BOOK REVIEW

Impending Crisis: Too Many Jobs, Too Few People
by
Roger Herman, Tom Olivo & Joyce Gioia

FUTURECASTS online magazine
www.futurecasts.com
Vol. 5, No. 5, 5/1/03.

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Human resources management:

  This book - for businesses, nonprofits and public agencies - by a team of management consultants - covers a wide spectrum of techniques for attracting and retaining employees - all employees - but predominantly those with skills needed to stay abreast of the 21st century's rapidly changing technological and business environment.
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The authors contribute a sense of urgency to the subject and the reasoning behind that sense of urgency.

 

The benefits of large scale layoffs that cut costs and give a temporary boost to earnings and share prices may obscure fatal damage to the long run prospects of a business.

  The book conveniently provides a fairly comprehensive single source for the material. It explains the reasons for these measures in a readily understandable manner suitable for use as a convenient tool for educating management at all levels on this important matter. While much of this is familiar to business consultants and experienced management, the authors contribute a sense of urgency to the subject and the reasoning behind that sense of urgency.
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  The authors emphasize the value of human capital - the many costs of rapid rates of employee turnover and the many benefits of a stable, satisfied and well trained workforce. They emphasize that the benefits of large scale layoffs that cut costs and give a temporary boost to earnings and share prices may obscure fatal damage to the long run prospects of a business.
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  This is all good stuff for consultants and executives, but FUTURECASTS is, of course, primarily interested in the authors' forecasts. They foresee an economic climate that produces more jobs - especially skilled jobs - than there are employees available, with obvious damaging consequences for organizations that fail to attract and retain employees. The recent recession and current sluggish economic conditions are, of course, just a phenomenon of the normal business cycle - hopefully only temporarily impacted by war fears - and in no way undermines their thesis.
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The forecast:

 

 

 

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  The authors expect a 10 million worker shortfall by 2010, based on projections from Bureau of Labor statistics. They point out that this trend has been developing for some time already due in part to the nation's low birth rate. Difficulties in filling job slots will soon be increased by the rising rates of retirement for the baby boom generation and vibrant economic growth, and the increasing mobility and work expectations of the young people entering the labor force. From an excess of 7 million workers early in the 1980s, the economy had shifted already to an excess of well over 4.7 million jobs in the year 2000.
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The market will deal with the problem in many ways. It will not only induce the shifting of production abroad - expand the use of outsourcing, telecommuting and part time employees - increase the employment of foreign workers and efforts to lure back retirees - but it will also weed out those entities that can't compete for needed skills.

  The authors believe that both the causes of the trend and therefore the trend itself should continue for the foreseeable future.

  As with all statistics, the figures don't resolve the issue, they just begin the analysis. Statistics must be evaluated for many characteristics. Projections that go "off the charts" frequently just indicate imminent changes that will change the trends.
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  First, the figures as they are presented are misleading. They begin during the depths of the 1980-1982 depression - continue through the sluggishly improving economic conditions during the 1980s period of high real interest rates needed to combat the inflationary forces generated during the 1970s - and culminate during the low interest rate boom at the end of the 1990s. They thus include at least in substantial part the normal labor market response to an extended upward phase of the business cycle - factors the authors do not overlook.
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  Second, market mechanisms will play a role in any major labor market shortages. But that is precisely what the authors are warning about. As the authors note, the market will deal with the problem in many ways. It will not only induce the shifting of production abroad - expand the use of outsourcing, telecommuting and part time employees - increase the employment of foreign workers and efforts to lure back retirees - but it will also weed out those entities that can't compete for needed skills.
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  FUTURECASTS not only evaluates recent trends, such as the employment trends emphasized in this book, but is constantly alert to factors that will materially modify or change the direction of established trends. The period of declining inflation and interest rates is over. The next substantial economic recovery will see both inflation and interest rates rising - with profound impacts on labor market trends - as well as just about everything else.
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  Nevertheless, the risks of falling into this last category - of entities weeded out - is very real under any scenario - and the "impending crisis" about which the book is written.

  The key variable concerns expectations that - any periodic or crisis downturn aside - the conditions for economic growth during the rest of the decade will be good. The authors point out that this decade will see the peak earning and spending years for the baby boom generation. As this drives the economy forward, and baby boomers retire, businesses will have increasing difficulties staffing up to take advantage of their increasing opportunities. (The factors stressed by the authors are certainly substantial enough to require consideration by all forecasters.)

