Perfect Labor Storm 2.0

One in Two Employers Impacted by a Talent Shortage

This article has been moved to http://www.perfectlaborstorm.com/2011/workforce-trends/one-in-two-employers-impacted-by-a-talent-shortage/

While Washington Fiddles, U.S. Dropouts Burn

A U.S. debt crisis threatens to paralyze our government and disrupt the global economy.  But despite all the political posturing, the impasse will end sooner or later. 

What won’t end - and regrettably will get far worse due to budget cuts and falling revenues - is a high school dropout that is both discouraging and depressing.  Each year nearly four million kids begin ninth grade.  Nearly 1 million of them don't make it to graduation. That’s nearly one out of every four students fail to graduate. A fifth of schools identified by the U.S. Department of Education are identified as "dropout factories," where no more than 50 percent of students graduate.

The impact of the decision to leave school is lifelong, not only for the dropout but for every taxpayer. Dropouts are more likely to commit crimes, abuse drugs and alcohol, become teenage parents, live in poverty and commit suicide. Dropouts cost federal and state governments hundreds of billions of dollars in lost earnings, welfare and medical costs, and billions more for dropouts who end up in prison. Estimates of these costs run as high as 320 to 350 billion dollars.

Despite the staggering rate and associated costs, these rates may be conservative. They certainly are not accurate. Part of the problem is that every state has had a different definition for dropout. For example, in some states, students who leave school aren't counted as having dropped out if they enroll in adult education classes like night school or in a GED program. The U.S. Department of Education says GED recipients should be counted as dropouts - but few states and school apply the rule. Okay, you might argue, who cares how the student gets educated as long as they continue in school.

But get this? Students who did drop out because they go to prison aren’t counted either. Very few school districts count kids who are incarcerated — even in juvenile justice facilities. Some schools don't think they should be held responsible if a kid quits school because he gets in trouble with the law.

Responsibility in this case equates to funding. It's not in the interest of schools to have an honest, accurate account of dropouts — not just because a high dropout rate makes a school look bad, but also because there's serious money at stake. Most schools get funded based on attendance. If kids don't show up, schools lose money.

Some schools “fudge" the numbers by taking attendance at 10 a.m. rather than 8 a.m. - if kids show up at all, they come in late and would be counted absent if attendance was taken at the start or end of the day. A late roll call counts tardy students as present.

Why should employers care? The unemployment rate for dropouts right now is anywhere from 15 to 18 percent, double what it is for high school graduates. That’s an enormous financial burden on society and government which ultimately is paid for by mostly business taxes.  Possibly worse, dropouts in the future will essentially be unemployable, lacking even the most basic skills required to do even the simplest jobs.

So while all attention and theatrics is focused on the debt crisis, a high school dropout catastrophe simmers that will boil over if business, government, and the public don’t soon acknowledge the problem and begin to do something about it.

8 Reasons Why Recruitment of Employees Needs to Change

This page has been moved to http://www.perfectlaborstorm.com/2011/workforce-trends/8-reasons-why-recruitment-of-employees-needs-to-change/

Hidden Payroll Costs Significantly Drive Labor Costs Up

More articles about rising salaries and the cost of employee turnover seem to be surfacing again, concurrent with attrition trends pointing upward.  While many organizations consider cost of turnover just another cost of doing business that practice has increasingly serious implications for the bottom line. The costs are particularly troubling when the loss involves a top performing employee.

The recent KPMG 2011 U.S. Hospital Nursing Labor Costs Study identifies several trends and benchmarks in relation to hospital nursing labor costs in the United States.  Other businesses could learn quite a bit from the results as well, particularly the when it comes to “hidden” labor costs.

Respondents to the survey indicated it is not easy to quantify all labor costs related to full-time direct care registered hospital nurses and mentioned various “hidden” costs. These hidden costs may be significant and are the result of nonproductive labor hours and associated opportunity costs, attrition, and time required to fill a permanent direct care RN position.

On average, 13 percent of hours are believed to be nonproductive hours. This suggests that additional costs can be attributed to nonproductivity e.g., due to training, education, and personal internet use. These costs may be even higher if the nonproductive hours are made up during overtime at an average 1.5x base pay. It is recommended when calculating the “all-in” payroll cost of a registered nurse that 13 percent of payroll costs should be added. 

Respondents stated base wages of full-time registered hospital nurses are on average $56 thousand per year (or $26 per hour). Respondents further indicated that base wages on average 57 percent of all-in fully loaded cost ($98 thousand per year or $45 per hour).

The average attrition rate for registered nurses was 14 percent. Respondents stated it takes on average 37 days, or over seven work weeks, to fill a permanent RN position. Taking into the account the 233 hours, or 28 work days, that are on average spent on new hire orientation and training, it appears attrition could have an impact of almost 65 work days, or 13 work weeks, on productivity related to the affected position. 

During that time, contingent staff was required to fill the open position or overtime hours were offered to existing staff. In some cases, services may be curtailed for lack of critical support.  In addition, managers and human resources are diverting attention to recruitment and replacement rather than retention and engagement of the current workforce. 

In addition to base wages, insurance costs, and non-productive time, recruitment costs added another 2 percent to all-in payroll costs. 

Quite a few lessons could be learned from this study.  The most significant story is the impact of hidden payroll costs on the bottom line. To lower and control payroll costs:

1. Calculate “all-in” payroll costs.  Most companies already compute and track the obvious costs – base wages and insurance costs.  But few businesses monitor “hidden” costs including the cost of turnover.  Start today.
2. Don’t be penny-wise, pound foolish. Assign a dollar amount to time-to-fill open positions.  That extra dollar your experienced employee is demanding may be a drop in the bucket compared to finding his or her replacement.
3. Track rate of turnover.  Find out why employees leave, then do something about it.  In addition to higher levels of employee engagement and customer satisfaction, employee retention saves lots of dollars on recruitment costs and lowers hidden payroll costs. 

