Workforce Development - A Good Investment?

We Are Sad to Pronounce That Horatio Alger is Dead...

If you're feeling that you're working hard, but not getting any further ahead, you're probably right...

The Economic Policy Institute (EPI) studies issues relating to Living wage, Minimum wage, Offshoring, Family budgets, Retirement security, Social Security, Unemployment, and Welfare. 

The  president of the EPI, Lawrence Mishel, just published a study about the increasing problem of income inequality in the United States, entitled "Surging wage growth for topmost sliver"

The late 19th century American author Horatio Alger, whose fame at his time rivaled Mark Twain, wrote several rags to riches stories, illustrating how down-and-out boys might be able to achieve the American Dream of wealth and success through hard work, courage, determination, and concern for others.  These works have inspired generations of working Americans who sought to achieve the "American Dream" of middle-class security, stability, and a solid reputation — that is, their efforts being  rewarded with a place in society, not domination of it.

Thus, Mr Mishel's report tells a story of increasing income inequality in the U.S. - not only are we not "moving up" in economic society, we're headed the other direction.

Additionally, this report illustrates that we are seeing decreasing economic mobility.  Mobility not the same as “inequality” - Inequality is the difference in incomes at one moment in time.  Mobility is the changes in an individual’s ranking over time, that is, are they better off compared to their peers or worse off, over time?

What this illustrates is that the "opportunity" here in the land of opportunity is shrinking.

Let me provide an example:

According to socioeconomic research published in 2004 by Earl Wysong and others, sons from the bottom three-quarters of the socioeconomic scale were less likely to move up in the 1990s than in the 1960s. 

(Wysong is widely published in this area and has written several works refocusing our attention on class interests that are rapidly polarizing American society. It redefines the terms of class analysis by arguing that the distribution of resources critical to class membership)

By 1998, only 10% of sons of fathers in the bottom quarter (defined by income, education, and occupation) had moved into the top quarter, whereas by comparison, by 1973, 23% of lower-class sons had moved up to the top.

Thus, there is a smaller chance that a low-income family today will move up the income ladder over time.

Whatever happened to the belief that any American could get to the top?

The United States likes to think of itself as the very embodiment of meritocracy: a country where people are judged on their individual abilities rather than their family connections. The original colonies were settled by refugees from a Europe in which the restrictions on social mobility were woven into the fabric of the state, and the American revolution was partly a revolt against feudalism. From the outset, Americans believed that equality of opportunity gave them an edge over the Old World, freeing them from debilitating snobberies and at the same time enabling everyone to benefit from the abilities of the entire population. They still do.

To be sure, America has often betrayed its fine ideals. The Founding Fathers did not admit women or blacks to their meritocratic republic. The country's elites have repeatedly flirted with the aristocratic principle, whether among the brahmins of Boston or, more flagrantly, the rural ruling class in the South. Yet America has repeatedly succeeded in living up to its best self, and today most Americans believe that their country still does a reasonable job of providing opportunities for everybody, including blacks and women. In Europe, majorities of people in every country except Britain, the Czech Republic and Slovakia believe that forces beyond their personal control determine their success. In America only 32% take such a fatalistic view.

But are they right? A growing body of evidence suggests that the meritocratic ideal is in trouble in America. Income inequality is growing to levels not seen since the Gilded Age, around the 1880s. But social mobility is not increasing at anything like the same pace: would-be Horatio Algers are finding it no easier to climb from rags to riches, while the children of the privileged have a greater chance of staying at the top of the social heap. The United States risks calcifying into a European-style class-based society.

The past couple of decades have seen a huge increase in inequality in America. The Economic Policy Institute, argues that between 1979 and 2000 the real income of households in the lowest fifth (the bottom 20% of earners) grew by 6.4%, while that of households in the top fifth grew by 70%. The family income of the top 1% grew by 184%—and that of the top 0.1% or 0.01% grew even faster. Back in 1979 the average income of the top 1% was 133 times that of the bottom 20%; by 2000 the income of the top 1% had risen to 189 times that of the bottom fifth.

Thirty years ago the average real annual compensation of the top 100 chief executives was $1.3m: 39 times the pay of the average worker. Today it is $37.5m: over 1,000 times the pay of the average worker. In 2001 the top 1% of households earned 20% of all income and held 33.4% of all net worth. Not since pre-Depression days has the top 1% taken such a big whack.

Does it matter to the typical working American that this gap in inequality is increasing?  You bet it does!

Additionally I ask you to consider the impact of the systematic dismantling of social welfare institutions in the U.S. that foster mobility — education, housing, health care, adequate child care, protective labor law.  How do we increase worker development, engagement and productivity when we're seeing the erosion of these "cornerstones" upon which millions of Horatio Alger figures began their careers.

When workers become discouraged workplace disengagement starts to set in, along with decreasing productivity and higher costs per unit of output. Rising levels of inequality and limited bargaining power of workers is seen today taking a long-term toll on particular workers and their families. 

Understanding employee expectations of Commuting

A recent BusinessWeek survey, "The Impact of Computing on Employees", is available that argues that 8 out of 10 employees say they need their employers to help reduce their commuting costs.

At the same time, employees say they want companies to help fight climate change.

The study sought to explore the challenges and issues that respondents have pertaining to commuting and the role they feel employers should play, as well as the strategies companies are deploying to address these issues.Additionally, to examine the role of commuter benefits as they relate to commuting issues, including level of interest and usage.

Based on survey findings, one of the most popular ways to do both is to offer tax-free commuter benefits, such as TransitChek®.

To see the full results of the BusinessWeek study and learn more ways you can help, click here to get a copy of this free white paper now.

Boomers - Can you retire when you want to?

There's a lot of discussion about how the baby boomers play into the workforce of the future.  Some argue that they are holding back younger generations of workers aspiring to positions of greater responsibility.  Others will argue that these older workers are the "body of knowledge" that need to be accessed to pass along decades of experiences and relationships.  An there are countless other variations on this theme.

The one reality that keeps coming up is that a number of boomers may not be prepared for retirement, which may change their plans and dates of leaving the workforce.

If you're one of the millions of Boomers not sure of what to expect, an improved retirement planning tool from Uncle Sam is one of the best resources available to help calculate your retirement finances.

