Tuesday, January 13, 2009

Our "job creation" has depended way too much on hucksterism

I remember back in the 1990s there was talk about starting to pay people for “piecework” in lieu of layoffs. I recall news reports about a company in Cleveland, Lincoln Electric, that had avoided layoffs this way during the “first Bush” recession around 1991.

We indeed had a time where we promoted an ideology of pushing the responsibility for “job security” back on the worker. During that time, it got easier for companies to get rid of health coverage and other fringe benefits. The competition of low cost labor from overseas was part of the problem.

Yes, during these economic times now, it seems like some of this came home to roost.

But there’s one trend that’s particularly troubling. That is, pay people with sales commissions only. It’s easier to budget jobs like this, obviously, and pretend that you have “created jobs”.

There are many career fields, varying from manufacturer’s representative to life insurance agent where compensation based mostly on commissions (sometimes amplified by “training bonus”) is well established and accepted.

The problem is that, when practiced too much, it encourages a culture of hucksterism and social manipulation rather than real innovation and productivity and “real wealth” creation. The psychology behind “sales culture” tends to encourage the development of bubbles (and “herd mentality”), because people are pressured to get short term sales results and close deals. Yet, social manipulation in itself is not such a bad thing. People need leadership and supervision. The question is who should to the manipulating and how much should be done.

People also need others to explain and teach them things, like how complex financial products work, or how set up a home IT network. The problem is that we have, perhaps for understandable reasons, rewarded the aggressive social contacting, "lead development" and sales closure rather than real customer service and teaching. It’s amazing to me that the practice has continued so well, during this bubble of bubbles, while the public as a whole wants more privacy, less intrusion, and more control of personal choices.

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