We're all in this together. Unless your Business Unit stinks...
SteveI'm sure you have heard something in the news about the current strike at Verizon Communications, notable for not only the sheer numbers of workers involved (about 45,000), the seemingly irrational timing of calling a stike in this economic climate, but also for the nature and nuances behind the dispute.
The striking Verizon workers represent and support Verizon's landline business, a business that according to the company is in decline. Whether it is due to more consumers choosing to simply forego a fixed home landline in this age of mobile telephony, or the simplicity and low cost of services like Skype, the facts seem to be clear that the landline business is not where growth and increased profitability for the company will lie.
Most of us these days when we think of Verizon, see it only as a wireless/mobile company, with a national presence, constant broadcast advertising, (Can you hear me now?), and retail locations popping up all over the nation. In fact my local Krispy Kreme establishment was closed recently and now has re-opened as a Verizon Wireless store. Sadly, the conveyor belt that used to carry the tasty donuts for their sugary glaze coating is gone as well.
But the 45,000 striking workers from the landline side of the business point to the overall growth and success of Verizon Communications (the consolidated landline and wireless sides), to argue against management's insistence on concessions and increased contributions to health care and retirement plans. Why should we, they argue, have to 'give back' when the organization overall is performing so well?
I don't really know enough about the details of the contracts and the proposals to come down on the side of either the striking workers or Verizon management as to the specifics of the dispute, but to me the interesting angle is the internal division at play here. While most of us have not been caught up in a strike like this one, I bet we have all been part of organizations with variations in performance (and contribution to profits and growth), across lines of business, regions, product lines - whatever.
Once the enterprise achieves a bit of scale there are bound to be some parts of the organization that simply perform better than others. And while sometimes individual contribution to the success of these better performing business units is recognized (unit specific bonuses or awards), often it really isn't singled out, particularly when for many organizations it can be difficult to fairly and accurately allocate shared corporate overhead costs to product lines or business units.
So while compensation might be tied to business unit success, things like benefit plans, retirement programs, PTO policies and the like are almost never variable inside and across competing business units within a larger organization. Whether or not you are a high-flying sales rep in a growing product line, or a administrative support person in a declining business, most companies treat you the same way with respect to benefits. After all we're all in this together, right?
The Verizon situation is certainly complicated by the fact that the declining landline business is unionized, and the growing and more exciting wireless business is not, but the larger issue that seems to position one side of the business against another is certainly fascinating.
I am sure we have all had different times in our careers when we looked at a business line in our organizations and thought - 'Man those guys are killing us'. But I doubt we ever as HR or Talent pros advocated for whacking their benefits or PTO because of it. Seems kind of a tough position to defend.
What's your take - should non-compensation related items vary inside organizations according to contribution to success?
Reader Comments (3)
While not exactly the same thing, there's a long history of professional services organizations, including some of the very largest, setting up separate legal entities, and not necessarily in lower cost economies, with quite different comp/benefits/facilities/everything in order to achieve a much lower price point for competing in certain markets or for certain types of business. And even the largest #EnSW price their products differently for different geographies/industries/market segments. There are always winning (i.e. more profitable) and losing lines of business/target markets/types of work and types of workers, and I think the day of one size fits all in comp/benefits/facilities/etc. are -- and should be -- behind us. But it's also important to recognize that legacy product revenues (again looking inside our own industry) often fund new product/new business development. Clear a topic worthy of more discussion.
Not the same thing. Verizon Wireless is not another "business unit" of the same company...it's not like accounting is doing worse than marketing. Verizon Wireless is a *separate company*. Despite the name, Verizon doesn't even fully control it--it is 49% owned by Vodafone, PLC of the UK. Why should Vodafone be punished because maybe a quarter of Verizon's employees object to contributing to health care like the rest of they company, and get to participate in one of the industry's best 401k plans instead of a pension that may not even be there when they retire. I have no sympathy for these spoiled union brats.
Naomi - Thanks for pointing out those professional services examples. No doubt there are some tricky waters to navigate for firms that are trying to build new lines of business but still need support and contribution from older more established businesses.
Dan - Thanks for the insight as to the structure. As I said, I had not really dug into the details to offer an opinion on the relative merits of each sides position in this labor dispute, but I did think it interesting to explore how different parts of the business were operating.