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Structural Unemployment in HR
Did you see this week’s In The Know v1.32? The links are all about aspects of structural unemployment. There’s a debate raging about whether or not sustained high unemployment is the result of a seismic shift in the economy or as simple as a lack of demand.
If you think things have profoundly changed, that some jobs and occupations have disappeared and are not coming back, you hold the structural view. If you believe that the problem is simply that the economy is not growing, you think the problem is cyclical.
Pretty obviously, the national employment picture is a combination of the two. Construction is down because no one has the money for construction projects. As the economy recovers, more construction projects will be initiated. Broad swaths of the auto industry, however, are unlikely to return. Higher quality for a lower price is available elsewhere. In a global market, higher quality at a lower price is a trump card.
The interesting thing about the basic idea of structural unemployment is that is a regional phenomenon. While the national unemployment picture is an aggregate, the essence of the problem is different based on geography. In some geographies, structural unemployment means a training deficit (like Detroit) following the demise of an industry. In other places, it means deep changes in the hiring process (like Silicon Valley). What is rarely considered is the creeping impact of technology on standard functions across the economy.
HR is a perfect example.
While the primary education and trade associations of the HR Industry have continued to focus on industrial era competencies, cutting edge technologies, outsourcing and massive data flows are changing the working reality for HR Pros. Today’s effective HR Department is considering the use of predictive analytics, increased vendor usage and the integration of more automation. That means that each member of the much smaller HR operation is responsible for getting much more done.
Not everyone makes the transition gracefully. Many people don’t make it at all.
Consider the members of the payroll team. Unless there is a surprising and unique value delivered by the in house payroll team, the function has been or will shortly be outsourced. Of the original team members, one or two will be left to manage the vendor. What happens to the other people?
It’s unlikely that they’ll survive ‘upskilling’ to other HR functions. Training, Recruiting, OD and Analytics all require specialized skills. In the first three cases, being a gregarious extrovert gets you part of the way there. The rest of the required skills include the use of influence, the ability to disseminate information in digestible packages and a project orientation. The folks in payroll are process oriented and often introverts.
HR is getting concentrated and the functions that are left in house will either be managerial (involving contracts and project administration) or pure-play value adders. The folks who fall out of the HR shop will have a hard time finding places in which to apply their now outdated skills.
The market will face a dichotomy: a surplus of people with HR resumes and a shortage of people with the right skills. This is how structural employment looks within a single discipline.
For individual workers, the answer is to never stand still. Always look for assignments outside of your area of expertise. For companies, there is real hardship in having to let people go because their skills are no longer useful.
It would be interesting to see SHRM or HCI address the problem and offer solutions. From here, it looks like 30% or 40% of the industry’s workers are likely to come up short as skills requirements continue to evolve.
In The Know v1.32 Structural Unemployment
“Unemployment resulting from changes in the basic composition of the economy. These changes simultaneously open new positions for trained workers.” – Investopedia
“Joblessness caused not by lack of demand, but by changes in demand patterns or obsolescence of technology, and requiring retraining of workers and large investment in new capital equipment.” – Biz Dictionary
“Economists often describe unemployment as “cyclical” or “structural.” Cyclical unemployment results from broad economic slowdowns: As the economy turns, businesses lay off workers, meaning other businesses suffer, meaning more layoffs. Structural unemployment results from broad economic changes: An economy with a strong apple trade might be becoming an economy with a strong orange trade, and as that transformation happens, a lot of apple workers might be out of a job.” – Washington Independent
As an HR leader, you’d better have an opinion on the question. If this is structural unemployment, you may have a recruiting problem of serious import. If it isn’t, you can just wait for the tide to turn. Here are five links to spark your thinking on the subject.
- Many Americans in Financial Panic Mode
The view from Canada. Last week Stocks rallied and sentiment turned solidly positive because the U.S. lost only 54,000 jobs in August. Roughly 1/6 of all US households are in a financial panic mode. This is becoming the primary vector of job satisfaction, retention and attrition. In spite of their best efforts, companies are beginning to fill with people who are desperate to hold on to their jobs.
- The Coming Structural Unemployment Crisis
From May 2010, the structural unemployment we’re about to face comes from automation. As machine intelligence grows exponentially, the jobs destroyed are replaced by fewer, more capital intensive occupations. Where do the unemployed migrate when even Wal-Mart is reducing staff with automation?
- The Varieties of Unemployment
This is not structural unemployment, this a collapse of demand that can be repaired with proper stimulus. “This may well look like structural unemployment in three years. In three years, we may well see labor shortages, rising wages, and increasing prices in expanding sectors, accompanied by high unemployment elsewhere in the economy.”
