How to Address the Labor Crunch

It’s the best of times for U.S. workers, it’s the worst of times for U.S. employers. Unemployment is at record lows while wage growth is at record highs, and many companies are hitting a wall trying to find qualified new hires to fill their ranks.

Jobs — particularly in industries such as construction — are going begging. And unless something changes fairly soon, this is going to have a big impact on economic trends. As Mark Zandi, chief economist at Moody’s Analytics, tells NY Times business columnist Eduardo Porter for a recent column, “Over the next 20 to 25 years, a labor shortage is going to put a binding constraint on growth.”

One of the biggest factors in the current talent scarcity is the withdrawal from the labor force by working-age (25 to 54) American men. The nation’s labor-force participation rate of this demographic is nearly the lowest in the industrialized world, Princeton University economist Alan B. Krueger tells Porter. Many of these men lack the skills that today’s new jobs require, while others have been lost due to disability or opioid addiction.

What to do? Porter cites a new study from researchers at the University of Maryland that recommends a number of policy solutions that may appeal to conservatives and liberals alike. The researchers, Melissa Kearney and Katharine Abraham, say improving access to high-quality education and providing more child-care resources will help people upgrade their skills while making it easier for working moms to re-enter the workforce. Expanding the earned-income tax credit may also entice nonparticipants to get back in the job-hunting game.

And, although support seems to be growing for raising the minimum wage ( to as high as $15 per hour in some quarters, in order to equalize it with the inflation-adjusted minimum wage from decades ago), Kearney and Abraham express caution about doing so, noting that it will price some job seekers out of the market. They also recommend reforming disability insurance to encourage recipients to seek jobs. And, they say, limiting immigration will only exacerbate the labor shortage, notwithstanding the stated conviction of many Americans that immigrants take jobs from deserving citizens.

These are all common-sense proposals, but they require political unity and some expenditure of public funds. That’s a tall order, of course. So maybe it’s time the nation’s employers take it upon themselves to be activists on this front, for the sake of the labor market and the economy.

Take My Employees, Please

Jolt CEO and co-founder Roei Deutsch doesn’t necessarily want his talented young employees to stay.

Deutsch, who heads the San Francisco-based career development start-up, started experimenting with “charterships” about a year ago; an arrangement in which workers would leave the job they were hired for after two years. At that time, they would either find a new internal role that would get them closer to their ultimate career destination or they would leave to pursue that dream elsewhere.

Earlier this year, Business Insider’s Matt Weinberger explained the key tenets of the chartership concept:

“After two years, your job is done, no matter what,” Weinberger wrote. “At that point, you can either leave the company with no hard feelings or find a new two-year ‘mission’ at the company.”

An employee’s exit “doesn’t mean I’m firing you,” Deutsch told Business Insider at the time. “It means, ‘Let’s find something new for you to do.’ ”

Jolt also goes against the start-up grain by not offering an overabundance of perks, and Deutsch “cops to the fact that he’s paying employees below market rate,” according to Weinberger.

The idea, he wrote, is to instead reinvest that money into what Deutsch calls “employee success,” meaning that new hires “come in with a list of things that [they] want to learn,” and Jolt devotes resources to helping them reach their professional goals, and assigns them a manager to co-pilot the journey, wherever it takes them.

Business Insider recently followed up with Deutsch to see how this experiment is playing out.

So far, things haven’t gone exactly according to plan.

Part of the problem, he says, is that some millennial workers aren’t sure where they want their professional path to lead them.

“People have no idea what they want to do next,” says Deutsch. “Therefore, it’s hard for them to prepare for it.”

He’s staying the course, however, and Jolt’s embrace of charterships hasn’t seemed to affect its ability to attract talent. In fact, the company has added five new employees since February of this year.

Instead of abandoning the chartership philosophy, Deutsch and the organization are making some tweaks to it.

“Originally, Jolt’s managers were responsible for making sure that the workers who reported to them were sticking to their career development plans,” according to Business Insider. “But the company came to believe that arrangement was unsustainable. The company was essentially asking managers to prepare employees to leave the company for their next jobs at the same time it was requiring them to get the employees to do their current work.”

That approach included a “built-in conflict of interest,” Deutsch told the news website, “that makes helping your employees prepare for their next chapter harder.”

So, in addition to giving employees more time to create their personal development plans—they now have a year, as opposed to the three weeks they were allotted when the experiment started—Jolt has also begun bringing in career coaches to meet with workers in confidential sessions every two weeks.

I don’t know if Business Insider plans to check in on Deutsch and his chartership program again, but it would be interesting to see where this first group of Gen Y workers find themselves when their two years are up, and how much this experience helped them get there.