Most people have the same first question about retirement: How big a nest egg will I need? Two years ago, the Employee Benefits Security Administration, part of the Department of Labor, published "Taking the Mystery Out of Retirement Planning." This smart, but lengthy PDF guide helps answer that question in a detailed, but easy-to-understand, manner.

And now it's even better.

The original booklet contained eight worksheets -- involving assets, income and expenses -- to help calculate Your Particular Number.

Now, these worksheets have been moved online and you can let the Labor Department's computers do the math.

What's more, with the new online tool you can store and revise your data and calculations for as long as a year (by means of a simple username and password; the site doesn't ask for any information that might identify you).

What are the pros and cons about telecommuting?

I have a blog I read with some frequency entitled HR Clean-up (Because HR is a Dirty Business), that recently published a great article entitled "Telecommuting"

It is written from the perspective of the current astronomical fuel prices we're seeing. The gist of the article follows:

There was an article, not a big one, in Sunday's Boston Globe that stated "4-day weeks, telecommuting look better to employers now".  Since I actually teach Virtual HR and I've been a proponent for flexible work arrangements for a long time, I read with interest. Traffic It turns out that soaring commuting costs are finally forcing employers to help employees out.  And, given that so many of us have moved away from work to find cheaper housing, employees are buckling under the increased expenses.  On top of employee costs, employer costs are also skyrocketing.  Companies are starting to figure out that office space isn't cheap--so if an employee is ok with heating and cooling themselves, why not? The other really big change is on the legal front.  Finally, there seems to be some movement to get a bit more flexible. As organizations start to embrace telecommuting, it will be critical for HR to be at the decision making table--along with IT, Building Services, and everyone else who makes the organization tick.  HR has an amazing opportunity to push the traditional boundaries of "butt in seat" and get companies to start measuring what counts--work output. It is going to be a long hot Summer and fuel costs are going to continue to escalate.

However, there are many faces beyond this article, that factor into the telecommuting discussion:

An article "Telecommuting not so great for those left in office" that was published in January 2008 by Kristina Cooke over at Reuters looks at how those that telecommute have less stress and a higher morale compared to those that are left to come into an office everyday. She mentions that “their co-workers tend to find the workplace less enjoyable, have fewer emotional ties to co-workers and generally feel less obligated to the organization.

The beginning of the article states "Telecommuting may boost morale, and cut stress, but it can have the opposite effect on those left behind in the office, according to a new study"

The author cites how telecommuting has been a growing trend in the United States since about 2000. About 37 percent of U.S.-based and international companies now offer flexible work arrangements, with the number of those programs growing at a rate of 11 percent per year, according to the Society of Human Resource Management. but then goes on to explain how

The author cites research of Timothy Golden, a management professor at Rensselaer Polytechnic Institute that claims that when a number of their co-workers toil away from the office by using computers, cell-phones or other electronic equipment, those who do not telecommute are more likely to be dissatisfied with their job and leave the company.

I'm a bit skeptical about this inference.

In the late 1990's I worked with IBA, an early pioneer in telecommuting, and participated in the establishment of the first "telework" centers around Washington DC.  Others have since sprung up, adding credence to the ideas of telecommuting in various "flavors".  In 2006, The Telework Coalition, conducted a Telework Benchmarking study of 13 large organizations with mature telework programs.

This study asked about the attitudes of those employees who did not telework. Both our study and two previously conducted studies by other organizations in which there were multiple participants showed that the non teleworking coworkers were both enthusiastically supportive and felt teleworking was good for the organization, or at the least, the situation was a non issue.

I believe that this area is ripe for investigation and action by management and HR practitioners.  Since each organizations' DNA is different, it may not be the right solution for every situation, but there are viable telecommuting approaches that will and do help organizations attract and retain talent in todays increasingly complex market.

Good Grief Charley Brown ! Now We Have a Maintenance Crisis

My thanks to Joel Leonard over at PlantServices.com for taking the bull by the horns.

With American Idol returning to the television air waves, Joel was reminded of why he started his crusade for awareness for the Maintenance Crisis in the first place.

The fuss and attention being paid to crowning still another singing American Idol has gotten on his nerves again. In case you didn’t know, almost five years ago he was a guest speaker at the Society for Maintenance & Reliability Professionals (SMRP) Conference in Nashville. That conference changed his life and started him on a crusade against the maintenance crisis.

At the time, Joel was serving as VP of the Association for Facilities Engineering and the board had been discussing the pending retirement of the boomer generation. To his surprise, that was a key concern at SMRP. Bob Baldwin, then editor of Maintenance Technology, led an open discussion about the pending crisis. He polled the audience of more than 600 engineers and maintenance pros from the biggest companies in the United States and said, “Raise your hand if you plan to retire in the next 10 years.”

More than 90% of the audience  reached for the sky. Then he asked the attendees to keep their hands raised if they felt comfortable with the next generation. Everyone dropped their hands.

Baldwin then asked why. One said,  “The kids aren’t hungry and aren’t pursuing the education needed to advance in this competitive profession.” Others chimed in, saying, “The insecurity of manufacturing is scaring the younger generation away,” and, They don’t want to get their hands dirty.” Some said that most of them don’t even know about the maintenance, reliability and facilities engineering professions. Or maintenance simply just isn’t cool.

When the group adjourned for a break, Joel and others stretched their legs outside in the 30° weather. To their surprise, around the corner they saw about 5,000 of the very people we had been looking for —16-to-28-year-olds — standing in a line outside the Nashville Coliseum. They were waiting to audition for American Idol. While we were discussing the exodus of retiring maintenance talent, whose salaries averaged more than $80,000, and wondering where the next generation was, we realized there they here at the Coliseum, hoping to sing their way to the top.

That evening, they decided that talking at maintenance conferences or writing books and articles for other engineers wouldn't fix the problem because outsiders need to be aware of the problem and the opportunities the crisis presents. After a couple of barley-infused beverages, Joel posed, “Why not write a song about the maintenance crisis?” His friends agreed that it was a good idea, but they said he couldn’t do it.

They were partly right: he couldn’t do it alone. With the help of some friends, real musicians took Joel's original lyrics and now as a result there we is not only a song, but in nine genres, with one version especially for women, and jazz, Spanish and French renditions in the works.

