The Paradigm Shift in Modern Corporations
Compared to the corporations that existed in the 20th century, the corporations today are very different. A paradigm shift was truly experienced in the management and handling of labor relations. In the 20th century, the balance of power stood between management and labor but less on shareholders. Employees were highly regarded as companies adopted efforts to take good care of employees. They also gave them long term employment with good benefits, including retirement benefits. Davis (2015) is comprehensive and exhaustive in showing how employee and stakeholder management in the 20th century shifted to shareholder management in the 21st century.
However, changes have emerged lately as the focus shifted from the employees to creating value for the shareholders. The shareholders look for the maximum possible return on their investment. This translates to the necessity of reducing costs. The advent of the internet further helped to grow this agenda. The availability of the internet made it easy for corporations to outsource various core company functions. This helped them in minimizing salary expenses. Instead of all employees working at the facilities, smaller teams manage the network of outsourced services. In other words, having a large number of employees was viewed as a mere expense.
This also created a shift in the labor market as job security became more and more elusive. Focus shifted from reliance on a single employer and people became more comfort when moving from one job to another. This sought to guarantee a steady flow of income. Things have further changed today and the focus is no longer on an ongoing job but rather on the completion of a task. Two parties get into agreement for a certain task to be completed. Payments are made after the task is completed and the engagement terminated. The engagement may be entered into afresh in the future in the event that the task is required again. A good example of a business using this model is Uber. Currently, people are more accommodating models that support labor input when demand arises. Therefore, focus their efforts on activities whose demand is rewarding.
Davis, Jerry. Capital Markets and Job Creation in the 21st Century. Center for Public Management