“Basically, a huge part of helping millennial employees,” he says, “is actually helping them figure out what they want to be.”

Jolt and Deutsch might be focusing on younger talent, but that seems like it would be true enough for companies looking to help develop employees of all ages.

Another Coffin Nail for EEOC Merger?

After taking office in January, one of President Trump’s first orders of business was to act on a recommendation from the conservative Heritage Foundation, which recommended eliminating redundancies in the Labor Department’s Office of Federal Contract Compliance Programs and the Equal Employment Opportunity Commission.

Indeed, in the president’s budget, the OFCCP saw its budget reduced from $105 million to approximately $88 million while EEOC funding in Trump’s budget proposal essentially stayed the same at roughly $364 million, according to Federal News Radio.

Labor Secretary Alexander Acosta even testified at a House Appropriations subcommittee hearing in support of the Trump proposal, where he called the merger a “commonsense change” that “combines two civil rights agencies that already work together closely.”

But opposition to the plan has been widespread ever since it was announced, according to that report. It notes that 73 civil rights groups condemned the measure, and even the U.S. Chamber of Commerce has lined up against it:

Camille Olson, chair of the U.S. Chamber of Commerce’s equal employment opportunity policy subcommittee, told lawmakers recently that numerous companies have contacted the Chamber with concerns about merging the agencies. “Both the EEOC and the OFCCP need reforms,” she said, but not in the form of a merger.

Signs of resistance to the merger idea are also becoming more evident in Congress, where last week the U.S. House of Representatives approved an amendment that would prohibit funds from being used to merge the EEOC and the Labor Department’s contractor compliance office, according to a Bloomberg BNA report.

The proposal to merge the Equal Employment Opportunity Commission and the DOL’s Office of Federal Contract Compliance Programs is “a total mess,” said Rep. Donny Scott (D-Va.), the ranking member of the House Committee on Education and the Workforce who offered the amendment.

“Both have important missions, but combining them would be total confusion,” Scott told Bloomberg BNA. “The Chamber of Commerce opposed the merger, civil rights groups opposed the merger, and the Senate already had language in their bill taking away the merger, so I think it was appropriate in the House bill to also make a statement.”

The Bloomberg report notes that “the House amendment follows the Senate Appropriations Committee’s rejection last week of the proposed merger, which can’t occur without lawmaker support. A number of legislative and regulatory actions would be required to consolidate the agencies and to reconcile their different enforcement structures and approaches.”

 

Are Employers Too Powerful?

It’s not often that a philosopher’s book makes even a small splash in the business world. This one may be an exception: Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It) by University of Michigan philosophy professor Elizabeth Anderson. The book, published earlier this year by Princeton University Press, has attracted attention in Forbes, on the daily public-radio business show Marketplace and elsewhere.

It’s not hard to see the interest for business leaders. Anderson argues that despite our faith that the nation is rooted in freedom and egalitarian values, many Americans work in oppressive conditions, with bosses who exercise tyrannical control over their lives both at work and home.

Anderson sketched parts of her thesis in a 2015 lecture at Princeton, according to a university transcript [pdf here]:

“Most workers in the United States are governed by communist dictatorships in their work lives. Usually, those dictatorships have the legal authority to regulate workers’ off-hour lives as well—their political activities, speech, choice of sexual partner, use of recreational drugs, alcohol,smoking, and exercise. Because most employers exercise this off-hours authority irregularly, arbitrarily, and without warning, most workers are
unaware of how sweeping it is. Most believe, for example, that their boss cannot fire them for their off-hours Facebook postings, or for supporting a political candidate their boss opposes. Yet only about half of U.S. workers enjoy even partial protection of their off-duty speech from employer meddling.”

“Far fewer enjoy legal protection of their speech on the job,
except in narrowly defined circumstances. Even where they are entitled to legal protection, as in speech promoting union activity, their legal rights are often a virtual dead letter due to lax enforcement: employers determined to keep out unions immediately fire any workers who dare mention them, and the costs of litigation make it impossible for workers to hold them accountable for this.”

Employment lawyers might challenge some of Anderson’s claims, and most HR executives likely would say they don’t recognize the business world she describes.

But Anderson’s book comes at a volatile time in America, and it’s difficult to predict which public-policy issue will next catch fire. If the nation’s recent populist anger swings in a new direction, it’s not hard to imagine Anderson’s work providing intellectual fuel for a left-wing presidential candidate such as Bernie Sanders or Elizabeth Warren in 2020. Private Government provides a sneak peak at possible stump-speech talking points.

