New Employer-Employee Contract Replaces Loyalty and Job Security

IF the worst thing about corporate downsizing is losing one's job, the second worst may be keeping it.

Employees who survive round after round of job cuts often see themselves as overworked, insecure, and on the verge of burnout, downsizing experts say. Corporate America is slowly realizing the problem and moving to alleviate it. But in so doing, it is rewriting rules that have stood for at least half a century.

``That whole implied contract where you give me loyalty and I give you security - that's shattered,'' says Peter Berner, a managing director of Drake Beam Morin Inc., a human-resource consulting firm headquartered in New York.

``This may be as big a change as the Industrial Revolution,'' adds Carroll Stephens, a management professor at Virginia Tech in Blacksburg.

Some 40 to 45 percent of companies in the United States downsize in any given year, according to the American Management Association (AMA) in New York. Even in good times, companies are slimming down. Slightly more than half of the companies that downsized between July 1993 and June 1994 did so even though they did not anticipate a business downturn, the latest AMA survey found.

Careers were simpler two generations ago when Ralph Verdu went to work for United States Steel Corporation (today USX Corporation). ``I was working alongside men who were there 35, 40 years,'' he says. He says he expected to do the same.

That expectation held until the 1980s, when the bottom dropped out of the steel industry and US Steel began unprecedented layoffs. Corporate staffers called them ``Black Fridays.'' Employees would come in Friday mornings to find a notice on their desks telling them not to return on Monday. ``There was a lot of tension in the office, a lot of unhappy people,'' Mr. Verdu recalls. ``The people remaining had more work to do. Then they cut your salary.''

Verdu stuck it out until 1983, when he jumped at an early retirement offer. ``I felt that really my health was at stake. You'd get so tense it would actually hurt.''

Employees are reporting much stress. An important reason for that stress? Downsizing, says Juliet Schor, an economist at Harvard University in Cambridge, Mass.

When Northwestern National Life Insurance Company, based in Minneapolis, surveyed 1,300 employees, 40 percent said their job was very or extremely stressful. A third felt they would burn out on the job within a year. That 1992 survey, if taken today, would find as much or more of a problem, says the company's communications specialist, Arlene Wheaton.

Helping the fired

By the 1990s, companies have learned a thing or two about downsizing. They routinely help the workers they fire to find new employment. When it looked as if New York-based American Telephone & Telegraph would have to let Pat Quinn go last spring, the company stepped in with special help: a severance package and job placement.

As it turned out, Mrs. Quinn's position was saved because someone else volunteered to leave. ``I'm ecstatic at having a job,'' she says, and ``my boss was absolutely wonderful throughout.'' But ``you feel the pressure, so you work whatever hours you have to work to prove yourself.'' Instead of 45 hours a week on the job, Quinn says she now spends 50 to 60.

Companies are beginning to realize that helping laid-off workers isn't good enough. Attention should also be focused on the people who stay.

``There's some common misperceptions about change - that it happens quickly and that survivors are happy to have their job,'' says Jane Martin, vice president of total quality management at Kayser-Roth Corporation, the Greensboro, N.C., company that makes No-Nonsense pantyhose and other consumer products.

In fact, survivors often feel guilty that they kept their jobs while their friends did not, downsizing experts say. And they worry whether their jobs are safe. In the case of the workers at Kayser-Roth, which recently downsized, ``they really wanted to know where the company was going and how they were going to be a part of it,'' Ms. Martin says.

Then there's this nagging question of employee loyalty. Today, ``the most honest thing an organization can say to someone they're hiring is: We'll use you as long as we need your services,'' says Marie Raber, a social-work professor at Catholic University in Washington, D.C. Those words are hardly likely to inspire workers to give their all.

There are signs that a new employer-employee contract is emerging, downsizing experts say. Instead of loyalty, workers will offer their services. Instead of lifetime employment, companies will offer training and skills that will make workers more desirable to other employers. It's easiest to sell this idea to the newest job entrants, these experts say.

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