All Work, No Games: No Business Benefit

Games are not just kid's play anymore.

The application of gaming technology in everyday business has become so popular we now have a name for it- gamification.  Gamification is an opportunity to enhance normally mundane learning experiences and operational functions for increased motivation and increased performance.  At the most rudimentary level consider the frequent flier programs. They are really 21st century scavenger hunts where customers are rewarded for "finding" items with different points. To the winner goes the spoils. Customers begin to make buying decisions based on points to get that brass ring.  One of the newest entries in the gaming of business are the location networking services like Foursquare and Facebook Places where frequent visitors are rewarded with badges like "mayor." The mayor then may receive special benefits or perks from the company they favor.

At this point you might be wondering how the heck your business could use games for improved performance and not more playtime for your employees.

Natron Baxtor Applied Gaming offers one solution. They call it "The Garden.". The Garden motivates employees toward higher levels of productivity through its integrated desktop interface. Response times and activities directed toward customers and team members are monitored. Player response times provide the flora with water, sunlight, and fertilizer. Failure to respond quickly - or at all - causes the garden to wilt and makes it susceptible to pests. The garden responds to attention: the faster and more frequent response, the more new plants and animals arrive.

Now consider how a game like this might increase referrals and leads. Or what it might do to meet or beat a project deadline and increase collaboration, especially as more workers find themselves telecommuting and working virtual. Games like this are now being used to onboard new employees, immersing both the recent hire and the existing workforce in the process. The Garden unifies employee behavior with corporate objectives.

Increasing the use of games in your business might also be the perfect prescription for the organization that finds itself facing a Baby Boomer brain drain, high turnover in the Generation Y workforce, or a disruptive rift between old and young workers. 55 and older is the fastest growing demographic using social networking sites on Facebook and Gen Y grew up with gaming devices, and now mobile devices, as extensions of their fingers. What better way to connect multiple genertions in the workforce.

Game technology comes in all shapes and sizes from social games like Farmville and Mafia Wars on Facebook to the virtual 3-D world of Second Life. Multiplayer online games like IBM's Innov8 are being used to improve collaboration, productivity, and engagement. Games are being used to inform, reinforce, and embed business strategy, to drive motivation, and stimulate innovation. As the benefits of using game technology for business performance becomes more mainstream, you can't resist asking if an organization's next hire might not be a Chief Gaming Officer?

What do you think? How is your organization using gaming technology?
Do you see any drawbacks?

One-third of US Workers Fed Up; Looking for New Jobs

Unless you’ve just woken up from a 10 year sleep, it won’t come as any surprise that workers are fed up with their employers. Workers across the board share this feeling.

Mercer, the global HR consulting firm, found that nearly one third (32 percent) of American workers are considering leaving their organization, that’s a 40 percent increase since 2005. As bad as that sounds, another 21 percent says they are not looking to leave but are dissatisfied with current working conditions.  That means that more than half of all employees (53 percent) have mentally checked out of work.  That raises a question I asked several years ago to a group of business owners:  “How many unemployed people do you have on your payroll?”

The numbers can be staggering and the root cause in many cases can be traced back to managers and supervisors.

Many supervisors possess sufficient skills to handle day-to-day production activities. Unfortunately few are true people managers – those managers and leaders who understand the motivational challenges that derail many workers. Even more troubling is how few are trained to avoid such traps in advance.

The failure to appreciate and understand what motivates workers is the weak link that leaves organizations vulnerable to employee burnout, disengagement, and employee turnover. Teaching supervisors how to manage and motivate effectively is both the prevention and the cure for controlling the spread of what I have called the Attitude Virus.

Just as the government funds the Centers for Disease Control and Prevention, whose experts tackle health issues among the general population, businesses need Centers for Attitude Improvement and Employee Engagement, staffed with experts who tackle motivational issues in the workplace.

What follows are four steps that an organization can follow to immunize the workplace and end bad attitudes:

1. Diagnose. Recognize that there is an attitude problem. This requires an honest assessment of the organization from top-down, then extending out to your vendors, suppliers and customers. Acknowledge any underlying causes of the Attitude Virus and take responsibility for removing them.
2. Assess. Select and promote only supervisors who have the skills or potential to manage, and provide the tools and training they need to detect a contagious worker or new hire, before their “bad attitude disease” leeches the morale and motivation from the healthy workers. Effective supervisors hold the keys to employee retention and profitability.
3. Treat. Take responsibility for upgrading the skills of your first line of defense, the frontline supervisors and managers, who battle such “infections” and “exposures” on a daily basis. Develop and train supervisors to have the skills to “quarantine” or treat infected workers and coach them back to health. The Virus is mutating almost daily, and continuous learning is crucial.
4. Monitor, monitor, monitor. Just as attending a diet class and waiting for the pounds to drop off is ludicrous, providing skills training without reinforcement, feedback and re-testing is equally bad. Identify the skills that differentiate your highly effective managers from the average performers, develop training that is specific and responsive to those specific skills, and provide ongoing feedback and post-assessment to monitor progress and ensure protection.

Now is the time to attack the Attitude Virus and immunize your organization. Companies that are Attitude Virus-free will continue to grow and prosper, because they know how to select positive workers and quarantine their infected employees (either nurture and rehabilitate them back to health or “delete” them before they infect other workers.)

A work culture clean and free of the Attitude Virus is rewarded with a healthy bottom line, high rates of employee retention, and continuous productivity improvements.