In longer-range terms, this book also could influence the common perception about business as did Michael Moore’s 1989 documentary Roger & Me, or Nickle & Dimed, Barbara Ehrenreich’s 2001 book about her attempt to live on a minimum wage.

Asked in a Q&A with Princeton University Press editors how she would prefer workplaces to be organized, Anderson says this:

“I argue that workers need a voice in how the workplace is governed. Other measures, such as making it easier for workers to quit, and laws protecting workers’ privacy and off-duty activities from employer meddling, can certainly help. But these can’t substitute for workers having a say in how the workplace is governed. Labor unions once gave voice to more than a third of American workers. These days, outside the state sector, few workers are represented by a union. Yet unions are not the only way that workers can have a say in workplace governance. In Europe, so-called co-determination, in which workplaces are jointly managed by owners and workers, is common. I make the case for exploring different ways workers could have a say, to open up a topic that is hard to frame in today’s impoverished political discourse.”

 

GE is Reinventing Talent Management

The Sept.-Oct. issue of the Harvard Business Review has an interesting package of articles on the 16-year tenure of recently retired G.E. CEO Jeff Immelt (including an essay by the man himself on what he learned during his time leading the company). One of what may be among his lasting impacts on the company is the campaign to use algorithms to transform the way GE develops and retains its 300,000 employees.

As writer Steven Prokesch notes, GE is now positioning itself as a tech-focused industrial company and has hired thousands of software engineers and other digital natives. These employees tend to have little patience for bureaucratic processes and a thirst to grow in their careers. As a result, GE’s HR team is coming up with a raft of analytics-based applications to help them develop their careers and networks, identify high potentials and match them up with training opportunities. “It’s GE’s version of Match.com,” James Gallman, who helped lead the effort at GE and is now Boeing’s people analytics director, told Prokesch.

GE’s analytics push is focused on six areas of talent management: career and succession planning, training, high potentials, networks, talent retention and cultural change. The tool for career and succession planning is the furthest along, writes Prokesch. It uses data on the “historical movement of GE employees and the relatedness of jobs (which is based on their descriptions”) to help users identify potential new opportunities throughout the entire company, not just in their own business or geography. The app is also intended to help leaders do a better job of succession planning by identifying “nonobvious candidates,” for example. “When we’re thinking about who could possibly fill a particular role, we have a technology that helps us come up with additional possibilities,” HR exec Paul Davies told Prokesch.

GE’s training app, still in the prototype stage, recommends training to help an employee do a better job and advance in his or her career. The company plans to connect it to an existing performance-development app for GE’s salaried employees that provides them with a steady stream of constructive feedback from their managers (Under Immelt, GE did away with the forced-ranking model implemented by former CEO Jack Welch, which has fallen out of favor in most of corporate America).

GE’s HR team is also building an app that uses a technique called the “Pareto frontier” to draw on “outcomes” data such as salary increases, bonuses, promotion rates, etc., to identify high-potential employees. It’s also building an app for networking that’s designed to  help employees identify others within the company they can go to for help or advice on a particular problem.

The team is also testing an app for talent retention that’s designed to predict, within a six-month window, when managers and employees in a given function are likely to jump ship. It will identify certain circumstances — such as when a team member leaves — under which people often quit, so that managers can intervene by, for example, talking about the next roles they might play.

Finally, GE’s “cultural change” app would help it identify factors within its organizational structure that may affect its efforts to become a nimbler, more customer-focused entity. For example, the app — still in the early stages of development — would measure whether people serving on large teams feel differently about the company than do people serving on smaller teams.

As Cade Massey, a professor at Penn’s Wharton School, tells Prokesch, although none of these apps will be a magic bullet for talent retention and development, they will give GE much more to rely on than intuition and bias in terms of what works and what doesn’t. “As analytics progresses, it offers a chance to make more rigorous those intuitive methods and to de-bias some of that judgement,” he says.

The Price of Secrecy

The most comprehensive, carefully thought-out company policies are basically rendered void if they’re not enforced.

And, moreover, not letting employees know that violations of these rules are being dealt with can actually have a pretty corrosive effect on an organization over time.

So says a new study from researchers at the University of California, Irvine, who used questionnaire data from “a large U.S. governmental agency” to find that “lower employee trust with tenure is incrementally linearly lower over the course of employment, not the result of an early breach of the psychological contract.”

This occurs, the authors continue, “for employees at all hierarchical levels, but is steepest for non-supervisory employees, suggesting that employees [lacking] information about policy enforcement may be driving this phenomenon.”

