HumanMarkets

Source: The US/Mexico border

You go into a staff meeting today and someone, maybe casually in the pre-meeting chit chat, starts talking about immigration reform and the Arizona state law.  Your colleagues then look at you and ask – “Hey HR, what should we be thinking about Immigration Reform? From your perspective, are we for it?

Do you have an answer?

Human Markets is not a political blog and immigration / immigration reform is in the most part a political topic.  However, it is also a labor market issue for some employers.  Here are a few thoughts that we might consider about forming an HR point of view in advance of being asked and looking ill-prepared.

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On the surface, the connection is that Federal policy has used employers as a significant enforcement mechanism for immigration.  I-9s; e-Verify, Work Visas, are all examples of employers having to take responsibility for denying employment to illegal/undocumented workers.  Some in HR focus on this as the totality of the HR issue within the immigration debate. 

The verification issues at point of hire are expensive and open employers up to risk that is uncompensated by the market.  That is, when we take risks in business, we should get paid for managing those risks well.  Here, managing regulatory prosecutorial risk is simply the price of admission.  (In other words, if a customer as two widgets, yours and your competitor’s.  All else being equal, will they pay you more for having a cracker jack I-9 process versus the other guy having a few illegal workers on board?  I am guessing they will not.

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Maybe the more important perspective for HR to have is how immigration reform will impact hiring.  It would be great to have a more holistic view that includes the impact of immigrants as customers or clients for our organizations, but that is likely the purview of the marketing group.

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A few questions that might be helpful in forming a point of view about the impact of immigration on your workforce :

• Does your workforce include a material number of people who are working in the United States illegally already?  (If this is true, you as HR should know this and know the risks your are accepting on behalf of your company.  They may or may not be acceptable risks depending upon your firm’s situation.  However, like Bristol herself – you can’t be a little bit pregnant on this.)

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• Do you compete for labor in a market that pays close to the minimum wage?  In other words, are you competing for labor in a market that is influenced by ultra low wages?  (If immigrant labor dried up, would your cost of labor be directly impacted, even if you do not yourself employ a large population of immigrants?)

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• Do you provide benefits in a community with a significant level of immigrants? Do you understand the relationship between your “unit costs” for health care and whether or not it is influenced by immigration?  (So across the range of recent immigrants there is a range of experience in how they are able to finance their health care – both those working legally or illegally.  Ask your broker or consultant to explain to you if local health care providers have higher costs because of the cost of unpaid services.

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• Do you operate with a labor model that is dependant or high volume or high skill within your workforce?   

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• If you operate on a wider geographic scale, do you see differences in your employment issues in areas closer to large illegal immigration? 

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I would stay away from politics and from the broader economics of immigration.  Unless you are really expert at it, for example, I am not, making political assessment on the job is not so smart.  However, as the Barons of Talent within our organizations, we should understand the labor markets in which we compete.  If immigration policy impacts your labor market, you should have a point of view about it.

No Comments | In: HR Strategy, How to do HR, Multiple Markets, Recruiting, Talent Management | tags: Immigration, Labor Markets. | #

Here is a great question to use in understanding an organizational role. It is a illuminating for market pricing a job; for OD diagnosis; or for talent management questions.

Who does the person in this role affiliate with within the organization?

Let’s take for example you are focused on the “Chief Engineer” of a technology company.  When you ask where the Chief affiliates you are asking, is this person the member of the top executive group who has responsibility for engineering (top down management – flowing management into Engineering); or is the Chief the senior most engineer who then liaisons with the executive function (leads the group from within; an “engineer’s engineer”, a technical leader).

Affiliation tells you a lot about the person in the role; how to pay them’ what support that team may need to balance the affilitation choice; and how others at the level of the Chief may percieve them and their department.

Market Pricing:          Assume from above that the person affiliates with the Engineering group.  Market pricing might then be best seen as classic “Chief Engineer” with an internal reference to a gap between the person and the tier below.  However, if the affiliation is as an executive, the balance of market pricing might be on what executives as a whole are being paid.

Organizational Effectiveness:   Is the engineering group linked directly to competitive customer activity, or is the group more of an infrastructure support.  I don’t know that the answer does or does not make one or the other affiliation ideal.  However, it does seem to me that affiliation with the engineering group would be more typical in an infrastructure group.  In the even that engineering is directly creating customer value, there would need to be another strong executive outside of engineering able to play the watershed role to pull together all of the customers’ interests.

Recruiting:     When thinking about making a placement on a team, exploring the history of affiliation for the person, and thinking about what affiliation the current situation calls for, can make for the difference between a good and a great selection.  A candidate whose passionate affiliation runs downstream is less likely to want to be promoted out of the group.  Is that what you need in your internal labor market?

