7 Ugly Truths ‘Undercover Boss’ Reveals About American Business

I’m not much of a TV watcher these days, but there are certain programs I watch if they’re on and I have nothing better to do. One of them is Undercover Boss. I like it because it involves the interaction between business management and the “little people” on the front line. It’s a much more delicate and complicated arrangement than we generally think. There are at least seven ugly truths Undercover Boss reveals about American business in general.

Here are my observations of those seven ugly truths the show reveals:

1. The Boss is Disconnected From Street-level Operations

There are a few bosses on the program who actually know what’s going on in their business from top to bottom. But those are usually the true entrepreneurs, the people who started the business from the ground up, and know and understand every nuance of it.

The majority however display an obvious level of ineptitude in regard to the everyday operations of the business. Now it has to be said that the purpose of Undercover Boss – from the boss’s perspective – is precisely to learn about frontline operations (that should leave us wondering why something so fundamentally important requires a TV show to make it happen). But in too many situations, the boss is utterly unfamiliar even with the basic business model of the company.

I believe that this is the fundamental difference between an entrepreneur and a manager – and we should never confuse the two. I forget whether it was Charles Hugh Smith or Mike Shedlock who made this point, but it’s a valid one. He said that we should not confuse managers with entrepreneurs. That today’s high ranking corporate managers come not from the entrepreneurial class, but from the managerial class.

As a “graduate” and member of the managerial class, this type of boss probably has an MBA, and has held top-level positions at either competing companies, or at completely unrelated businesses. Such a person works his or her way up the corporate ladder, and has no experience actually starting a business and building it from the ground up.

This point alone explains why so many companies are so poorly managed, and not very good places to work. An entrepreneur may consider the operation of his or her business as a matter of personal pride and integrity; a manager may be concerned primarily with profit.

2. Employees Are Barely Surviving

This factoid may be the most common theme. Most of employees of the companies highlighted on the show clearly fall under the category of the working poor. They work for minimum wage or slightly higher, and are often forced to work extended hours or multiple jobs just to carve out a meager living.

Most also have some sort of background financial crisis going on, which is symptomatic of the working poor. It could be outrageous medical bills, student loan debts, or paying for the care of young children, or sick or elderly relatives. Most struggle with what we think of as basic middle-class commodities, such as housing, healthcare, or even owning a car.

It may seem as if such side dramas are mostly to create a strong emotional element on the show, and that’s certainly possible. Yet the near poverty conditions of most of the employees accurately reflects the downgrading of the middle class to the status of working poor. For example, in 2016 it was reported that 62% of Americans have less than $1,000 in savings. Undercover Boss demonstrates graphically how that has come to be.

But here’s an even uglier statistic. A 2015 article in Huffington Post cited a study that showed that the average CEO earns 204 times the compensation of the average employee of the same organization (based on 2014 income data). At some firms the spread is well over 1,000.

It often seems as if the boss is leaving his castle (home/mansion) and his ivory tower (corporate headquarters) to go out into the fields for a brief visit with the peasantry.

Or is that just my own perception?

3. Employees are Dis-empowered

There have been a few episodes that uncovered rogue managers in front line operations. You know the type – they run a store or a branch as though it’s their own personal fiefdom. None of the corporate higher-ups seem to be remotely aware of this, since they’re basically hiding in the ivory tower themselves. But you do get a definite sense of sweet revenge whenever one of these losers is exposed by the undercover boss.

But apart from rogue managers, another point that’s clear is that most employees in most business environments have little or no authority. That’s not a minor point either. In order to carry out nearly any job, the worker does need a certain amount of authority to make it happen.

Instead, business seems to be dominated by low-level, non-ranking clerks. This isn’t to denigrate people in those positions either – it’s clear that many of them are more competent than their immediate supervisors. But since they’re subject to often incompetent supervisors, and upper management is clueless about what’s going on at the front line, the employee is buried in the organization.

At the same time, he’s often subject to arbitrary rules and workflows that make it impossible to work efficiently. Only when the undercover boss shows up in person is the disconnect uncovered. We’re then made to assume that improvements are made after the fact.

4. Employees Must Work With Limited Resources

The finale at the end of each episode has the boss realizing that fundamental mistakes are being made, and that good people are going unrecognized. This is where Undercover Boss begins to resemble something of a game show. The boss rewards overlooked employees with financial awards, such as paying off the employee’s debts, buying them a house or a car, paying for college education, paying off medical bills, and even all-expense paid vacations. Some employees even get promoted, or get put into valuable employee training programs.