- When Long Term Unemployment Becomes Structural
Currently, 6.5 Million US citizens have en unemployed for over six months. In the previous two recessions, the high was 2 Million.
The underlying structure of the labor market is disconcerting. Real growth won’t return until the problem is addressed.
- The Richest Man in the World: A parable about structural unemployment and a basic income
Nice video. Simple and effective.
Are people in your organization making videos like this?
- Bonus Link: A Deeper Kind of Joblessness
Harvard Blogger Umair Hacque updates the notion of structural unemployment. Noting that Henry Ford’s employment premise was that every employee should be able to buy a Ford, he highlights the quality problem in today’s job opportunities. “Ford explicitly said that if he paid his workers above the norm, and gave them more leisure time, not only would he gain greater commitment and dedication, in a industry marked by quick turnover — but, more importantly, he’d also spark more, better demand for novel relatively expensive durable goods, like cars, amongst a still relatively poor middle class.”
Influence is part reach and part focus.
Although some commentators suggest that influence is the ability to cause things to happen, the reality is more subtle. Power is the ability to make things happen. Influence is the capacity to increase the likelihood that something will happen.
Can you see the distinction? Power is the way things work in line functions (where hierarchy is the predominant management style). Influence is how things get done in staff functions. The functional manager can apply power. The program (or matrix) manager can apply influence.
Consciously or not, wielding influence is a way of applying leverage to situations. Influencers, more often that not, are advocates for a certain perspective. They are single voices in a marketplace of voices. The people with influence have an easier time being heard. Influence, in our noisy little niche, is the ability to get your message out.
On distinguishing factor is the size and scope of the audience. Imagine two influencers. One is a widely read blogger with a huge audience (say, 15,000 regular readers) of working level HR professionals. The other is an industry analyst with an audience of 2500 senior level HR managers. Which of the two is more influential?
The answer is not obvious.
The blogger is in a unique position to have grassroots influence. This is the best position from which to change the way the industry works and sees itself. Moving the hearts and minds of 15,000 people (maybe 1% of the industry)is no small thing. But, grassroots leadership requires a very clear and simple message and the ability to deliver that message repeatedly. Large, fan based audiences can be fantastic revenue sources. They can create great sentiment for change. Fan based audiences are all about entertainment and the use of celebrity.
The industry analyst, on the other hand, operates as a trusted advisor in the decision making process. An audience of 2,500 policy makers with check writing authority is enough financial muscle to make or break many vendors. The evangelical analyst (one who forecasts the future) is in a position to shape the world in which the blogger’s audience works. The trade oriented analyst (assessing vendors and near term trends) is usually the source of the core ideas that emanate from the bloggers.
Both positions are influential and complementary. It’s worth considering that this decade’s blogger is next decade’s elder statesman/analyst. One of the really interesting things about today’s industry is that career paths that were once very clear are up for grabs. Bloggers are taking the momentum they create in grassroots settings and converting it into new positions with career momentum. Analysts are taking on roles that might not have been considered before.
At HRExaminer, we’re continuing our investigation of influence. Take a look at our various automatically generated lists of influencers and our hand selected Top 100 Influencers in HR. Understanding influence and how it works is an important part of being effective in the operating word of HR and the industry that serves it.
Top 100 Influencers in HR v1.68: Lisa Rowan
Lisa Rowan is one of the two or three primary reference points in the analyst landscape. Plainspoken and rooted in common sense notions, Rowan’s history is laced with the foundations of HR automation. She views enterprise technology with the wizened eye of someone who has been in the trenches.
Lisa Rowan serves as IDC’s Program Director for HR and Talent Management Services research. In this role, Ms. Rowan provides expert analysis focused on both the business services addressing HR and talent-related process issues, such as human resource consulting, processing services, and Business Process Outsourcing (BPO) services; and HR IT Services, such as systems integration and IT consulting.
For the ten years prior to joining IDC, Ms. Rowan held business development, product management and marketing positions in the human resource software and services markets. Ms. Rowan held director positions in both business development and marketing within Genesys — a provider of human capital management software and services based in Methuen, Mass. Prior to Genesys, she held positions in both technical marketing and IT at Digital Equipment Corporation.
As a result, she has gained a depth of experience with both core human resource and talent-related services, and understands firsthand the unique challenges her vendor clients face. Ms. Rowan is an active member of a number of HR organizations and serves on the board of directors for the New England Chapter of IHRIM (International HR Information Management society.) Lisa’s influence and industry impact was recognized recently as she received IHRIM’s Summit Award for 2008, the association’s highest honor and was named to HRO Today Magazine’s list of 2010 HRO Superstars for the third year in a row.
