5 Ways Your Boss Is Trying to Fire You and What to Do About It

Regardless of what you do, your boss is finding a way to get rid of you. Your glowing, past performance review is not an indicator of your future employment. What did you do wrong?  Probably nothing (rest easy, it wasn’t that pen you took home for yourself). It’s more likely because you’re too expensive–regardless of whether you make $8 an hour or $800,000 a year.

You’re expensive in ways obvious and hidden: you’re not efficient enough, or insuring your health costs too much (especially if you have a family). Having spoken with many CEOs over the years, I’ve been privy to many of their concerns and plans. Here’s the inside scoop on the 5 ways they plan to replace you.

Replacing You With a Temp Worker

This is especially true for companies hovering around the 50 full-time employee mark. Under the Affordable Healthcare Act (aka Obamacare), employers with 50 or more employees may see health care costs increase by a lot. To get around it, a company around this threshold may opt to reduce its full-time employees and staff the rest with temp workers.

Of equal importance? Doing this makes a company’s cost more variable. That means if sales fall, so do a lot of expenses: they can just reduce their temp force instead of keeping salaried employees on payroll or spending on expensive severance packages. There are reasons I’ve been looking to buy a staffing company in the past year.

Creating “Synergies”  

Synergies. Fancy word, right? Basically, it’s 1+1=3 and is most often seen when one company buys another. So when company ABC buys company XYZ, they’re more profitable and valuable together rather than apart–because of synergies. There are several forms (cross-selling products, more purchasing power with their suppliers, etc.) but the best kind of synergy is through reducing redundant workers. You don’t need 2 CEOs, COOs, CFOs, Controllers, IT teams, or the admin that supports each of them (the fancy term for this is RIF, or “Reduction in Force”). This is the “best” kind because these cost-savings are identifiable and achievable (i.e. not subject to any speculation).

Replacing You With Cheaper Overseas Workers

Until recently, this had only been true for industrial-type work such as assembling and machining, but it’s becoming ever more the case for even simple, everyday work (performed by virtual assistants, who can do things such as check your emails or send your wife flowers. Too bad they can’t wipe my potty training daughter Liza’s bottom!) and high-level work. I know a very, very large hedge fund that now outsources all of its financial modeling to India.

Take Under Armour. Currently, there are 250,000 people making Under Armour gear, mostly in Malaysia or another place with lower labor costs, with a plan to add 200,000 or so more–none in the U.S. However, Under Armour recently opened up a 133,000 sq ft manufacturing facility in Baltimore, but will only need 50 manufacturing jobs. The manufacturing of the future requires very few workers (see point #5)

Replacing You With Software  

Somewhere in Silicon something (Valley/Alley/Beach), someone is thinking about how to automate the work you do. With the internet, they can now deliver software over the cloud instead of the old way of installing on each work computer.

So back in the old days (old, as in 5 years ago), if you wanted Microsoft Office for your business, you went to your local Office Depot and bought yourself and your employees those physical CDs (or even 55 floppy disks–goodness gracious sakes’ alive!). Then you had to install it on every computer. Yuck.

Now, however, you can skip waiting in line at the store and installation hassle and just call it down from the cloud. This easy distribution (via the internet) increases scale and reduces expenses by cutting out the middleman (Office Depot). But here’s the most important part:

Recurring revenue.

These two words make venture capitalists weak at the knees. Back then, buying Microsoft Office was like buying a car, something you did every several years. Now it will be like your electricity bill, something you pay for monthly. And you’ll never unsubscribe, because if you stop, you can’t run your business.   If you can’t view/edit your hundreds/thousands/millions of files or edit them when someone sends you a .doc or .xlsx, you’re sunk. This is what’s known as being “sticky.”

Frictionless Distribution + Cheaper to Sell + Sticky and Recurring Revenue = as close to perfect a business as you can get.

Actually, forget the electricity bill, it’s like selling corporate crack. And even better, because a company has way more money to spend, and because you’ve improved their life. They call this corporate crack Saas (or software as a service), and oftentimes that software service replaces the service you currently provide.

Here’s another one:  Artificial intelligence (“AI”). Billions are already being spent on developing it, and the best AI researchers get paid more than NFL quarterbacks. This is going to be huge even though no one knows exactly how yet. But it’s coming.

Replacing You With a Machine or Robot

Although the rising cost to manufacture in China and long-supply chain has brought back some manufacturing to the States, don’t confuse this with jobs returning. Under Armour only needs 50 people to make shoes in the 133,000 sq ft facility because most of it will be made by machines. How about facilities that hold machines? China 3-D prints houses. And they can make 10 in one day for less than $5,000 each. Do you know of any construction crew that can compete with that? Oxford researchers have estimated that 47% of U.S. jobs will be automated in the next two decades. 

The Boston Consulting Group estimates that spending on robots will jump from $15B in 2010 to $67B in 2025, right about when my kids become college age. 

