Why Is Your Job So Terrible? A Wharton Professor Explains. We're in a new professional era — and the outlook isn't good.
By Amanda Breen Edited by Jessica Thomas
Key Takeaways
- Real wages are declining, job insecurity is increasing and retirement incomes aren't guaranteed.
- Wharton professor Peter Cappelli says companies are prioritizing financial accounting over employees.
If you feel undervalued at your company, you're not alone.
Sixty percent of employees said they were "emotionally detached" at work, 19% admitted to being downright miserable, and just 33% reported feeling engaged, according to Gallup's State of the Global Workforce: 2022 report.
Part of the problem?
From declining real wages to increasing job insecurity and uncertain retirement incomes, we've entered a professional era that puts financial accounting above employees, Peter Cappelli, Wharton professor and author of Our Least Important Asset: Why the Relentless Focus on Finance and Accounting is Bad for Business and Employee, tells Entrepreneur.
According to Cappelli, financial accounting is the "scorecard" companies use to gauge performance — and it's the most important piece of information investors see.
"It tracks money spent on employees, and sees it as a particularly bad type of cost, fixed costs," Cappelli explains. "Because employees are not seen as having any asset value because assets have to be owned, laying them off appears to have no costs. Training can't be an investment because investments can only be on assets."
Related: How Investing In Employee Training Benefits Your Business
As a result, companies train people less and otherwise "squeeze" wages and employment costs even if it creates costs elsewhere, like turnover, because those aren't measured, Cappelli says. "Employee benefits that are accrued or earned such as pensions or vacation time count as liabilities that have to be offset by assets, so dropping those makes the company instantly more valuable," he adds.
What's more, because important measures of performance are considered on a "per-employee basis," reducing the number of employees drives those numbers up, even if those employees are replaced with contractors and "leased" workers, Cappelli notes.
It's reached the point where the corporate fixation on shareholder value maximization has transformed employees from perceived assets into liabilities in many cases — and Cappelli says that shift makes issues related to financial accounting all the more important.
Naturally, other mistakes around managing talent emerge from these accounting issues.
"For example, on hiring, they focus on costs-per-hire while ignoring the quality of hires because the former shows up as part of financial accounting costs while the latter appears nowhere," Cappelli says.
Additionally, "training has declined so much" that companies are attempting to fill their talent requirements by hiring from competitors rather than from within, which only contributes to the turnover issue, Cappelli explains — and makes it harder for recent graduates to land jobs too.
Related: What Is 'Quiet Hiring'? And How You Can Use It To Your Advantage.
"Jobs have been pushed to contractor positions, which are less stable, where the workers have little interest or engagement with their organization," Cappelli says. "Pay gets squeezed, benefits get squeezed, all of which are worse for employees."