The songs have been played at industrial and engineering conferences worldwide. Rolls Royce Aerospace and others have made it their department’s anthem. The songs have been downloaded from Joel's Web site more than 50,000 times. Radio stations, including National Public Radio, have played it. Even a class of sixth graders knows the country version, “Find me a Maintenance Woman,” and at least three of them memorized the lyrics.

Free downloads of “Find Me a Maintenance Woman” and “The Maintenance Crisis Song” can be found at www.mpactlearning.com.

Are Construction Jobs Going Down Under?

One of my favorite sources on trends about the skilled labor shortage, is "Perfect Labor Storm 2.0" authored by Ira Wolfe, who constantly helps fill in the gaps about HOW people are coping with the worsening skills shortage.

One of Ira's latest excellent contributions is "Will U.S. construction workers flee to Australia?" where he discusses how the Australian Housing Industry Association (HIA) has called for a special visa scheme to recruit 15,000 overseas construction workers to combat the local (Australian) skills crisis. Thousands of skilled building workers could be lured from the faltering US housing industry to help ease the crisis "down under"

I'd like all of my readers in the construction space to ponder this, and carefully so.  Ask yourself what you think the economic will be to the US, when many workers choose to "relocate" their future to the other side of the globe. 

Just check out one of many sites offering Construction Jobs in Australia and you'll notice two things:

1. many companies are actively seeking qualified and skilled people to join them, and
2. these are the same types of jobs that are being cut by the implosion of the residential housing construction market in the U.S.

American construction workers may be surprised at how well they'll be received by the Australian workforce marketplace, and the incentives they'll have to come down to work.  Kind of makes you wonder when the last time their former American employers told them how valued they were?

Put yourself in the place of the laid-off or soon-to-be-laid-off construction worker.
There are a number of questions you might want to ask yourself...

• Did you feel valued at your last job? 
  
  • Was it because you were unappreciated, or was it because your work contribution was just "ordinary"?
• Do you have the skills to compete in the highly competitive Australian workforce
  • you didn't think they were looking for unskilled general labor did you?
  • (by skills, I mean the skills to survive in the marketplace, not just the technical skills to get the job)

Looking for another job, especially in another country, can be a daunting, as well as an enlightening process for US construction workers.  By entering into a job search in the other parts of the world, they will become informed of other opportunities and perhaps for the first time for most U.S. construction workers, lets them know how competitive they are in the "global" job market.  (HINT: If your skills have become outdated or job specific, you might want to consider a few training programs in order to update your skills, or develop new ones.)

American construction workers who consider the new global opportunities that are appearing, may also find that they need skills to adapt in a different culture that they never before had to consider.

Time of great risk or great opportunity?  I guess it depends on how you want to look at it.

When Location Matters

Hint - it ALWAYS matters!

When businesses go looking for an "ideal" location, you'll often hear that it's all about the quality of the workforce.  While that is always true, it's an oversimplification.

In reality, the workforce is only one of many factors that influence where to locate,, or where to expand. The major factors usually taken into consideration include:

1. Workforce
2. Taxes
3. Economic Incentives
4. Quality of Life
5. Operating Costs and
6. Real Estate

These factors provide business owners with a two level scale of "goodness of fit"

• Quantitative (Demographic, Workforce, Quality of Life) and
• Qualitative (Wages, Taxes, Utility Rates)

The elements also have differing weights, based upon the level of needs.  For example, a a foundry would be looking for a much different skillset, incentive and real estate package than a biotech firm, or a highway construction company.

Workers also look at similar elements when seeking out their future employer.  And they do so on multiple levels (Level 1 - what is important to me for the job I am considering, and Level 2 - once I am ready to change employment again, and wish to stay in the area, what other aspects of the location would compel me to stay in the area?)

Thus, each factor related to attracting and keeping a qualified workforce needs to have a similar perspective (an owners perspective) as well.  Bearing in mind that today we live in a global market for most commodities and skills, it's no longer sufficient to just try to match job titles.  Today's workers understand that they have more options available, so the employers job of "selling" the overall package must reflect these changing times.

Are you measuring the economic impacts of Skill Shortages?

One of the most common items I'm asked about when I present to groups is how the "skilled labor shortage" impact can be measured.   Great questions !

When organizations discover that they have skill shortages, there are a number of quantitative and qualitative ways that this impact can be measured.

• Reduced production output or sales
• Lowered overall productivity
• Reduced product or service quality
• Prevented firm from expanding its facilities
• Prevented firm from developing new products/services
• Caused firm to move some operations out of state

Are any of these impacts minuscule?  No way!  The better question is how many of these metrics do you currently measure today?

Can You Afford The High Co$t of Turnover?

Thanks to the folks over at Chrysalis for this article, which puts the real cost of workforce turnover into a real-world dollars and sense perspective.

Case Study:The High Cost of Workforce Turnover

Les's business generated revenues of $6.6 million in 2003. Profit margins were 14%. His 2004 projected increase in revenues (an eight percent increase) is $528,000.

Last year, Les's company produced sixty-four W- 2's for 35 positions. Essentially they hired 64 new employees for twenty positions; 15 employees were employed more than 12 months.

On the surface, turnover appears to be 83 percent, less than the 92 percent industry average. Churn-over, the number of employees hired and gone in less than one-year, was a whopping 320 percent (64 attempts at hiring for 20 positions)!

At the cost of $6,000 per employee, these 64 employees cost the company $384,000. Even at the same clip this year, churn-over will eat up nearly seventy-two percent of the projected revenue gains.

What's worse - much worse - is how much revenue has to increase to sustain the 14 percent profit margin. At fourteen percent profit margin, nearly $2,743,000 in additional revenues need to be brought in just to keep pace with the lost costs of churn-over.

Increasing revenues shouldn't be Les' primary focus unless he likes to just work harder and harder with not a lot to show for it. If Les and his team would only put a plan in motion to reduce annual hourly turnover to 25%, they would find it much less painful to grow the business at the top line and the bottom line.

The cost of 16 churned employees would be $96,000, a savings of $288,000 in the human resource line item. Re-funneling a portion of the savings for wages, benefits and training back to the remaining employees would certainly be a good idea too as the return on retaining employees is clearly much greater than recruiting new ones.