That’s all very encouraging, but it overlooks the day-to-day limitations that employees have to deal with in their jobs. And we have to ask what happens to the hundreds or thousands of employees who are similarly overlooked, but who never got to meet with the boss?

Every time I watch the show, I think of that Winston Churchill saying, “Never was so much owed by so many to so few”. Now Churchill was describing the efforts made by RAF fighter pilots during the Battle of Britain. But I would paraphrase that famous saying for employees with:

Never have so few (employees) been asked to do so much, with so little, for so many (customers), and for so few with so much (upper management).”

A common theme on the show is that most businesses are chronically understaffed, work without necessary equipment, but are forced to deliver a service level that often is expected from people who earn considerably more money.

This forces employees into having to do multiple jobs, working extended hours, and to develop individual workarounds to deal with chronic shortfalls. And not unexpectedly, the pressure on the entire staff frequently generates ongoing conflict.

This would not be so disturbing were not for the fact that this situation is not unusual in the American workplace. Not in the 21st Century at least.

5. Employees Have No Future

Most organizations have flattened out to the degree that there are few opportunities for advancement. Someone is hired as a clerk, and may still be a clerk five or 10 years later. The best job they can do isn’t sufficient to warrant a promotion or a significant pay increase. With businesses run on a financial shoestring, and always looking to make additional cuts in spending, the money is never there to grow and promote employees.

For most, the only way to get higher pay or a promotion is to move to another company. And that in itself is complicated by the fact that he or she is unable to advance in their current position. On the show you see a lot of people in their 20s and 30s who already seem trapped in dead-end jobs.

Which wouldn’t be so tragic were it not for the fact that…

6. There are More Good Employees than is Commonly Assumed

On the episode we were watching last night, one of the employees was a young man from Indiana who was working at a California-based coffee and tea shop. It was a good example of an employee who was dis-empowered, operating with severely constrained resources, and clearly had no future with the company (though the boss fixed all of that at the end of the show).

He wasn’t making much money either. He was “sleeping on the floor of some guy’s house” for $550 per month. He had no car, had to commute to the job one hour each way by bus, and had another part-time job in order to survive.

But this man was clearly an example of a person who was bigger than the job he was doing. He knew more of the nuances of tea than the boss of the company did. He was the kind of person that, were he turned loose and empowered, could make a real difference in the organization.

From what I’ve seen on this show, there are many more good employees out there than we commonly assume. Yes, we all see the bad examples. And we remember those precisely because our experience with them is poor. But there are far more good employees than bad ones. If there weren’t, then America’s thousands of shoestring business operations would come to a grinding halt.

I think there’s an unspoken message in there somewhere. Though we all get frustrated in dealing with business operations, we’re often unsympathetic with the circumstances that the staff has to work within. This show has taught me to have a more generous attitude toward employees in all kinds of environments. Often, the problems we experience are really about the organization, and not the employee who is close enough to the front line to take the blame for all the problems.

7. Good Employees Are Lost in the Numbers Game

This is just my own interpretation, but I consistently come away from Undercover Boss with the uncomfortable feeling that most of those companies are not very good places to work at. Many of them deliver respected products and services, but they do so at a high personal cost to the employees who are expected to make it all happen.

I think it’s clear that this is having a real negative effect on the American workplace.

According to the Bureau of Labor Statistics (BLS), the labor participation rate – the percentage of people 16 and older participating in the job market – has been falling for years. In the most recent decade it fell from 66.0% in January of 2006, to 62.7% in December of 2016. The longer term trend is even more discouraging.

There is no single explanation for the decline. However, various experts have attributed it to people taking earlier retirements, more people collecting disability, young people staying in school longer, and some people shifting over to the underground economy.

But we need to ask the bigger question why are people leaving the workforce at all? I think that Undercover Boss helps to explain that trend. People would stay in the job market if only doing so made sense. But it’s becoming increasingly obvious that it no longer does.

There is a major disconnect between the compensation and working conditions of the majority of workers, and the cost of living. As just one example, even as wages have gone flat in recent years, the cost of housing has continued to rise. We don’t even need to comment on the cost of health insurance or college education.

It’s easy enough to understand why millions of disillusioned workers would simply drop out of the employment universe to find an alternate – and less taxing – way to survive.

As much as I find Undercover Boss to be entertaining, it’s also very disturbing. It makes it only obvious that good employees are lost in the numbers game. That’s not a very optimistic turn of events.

Do you ever watch Undercover Boss? Do agree with what I’m reporting? Do you have other observations? And what do you think it says about the American workplace?

( Photo by GDS-Productions )