Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.

Entitlement – Stability or Curse

The printing industry, the country, and even the free world are undergoing unprecedented challenges. The recent Print Outlook Conference 2003 attendees heard economists’ forecasts based upon the assumptions of no unusual terrorist activity or war intervention. These disclaimers left the industry supplier audience with the distinct impression that the experts don’t know what’s going to happen in light of the unpredictability of the volatile global environment.

There are isolated companies, in and outside of the printing industry that will survive this current upheaval and be positioned for extraordinary prosperity. Post analysis will no doubt show universal corporate customer sensitivity, creative marketing, embracing leading technologies, solid balance sheet with modest debt, and highly productive operations.

But there will be an intangible distinctiveness that bridges size, geography, market or product concentrations, and most probably even industries. And it has to do with corporate culture and more specifically values. Initially during hard times, when virtually every company is looking for ways to reduce costs while remaining competitive, labor expenses loom high on the priority hit list. If you or your department is in the crosshairs for elimination or reduction, your defensive reaction indicates that you are probably already too late in adjusting to reality. This defensive attitude is universally expressed as “I’ve been loyal, I’ve worked hard, I’ve done what you’ve asked, Aren’t my past contributions worth something now?” The sense of entitlement is a normal human reaction.

Entitlement is defined as the “right or claim for something.” The implication is that because of previous sacrifice(s) or good deed(s) the individual or organization deserves special consideration. The classic examples are “My firm has supplied you widgets for decades. How can you consider leaving us over a low ball price of only a nickel a unit?” And from the individual’s perspective, “I’ve worked here for twenty years. I deserve continued wage increases during my last eight years until I retire.”

Reality of the past fifteen years is that organizations offering the same services and individuals bringing the same skills as a decade earlier are obsolete in the marketplace of the millennium. This can be attributed to both technology advances and free enterprise. “Price, quality, or service – choose two of the three.” This has not been reality for most of the printing industry since the 1980s. The vendors of choice are offering all three plus continued service enhancements that clients perceive of value.

To remain competitive firms have invested in new technologies and in the prerequisite training of existing employees to keep their skills current. Return on investment has often not achieved expectation as the anticipated savings have either been passed on to employees as higher wages or to clients as “shared process savings.”

In recent few years many in-plant printers have considered outsourcing their operations. While labor costs have normally not been out of line, their much higher fringe benefits due both to length of service as well as more generous packages offered by larger corporate entities have made the total labor compensation expense approach the upper tiers relative to their private sector printer competitors. And yet the issue that makes many of these in-plants marginally competitive in the eyes of their corporate clients is that the in-plant offers one shift plus overtime while many other print sources offer faster turn around due to multiple shifts.

In several instances this service issue could be overcome if the existing staff would move to a flex shift manning during the few seasonal peak periods. For example, for colleges the three-week time period before each semester starts is often the most pronounced seasonal hump time. Instead of offering standard 8:30 to 4:30 coverage during this increased volume period, the shop would open at 7:00 a.m. and close at 8:00 p.m. One or more employees would work 7:00 a.m. to 3:00 p.m., while his counterpart would come in at noon and work till 8:00 p.m. No overtime would be paid though some shift differential may be appropriate.

Equipment utilization moves from eight to thirteen hours a day. Employees, who refuse to adjust their hours accordingly because historically they were paid overtime, are setting themselves up to be outsourced. This entitlement attitude could be self-destructive.

Training and learning is essential for every employee. While the company will hopefully provide access to as many educational resources as possible, personal educational initiative on every employee’s part is important. The printing industry has more than thirty trade press publications that are available free to subscribers. Employees should subscribe with the issues sent to their home address, not work address. Interesting articles clipped out with salient sections underlined for distribution to other fellow employees should be encouraged.

Many of the PIA regional affiliates have biennial trade shows with accompanying educational seminars. Employees should not be told to attend and expect to be paid if they attend over the weekend. The company may provide transportation, overnight accommodations, and meal expenses but overtime wages should not be expected.

A number of companies have decided to include all journeymen employees in a profit sharing pool rather than automatically giving inflationary wage increases. Some of these companies are continuing to pay the annual increases of their employee’s portion of medical coverage. Junior employees that are moving through normal apprenticeship training and review cycles continue to receive periodic increases and may not participate in the pool until reaching the journeyman status.

For this to be successful, management would need to share corporate financial results with employees on say a quarterly basis. The full profit and loss statement is not handed out as this is more information than many employees would need or are trained to understand. Similarly this might be damaging information if it got into competitors’ hands. Sharing financial ratios compared with the printing industry norm is often effective at highlighting strengths and weaknesses.

If management is not willing to share this basic information with their employees, why should they expect their employees to trust them with what the actual corporate profits and therefore the profit-sharing pool is? For privately held family firms this is often a difficult, but essential disclosure.

The current investor unrest is not a Wall Street crisis, as some investment bankers would like the populace to believe, but a management credibility crisis. Obvious conflicts of interest have been standard practice for many public accounting firms, not just the former Arthur Anderson. Because they’ve always gotten away with it, does not mean it should continue or that the perpetrators should go unpunished.

Management is not immune to this entitlement bug either as they are subject to the same human frailties as all other employees. But there are differences. They assume greater corporate responsibilities and, for the owners of privately held firms, greater financial risks. In turn they normally receive higher compensation than their fellow employees. But management can’t expect to change compensation systems without placing their own compensation under the public magnifying glass for scrutiny.

The story is told of the printing firm owner that announced no annual wage increases because the firm lost money the previous year. And the next week he drove into the employee parking lot with a new Lexus. As far as he was concerned, the lease was up on his previous car and this was a standard lease roll over. The reality is that only select higher income people lease their automobiles. Normal employees don’t understand the tax consequences of leasing versus buying and only see the boss exercising a double standard. If the lease is up, either buy the three-year-old car or renew the lease on the same vehicle. Don’t be so insensitive to your employees, which were asked to make a sacrifice, as to roll in with a new car, regardless of what the accountant says.

Entitlement carries a negative connotation when applied to someone else. But it really holds us all back from achieving what potential that exists. Corporate cultures that acknowledge the existence of entitlement but are successful at remolding employees and their attitudes into being self-motivated change agents in a much more difficult business environment. It’s a new ball game with even different rules requiring more and different skills from each team member. Words and actions must reinforce this precept: “We appreciate your loyalty and dedication in the past. However, for our firm to remain viable in the future, everyone needs to work smarter, more creatively, and often more flexibly in terms of tasks to be performed and hours worked. Please spend your time and the company’s money as if you were solely accountable for it.”

Life may never be as carefree as it was before September 11, 2001. The printing business may not be like the good old days ever again. What are we really entitled to? If your job were open for hiring today, would you be the leading candidate for the position? Would the compensation package offered be the same as you are receiving? These questions pertain to management as well as hourly employees.

Are we entitled to a comfortable living, to a democratic society, to freedom, or even the love of our spouse? If our attitude is one of gratitude, servitude (in difficult times calling for sacrifice), and earning the respect of those around us, then yes maybe we are entitled … to a little slack. If we’ve put-in-our-time, paid-our-dues, and we deserve more of the same elements of the good life then we could be standing on a slippery slope.

Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.