ between Van Wijnen and at one side and their suppliers at the other side. Contracts and service level agreements, in which the demanded achievements and performance levels are described ‘to a T’; probably with draconian penalties for errors, general underperformance and/or workers dropping out or not showing up at all.

In the world of these companies, it seems like workers are nothing more than sustainable means of production that are deployed just for what they can do and not for who they are and what they bring with them, like brains, passion and dedication. Instead of intangible assets on the asset side of the balance sheet, such workers have turned into simple costs and expenses on the P&L table: Labour-as-a-Service!

If people from Poland don’t work hard enough anymore to meet our performance goals, we will settle for Ukrainians or Romanians. Labour circumstances? Fair remuneration? Chances for a career, trainings and personal growth and development for these workers?! It is not our deal anymore. We pay our suppliers a fair price per item and what they pay to or do with their workers, is totally not our problem!”

And so it could turn out in this situation that the only people caring for their personnel, is the personnel itself: everybody is the owner of his own business, aka himself. All the others are none of his business, as they all need to take care of themselves.

This means: 
  • There is no other responsibility for the health and wellbeing of workers for hiring companies than the absolute minimum that is required by law. This is in practice the bare minimum for which the principal company or ultimate employer is liable and not much more;
  • There is no shared past and no mutual future between companies and their staff, as such workers can come and go and don’t bring any legacy or future obligations with them;
  • There is no mutual solidarity between both parties:
    • The worker does not feel responsible for any other part of the work / project than the simple part for which he is directly responsible. When the whole project or service fails, and he is not to blame for that, he does not care;
    • The company does not feel responsible for the general well-being and future deployability of their workers, as they are only loosely connected for the time span of their contract.
  • There is no moral obligation for the ultimate employer to find better / other employment, when jobs, projects or services are finished, or when a particular job does not fit a certain worker anymore;
    •  Staff is hired for a certain job and when they can’t do that job satisfactorily anymore or when they are outperformed by others, they can simply be replaced.
    • It is not the company’s responsibility anymore to put the right people at the right place. The right people for a job might stay, while the wrong people are released from the job at will; 
  • And last, but not least: there is no burden or sacrifice at all in having their own personnel for these modern employers. Their workers are just a small figure on their P&L sheet and not a long term obligation / commitment of their company. 

I would like to call this situation in the business industry ‘the detached society’: a society in which interconnectedness, compassion, a shared past and future, as well as mutual responsibility between employers and workers are seen as ‘weaknesses, being bad for business’, instead of strenghts...

Such a detached society would make extremely successful and yet compassionate entrepreneurs like Frits Philips, Tomáš en Antonin Baťa, Freddy Heineken, Andrew Carnegie, George Eastman or Henry Ford feel ashamed. 

These were people who were all very focused and extremely innovative entrepreneurs, but yet had a profound feeling of responsibility for the health and physical/mental wellbeing of their personnel and for the society in which they operated, which they showed in many different areas and ways.

These entrepreneurs showed their compassion, by delivering to their workers and the societies in which they lived:
  • better and safer labour circumstances;
  • better housing and hygienic infrastructure ('Bata villages');
  • better healthcare, when this was yet far from fashionable;
  • better education and more chances for underprivileged people;
  • cultural and sportive entertainment and leisure activities; 

What would these great, visionary entrepreneurs think about this ‘outsourcing of responsibility, mutual care and interconnectedness’, that is currently going on in the 21st Century?

Would they endorse this development and go with this flow? Or would they veto this way of doing business, knowing that in the end this is ‘the road to entrepreneurial hell’, for reasons of being nihilistic, narcissistic, utterly selfish and utterly short-term focused.

You know what the answer is, don't you?!

At this seems to be the moral of this story: 
  • When companies only operate like trading houses and do not want to be responsible for anything else than the delivery of a certain service, product or project;
  • And when the only party feeling responsible for their staff is the staff itself,
this leads to a detachment within companies and (in the end) within society that can be hardly repaired anymore. 

As long as the owners of such companies are seen as financial winners and not as moral losers, the deterioration of working circumstances and the detachment between staff and employers will continue.

No comments:

Post a Comment