Of even greater importance will be the increased profit margin from revenue growth. Although the revenues required to foot the bill for even 25 percent turnover is still over $600,000, Les's company will increase profits due to increased productivity and quality from a more experienced workforce, lower administrative and training costs for new hires, and less stress on supervisors, managers and co-workers.

Income inequality and how it affects the workforce

Paul Krugman, in an article entitled The Great Wealth Transfer articulates the simple reason why he thinks most Americans think the economy is fair to poor amidst the apparent "healthy" economy we enjoy.

For most Americans, it really is fair to poor. Wages have failed to keep up with rising prices. Even in 2005, a year in which the economy grew quite fast, the income of most non-elderly families lagged behind inflation.

The number of Americans in poverty has risen even in the face of an official economic recovery, as has the number of Americans without health insurance. Most Americans are little, if any, better off than they were last year and definitely worse off than they were in 2000.

But how is this possible? The economic pie is getting bigger -- how can it be true that most Americans are getting smaller slices? The answer, of course, is that a few people are getting much, much bigger slices. Although wages have stagnated since the 2000 elections, corporate profits have doubled.

The gap between the nation's CEOs and average workers is now ten times greater than it was a generation ago. And while the current administration's tax cuts shaved only a few hundred dollars off the tax bills of most Americans, they saved the richest one percent more than $44,000 on average. In fact, once all of these tax cuts take effect, it is estimated that those with incomes of more than $200,000 a year -- the richest five percent of the population -- will pocket almost half of the money. Those who make less than $75,000 a year -- eighty percent of America -- will receive barely a quarter of the cuts. In the post 2000 era, economic inequality is on the rise.

Rising inequality isn't new. The gap between rich and poor started growing before Ronald Reagan took office, and it continued to widen through the Clinton years. But what is happening under the current administration is something entirely unprecedented: For the first time in our history, so much growth is being siphoned off to a small, wealthy minority that most Americans are failing to gain ground even during a time of economic growth -- and they know it.

In the past few years, distrust of our government and its actions only worsens as economic inequality rises. Indeed, the gap between rich and poor doesn't just mean that few Americans share in the benefits of economic growth -- it also undermines the sense of shared experience that binds us together as a nation.

"Trust is based upon the belief that we are all in this together, part of a 'moral community,' " writes Eric Uslaner, a political scientist at the University of Maryland who has studied the effects of inequality on trust. "It is tough to convince people in a highly stratified society that the rich and the poor share common values, much less a common fate."

Does this affect the attitudes of the workforce?  Readers, what do you think?

Concrete proof that Employee Benefits are going to the dogs

The American Animal Hospital Association in a recent article (AP) has revealed that while employers are scaling on back costly health benefits, pet insurance is gaining popularity as an employee benefit.

Veterinary Pet Insurance, the nation’s largest pet insurer, saw its corporate accounts balloon from 15 to 1,600 in the past six years. About 15 percent of Veterinary Pet Insur­ance’s policies, or about 50,000, come from its corporate accounts.

The growth of this perk comes as pets occupy an increasingly promi­nent place in the American home. According to the American Pet Prod­ucts Manufacturers Association, pet owners spent an estimated $9.8-bil­lion on veterinary care in 2007, up from $7.1-billion in 2001.

Pet owners are spending more on sophisticated care to give animals some comfort or a few extra years when illness strikes. The cost of a sur­gical veterinarian visit was $453 for dogs and $363 for cats in 2006, but treating a pet for an illness like cancer can cost several thousands of dollars.

Pet insurance is rare, with about 2 percent of U.S. pets insured. Anoth­er major pet insurer, PetHealth Inc., expects that figure to grow to about 10 percent over the next decade as options for animal medical care grow. PetHealth in Oakville, Ontario, saw revenue from policies jump to $4.3-million in the third quarter, up 12 percent from the previous year.

Noninvasive procedures like MRIs, CAT-scans and endoscopies have become rela­tively common for animals. Though rare, owners can get organ transplants and pacemakers for cats and dogs.

For employers, offering pet insur­ance doesn’t cost a dime, since employees pay the full cost of the benefit, unlike health insurance for humans. Workers typically get a dis­count of 5 or 10 percent if pet policies are obtained through their company.

Only a tiny fraction of employees typically sign up for the benefit — usually less than 5 percent, according to Veterinary Pet Insurance. But with big names like Comcast Corp., Home Depot, the Walt Disney Co. and Sprint offering the benefit, policies add up.

Del Monte Foods Co. in San Fran­cisco started offering pet insurance about a year ago. Only 15 or 20 employees signed up, but the benefit makes a statement about the compa­ny’s culture, said Paul Berg, vice pres­ident of compensation and benefits.

Bobbie Stanton, a 55-year-old employee at Del Monte, signed up her two Shetland sheepdogs.

Stanton pays $313 a year for each of her two dogs. She recently paid $20 to have a burr removed from one dog’s ear; the cost without insur­ance would have been $200.

Pet insurance isn’t for everyone. Unless your pet’s breed is prone to chronic illness, Consumer Reports says insurance might cost more than it saves. Depending on the age and type of animal, insurance costs $10 to $40 a month. Pet owners often pay bills up front, then are reimbursed.
Whatever the means may be — pet insurance, a savings account or any other financial plan — the key is to simply plan ahead for medical care, said Dr. Thomas Carpenter, presi­dent of the American Animal Hospi­tal Association.

Putting "old Charley" out to Pasture

Recently, I witnessed the retirement of a fellow, who I'll call "old Chariey" who after many decades as a player in a large construction firm, stepped down, in order to "pursue other interests"

A veteran of the business, he had built up a stunning legacy of successfully completed projects, had served on dozens of committees and industry boards, was well known in the construction market, and when he walked out the door, took much of this knowledge with him.

We live in interesting times, indeed.

There is a general recognition that many industries, including construction, can benefit from the extensive skills of existing older workers.  And trend data indicates more older workers want to remain on the job longer.  Unfortunately, they often are forced to decide between their social security benefits and a paycheck.

Older workers possessing a broad array of building, supervision and management skills are often discouraged from working past retirement because they can lose some of their social security income if they earn more than the limits.

In calendar year 2005, for example, until recipients turn 65 (currently the normal retirement age) they can earn up to $31,800 without penalty; seniors earning more than that amount lose $1 of benefits for every $3 of earnings above the limit. There is no limit once past 65 years old.

