Investors, business leaders, politicians, and many others are fretting about the numbers recently released by the Department of Labor. Job growth is lower than projected for the month of July.
"Hoped-for growth in the economy is faltering," wail the crowds of people focused on the short term results. Instead of looking at the bright side, they accentuate the negative. The results confirm growth in the employment market. The growth may not be as strong as what was projected, but how realistic were the projections? What are we really comparing here, and why are we so upset?
The reality is that investors, particularly those who are trading for short- term profits, are pushing for demonstrable results that can drive up stock prices. Those who are more concerned with the long-run big picture are not fazed by the employment numbers. There is a set of longer range trends to pay attention to.
Employment is growing. Companies that have not hired in a long time are hiring again. While it's not dramatic, there is a sense of hope in the air. This is good, and the slower growth is good. Most employers are not prepared to handle a surge in growth yet. They have been running at idle, almost in neutral, for so long, they do not have the plans, the attitude, or the capacity to manage a steep growth curve. It will be more effective for them to build into the new levels of employment and performance more gradually.
There's a deeper problem that has been delayed by the slower job growth: employee turnover. Employees are restless. Depending on which studies you believe, anywhere from 35 percent to 70 percent of workers are at least willing, if not eager, to leave their current jobs and accept new positions. Higher job growth will stimulate higher turnover, and few employers are prepared for that eventuality. Too many corporate executives have their heads in the sand-like the ostrich-ignoring the problem and thinking it will go away. They don't believe that their companies are vulnerable; high turnover will happen to other employers.
Staffing agencies are reporting significant new activity. The strong increase in the number of resumes posted recently on internet job boards suggest a different story. The number of resumes posted on vetjobs.com by members of the armed forces planning to end their tour of duty has doubled since this time last year. A study released by Spherion August 6 reports that 38 percent of workers are likely to look for a new job within the next 12 months. The activity is not obvious yet, because employment market numbers, like those released last week suggest that the jobs aren't available yet.
As we survey employers around the country, we find the opposite situation. Recruiters are scrambling to find qualified skilled workers to fill an increasing number of vacancies. There is considerably more activity in the employment market than the numbers watched by the stock market would have us believe. It is important to remember that the labor market report looks at the past, not the present or future-and the view is not as comprehensive nor deep as people think. Basing decisions and strategies on these reports is similar to driving your car by looking in the rear-view mirror.
Employers who neglect to concentrate on employee retention now risk losing many of their best (most attractive to other companies) people within the next 6-8 months. With a distinct probability of employment-and employee turnover-picking up soon after the election, a substantial number of companies face serious vulnerability. Qualified replacements for valued workers who leave will be hard to find. With an insufficient number of employees to meet customer needs, executives risk committing corporate suicide by not protecting their investment in their human resources.
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: email@example.com.
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