The word came down through human resources, in an email to my consulting firm, from a woman alleged to be a person, obviously encouraged by high-level management to treat contractors as children of a lesser god and their consulting firms as sleazy purveyors of expensive, nonessential services:
"Based on an internal cost-cutting study (performed by Cousin Eddie in accounting?), we're requesting all vendors to help <large information technology (IT) company> ["MasterCard International" if you must know. -Ed.] in its hour of need: We need a 10 percent across the board contractor billing rate cut, to take effect in two weeks. Thank you very much."
Little Ms. Dangerous (LMD) here is carrying out the company's obviously carefully considered pogrom, by formally conveying to all contractor vendors that <large IT company> is changing the money terms of its "at will" contracts across the board. Heavily implied: if you do not accept redux, we will walk your people at the door.
Next day, I wander the aisles to chat with some of my small-shop contracting associates. Unlike yours truly, most are family men and women who work out a strict budget and count on receiving their agreed-upon dollars on a regular basis. When the client precipitously alters those dollars downward, they become chagrined. Pissed, if you will.
And so am I.
Is this legal? Is this right?
Do the concepts of legality and morality connect in the known universe?
The Man broke our deal!
Not only that, The Man says the next deal won't get any better: no nominal rate increases at the beginning of subsequent contracts, no money recognition of superior performance. Nothing, zilch, nada!
"Toto, we're not in Kansas anymore!" In the Oz of <large IT company> central personnel, the Wizard is a woman with the soul of Marie Antoinette, discounting beans without a curtain. Further, our immediate management team has been commanded not to discuss the change! "Oh ye docile wonders of the world, unite!"
I seek solace among family and friends:
My sister-in-law relates a similar recent occurrence at Chrysler, where suppliers took a 12% hit. "That's life." My ex remembers Ignacio Lopez at Generous Motors years ago who tore up supplier contracts and relet them to the lowest bidder (using existing-supplier specs). "Lay low, and then get more." A golf bud tells me to quit whining, "You're overpaid anyway and lucky to have a job." A contractor brother sighs life is still pretty good, "Dude, easy on the negative vibes."
So much for the sympathy brigade.
Hey, guys, we're bein' mugged here! Okay? I'm not crying for money, I'm crying "Stop, thief!"
Have we become so accustomed to seeing Joe Lunchbucket and Jane Breadbasket take lumps from the system, or have we taken so many lumps of our own, that compassion-fatigue and cynicism have taken over? Not that this little ambush from headquarters ranks with the skewering of puppy dogs or small children on a spit. I do, however, want to propose that it is wrong.
It is morally unacceptable for a buyer to lower payment to a seller before the end of an "at will" contract period under the guise of renegotiation, when the alternative is termination.
Also true if the shoe's on the other foot:
When celebrity Jock Extraordinaire signs an agreement to play for a team x number of years for y gazillion dollars per year, then has an unexpectedly good year (number of year less than x), it simply isn't right at that point for JE to insist the team cough up half a gazillion dollars more, or else JE withholds his services.
A contract has no purpose if not to bind payment and performance for a set period of time. If a party needs to bail on the money/performance terms of a contract, the party needs to have written the contract better.
A subplot: One of our sole-proprietor contractors actually quotes a hefty increase. After some VPs support this contractor's continuation, LMD relents, emailing to him the existing rate is acceptable.
"Okay, soup for you!"
Specifically, if management sees you as a producer, you can escape cost-redux edicts from human resources. Universally, productive class-or members of the productive class with balls, money in the bank, and attractive options for subsequent income-can trump parasite class.
Large business systems-we'll discuss government systems in the next column-tend to embrace a tension between productive behavior and productivity-depleting behavior. Productive-class behavior is creative and, normally, wealth-causing. Parasite-class behavior is contrary to that life-giving force.
Parasite-class personnel-this is only a descriptive phrase-tend to view reality as a collection of people to control and dominate as opposed to the perspective of productive-class personnel who see a material reality to figure out and do things with and make things from.
Key to the ephemeral success of the parasite class is acquiescence of big-system leaders, a capitulation one might ungenerously term "moral cowardice," i.e. failure to stand up for the obvious truth of things. In our case, a slash-and-burn policy, having the patina of efficiency and requiring minimal thought and paperwork, has been sold to stratospheric management.
But because the policy slams a large set of known super-producers, its effect is detrimental. While slash and burn may nudge the bottom line of a company into the black for a microsecond, the long term effects are further profit loss, dissipation of good will, and evaporation of creative juice.
In other words, breach of morality and etiquette by a business leads inexorably to a financial train wreck. I've never seen an actual train wreck, but I can imagine the spectacle unfolds from a seemingly minor distortion of rail or equipment into a hypnotic slow-motion smashing and scattering of gargantuan objects in every direction. Like Godzilla pummeling Tokyo.
As human beings, independent contractors worth their salt care deeply about the people aboard such a cataclysm, but tend to figure out ways not to join them.
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