[Where employees are a corporation’s key assets, workers’
greater power comes in threatening to walk out the door]
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ELON MUSK WENT ON A FIRING FRENZY AT TWITTER. NOW HE’S PAYING FOR
IT  
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Robert Reich
November 22, 2022
The Guardian
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_ Where employees are a corporation’s key assets, workers’
greater power comes in threatening to walk out the door _

‘Not even Donald Trump seems particularly eager to take up Musk’s
offer to have him back on the platform.’, Susan Walsh/AP

 

When Elon Musk [[link removed]]
bought Twitter for $44bn, he clearly didn’t know that the key assets
he was buying lay in Twitter’s 7,500 workers’ heads.

On corporate balance sheets, the assets of a corporation are its
factories, equipment, patents and brand name.

Workers aren’t considered assets. They appear as costs. In fact,
payrolls are typically two-thirds of a corporation’s total costs.
Which is why companies often cut payrolls to increase profits.

The reason for this is corporations have traditionally been viewed as
production systems. Assets are things that corporations own, which
turn inputs – labor, raw materials and components – into
marketable products.

Reduce the costs of these inputs, and – presto – each product
generates more profit. Or that’s been the traditional view.

Yet today, increasingly, corporations aren’t just production
systems. They’re systems for directing the _know-how_, _know-what_,
_know-where_ and _know-why_ of the people who work within them.

A large and growing part of the value of a corporation now lies in the
heads of its workers – heads that _know how_ to innovate, _know
what_ needs improvement, _know where_ the company’s strengths and
vulnerabilities are found, and _know why_ the corporation succeeds (or
doesn’t).

These are becoming the key assets of today’s corporations – human
assets that can’t be owned, as are factories, equipment, patents and
brands. They must be motivated.

So when Musk fired half of Twitter’s workers, then threatened to
fire any remaining dissenters and demanded that the rest pledge to
accept “long hours at high intensity” – leading to the
resignations last week of an estimated 1,200 additional Twitter
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began to destroy what he bought.

Now he’s panicking. Last week he tried to hire back some of the
people he fired. On Friday he sent emails to Twitter employees asking
that “anyone who actually writes software” report in, and that he
wanted to learn about Twitter’s “tech stack” (its software and
related systems).

But even if Musk gets this information, he probably won’t be able to
save Twitter.

With most of Twitter’s employees gone, most of its _know-how_ to
prevent outages and failures during high-traffic events is also gone,
as is most of its _know-what_ is necessary to maintain and enhance
computing architecture, most of its _know-where_ to guard against
cyber-attacks, and most of its _know-why_ hate speech (and other awful
stuff advertisers want to avoid) is getting through its filters and
what to do about it.

Without this knowledge and talent, Twitter is a shell – an office
building, some patents and a brand – without the capacity to improve
or even sustain its service.

It’s unlikely to fail all at once, but bugs and glitches will mount,
the quality of what’s offered will deteriorate, hateful tweets will
burgeon, and customers and advertisers will flee.

As Richard Forno, assistant director of the Center for Cybersecurity
at the University of Maryland told
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the New York Times: “It’s like putting a car on the road, hitting
the accelerator, and then the driver jumps out. How far is it going to
go before it crashes?”

Not even Donald Trump seems particularly eager to take up Musk’s
offer to have him back on the platform.

Safe to say, Twitter is no longer worth the nearly $44bn Musk paid for
it. It’s probably now worth only a fraction of that – a fact that
should be of no small concern to the bankers who lent Musk $30bn to
purchase Twitter on condition he pay $1bn a year in interest.

Two lessons here.

First, corporations that regard employees only as costs to be cut
rather than as assets to be nourished can make humongous mistakes.
Elon Musk is Exhibit 1.

Second, where corporations view employees as costs, the traditional
way for employees to flex their muscle is to strike, thereby
temporarily closing factories and stopping the machines.

But where employees are a corporation’s key assets, workers’
greater power comes in threatening to – or actually – walking out
the door.

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Robert Reich, a former US secretary of labor, is professor of public
policy at the University of California, Berkeley, and the author of
Saving Capitalism: For the Many, Not the Few
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and The Common Good
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His new book, The System: Who Rigged It, How We Fix It,
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is out now. He is a Guardian US columnist. His newsletter is at
robertreich.substack.com [[link removed]]

* Elon Musk; Twitter; Twitter's Workers;
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