In other, plainer words, your people want to know that policies are being enforced, and keeping them in the dark about enforcement proceedings only serves to chip away at employees’ trust in the organization.

“The decline happens incrementally over the span of an employee’s tenure with their organization when policy enforcement is kept secret from other employees,” says lead author Jone Pearce, dean’s professor of organization and management at the UCI Paul Merage School of Business, in a statement.

“Secret proceedings weaken, rather than support, employees’ perceptions that policy enforcement is taken seriously, which then works to undermine trust in their organizations.”

Unlike legal trial proceedings, the authors write, most companies’ policy enforcement proceedings “lack the fundamental feature of due process procedures: They are not open.”

In addition, they note, organizational secrecy can spread as employees “assume secrecy is what the organization expects, and so they withhold information that they should be sharing, potentially causing additional harm to organizations and employees alike.”

While the company might contend that keeping policy proceedings hush-hush is done in the interest of privacy, being open about enforcement proceedings actually “helps protect against someone making false charges and allows all employees to know that violations have consequences,” according to Pearce.

“Openness keeps those rendering judgement honest, while secrecy undermines accountability. Hiding enforcement proceedings may help a company or its employees avoid embarrassment; however, it comes at a price. And, that price is a loss of trust in the authorities and their policies.”

And, compounding the problem is the possibility that this skepticism might trickle down from veteran workers to more junior colleagues who are still forming impressions of their employer.

“Understanding why employees with more tenure trust their organizations less also has important theoretical and practical implications for human resource management practices,” the authors point out. “Longer tenured employees are often sources of guidance for newer employees on understanding organizational values and expectations, and may spread their low trust to their less experienced co-workers, further undermining others’ organizational trust.”

 

 

 

 

 

A Lesson in Bad Management

In the recent wake of the destruction left behind hurricanes Harvey and Irma, we’ve seen countless stories of people in the affected areas following their “better angels” by making decisions that take into account the safety and well-being of others.

This is not one of those stories.

According to the Washington Post, a Pizza Hut franchise in Jacksonville, Fla., posted an ominous flyer for employees in advance of Hurricane Irma:

“To all Team members,” the memo begins, before laying out a policy that dictates that employees cannot evacuate more than 24 hours before the storm and must return within 72 hours. “Failure to show for these shifts, regardless of reason, will be considered a no call/no show and documentation will be issued,” it reads. “After the storm, we need all TM’s available to get the store up and running and serve our communities as needed.”

After the flyer made the rounds on social media and drew the wrath of many, Pizza Hut’s corporate office made a statement on its website that read, in part: “We absolutely do not have a policy that dictates when team members can leave or return from a disaster, and the manager who posted this letter did not follow company guidelines. We can also confirm that the local franchise operator has addressed this situation with the manager involved.”

The situation, unfortunately, is a common one for some workers in the path of inclement weather, as this story highlights.

Opioid Epidemic Hinders Hiring

Economists in recent days have taken note of a trend that’s been painfully obvious to many in HR: The opioid epidemic is preventing some employers in parts of the country from hiring and keeping workers.

Most notable among the new voices was Federal Reserve chairwoman Janet Yellen, who addressed a question that has puzzled labor economists —what is driving the decades-long decline in the labor-force participation rate for prime working-age men? (Translated from econo-speak: Why are fewer men ages 25 to 54 either employed or looking for work?)

Speaking to the Senate banking committee on July13, Yellen tied that decline to another troubling trend: the rising death toll from overdoses of prescription opioid painkillers. “I do think it is related to declining labor-force participation among prime-age workers,” Yellen said. Other economists have elaborated on this theme in recent weeks. For example: the Federal Reserve Bank of St. Louis, in its August 2017 “beige book” economic report, notes: “Manufacturing contacts in Louisville and Memphis reported difficulties finding experienced or qualified employees,

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with some citing candidates’ inability to pass drug tests or to consistently report to work,”

The link between opioids and employment isn’t just guesswork. Yellen and other economists cite the work of Princeton University economist Alan B. Krueger. His latest research, published in the Fall 2017 edition of the Brookings Papers on Economic Activity, “makes a strong case for looking at the opioid epidemic as one driver of declining labor force participation rates,” write Brookings Institution editors in a summary of the research.

Building on his own earlier finding that Krueger’s latest findings are built on his own earlier research looking at labor and medical datafor U.S. counties. Krueger found that over the last 15 years,  after controlling for other variables ,“labor force participation fell more in counties where more opioids were prescribed.”