Executive Direction:   Executives love to use the “my team” phrase.  What is the difference in focus for managers below an executive if she explicitly tells them that they should be affiliating with the group they manage, as oppose to the affiliation being “I am on Sally Smith’s team.”  I think that it comes down to the “who says I’m sorry.” 

Every team has bad days and makes mistakes.  Because we live in an imperfect world, “bad things happen to good departments”.  We all have to say “sorry, we did not get that done”, from time to time.  When an executive allows a subordinate manager to primarily affiliate with being on that executive team, I think it makes it easier for the subordinate manager to “take the I’m sorry” from the folks doing the work below.  When the subordinate manager affiliates with the team, it is the subordinate givingthe I’m sorry to the manager.  This is important not because it is about accountability.  That can be pressed in either scenario.  It is important because it sets the subordinate manager, and the executive up for a different view of risk.  When I think that I an accountable for all risk – planned and unplanned; reasonable and unreasonable – I act differently than if I think that I have pushed that done a level and I am only accountable for risk that is reasonably known.

So, this is not a silver bullet question – it does not answer all of a companies questions or instantly make you the smartest HR wonk in the room.  However, I think that it is a useful lens to look through to understand roles a bit better.  Understanding how the risk is being allocated in your organization, on a de facto real life basis, makes you a better market player.

Make sense or is this a bad case of too much time on my hands?

No Comments | In: HR Strategy, Professional Development, Recruiting, Talent Management | | #

Source: OfficeMax via YouTube

This commercial has been running for a couple of months but will likely need to be retired soon.  I am going to miss it.  I just love the energy and I love the message of it.

2 Comments | In: HR Strategy | | #

Look for a post in a couple of days about women who are about 50 to maybe 53. Born in 1957 to 1960. Compare them to women who are younger – do you notice anything different in their collective behavioral tendencies.

I know someone who does and it is an interesting theory.

2 Comments | In: HR Strategy | tags: 50 Year Old Women. | #

The classic economic analysis of unionization is that unions drive up wages for workers by limiting the supply of labor. They impact the labor market through a classic supply and demand impact on the cost of labor. This is really wrong and if you are in HR and you get caught by this error you will live to regret it. 

The error is essentially canonical doctrine.  Just about every scholar of labor law in the law and economics movement starts with this as the foundation for their work.  Law and Economics is the area of scholarship that gives the most thought to the question. Law and economics generally is the proposition that our law is economically efficient – over time the most efficient rules will prevail.  Efficiency is measured in terms of economics (the science of choice within the context of scarcity and risk).  There are several major law and economics thinker and a great overview for those interested is on Wikipedia.  For a more in depth look at law and economics on unionization, I recommend the blog of Richard Posner – start with the posting from which the following quote comes:

Unions, in other words, are worker cartels. Workers threaten to withhold their labor unless paid more than a competitive wage (including benefits and work rules), but unless their union is able to organize all the major competitors in a market, the cartel will be eroded by the entry of nonunionized firms, which by virtue of not being unionized will have lower labor costs. The parallel to producer cartels is exact–workers are producers.

This quote comes from a longer post Can the United Auto Workers Survive? Posner- read down into it to get the fundamental Posner premise.  Again though, while incredibly instructive, Posner is wrong.

The market that unions compete in is not about wages – the market is for employee representation.  Unions can’t magically produce greater wages.  At this point, unionized worker do in fact get more per hour than non-union workers – about $39/hour versus $30/hour (see the Bureau of Labor Statistics most recent data).  However, union membership continues to decline – less than 8% of private industry employees now belong to a labor union. (Source BLS.)  The argument that this shrinking group is increasing wages by reducing the amount of available workers with the rate of unemployment out pacing the rate of unionization by 2 points is foolish in the face of the facts.

The key is that unions don’t work to maximize wages for members – they work to maximize labor unions.  God bless’m, they are the same as any other business.  They maximize profit; they start with dues – revenue and go from there.   They sell representation services ala carte to employees the way HR departments “sell” representation to the same employees on a bundled basis as part of “working for this organization.”  The wages are driven by the economics of the organization and the broad market for talent.  The competition between unions and management is about the other stuff – personal representation.  Keep in mind, we are long past the idea of an ad hoc group of employees self-forming a union.  It just doesn’t happen.  When employees unionize it is with the engagement of professional union organizers and profession union management.  Organization of labor unions – and therefore EFCA issues and the like are not rights based issues – they are market issues.

What is the issue for the HR marketeer then?  If you really believe that a your workforce and the work place benefit from a direct relationship rather than one that runs through a union – understand that you are competing on the basis of the quality of your representation services.  Take that market dynamic seriously or go the way of all inferior competitiors in the market – lose.

Happy Labor Day from Human Markets.

No Comments | In: Employee Relations, HR Strategy, How to do HR, Labor, Multiple Markets | tags: Labor Day, Law and Economics, Unionization. | #

Is the Middle Class dying?  This recession may be increasing the possibility of that being true.

