This Week's Herman Trend Alert

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  Press Release
For Immediate Release
Contact: Roger Herman

Strong Economic Signs Point to Instability

Corporate executives are being lulled into a dangerous complacency by welcome news about improvement in the American economy, according to The Herman Group, workforce forecasters. They are unwittingly increasing their exposure to employee turnover, warns CEO Roger Herman. Employee retention should be the highest priority for most employers, Herman says, but they have yet to engage this vital strategy.

The news is full of positive signals about the economy.

  • Orders for U.S.-made factory goods increased 2.2% in October, the Commerce Department reported this week. Orders are up 7.7% in the past year.
  • Growth was robust in November in the U.S. non-manufacturing sectors, the Institute for Supply Management reported, noting that their Inventory Sentiment Index was up 5 Points to 60 percent; the Employment Index was up 4.1 Points to 57 percent; the Inventories Index was up 4 Points to 54 percent; and the Prices Index went down 3.8 Points to 74.2 percent.
  • Twelve of 17 non-manufacturing industry sectors report increased activity in November compared to 11 that reported increased activity in October
  • U.S. stock gains rose as the S&P 500 and the Nasdaq Composite reached their highest levels in four and a half years, driven up by a drop in Treasury bond yields and news of the strongest productivity rise in two years.
  • November nonfarm payrolls rose by 215,000 workers

This assortment of good news will stimulate confidence in the workforce, from senior executives to entry level employees. That confidence will encourage people to consider changing jobs and changing employers. A strong economy means expanding employment opportunities, giving workers more choices about where they work. Most employers have vacancies today, so recruiters are actively promoting career moves for the most qualified candidates. The sense that conditions are right for job change is spreading, stimulating increased movement in the employment market.

A survey report released Nov. 16 by the Society for Human Resource Management and indicated that as the U.S. economy and the job market improve, a significant majority of workers are searching for new employers. Three out of four workers who are employed and responded to the survey said they are job searching actively or passively. This information is powerful and should be grabbing the attention--and resources--of practically every employer in the country. Corporate leaders who discover that 75 percent of their workforce may walk out the door at any time must emphasize and accelerate employee retention strategies or assume huge risks of failure to accomplish their missions due to lack of human resources.

It's not happening. Less than half (49 percent) of human resource professionals who responded to the survey said their organizations were implementing special retention processes as a direct result of perceived improvements in the economy and the job market. That's a significant increase from 2004, when 35 percent of responding employers reported deliberate work on employee retention. “With fewer than half of our employers focusing on retention, we can easily forecast a surge in movement between jobs,” says Herman, author of Keeping Good People and other books on workforce stability.

In their latest book, Impending Crisis: Too Many Jobs, Too Few People, Herman Group futurists address the increasing shortage of qualified workers. A new report from the Society for Human Resource Management, 2005 U.S. Job Recovery and Retention Poll Findings, found that there is evidence that in the past year highly prized workers have begun the long-anticipated exodus that The Herman Group has forecast.

The competitive advantage for employers will emerge from the stability and capacity of their employees. Employee retention,” Herman says, “will make the difference for success.”

The Herman Group is a firm of consulting futurists concentrating on workforce and workplace trends and their implications. Emphasis is placed on employee selection and retention as critical strategies. Included in the firm are researchers, professional speakers, authors, and consultants. The Herman Group is based in Greensboro, NC, with affiliates in Sao Paulo, Melbourne, Hong Kong, and Port Louis, Mauritius. Contact Joyce Gioia-Herman at 336-210-3548 or e-mail:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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