BUSINESS 2.0:

It's Time to Start Trusting the Workforce

With rights to privacy and participation eroding, many employees are heading for the exits. When that happens, everybody loses.

By Jeffrey Pfeffer, Business 2.0 Magazine columnist

(Business 2.0 Magazine) -- Count me as one of the few people in America who harbor no sympathy for the handful of wealthy directors in the Hewlett-Packard boardroom who were spied on, "pretexted," and subject to any of the other tricks that HP's investigative sleuths had up their sleeves.

It's not that I don't take privacy rights seriously - far from it.

It's just that had Tom Perkins or George Keyworth been subject to the same standards as all 150,000 employees at HP (Charts), there would be no need to call in the private eyes.

That's because, if they'd done any communicating while on the job or using company networks and equipment, devising a ruse to see who they had called or what Internet communications they'd had would have been superfluous.

According to a 2005 American Management Association survey of employers, 76 percent monitor workers' website connections and 55 percent retain and review e-mail messages. Since 2001 the portion of employers monitoring employee telephone use, which includes tracking the amount of time spent on the phone as well as the specific numbers called, has jumped from 9 percent to 51 percent. Testing workers for drug use has become routine.

In effect, employees now completely surrender their privacy if they want a paycheck.

I'm also with the minority when it comes to shareholder rights. Many advocates think shareholders should be able to do more than merely withhold their votes; they should be able to nominate slates of directors without going through the expense of a proxy fight, boot directors who don't get a majority, and more easily take other measures against management.

Don't get me wrong - I'm a big fan of democracy and transparency. But I don't see why everyone seems so obsessed with the rights of shareholders who, given average portfolio turnover, often don't own company shares for even a year, when we can be so cavalier about the rights of employees who have much more personal capital and economic well-being at stake.

It isn't just shareholders who become disenfranchised by company management - employees do too. But unlike capital, employees can't bail out quite so fast.

Maybe we ought to be more concerned about employee rights for their own sake - and because their lack ultimately hurts employers.

In 1970, Albert Hirschman wrote "Exit, Voice, and Loyalty," which has become an influential treatise on the consequences of customer and employee disaffection. Hirschman argued that when people are dissatisfied, they have a choice: complain and try to change things, or leave. Without rights and protections, workers won't stay for long. But give them the opportunity to make things better, aided by rights and protections to get their voices heard, and they're more likely to stay and become more loyal to their organizations. Hirschman found that voice, therefore, builds loyalty.

Moreover, when employees quit, problems become visible but solutions are slower to emerge. Voice brings problems to the surface more quickly, and when people can express why they're dissatisfied, diagnosis is easier. Therefore, Hirschman showed, voice is a more reliable way of managing. And effective voice depends on having the right to be heard and some protection against retaliation.

With fewer rights to privacy and participation, it's no surprise that employees are heading for the exits in droves.

Since 2004, turnover of executives, salespeople, and production employees has nearly doubled, while turnover of professional and technical personnel has jumped about 70 percent. All those workers take their skills and know-how with them.

So perhaps it makes sense for companies to rethink their approach to employee rights and align them more with those of investors and board members. That kind of attention and concern can only make everyone better off.

Business 2.0 columnist Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at Stanford University's Graduate School of Business. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.