TrendWatcher

Beware the Shiny Objects

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When I was in college I had a friend who paid for most of her graduate school tuition by working part-time at the fine jewelry counter at Sears. I once commented to her that it must be difficult making decent money selling diamond rings at a store better known for its kitchen appliances, table saws and Toughskins™ jeans. Her response was simple. She said, "John, never underestimate the inclination of people to be attracted to shiny objects."

The attraction to things that are shiny, loud or controversial is a natural human weakness. It's the same reason we slow down at traffic accidents. That's why, amidst the past two weeks' news headlines of political brinksmanship in Washington, the debt ceiling countdown, credit rating downgrades and verbal slaps on the wrist from China, a series of perhaps equally important stories were released with little notice or fanfare. And with the distraction of all the other shiny objects of journalism, they nearly didn't catch my attention either. Consider the following reports all released in the past two weeks:

  • On July 26, The Conference Board released its latest Consumer Confidence Index, which showed a modest increase in overall consumer confidence. However, more significant were Americans' responses to a single item within the index that asks whether or not they believe that jobs are "hard to get." While the responses were mostly negative, they represented the highest scores on that question since November, 2009. (It should be noted that this specific question is an exceptionally strong lead indicator of movement in the nation's overall unemployment rate.)
  • This past Friday, the Bureau of Labor Statistics reported that 117,000 new jobs were added to the economy in July, seemingly reversing the jobs slump that we've seen since early in the spring.
  • On Tuesday, Bloomberg News reported that more than two million people actually voluntarily quit their jobs in order to accept better ones during the month of May. And, according to the Department of Labor, this is a 35% increase over the lowest level of voluntary resignations in this recession posted back in January, 2010. In other words, while unemployment rates might still be high, there are more and more opportunities for talented people to advance - by leaving their jobs.
Together, these reports may still appear to be little more than a "diamond in the rough" when it comes to optimism about the employment component of the economic recovery. On the other hand, it does demonstrate that multiple research organizations are now reporting that employees are not only more optimistic about future job prospects, they are actually finding them, and in two million cases in May alone, left their current employers to take them.

Interestingly, this trend was predicted by i4cp with our The Critical Human Capital Issues of 2011 report released back in January. According to our annual survey, high-performing companies were already squarely focused on issues related to potential turnover, with both succession planning and knowledge retention among their top five priorities. Comparatively, these issues did not appear at all amid the top five priorities of lower-performing companies.

Is this a coincidence? Not likely. As I noted in our January 19 TrendWatcher, Peter Drucker once said, "The best way to predict the future is to create it." High-performing companies have a way of recognizing what constitutes near-term "shiny objects" versus longer term challenges and opportunities. They told us that turnover was going to be an issue in 2011 and sure enough, turnover is now in fact emerging as a tangible issue.

Does this mean that unemployment rates are about to plummet and job creation begin to soar? Not necessarily. Obviously, there are many social and economic factors that influence job creation - not the least of which are the uncertainties currently plaguing Wall Street. But just as retirement planners tell us to focus on long-term approaches to investing, employers should focus on the longer-term economic trends and understand the inevitable impact that these trends have on retention and turnover.

While I don't want to trivialize the news that has dominated the headlines over the past few weeks - indeed, debt ceilings, the credit worthiness of the U.S. and the ideologically driven paralysis that has gripped the political discourse of the country are certainly nothing to be taken lightly - it's also important to understand that there are longer-term trends that, while perhaps less flashy, are just as important for employers to focus upon.

My friend successfully made it through graduate school and, in fact, made a small nest egg that helped her furnish her first apartment (albeit, from Ikea) by selling fine jewelry at Sears. And, while the current headlines may be boosting news channel ratings and selling newspapers, it is important to remember that you came into the store for a reason - and to remind yourself not to get distracted by all of the shiny objects.

John Gibbons is the Vice President and General Manager of Research and Development at i4cp. He has been a human resources practitioner, researcher and thought leader in human capital strategy for more than 20 years. His work has been featured in hundreds of publications and news outlets around the world including the New York Times, The Wall Street Journal, The Financial Times, CEO Magazine, CNBC, CNN and National Public Radio (NPR).

Comments

John, a large problem is matching the right talent to the job opening. There are still reportedly 4+ job seekers for every opening, but in many cases, we can't find the right skills to fill open positions, especially in tech jobs. Talent with high-demand skillsets are suddenly able to command higher salaries. However, there is still a great deal of pressure for employer companies to keep pricing low, and insurance and other benefit costs continue to rise at disproportionate rates. All of this makes it very difficult for companies to incentivize existing team members with salary increases. If a higher salary position opens due to attrition or growth at another company, that is going to exert a strong pull. These issues are all coming to a head, suddenly putting employers in a very tenuous position.
What a bunch of left-leaning wishful-thinking nonsense! Don't worry, they'll "adjust" the numbers down again, as they have month after month!
Chris and Doug, Thanks for taking the time to contribute your notes. We always hope that our TrendWatchers will provoke thought and reaction and, fortunately, this one has stayed true to form. Chris, I agree that one of the major challenges ahead for employers is costs – particularly costs related to benefits. Interestingly, we have a new report on managing benefits costs that is slated for release next week. Stay tuned! Doug, it’s interesting that you would suggest that we are a bit “left-leaning” in our reading of the economic tea leaves. Just this morning, the Wall Street Journal (not exactly known for having a liberal slant) reported that workplace productivity dropped for the second quarter in a row in June. This represents a full half-year of a slowing of the cycle of lay offs that we've seen since 2008 and, in fact, represent a modest uptick in hiring. If you’d like to see the report itself, here’s the link: www.bls.gov/news.release/prod2.nr0.htm Thanks again! John P.S. FYI….the Department of Labor reported that they had to adjust their June jobs number up, not down.
Whoa! This blog looks just like my old one! It's on a totally different topic but it has pretty much the same page layout and design. Great choice of colors!

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