Trump Nominates HR Veteran for OPM

Jeff Tien Han Pon is President Trump’s nominee to head the U.S. government’s Office of Personnel Management, which oversees HR policies for the federal government’s two million-plus employees.

Pon currently serves as CHRO and strategy officer for the Society for Human Resource Management and was chief operating officer for Futures Inc., an organization that helps military veterans find civilian careers, reports Government Executive magazine. He’s also served as a principal at Booz Allen Hamilton.

Trump had previously nominated George Nesterczuk to be OPM chief, a move that drew the ire of federal employee unions who objected to his role in implementing the National Security Personnel System, a failed attempt to introduce performance-based pay to the federal workforce during the George W. Bush administration. Nesterczuk withdrew from consideration in late July.

If confirmed, Pon will have his work cut out for him. The federal government’s personnel system has been widely derided as in dire need of fixing; in July, the National Academy of Public Administration released a report that dismissed piecemeal attempts to fix the civil service system in favor of a broad overhaul that would give individual federal agencies more flexibility over their processes for hiring, firing and promoting employees. Under this decentralized scenario, the OPM’s role in overseeing federal workers would likely diminish.

However, federal employee unions have expressed wariness toward the NAPA proposal, saying that it would undermine civil service protections for government workers. “Flexibility … is a common dog whistle for at-will employment,” union leader Lee Stone wrote in an email to the Washington Post.

A Home for Workaholics

The innovators and iconoclasts that inhabit Silicon Valley have long cultivated a reputation for swimming against the corporate current.

So, it makes sense then that some of these same individuals would be pushing their people harder at a time when many companies are striving to help employees achieve something close to work/life balance.

The New York Times’ Dan Lyons says as much in a recent opinion piece that focuses on how some companies in the Valley are actually “branding workaholism as a desirable lifestyle choice.”

In the north of California, “an entire cottage industry has sprung up,” writes Lyons, “selling an Internet-centric prosperity gospel that says there is no higher calling than to start your own company, and that to succeed you must be willing to give up everything.”

A tech company’s founder and architect making enormous—and, to some, unthinkable—personal sacrifices to build and sustain a successful business is one thing. But “rank-and-file workers are buying into this madness, too,” says Lyons, a former tech reporter who also worked in marketing with a start-up after losing his job at Newsweek at age 52. (Lyons, who bowed out of that position after not quite two years on the job, has since penned a book chronicling his time in the start-up bubble. Spoiler alert: he didn’t particularly enjoy it.)

He offers a recent scenario at San Francisco-based Lyft as an extreme example of the all-work-all-the-time ethos that persists in the Valley.

Last year, a very pregnant Lyft driver started having contractions while on the road working, and, you guessed it, continued picking up fares on her way to the hospital. A subsequent Lyft blog post celebrated the driver’s refusal to let a little thing like childbirth get in the way of doing her job. The post was ultimately deleted after critics lambasted Lyft for praising the driver; a reaction that Lyons says “genuinely puzzled” those within the company, including the driver herself.

Proud workaholics abound in the Valley, of course, but some show it in more discreet ways—wearing T-shirts that say “9 to 5 is for the weak,” for example. Then there’s venture capitalist Keith Rabois, who bragged in a recent tweet that he worked for 18 years while taking less than one week of vacation, according to Lyons, who says living at such a breakneck pace is actually a selling point for those with designs on becoming the next big-time tech player.

“Wannabe Zuckerbergs are told that starting a company is like joining the Navy SEALS,” writes Lyons. “For a certain type of person—usually young and male—the hardship is part of the allure.”

As for the hopefuls flocking to the Valley to get in on the ground floor with the next Facebook or Lyft, maintaining a brutal work schedule is perceived as just another part of the job, clinical social worker Anim Aweh tells Lyons.

“Everyone wants to be a model employee,” according to Aweh, who Lyons says “sees a lot of stressed-out tech workers” where she works in the Bay area.

“One woman told me: ‘The expectation is not that you should work smart, it’s that you should work hard. It’s just do, do, do, until you can’t do anymore.”

We often hear HR leaders say their organizations are becoming much more vocal in encouraging employees to balance their work with their personal lives—minding the number of hours they put in or taking a day off when they need a break, for example.

If the picture that Lyons paints is an accurate one, then some in the tech sector are taking a much different approach. And—sadly, some might say—the hopeless workaholic will likely remain a fixture in northern California for the foreseeable future.

“The chance to become the next 20-something tech celebrity billionaire has not lost its power,” says Lyons. “Every year thousands of fresh recruits flood into San Francisco, hoping to be baptized into the religion of the hustle. As bad as things have become today, there might be worse to come.”