There’s a new corporate playbook in town.
The game has changed, and so have the rules that CEOs once followed. Gone are the days when long-term growth and employee well-being were cornerstones of corporate strategy. Today, it's all about maximising short-term shareholder value, because, in the modern corporate landscape, shareholder value equals C-suite compensation. Let's break down how this is playing out and why it’s problematic for both employees and the broader economy.
Phantom Performance Plans
One of the most prevalent tactics we’re seeing is the rise of “Phantom Performance Plans” (PIPs), which are designed to either squeeze more out of existing high performers or push them out the door entirely. By raising performance expectations to unsustainable levels, companies can either force employees to leave voluntarily—thus avoiding severance payouts—or push them to deliver far more for the same pay. The result? Reduced headcount costs and increased short-term profits. For those still standing, it’s a punishing workload with no guarantee of security.
Return-to-Office Mandates
Many companies are mandating a return to the office, citing low productivity as the reason. But let’s be real—numerous studies have shown that productivity didn’t take a hit during the work-from-home era. In fact, research by Stanford shows that remote workers were 13% more productive than their office-based counterparts .
So why the push to get everyone back? In my opinion, it’s for two main reasons:
1. Commercial Real Estate: When you dig deeper into the ownership structure of large multinational corporations, you’ll find that asset management giants like Vanguard and BlackRock hold substantial stakes in these companies. But here’s the kicker: these same firms also have trillions invested in corporate real estate. Office spaces, surrounding restaurants, gyms, social hubs, and residential areas all stand to benefit from employees returning to physical workplaces. It’s not hard to see the connection—there’s a clear incentive for these asset managers to push companies into mandating a return to the office.
2. Reducing Headcount Without Layoffs: Forcing people back into the office also serves as a convenient way to shrink the workforce. By making it unappealing for employees who have embraced remote work, companies can cut headcount without having to go through formal redundancies, saving on severance costs.
Job Consolidations: Stretching the Workforce Thin
I’ve never seen job consolidation at the scale we’re seeing now. Pre-pandemic, when someone left a role, companies would typically hire a replacement or, at the very least, bring in an interim contractor to fill the gap. Now, many companies are simply redistributing the responsibilities across remaining staff without additional support.
This approach might look good on the balance sheet, but it’s coming at a human cost. Burnout, mental health issues, and long-term sickness are on the rise. Many employees, especially Gen-Xers, are choosing to leave the workforce entirely because they’re simply not willing to endure the stress and strain of doing the work of two or three people. A 2023 survey by Deloitte found that 77% of employees experienced burnout in their current role, a clear signal that the job consolidation trend is pushing many workers to their breaking point.
Dry Promotions: All Title, No Pay
Another tactic I’ve seen is what I call "dry promotions"—promoting employees in title only, with no accompanying pay raise. This move is designed to placate top performers who might be seeking advancement, but without the company having to invest in them financially. It’s a short-term fix that might buy an employer 6 to 12 months of loyalty, but ultimately, employees catch on. After all, you can’t pay rent with a title upgrade.
Outsourcing: Reducing Risk and Headcount
If squeezing more out of existing staff doesn’t work, companies are turning to outsourcing as a fallback. Outsourcing roles to external vendors—particularly in areas like IT, customer service, and finance—is increasingly viewed as a low-risk, cost-effective strategy. Not only does this reduce headcount and costs, but it also allows companies to remain agile and better equipped to handle unexpected events like another pandemic. The outsourcing market, which is expected to reach a value of $680 billion by 2027, has seen substantial growth as companies prioritise flexibility and cost control .
Why is This Happening?
At the core of all these trends is the fact that corporate leadership, particularly in large organisations, is no longer incentivised to think long-term. The average tenure of a Fortune 500 CEO is now just 4.9 years . With such short tenures, there’s little incentive for CEOs to invest in long-term employee well-being or sustainable business growth. Their focus is squarely on maximising shareholder returns in the shortest possible time—because that’s what boosts their compensation packages.
A stark statistic: only 8% of Fortune 500 CEOs have been in their roles for more than 10 years . The rest are playing a short-term game, driven by stock price movements and quick wins, with little regard for the long-term impact on employees or the economy.
In summary, we’re in an era of short-termism, where the human side of business is being sacrificed for short-term financial gain. Employees are being squeezed, outsourced, or pushed out under the guise of performance plans and return-to-office mandates. If this trend continues, we’ll see even more disillusioned workers leaving the corporate world, seeking alternatives that offer more balance and respect for their contributions.
The question is, how long can companies operate like this before the cracks start to show?
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