She is frequently invited to present her industry knowledge and views at industry events and to the press. Ms. Rowan holds a Masters in Business with a specialization in marketing and product management from the University of Southern New Hampshire. She received a Bachelor’s Degree in Fine Arts from the University of Massachusetts in Amherst.
Back round, competence and style aside, Rowan is a central part of the landscape because she has her finger on the pulse and people really listen to her. From her seat, she sees the ebb and flow of technologies and emphases. The HR Industry is maturing, across the board.
Rowan’s calendar is a meticulous, structured jaunt through the year. She writes forecasts at the beginning of the year and Market Analyses at the end. In between is a hurdlers course of breaking news, speaking engagements, inquiries from buyers and sellers, custom research and an endless supply of reading material.
Rowan’s voracious appetite for new ideas is at the heart of her success.
We talked about the major trends that are driving the evolution of the industry. Rowan noted a balance between maturing technologies (which are smartly outsourced) and emerging technologies where the inventors and innovators are outpacing the market. Payroll and benefits management are at the mature end; Talent Management is near the midpoint and Mobile and analytics are at the edges of acceptance.
HR Transformation came up in our conversation. Rowan sees major change as unavoidable as the result of the dramatic force reductions in HR Departments. Outsourcing and the use of consultants is going up while automation is increasingly used to cut costs and reduce manpower. The Transformation of HR will be a consequence of these market variables.
In Lisa’s view, Mobile technologies will have a dramatic impact on HR. From approval processes to self service comp and benefits, the use of handheld personal devices will come to dominate the space.
Finally, Lisa sees a big future for analytics in the industry. “Think back to Jac Fitz-Ens and forward to Dan Hilbert. The history of HR is all about increasing the flow and meaning of data. Talent Management is just a waypoint in that process. ”
Keep your eyes out. Lisa Rowan is often a major presence at industry events. If you get a chance to talk with her, take it.
The essentials of great recruiting are graciousness, good judgment, good conversation and persuasion. The fundamental transaction is a great relationship that matures into a career opportunity. In order to get there, recruiters sift, sort, evaluate and struggle to stay ahead of the curve.
That’s where StrictlyExecs, the latest project from industry great Hank Stringer, makes its stand. The web recruiting tool is simplicity at its best. The service is a relationship gateway. Recruiters offer opportunities; candidates offer credentials; matching ensues; relationships are started.
The operation is a part of a larger offering called “StrictlyTalent“. The idea is to offer these relationship gateway services to very specific niches. Narrow focus, niche specificity and a ‘no fuss, no muss’ attitude give recruiting relationships a head start. Exclusivity is assured by a fee on both sides of the relationship. Candidates pay $9/month. Employer fees range from $99 to $345 per month.
It’s almost easier to define the heart of the project by noticing what it isn’t. It’s not a resume database, an email tool, a CRM system, an ATS, a recruiting workflow tool, or a multi-site job posting service. You can’t buy enhanced web pages, micr sites, social media add ons. The StrictlyTalent project (of which StrictlyExecs is the first offering) wants to do one thing only and one thing well.
In the coming weeks, you’ll notice that we’re seeing a shift in the market. The offerings that are making headway are focused in their simplicity. The very best designs in consumer goods and industrial gear and services are sample. Elegance and grace, two essential elements of great recruiting come from studied simplicity.
In a small nod to viral marketing and social networks, the company offers a talent scout program. Through TalentScout a recruiter or candidate can make money by encouraging friends to sign up. Referrals and referral bonuses are easily digested in this approach.
The process of simplifying an idea until it is nearly perfect is one of those things that they teach in design school. It’s what separates the great from the not so great. Simplicity means understanding that you can not be all things to all people. StrictlyExecs doesn’t do everything. It simply brokers relationships between talent and the people who need talent.
It’s refreshing to see people resist the temptations of consolidation. So called full service offerings are rarely integrated and rarely full service. But, their contracts often require the buyer’s full service. What Stringer and his cohort have accomplished is the delivery of an alternative view of the market.
They think that recruiters are smart and that the people they want to recruit are smarter. As a result, they assume that the recruiters they serve will have access to other tools. StrictlyTalent wants to be one arrow in the quiver and will not ask you to modify the rest of your operation.
StrictlyExecs is focused exclusively on senior executives. In five minutes, an exec can build a profile, make a match and start relationships with relevant employers. Confidentiality, long understood as a central component of executive search, is a given.
StrictlyExecs will surprise the industry. As a leader of the return to simplicity, the firm is planting a stake in the ground. Operators of systems that specialize in complexity may want to look closely.