What is the nature of the relationship between an employer and an employee? Is it based on Paternalism, the idea a company is like a family with the employer as the patriarch to which employees subordinate themselves? Or is it based on Individualism, with both the entrepreneur and their employees, in pursuit of their own rational self-interest, are joined by agreement in a common pursuit?
Many companies view their employees paternalistically. They believe they are responsible for the health wealth and well-being of their employees. They provide numerous incentives expecting this alone will motivate employees to make the company’s success there primary goal. In return it is expected the employee will subordinate their personal motivations to those of their employer.
But if Individualism is the reason to become an entrepreneur (See Why Become and Entrepreneur) should it not apply equally to employees? This would imply the success of the company is not the primary objective of an employee. An employee works for their employer first to support their own livelihood, which is their incentive. But secondly, they are motivated by the pursuit of their own career ambitions. The success of the company is merely the means for achieving those goals.
For an Objectivist entrepreneur the principle of Individualism that underpins them underpins their relationship with their employees as well. For them the employer/employee relationship is not based on Paternalism. They do not assume responsibility for the health, wealth and well-being of their employees. It is not that they do not care about their employees. As an incentive they may well provide many benefits to meet those needs. It is that they are not responsible for them. Each employee as an individual is individually responsible themselves.
Unfortunately employees can make the reverse mistake of viewing their employer paternalistically. They often view their employer as being responsible for their health, wealth and well-being; and willingly abdicate the responsibility for providing it to their employer. Motivated primarily by the incentives offered they view their job as something they have a right to as they are now part of the company’s “family.” In varying degrees this idea is so inculcated in some societies it has become law, making terminating an employee difficult if not impossible. But in free societies, to varying degrees, with “at will” employment laws, meaning an employee works at the will of the employer, an employee has no more right to possess their job than an employer has a right to possess an employee.
“Do not make the mistake, at this point, of thinking that a worker is a slave and that he holds his job by his employer’s permission. He does not hold it by permission—but by contract, that is, by a voluntary mutual agreement. A worker can quit his job. A slave cannot.”
Ayn Rand
To illustrate the rational of this point consider the following two scenarios. Imagine an employer saying to an employee who has given notice “You can’t quit. I need you. You are important to this company. You have a responsibility to this company, your fellow employees and society in general. I will not allow it. You will be forced to stay.” Even though in history and in communist countries still this might occur, in a free society, where involuntary servitude was abandoned long ago, this response would be considered absurd.
“We are long past believing that some men were born into this world with saddles on them and others with stirrups to ride them.”
Thomas Jefferson
And yet many find the following response from an employee who is being terminated quite reasonable. “You can’t let me go. I haven’t done anything wrong. I need this job. I have a wife and family to support. If you fire me I will sue. You will be forced to keep me.”
While the first scenario seems absurd, and the second quite reasonable by many, fundamentally they operate on the same two principles. Both are based on “need”, and both attempt to employ “coercion” to meet that need. But just as one would reject the need of the employer to coerce an employee to stay, an Objectivist entrepreneur would reject the need of the employee to coerce their employer to keep their job. But why?
First, because the relationship between the employer and the employee is a voluntary one based on mutual consent, coercion cannot be employed by either party.
“In a free society, men deal with one another by voluntary, uncoerced exchange, by mutual consent to mutual profit, each man pursuing his own rational self-interest”
Ayn Rand
And second because the job belongs to the employer, not the employee. It is the employer’s decision who if anybody they wish to offer it to. Just as an employee’s allegiance to their employer ends when it no longer serves their best interests, an employer’s allegiance to their employees ends when that employee is no longer of service to the company.
“..jobs do not exist “in nature,… they do not grow on trees,… someone has to create the job you need”
Ayn Rand
But this does not create conflict between the employer and the employee that works to undermine the success of the business. They both strive for the business to succeed because it is the vehicle for achieving their inidividual goals, their livelihood as their incentive and personal achievement as their motivation. And it is with this understanding that they come together in mutual agreement to pursue those goals. That is the essence of an Objectivist entrepreneur’s relationship between with their employees, one based on Individualism not Paternalism.
With this understating it is both rational and in the Objectivist entrepreneur’s best interest to create a work environment where the employee’s success is tied to the company’s success. Incentive is provided through profit sharing, stock options and other benefits. Motivation is provided through meaningful work and career advancement. Employees are encouraged to take responsibility for their decisions and their actions. They are held accountable for their failures and rewarded for their successes. Yet an Objectivist entrepreneur embraces the principle that the employee works for their own personal advancement, with the company merely a vehicle for achieving that.
“Individualism regards man—every man—as an independent, sovereign entity who possesses an inalienable right to his own life, a right derived from his nature as a rational being.”
Ayn Rand