Beneficiaries under the age of 65 are penalized by a reduction in benefits of $1 for every $2 of earnings above $12,000 in 2005.

Smart firms are starting to realize that they need to make better use of older workers talent, relationships and experiences.  These are people proud of their accomplishments, who want to contribute and share in a meaningful way, and it puts organizational leadership into the position of "thinking outside the box" to figure out how to leverage these assets in a meaningful "win-win" way.

Removing the social security earnings test would encourage more skilled workers to remain in the building trades - where their knowledge, connections and experience are still needed, and valued.

Where do you think the workers are coming from?

China currently uses half of the world’s production of steel and concrete and will probably construct half of the world’s new buildings over the next decade.

What you might ask is fueling this awesome level of construction activity?  There are actually many factors at work?

• China's increased global visibility, including the WTO, APEC, Olympics, Expo 2010
• Continued GDP Growth – Currently running at 9% plus
• Construction spending growth – running at 8% annually
• An emerging middle class and growing consumer market
• A proactive and supportive Chinese government
• The reality that they have become the “Manufacturers” for The World
  • and that's Manufacturers with a capital M - Some Chinese factories can fit as many as 200,000 workers

What we're seeing is an unprecedented growth in Chinese construction, and construction by Chinese contractors in Asia and Africa, where the Chinese continue to invest heavily, often to secure access to oil and other natural resources China needs to fuel its economic expansion.

The engineers and contractors that we have come to expect to hire, increasingly are eyeing the "red hot" East as the "hot spot" for the AEC industry.  And that implies there will continue to be a diversion of foreign engineering and construction talent to the US that will continue to frustrate US firms trying to recruit talent. SO where will the talent come from that is needed for their business backlog and active projects? 

Not All Jobs Are Created Equal

I recently read an interesting report entitled: "Top 200: The Rise of Corporate Global Power" that illustrates some dimensions of todays workforce that you may find interesting in understanding the complex dynamics of today's global workforce.

While the sales of the Top 200 corporations are the equivalent of 27.5% of world economic activity, these firms employ only a tiny fraction of the world's workers. In 1999, they employed a combined total of 22,682,166 workers, which is 0.78% of the world's workforce.

Between 1983 and 1999, the number of people employed by Top 200  firms grew 14.4%, an increase that is dwarfed by the firms' 362.4% profit growth over this period.

Corporate analysts may see the dramatic increase in the ratio between profits and employees as a positive sign of increased efficiency. The growing gap between profits and payrolls is at least partly the result of technological changes that has allowed firms to produce more with less people. Automation is not always a negative development, especially in the case of jobs that are dangerous or otherwise undesirable.

However, another factor is the trend towards outsourcing, particularly among large industrial firms, but also increasingly evident in other skilled areas including engineering. By shifting more and more of their production to contractors, companies can distance themselves from potential charges of labor rights abuses and other illegal behavior and keep labor costs low by forcing contractors to compete for business with an ever smaller number of giant purchasers.

The giant firms also have more freedom to hire and fire contractors to meet shifting demand. U.S. corporations have been at the forefront of this trend.  Add this to domestic "at will employment" policies in many states, employees feel justifiably uneasy about their long-term stability.

Chrysler (formerly known as DaimlerChrsyler since the merger with Daimler Benz), for example, purchases almost all of its parts, from brakes to seats, from suppliers. Hewlett-Packard relies on 10 different contractors and IBM relies on 8 to make their products.

In recent years, Japanese electronics firms, including Mitsubishi, NEC, Fujitsu, and Sony, have also begun to outsource. Still, Americans may be less concerned about the growing gap between profits and employees because of the country's record low unemployment rate.

What is often ignored in the mainstream media is the fact that unemployment problems remain prevalent elsewhere in the world, including in many countries where the Top 200 firms are enjoying strong profits.

In the European Union, the 1999 unemployment rate was 10 percent, compared to 4.2 percent in the United States.  The International Labor Organization estimates that one billion people worldwide are unemployed or underemployed.

Joblessness around the world hurts the United States because it reduces the capacity of consumers in other countries to purchase U.S. products and can lead to social instability that has international ramifications.

It is also harder to draw a bead on how the top firms are structuring their workforces.  There is much information that U.S. firms are not required to reveal to the American public:

• a breakdown of their employees by country

• locations of overseas facilities or contractors

• wage rates paid at overseas facilities

• layoffs and the reasons for layoffs

A full 5 percent of the Top 200s' combined workforce is comprised of Wal-Mart employees. The discount retail giant's workforce has skyrocketed from 62,000 in 1983 to 1,140,000 in 1999, making it the largest private employer in the world.

The next largest, DaimlerChrysler, has a workforce of 466,938 (less than half the size of Wal-Mart's).  Think about how any change in these statistics affects the jobs reports that come out of Washington.

Although Wal-Mart is indeed providing many new jobs, the company is notorious for its strategy of employing armies of workers on a part-time basis to avoid paying benefits.

The firm is also adamantly anti-union. In March, Wal-Mart announced it was closing the meat department in 180 stores two weeks after the meat cutters at one Texas store voted to form a union the first successful organizing drive at an American Wal-Mart.

At a time when workers are increasingly uneasy about job stability and coming to the realization that often the fate of the American worker is not considered in corporate decisions, it has to make you wonder if it is a surprise that young workers coming into the workforce are exceedingly skeptical about a long-term commitment to any employer.

Can't we do better?

A Perfect Hiring Storm: Scarce talent and Bad Press

Over at the Offshore Recruitment Outsourcing blog I always find perspecfives of value.  In early December, they published a great piece entitled A Perfect Hiring Storm: Scarce talent and Bad Press

In this article, they discuss another recent article appearing on Careermag.com contributed by Debbie Benami-Rahm, whose research I have found to be top shelf.

One of the key elements of this discussion is the following:

The way your organization handles the interview and hiring process either brings you the talent you want or scares your talent away.

Couldn't agree more.  It's increasingly a binary choice.  Many organizations with whom I have consulted over the years have not changed their tactics and methods, despite the fact that entire workforce "value proposition" has changed.  Further, many are completely clueless, and still do the same thing over and over and expect a different outcome.

