Perfect Labor Storm 2.0

Santa faces economic "perfect storm": elf layoffs possible

For the second time in as many years, the Stowe Reporter has sent a reporter to the North Pole to report on how Santa and his helpers are dealing with the holidays. Last year, he reported on the anxiety Santa and his workers felt as they learned that climate change may melt the Arctic. This year, he reports on Santa as he faces a serious short-term problem: the global economic crisis.

Of particular interest to me are the effects of the perfect labor storm on his eternal enterprise.

Claus has been disproportionately affected by the rising costs of health care. Elves, which make up the bulk of Santa's work force, are thought to be immortal, meaning their pensions and health-care benefits never stop. Further, they are also thought to be "gods of fertility," according to Germanic mythology, and reproduce more often than humans.

"My labor costs are through the roof. If I hired elves overseas, they could work for 8 cents an hour," Claus said, who noted that massive elf layoffs are possible if they are not willing to make concessions.

The Elves Union has publicly cautioned Santa to rule out layoffs.

Read more about the Santa's business woes.

(Thanks to colleague Jim Kissane for posting this on his blog.)

Layoffs: New Study reveals companies shooting themselves in foot

If your company is undertaking a layoff, be forewarned: Your surviving employees are not going to work harder out of gratitude.  According to a new study by Leadership IQ, 74% of employees who kept their job amidst a corporate layoff say their own productivity has declined since the layoff.  And 69% say the quality of their company’s product or service has declined since the layoffs. Leadership IQ, a leadership research and training company, compiled these results after surveying 4,172 workers who remain employed following a corporate layoff.  These subjects were drawn from 318 companies that have undertaken layoffs in the past 6 months.  Employees were asked questions about productivity, product quality, workforce issues and management effectiveness. Other key study findings about the state of the workplace following the layoffs include: ·         87% of surviving workers say they are less likely to recommend their organization as a good place to work ·         64% of surviving workers say the productivity of their colleagues has also declined. ·         81% of surviving workers say the service that customers receive has declined. ·         77% of surviving workers say they see more errors and mistakes being made. ·         61% of surviving workers say they believe their company’s future prospects are worse. Read more about layoffs and productivity.

Despite high unemployment, business still struggles finding qualified workers

Despite the layoffs and rising unemployment, I have a number of clients struggling to find qualified workers.  This doesn't come to me as any surprise since I've been writing about it since 1999 (www.perfectlaborstorm.com).  But it seems to be counter-intuitive to mainstream management and the media who still haven't accepted the fact that the filling seats with warm bodies is a thing of the past. 

To prove my point that even in this downturn, more job seekers doesn't solve the problem for many companies. Jus this morning, I received this request from an HR manager:

“My company has been searching for a 3rd shift Sanitation Supervisor since May of 2008 and have not been able to find qualified candidates. … I would appreciate any advice on other routes of sourcing a great candidate for this position. We have placed ads in area newspapers multiple times and have over 5 recruiters searching for us as well!”

So...here's my request.  Do you have any stories about your company (or clients) looking for key employees that they still can't find?  Are these tough-to-fill positions holding the company back?  In what ways is it costing them when the position is not filled? And what if any advice would you have for managers in the same situation?

How much does absenteeism cost your business?

It's no secret that missing workers cost companies millions of dollars in lost revenue each year. But exactly how much does absenteeism cost your business?

According to a new survey by Mercer, "The Total Financial Impact of Employee Absences," the total cost of absence can equal as much as 36% of payroll (compared to 15.4% for health care coverage). Of that figure, 9% accounts for unplanned absences. Planned absences, like vacations and holidays, average 26.6%. For a midsize business, this unplanned absence can account for as much as $4.5 million dollars per year.

This new survey suggests that absences cost employers more than half the cost of health care, a startling number and a call to action for all organizations to get a better handle on this often unchecked cost.

Unplanned absences like casual sick days result in the highest per-day productivity loss, 21% versus just 15% for planned absences like vacation days. On average, employees have 5.3 unplanned absence days per year.

Employers must consider both the direct and indirect costs incurred when an employee is absent. Direct costs are the most obvious and those usually tracked by employers.  Direct costs are the benefits paid to the employee to provide income during an absence.  These include sick, holiday and vacation pay as well as a disability benefit when available.

The real impact to the organizations comes in the form of indirect cost.  These costs are typically ignored or poorly tracked but account for a considerable loss dropped to the bottom line.  Indirect costs are represented by:

• The employee's absence affects coworkers and slows down a project's completion.
• The absent employee's work is "covered" by coworkers, a temporary worker, "floaters," or the employee's supervisor.
• An ample supply of replacement workers slows but does not stop the "bleeding." 

Replacement workers are less efficient: 

• 71% as efficient during unplanned incidental absences
• 79% as efficient during planned absences
• 80% as efficient during extended absences
• The work output of 4 to 8 co-workers was reduced by 19%

Both types of impacts significantly add indirect costs. 

What can you do to manage the costs of absenteeism?

1. Know your costs.
2. Use the ratios of total costs to direct costs to estimate your organization's total costs.
3. Educate your staff and managers on:
       a. What the real costs of absences are.
       b. What other employers are doing (or not doing) to better track and manage absences.