The world’s smartest researchers are telling us that the world is going to change.  Fast.  We would be wise to listen. We would be smart to prepare our children. More examples:

Been to a CVS lately?  Many of them don’t even have checkout people anymore. Checkout machines have replaced the 3-5 people they used to have up front, even though shoplifting has increased. Think about it this way: CVS would rather have more people walk out with a box of Cheerios without paying than hire you because they would need to lose several boxes of Cheerios per hour, every hour you work to make hiring you worth it. And if you’re honest with yourself, you would make the same decision as CVS.  Expect checkout machines to be ubiquitous.

We have robot vacuums, folks. Once these become less than $100–and they will–I’m picking one up. These devices are currently considered “dumb robots.” The dumb roomba just got a lot smarter with this version and smarter still with the next version. And they’ll find more things to do for you. Dumb robots are only dumb for now.

We are on the verge of self-driving cars (despite early, unfortunate, fatal incidents). Your children will one day say: “Remember when we were growing up and you actually had to drive us around?”  What’s prevented cars from becoming pure commodity products thus far is that we’re very particular about the way they look, feel, drive, and what it says about who we are as their drivers. I can see a future where cars are mere utilities and the platform/app in which we order them is the most important aspect. Makes sense why Uber, Lyft, not to mention Apple, Ford, Tesla and others are engaging in crazy turf wars.

Robot chefs are coming. Once they figure out how to pull this off, this has the potential to completely change the restaurant industry (other than food, your most expensive cost is your chef–if you can replace him/her with a $15,000 one, the whole calculus of your business changes and your ability to start becoming profitable).

And on and on. This is how it starts–a few bits of news, some new products or inventions, then all of a sudden, these inventions just become a part of how we, but mostly our children, live life.

What To Do About It

The Automatized Age is undeniable and unstoppable. It makes no sense to resist it.

Embrace it.

Those of us who want to fight it and are building an ark for when the rain comes–it doesn’t matter how big your boat is, when the big wave comes, you’re going to be rocking with it.

Remember a company called Blockbuster Video?  Remember how a once tiny start-up called Netflix disrupted the video rental business and made the old way of renting movies obsolete?  In the same fashion, there are many businesses today that are the Blockbusters and Netflixes of tomorrow. In hindsight, the Blockbuster/Netflix thing seems so obvious, but think back to when Netflix was just something your tech savvy cousin was doing, before you saw the red envelopes everywhere. It was hard then to see just how vast and fast the change would come, destroying a multi billion dollar business like Blockbuster in the process, but raising another one in its place.

Identifying which side (old, disappearing industries vs. new ones that are destroying them) takes some thinking and foresight. I believe much of the way we’re training our children is oriented toward the old when we should be preparing them for the new.

The Hope

And here’s the good news.  This has happened before.  It happens all the time, in fact. Yes, jobs become fewer and fewer, but new types do arise. If you know where to look, you can help prepare your child to thrive.  

With change always comes opportunity.

Since the elections are upon us, I recall an article during the last presidential election about Mitt Romney (leaving aside politics — I mention this article only because the quote is so dead on).  By any measure, he’s a successful person: Stanford to BYU to Harvard Law/Harvard Business School to Bain & Co. which he helped spin off into Bain Capital, and then on to a successful political career.  Here’s the environment in which he came of age, as written by the New York Times:

By 1973, the economy was sinking, in part because of an oil crisis. But at the same time, businesses were using new technologies, from electronic calculators to mainframe computers, to analyze and exploit data more fully than ever before.

“He was there at this epicenter where you had a few people who realized that these changes opened up enormous opportunities.” – Kim B. Clark, former Dean of Harvard Business School, about Mitt Romney

So it happened in the 1970s with the Computer Age, it happened in the late 1990s with the Internet Age, and it’s happening now in the Automatized Age. We are the lucky few who recognize it.

But before I get into how to help your children thrive as one of the “few,” I’ll tackle some of the ways we should be rethinking how to raise our children in my next post.


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5 Comments

  • Five Ways to Think Differently about Raising Our Children – just making cents August 5, 2016 at 4:26 pm

    […] you only read my prior post without reading this one, you’d be left thinking the future will be a dystopian […]

    Reply
  • Mark August 8, 2016 at 1:32 pm

    Came for the advice on teaching kids about money, stayed for the free business school education.

    The automation stuff is interesting to me for a number of reasons, including the question of how we’re going to organize society when most people won’t be needed to work. We’re tiptoeing into that future now with so many Americans dropping out of the labor force. But at some point we are going to have to plan for what to do with all of us if automation is going to do most of the producing.

    Reply
    • justmakingcentscom August 8, 2016 at 2:24 pm

      Welcome and stick around! It will be interesting to figure out. Lots of change, but also lots of opportunity if you play it right.

      Reply
  • What I’ve Been Scared to Write, or: My Big Goal – just making cents August 19, 2016 at 3:56 pm

    […] I’m trying to build is a machine that generates money with the intention of investing much of the proceeds in charities and […]

    Reply
  • How to Help Your Children Thrive Financially – just making cents August 20, 2016 at 10:27 am

    […] believe that changing technology (what I’ll refer to as the “Automatized Aged”) is going to displace many, many jobs, even professional […]

    Reply

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