A few years back, I also put some specific metrics on the true cost of employee attrition when I wrote "The Death of Employee Loyalty"

The situation is changing, and the companies that refuse to change will be relegated with higher costs, lower customer satisfaction and lower profits until they come to the realization that the workforce recruitment and retention process IS their business.

Is CEO pay an issue for the workforce?

I'd like to begin this post with an article on CEO compensation that came out in late August

Americans Pay a Staggering Cost for Corporate Leadership

(Washington, D.C.) With leading Presidential candidates turning up the heat on overpaid CEOs, a new report from the Institute for Policy Studies and United for a Fair Economy documents for the first time the extreme pay gaps that have opened up not just between U.S. business leaders and American workers, but between U.S. business leaders and leaders elsewhere in American — and European — society.

Download the complete report “Executive Excess 2007” at www.faireconomy.org/reports/2007/ExecutiveExcess2007.pdf (PDF, 1 MB).

KEY FINDINGS:

CEO-WORKER PAY GAP: CEOs of large U.S. companies last year averaged $10.8 million in total compensation, over 364 times the pay of the average U.S. worker, a calculation based on data from an Associated Press survey of 386 Fortune 500 companies.

The top 20 private equity and hedge fund managers, pocketed an average $657.5 million, Forbes magazine estimates. That’s 22,255 times the pay of an average U.S. worker.

Workers on the bottom rung of the economy have just received their first federal minimum wage increase in a decade. But the inflation-adjusted value of the new minimum, despite the hike, stands 7 percent below the minimum wage level a decade ago. CEO pay, in that decade, has increased over inflation by roughly 45 percent.

“The CEO-worker pay gap is finally getting some high-profile attention from Presidential candidates,” says report co-author Sarah Anderson of the Institute for Policy Studies. “But lawmakers still aren’t doing nearly enough to tackle the gap.”

PENSION AND PERK GAPS: CEOs at major U.S. corporations enjoyed, on average, $1.3 million in pension gains last year. By contrast, only 58.5 percent of American households led by a 45-to-54-year-old even had a retirement account in 2004. Between 2001 and 2004, the retirement accounts of these households gained an average of only $3,775 in value per year.

CEOs of S&P 500 companies retire with an average $10.1 million in their special Supplemental Executive Retirement Plans, accounts not open to average workers. By contrast, only 36.3 percent of American households headed by an individual 65 or older held any type of retirement account in 2004. The accounts that did exist averaged only $173,552 per household.

The top 386 CEOs took in perks worth an average of $438,342 in 2006. A minimum wage worker would need to work 36 years to earn as much as CEOs obtained just in perks last year.

THE LEADERSHIP PAY GAP: Compensation for American business leaders now wildly dwarfs the pay that goes to leaders in other sectors of American society. The 20 highest-paid individuals at publicly traded corporations last year took home, on average, $36.4 million. That’s 38 times more than the 20 highest-paid leaders in the nonprofit sector and 204 times more than the 20 highest-paid generals in the U.S. military.

The 20 highest-paid figures in the private equity and hedge fund industry collected 3,315 times more in average annual compensation in 2006 than the top 20 officials of the federal government’s executive branch, a group that includes the President of the United States.

“Today’s soaring pay gap between business executives and elected leaders in government essentially makes corruption inevitable,” notes Sam Pizzigati, an Institute for Policy Studies associate fellow. “With such huge windfalls at stake, business leaders have a powerful incentive to manipulate the political decisions that affect corporate earnings.”

IS CEO PAY REALLY THE ISSUE?

Before we tackle the answer to this question, I'd like to share with you comments from reader Rex Stormont, a former employee of Coca-Cola.

For 17 years the world’s most recognisable brand, Coca-Cola, was lead by CEO Roberto Goizueta. During his period in this role he managed to increase share price growth on average by 20% year on year compounded. He was arguably the most successful large corporate CEO of all time.

There are many Coca-Cola millionaires who have Mr Goizueta to thank for their financial stability which very often was achieved with their minimum investment.

For the last 10 years of his tenure, he was shadowed by Mr Douglas Ivestor who was the corporation’s COO. Mr Goizueta was grooming him to become the next CEO upon his own retirement. The stock markets, who universally loved the company and its CEO, were very comfortable with with the heir apparent and Mr Ivestor had their full backing.

Mr Goizueta achieved his tremendous success with his exceptional character, people skills, incredibly shrewd business acumen, ability to build strong teams and develop a strong corporate cultural identity. Everyone who worked for the company (it seemed) loved this man.

There was an almost tactile relationship with him for most employees, most of whom had never even met him. Belief in his vision and objectives was wholeheartedly embraced en masse by them. They felt they had a very real and personal connection with him.

Then suddenly, in 1997, Mr Goizueta was diagnosed with cancer and very sadly succumbed to the condition 2 weeks later.

On the day his death was announced, Coke’s share price grew, a clear indication of the stock markets’ faith in Mr Ivestor. This was a totally unexpected response for the corporation, who thoroughly expected the share price to remain static (if not slightly decline) until his protegee had proven himself.

The honeymoon period continued, until after a relatively short period, product quality issues were discovered in Europe resulting in certain markets totally withdrawing Coca-Cola products from the supermarket shelves.

Mr Ivestor made no public announcements for 2 weeks. The share price halved overnight. He was subsequently sacked by Mr Warren Buffet, Coke’s largest shareholder.

Today, Coca-Cola has still not recovered its share value, some 10 years on….. But what was the impact on the corporation?

From being ‘THE’ FMCG corporation to work for, they quickly became 2nd division players. Morale within plummetted. And worse huge numbers of employees at all levels of seniority were made redundant across the globe.

How do I know this? I was one of the many employees who lost his job as a consequence of an incompetent CEO.

The CEO’s of sucessful corporations are a very rare breed. They have something about them that the vast majority of good businessmen do not possess. It is rather like drawing a comparison between the Peles of this world and an average Premier League soccer player.

Are CEO’s salaries very high? Have they mushroomed as the chart shows above? Yes.

But rather like the big clubs building teams of professional soccer players at the top of their game, the boards of executive directors who appoint the CEOs know full well that they recruit in a competitive job market, where good performers are rewarded with astonishing packages.

Ultimately, the CEO can quite easily make or break these giant corporations. The CEO knows he and his performance as well as that of the people under him are answerable to the stock market.

