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Business Development Starts and Ends With People.

With the election over in the U.S., there’s a lot of talk about bringing good paying jobs back to America. That’s an admirable goal, but there’s another side to it. Where is this workforce going to come from?

Below is an excerpt from my newest book, Conscious Business Development on the human resource issue.

In my humble opinion, finding and hiring qualified people is the biggest problem for business today. I know several of my clients are limiting growth specifically for that reason. They are turning away business because they can’t get a reliable workforce in increasing numbers!

Business has caused some of today’s issues. I had a discussion with a client a while back, and he made an interesting point. Somewhere in the 1980s, companies started seeing people as “head count” as in “We have to reduce head count.” I’m not talking strictly about unskilled labor; I include technical and administrative people as well.

The use of temporary, or contract labor, became common to better manage labor costs during peak and slow times. In addition, hiring part-time employees (under thirty hours per week) to reduce benefits expenses became more acceptable. This has morphed into a low-skilled workforce that accepts employment through temp agencies as a way of life. They have little expectations of full-time work and being able to grow with a company, moving on has become common for them.

Large corporations outsourcing manufacturing jobs offshore for lower labor costs, or instituting layoffs to keep a stock price up have certainly contributed to this problem.

The government also has contributed in several ways.

  • The historical high corporate-tax rate has driven investment offshore and has reduced skilled jobs, and thereby skilled workers, through lack of apprenticeships.
  • The welfare benefits and entitlements are to blame as well. Michael Tanner published an article in the National Review, on August 21, 2013, about a study done by the Cato Institute. That article entitled “Welfare: A Better Deal than Work” states that there are 126 separate federal programs for low-income individuals, in addition to state programs. The Cato study also states that median value of the welfare package across the fifty states is about $28,800. Broken down at an hourly rate (forty hours per week), it’s about $13.70 per hour. But health care is included in that number, so a person working for you with a family would need to pick up some or all of their health-care costs. In addition, the IRS states that welfare payments are exempt from taxation. That means you would need to pay a person about $20.00 per hour based on the average to make working be a better deal. Many employers would be hard pressed to pay $20 per hour for unskilled labor. That’s one set of issues. Another has to do with the expectations of younger people. A Generation Y (twenty-two- to twenty-nine-year-olds) workplace expectations study by American Express and Gen Y Research, which received survey responses from one thousand managers, finds some interesting statistics:

Before I upset anyone, I’m not saying that I’m for, or against the programs; I’m simply stating facts on the difficulty of finding and keeping employees in the current environment. True, $28,800 doesn’t provide a great standard of living, but the folks on the production floor making $13.70 per hour or even $15.00 per hour are actually worse off. The article refers to surveys that say many of these people would prefer to be working and that they just can’t afford the reduction of income.

That’s one set of issues. Another has to do with the expectations of younger people. A Generation Y (twenty-two- to twenty-nine-year-olds) workplace expectations study by American Express and Gen Y Research, which received survey responses from one thousand managers, finds some interesting statistics:

  • Gen Y employees have unrealistic compensation expectations (51 percent).
  • These employees are perceived to have a poor work ethic (47 percent).
  • These employees are easily distracted (46 percent).
  • Generation Y employees have an overall positive view of management, believing they can provide experience (59 percent) and wisdom (41 percent).

Some say they also lack certain interpersonal skills, because of the level of interaction with technology and the reduction of face time.

There is clearly a gap between management expectations of Generation Y employees and their perception of work overall.

So those are the facts. Now what do you do about them? You still need quality people if you are going to grow your business. How will you do that?

Well, clearly, you have to find a way to pay a living wage, but there has to be more to it than that. As employers, we need to rethink our relationships with the workforce. The world has moved from the agricultural age, to the industrial age, and now to the information age. However, most of our thinking and management techniques are still in the industrial age. Management sets the strategy and delegates actions, and the bulk of the workforce doesn’t have a need to know. Then we wonder why we don’t have buy in to our plans.

The problems above were over thirty years in the making and are not going to be solved on a macro scale. No one is going to sign a paper and make it all go away.

There are several steps that each owner or CEO must take in order to develop people:

We have to take a hard look at who’s employed now. What strengths can we build on, and what weaknesses can we correct through coaching? Are they in the right positions today?

  1. We have to develop a retention policy to keep good people working with us.
  2. We have to develop a reputation in the market place that we are the best company to work for to attract good people. (Blogging helps here as well.)
  3. We have to be creative in our incentive and compensation policies to not just deliver dollars but also participation and recognition.

I’m curious to hear what business owners and CEOs are thinking on this subject.

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