  "We forecast an unprecedented churning in the labor marketplace, accompanying these shifts. As other trends affect employment decisions, turbulence in the employment market will make the worker movement of the late 1990s seem mild by comparison."

  Skilled employees will be especially hard to come by and retain, but the shortages will exist at all levels. Young employees now "feel that work should be fun, meaningful, and intrinsically rewarding." It will take a vastly different approach to human resources to attract and retain these people.
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  Jobs are now readily available through the internet, making job changes easy. Job seekers can search for "just the right employer." As the economy heats up, competitors will begin targeting each other's most competent employees, making retention more difficult.
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Techniques for meeting the challenge:

 

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    The book covers leadership and management practices - organizational and business practices - and relations with employees, customers and suppliers - and relates these practices in a practical fashion to their impact on the bottom line. The importance of staying abreast of changing conditions, especially changes in technology and product - whether physical or service - is emphasized. Chapters cover human resources techniques for attracting and retaining employees - especially skilled employees - and strategic planning to meet future workforce needs. A program for meeting these needs is provided.
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More employees will need "cross-experience" in the organization to provide needed flexibility.

  Organizations will have to plan ahead - to engage in "strategic staffing" - to be sure they have the required skills trained and on hand for future needs. More employees will need "cross-experience" in the organization to provide needed flexibility. Valued employees must be accommodated in their personal needs, satisfied in their opportunities for training and growth, and provided with relationships with supervisors and fellow employees that they find pleasant. Older workers, and especially women, will have to be accommodated. Single parent employees and employees whose spouses also work will also have special needs.
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  Other considerations covered include:

  • Supervisors must be trained to work "with" employees. Employees will not long stay with supervisors who expect them to work "for" them.

  • Use of signing bonuses to attract needed skills will develop a "fickle workforce" with high turnover rates.

  • On-the-job training will have to be expanded to make up for inadequate schooling as well as for providing traditional job skills.

Managers will have to be able to "build cooperation and collaboration." They must be able to keep abreast of technological developments.

  Success in the future will be built around small flexible "mission driven" corporations, employing as needed "an ever-changing body of contingent workers - professionals as well as functionaries, insourced and outsourced suppliers, vertical and horizontal partnerships, and strategic alliances." Managers will have to be able to "build cooperation and collaboration." They must be able to keep abreast of technological developments. Organizations will have to provide training for their employees that extends from skill enhancements for veteran employees to remedial education for recent hires - to make up for the woeful inadequacies of public education.
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  Increasingly, businesses are establishing specialized vocational training programs to fill skill needs. College programs include opportunities for internships, programs devised in collaboration with businesses, and courses that include instructions by business executives.
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It is the most talented that are most likely to leave - the most experienced that are most costly to lose.

  The costs of employee turnover - both after employees leave and by performance degradation while they are preparing to leave - are especially stressed by the authors. It is the most talented that are most likely to leave - the most experienced that are most costly to lose.
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  The book provides an analytical method for evaluating such costs. It reflects studies that show that company performance varies directly with rates of employee turnover, which in turn varies with such factors as employee pride in the organization and job, the opportunities for training and development, the stated and communicated values and principles of the organization, and the care with which the suitability of new hires is evaluated.
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Health care industry experience:

  The authors have extensive experience with the health care industry and naturally draw on this experience to provide a prominent example of things to come. However, examples from other industries are also provided.

  The dysfunctional nature of the health care industry - due to increasing levels of government influence and involvement extending back to WW-II - has been frequently included as a component in FUTURECASTS forecast articles and other articles. Also - the delivery of health care, by its nature, cannot be outsourced to other localities or nations, although some administrative activities can be handed to domestic or foreign subcontractors.
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  Thus, personnel and budgetary problems in this industry are inevitably far in excess of those in the general economy. Unfortunately, the authors totally omit consideration of the impacts of government involvement. Nevertheless, the industry's extraordinary labor market problems make this example of what it takes to do well even more illuminating.
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  Whether or not the expected chronic labor market shortages come to pass, the material in this book is still applicable - both for cyclical periods of full employment such as the one recently experienced, and generally to assure a more productive and flexible workforce.

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Copyright 2003 Dan Blatt