Why Everyone's Working So Hard

Why do today's corporate managers have their pedal to the metal 24/7? Here are five reasons, and they're not going away anytime soon

by Marshall Goldsmith

In the early 1980s I had the opportunity to work as a consultant in several of America's largest organizations. In those days I often thought that corporate managers and professionals were lazy. In most corporate headquarters buildings I could have shot a cannonball down the hall at 5 p.m. and not hit anyone! Professionals and managers were working 35 to 40 hours per week. They were taking four to five weeks of vacation during the course of the year. They enjoyed incredible job security, great benefits, lifetime health care, and guaranteed pensions.

Those days are gone! Today I am amazed at how hard corporate managers and professionals work. What happened?

Five factors have converged to create a new world for professionals:

1. Increased Differentiation in Compensation

Many studies and reports have highlighted the huge compensation increases of CEOs relative to the average salaries of the general population of employee.

As CEOs have enjoyed massive increases in pay, other C-level officers—the next level down—have also noticed large increases in compensation. This trend has continued throughout the organization, from vice-presidents to directors. While mid-managers and staff professionals have not had the relative increase in compensation enjoyed by executives, they have still been moving ahead at a much faster pace than the general population.

Recently, in a conversation with the CFO of a blue chip company, I observed an example of the impact of this increased compensation. One of his direct reports complained, "I didn't go to work in a major corporation to work this hard. If I had wanted to put in this many hours, I would have worked in a professional services firm." The CFO replied, "You are getting paid as much a partner in one of the top professional services firms. If you don't want to work like one, why don't you either take a demotion or leave?"

Higher salaries come with higher expectations. The bottom-line pressure from shareholders has only gone up. As top managers and professionals are being paid more money, they are subject to greater expectations. Managers expect their subordinate managers and professionals to earn their pay increases.

2. Decreased Job Security

In the early '80s I did a study of dismissals at IBM (IBM). While IBM would always fire employees for ethical violations, almost no one was fired because of poor performance. If you wore a white shirt, showed up, and met minimal expectations, you had a job for your entire career.

As IBM's corporate profits began to disappear, then-CEO John Akers faced increased pressure from stockholders to change the corporation. His hesitation to move away from IBM's full-employment practice was one of the factors that led to his eventual dismissal. IBM's lack of tough performance standards was not that unusual in the U.S from the 1960's to the 1980's. The same story could have been observed at AT&T (T), Eastman Kodak (EK), and many other huge companies during that era.

In today's competitive world, job security for managers and professionals seems a distant dream. Along with the carrot of increased rewards, managers, and professionals live with the stick of losing their jobs. Overall, the professional work ethic has increased in a world where the value of performing can bring greater rewards, while the cost of nonperformance can bring severe and immediate punishment.

There has also been a marked decline in midlevel work—a "hollowing-out" of the middle class. The lack of midlevel jobs has further increased the distance between society's economic "winners" and "losers."