Whether a company’s stock growth is 1% or 100% frankly it is irrelevant. What counts is if the city analysts and shareholders are content with it.

In other words, in a competitive CEO recruitment market, provided the CEO ensures his company meets performance expectations, he is worth what the market is prepared to pay him.

Rex makes a great point folks - really good CEOs create stability, growth and equity creation that benefit everyone - employees, vendors, shareholders.  What's that worth?  Well, what % of the equity created did the CEO end up pocketing as compensation?  Is that excessive or reasonable?  What do you think?

Looked at the 2008 Federal Budget Lately?

I recently took a closer look at the 2008 Federal Budget.  What I saw troubled me - a lot.

It cuts funding for career and technical education in half, and job training programs by $1 billion.

These programs are critical if we are going to continue to prepare workers to meet the demands of the 21st century workforce. Job Corps is reduced by $55 million, or 3.5 percent. It also would cut Head Start by $100 million.

As we enter a time of increasingly sophisticated skills being needed in order to meet the workforce needs of today and tomorrow, doesn't this seem a bit strange to you?

Not bad for a McJob

One high profile example of a corporation tackling their employer brand head-on is McDonalds, who rely on a steady supply of Human Capital to give their business and their brand life.

After the term 'McJob' appeared in the Oxford English Dictionary, being described as having low pay and poor prospects, McDonalds responded in 2006 with the challenging 'Not bad for a McJob' campaign.

The McDonalds fight-back campaign featured posters including examples of health policies, flexible working hours and prospects for promotion, with the objective of improving their public image as an employer of choice and ensuring their employees felt 'McRespected' and 'McValued'.

McDonalds represents an extreme example, but other companies across the world dedicate much time and resource to winning coveted places in top employer listings, such as the Sunday Times Top 100 Companies to Work For in the UK and the 100 Best Employers to work for in Canada. And, according to Sheffield University, its a case of 'Who Cares Wins' in todays job market.

How Workers Suffer When Municipalities Don't Have Their Ducks in a Row

It's a problem that cost "Women in Construction" thousands in lost revenue this past building season.  "This summer, when we were waiting on four permits, we had to wait anywhere from four to six weeks to get those permits and in the meantime I had to layoff eight of my employees” said Michelle LeBeau, of Women in Construction.

It's a problem becoming more commonplace where overtaxed buildings departments, that are often being forced to cutback, have a profound ripple effect on builders that depend upon them for critical paperwork and approvals

It's somewhat of a self fulfilling prophesy however for in many parts of the country, the buildings departments have been systematically "raided" by contractors who are looking for construction experienced personnel.

read more | digg story

Emerging Health Care Trends 2007 Survey Results

Today, employers appear to be making a "choice of roads" decision when it comes to providing healthcare for their employees.  The choice taken can have significant effect for the employer as it impacts their ability to retain existing employees as well as colors the attractiveness of the organization when seen through the eye of certain classes of job-seekers.

There are two distinct types of employers, and their beliefs and behaviors are dramatically different in how they view the value of Healthcare benefits according to Hewitt Associates in a recent survey report.
Download emerging_health_care_trends_2007_survey_results.pdf  

There are the “Stop Light-to-Stop Light” employers who find they are primarily focused on managing trends.  They have substantial resistance to cutting benefits because they view health care benefits as an attraction and retention tool and are in a competitive market for talent. At the same time, however, they do not tend to see health and productivity as a business issue.

Then there are the respondents indicate they will become much more involved in health and health care benefits, referred to as the "Superhighway" companies

Employers from both roads ranked managing cost and competitive positioning as their top two business issues related to health care. However, the next most important business issue for Superhighway employers is a leadership mandate to address health care, whereas Stop Light-to-Stop Light employers are worried about profitability. Similarly, employers from both roads ranked employee satisfaction and protection from catastrophic loss as the top two employee issues related to health benefits. Superhighway employers ranked improving productivity next, while Stop Light-to-Stop Light employers are worried about turnover.

Small employers have been exiting from health care, dropping sponsorship of their plans entirely.  However, for most large employers, this approach would create significant difficulties for many of their employees. If an employee or dependent currently had a serious medical condition, for example, he or she may be denied coverage entirely in the individual marketplace. While costs continue to escalate, very few large employers are currently considering dropping sponsorship of health care
plans.

The Hewitt survey validates this trend—no respondents believe their organization will be less involved in health care benefits over the next three to five years than they are today.  What remains to be see is how each group reconciles the cost of quality healthcare to the demands of an increasingly tighter labor market.

On Temporary Jobs and Long-Term Labor Market Performance

One of the sites I frequent for it's great international discussion of "cause and effect" economic issues is the "Economist View", published and managed by Mark Thoma

Mark has published a very well done article entitled "Do Temporary Jobs Improve Workers Long-Term Labour Market Performance?" where he discusses a new study that contradicts previous thinking that on the job training increases skill levels and allows better employment outcomes.  His article argues that it is mainly better matching, not enhanced skills, that explains why temporary workers tend to do better in the labor market. This implies that there are informational or other problems preventing fully efficient labor market outcomes.

As usual, Mark does his usual "over the top" job of reporting, providing a rich collection of supporting materials and references.  Read this fascinating report - I believe it will change your point of view on this important topic.

Could Mom and Dad help keep young workers in the workplace?

Economists predict that a glut of job openings will wreak havoc on the economy, not to mention happy hour.
There have been plenty of blue-ribbon panels, forums and focus groups to address this issue, but none has answered the basic question: How do we persuade the best and brightest to stick around and help solve this looming worker shortage?

read more | digg story

Hiring Foreign Nationals: A Visa Programs Primer

In many situations, you may not be able to find "local" talent to fill a skilled labor requirement.  Obviously, there are a number of "alternative sources" from which you can source these needed skillsets.  When considering bringing in foreign workers, you and your team need to be aware of the myriad requirements, laws and issues associated with bringing foreign workers on board.

The good folks over at BLR (Business & Legal Reports) have provided a great source of information to help keep you out of hot water.  Their HR Daily Advisor newsletter, which provides in-depth professional guidance to those in the talent business, published a recent article you will not want to miss.

Entitled, "Hiring Foreign Nationals: A Visa Programs Primer", this great article will provide you useful information, including perspectives on your talent acquisition policies and procedures when it comes to hiring foreigners.

Check out this information, it can keep you out of trouble.

Population Trends and How They Play Into the Skilled Labor Shortage

One of the components that factors into the skilled workforce is, the availability of human workers.  Before you accuse me of being provincial, let me clarify.  If you do not have an increasing population base, and you do not have educated and skilled talent being developed in the population base, and demand increases, you will have a shortage.

Thus, it first takes a certain level of population growth to provide a foundation for an adequate skilled workforce.

According to US Census (domestic and international data), the developed countries in the world are all experiencing a population growth deceleration.  What this means is that there are fewer net people to develop into skilled workers.

Many parts of the world already face declining populations, sometimes due to too much of a good thing (the combination of economic development, women's education and easily accessible birth control that we see in western Europe and Japan).

Sometimes for more unpleasant reasons (totalitarian controls, war, hunger, disease, environmental pollution or simply a cost of living that discourages having children) the population is declining.

Add to this, the reality that in many parts of the world life expectancy has significantly increased.  Consider that, according to the U.S. Census Bureau, in 1900 the life expectancy of the average American was 47 years, and by 2000 it had jumped to 74.6 years.  That's a lot of older Americans that will require care.

Conversely, between 1960 and 2000 the birth rate fell by 40%.  And we're not alone, other industrialized countries have seen a birth rate decline of 60% or more during the same period.

This represents a reality that we will have to live with.  Let's get used to our "new future"...

Is Fraud or Incompetence Now a Skillset?

I am an avid reader of CFO magazine, an award-winning Economist Group publication, dedicated to providing relevant insights to senior financial executives around the world. Reaching an international audience of over one million corporate decision makers each month through specialized events, conferences and research, it is a highly credible "microscope" into the complex world of corporate finance.

Just for grins, I went back into the first three (3) weeks of headlines for September 2007 and discovered the following:

• Apple's Jobs Was Subpoenaed, Report Says
• Ex-CFO Says He Won't Be the "Fall Guy"
• Del. Court Slaps Staples on Backdating
• Retiree Miscount Leads to Restatement
• Quest's Quest for More Backdating Errors
• German conglomerate, embroiled in scandal
• Wachovia Sued over Drink Company's Spill
• Dynegy Settles Charges with Pensioners
• UTStarcom to Redo China Revenue Report
• Mentor to Fraud? Two Former Execs Settle
• SEC Charges Hedge Fund Head over PIPEs
• SEC Aims to Clean Up Grocery Spill
• Dried Dough: Krispy Kreme's Woes
• Fairchild Dumps KPMG
• CTRL-ALT-DELETE: Dell Frozen, Restarting
• Former HealthSouth CFO Back in Court
• Grand Theft Auto, for Real
• The Morality Play
• Shareholders Cry Foul in Calpine Plan
• Former CFO of a high-end car dealer is accused of embezzlement
• Ex-Controller Settles Fraud Case
• Unregistered Auditors Busted by SEC
• SEC Takes Aim at Ex-Nortel Finance Execs
• CFOs' Optimism Plummets to Six-Year Low
• CSC Tax Review Uncovers Years of Errors
• Wireless Company's CFO Takes a Leap
• Ace Discovers $154M Inventory Error
• Finite-risk Probe Halts Assurant Buyback
• Couple Guilty in "Pillow-talk" Case
• Top Exec Steps Down from FASB Parent
• Macau Gambling Plan Loses $1B in Loans
• Saks Settles SEC Vendor-Allowance Suit
• Motive Inc. Restates, Looks for Auditor
• Did Fake Purchase Orders Oust CFO?
• Overhill Farms CFO Goes over the Fence
• Internal Probe Stalls Retailer's Filings
• CEO Put on Leave Following Audit
• Uncollectibles Force SEC Settlement
• Internal Probe Stalls Children's Place Filings

I couldn't believe it - almost 40 headlines IN 21 DAYS showcasing matters relating to corporate fraud or incompetence (or both).

Makes me wonder?  Is fraud or mismanagement of company assets becoming a "corporate value?"  The headlines over three weeks would seem to indicate that is the case?  Has greed overtaken "core values" as being more desirable for workers than working hard, protecting company assets and keeping the customer satisfied?

Is the "I got mine" mentality, where managers and executives put their own self interest ahead of the employees, customers and shareholders leading to higher levels of frustration in the business world resulting in the attitude of "what the hell, everybody else is doing it?"

If this phenomenon is occurring on an increasingly widespread basis, what effect does this have on Workforce Development?  Do frustrated competent and honest workers leave for places they perceive as better or more ethical?  Does it become harder to attract and recruit top talent, when a cloud (either publicized or not) hangs over the business/organization?  Or do the "opportunists" flock to the firms being investigated in the hopes that they can profit from the "birds of a feather" mentality?

Readers - what do you say?

Offshoring is also eroding the quality of the U.S, workforce

Offshoring is increasingly eroding the quality of the workforce in the US. There are fewer entry level IT jobs in the US. These jobs go to increasingly Indian or Chinese software engineers. Similarly, the legal and investment banking tasks sent overseas are the yeoman's work that historically enabled young people to learn the profession. Next are the entry level jobs in architecture and design/engineering.

Fortunately, many service firms aren't of a scale where this sort of outsourcing is viable, but nevertheless, it reduces the number of domestic training positions. It's a hollowing out of service industries. The fact that is is now happening at the very large firms that do the most sophisticated corporate work begs the question of where their next generation of executives / principals and partners will come from.

Where will it end.  Keep watching this blog.  We've got answers coming for you.

Tougher US immigration leading to 'reverse brain-drain': study

The huge backlog in US immigration visas is leading to a "reverse brain-drain" that will force skilled workers to return to their home country, a report released Wednesday concludes.

read more | digg story

The employee retention audit - where it fits

Seldom does a day go by where I am not asked "What can I do to keep good people from leaving?"

Employee retention is essential in "winning the war for talent", so if you are losing good people, you need to understand WHY.

One method that can work is to conduct an assessment of your employee retention practices.  Such an assessment should enable you to :

1. Identify areas and activities that have the greatest potential benefits in retaining employees.
2. Allow you to create measurements and metrics to track your progress over time.
3. Discover