Here is may concern – we are in what others have called a “jobless recovery”.  Estimates of unemployment are commonly pegged, even two years out at 8% or more.  While we may be soon technically out of a recession because macroeconomic indicators are showing signs of growth, there is not enough confidence in the near term future to see employment levels increase enough to substantially knock down unemployment. 

My fear is that through the recession, many people have been living off of non-wage resources.  Extended unemployment benefits and the stimulus have produced some floor of economic activity.  I have to think that 401(k) balances and other savings are being depleted.  

Coming out of the recession truly, when employment does pick up again, what might we see?  I wonder if it will be more families living paycheck to paycheck, with no savings and with material debt.  At the same time, the people at the top of the corporate heap are already seeing signs of relief.  With a macro level recovery, they can expect to seen gains in bonus compensation and gains in equity awards.

We will also be down the line a bit more with the aging workforce and population.  More people in a more fragile economic situation relative to there earning potential and health.

In a nutshell, I am thinking a lot about whether the rich will get richer and the poor will get poorer.  What does that mean for HR in your organization?  What does that mean for talent?  What does that say about your customer base for your organization’s goods or services.  I think that forward leaning HR people need to consider that labor and customer markets could look very different in a few years. 

What do you think?

1 Comment | In: Compensation, HR Strategy, Labor, Multiple Markets, Recruiting | tags: Middle Class, Rich Get Richer. | #

Last year at about this time, Human Markets wrote about the question that is typically asked of Compensation Departments within organizations.  Namely, ” so what’s the number?”  If you want a bit more background on our thinking about setting merit increase budgets look there first.  Today we are really just updating since then.

The sad fact is that the economy is dramatically weaker than it was even a year ago.  Unemployment is very bad and, just like last year, is much worse than the main stream media seem to appreciate.  This fine post at the Freakonomics blogs sponsored by the New York Times, lays out the case well for how, under employment combined with outright unemployment is weakening the average American household.

The truth is that just about every organization in the country should be thinking about conserving resources – preserving assets.  Great employees are an asset.  Preservation of those employees, this year, may mean more about keeping expenses and capital low to make the whole operation more robustly sustainable.  If you ever thought that your job in HR or Compensation was to negotiate for the highest number that Finance would acquess to when they ask, “so what’s the number?”, that has never been more wrong than this year.

The right analysis balances what your customers are able and willing to pay (relative to any increase in your operating expenses) and, what is happening in the relevant labor markets for your organization.  Unions are blind advocates for more; my job is to be the best market player available.  Great HR can provide the analysis of where the organization sits relative to multiple markets.  They can argure the impact of EFCA but do so relative to the income statement of their employer.

This year, think 0%.  Build from there based on the full picture.  Remember however, that many people, people who are your customers, are losing some, if not all, of their income.  They will be spending less.  Your health care costs may well be going up.  Energy prices are increasing – again.  Credit is expensive.  All of these must be understood relative to what your customers are willing to pay.  Be a fact-based competitor when you get asked the big compensation question this year.  It may be what makes it possible for you to be there to answer it again next year.

No Comments | In: Compensation, HR Strategy, Multiple Markets | tags: Merit Increases. | #

On May 16th, HumanMarkets put up the post below on what it means to be middle class.  It came shortly after the Wall Street Journal [May 14, 2009 Microtrends],  featured a piece by Mark Penn.  The essay spoke about the negative connotation of the term “middle class”.  If you found the original post at all interesting, Penn’s piece is worth a read.  It’s, “Don’t Call Me Middle Class“.

The question is, how we understand the self-perception of people in our work force and how we want to choose words and symbols to describe their work.  It’s the market for worker affiliation.

No Comments | In: HR Strategy, Multiple Markets, Talent Management | tags: Affiliation, Mark Penn, Middle Class. | #

We are going to be hearing a lot about building the “middle class” in the country very soon.  It is Vice President’s Biden’s assignment from the President.  It is a social and economic policy rationale for EFCA, health care and other other governmental actions that will impacts markets and human resources.

Makes you wonder just want being “middle class” means.

I define middle class with a bit of help from listening to the brillent people at The Reinvestment Fund talk about it over the years.  Middle class is the socio-economic point at which a household has choices about where to get the essential goods and services of an American lifestyle.  They can choose where to live, what kind of food to eat, where to educate their children, where to get health care. 

By choice here, I don’t mean, “I think that I will live at 1600 Pennsylvania Avenue; or I think I will live in the Four Seasons hotel on Benjamin Franklin Parkway in Philadelphia.  I do mean, I don’t have to live, educate, get health care or eat, the way the government or some other charity tells me.  I can choose among choices of my own creation based upon my economic resources.  Poor people don’t get choices. 

The definition will matter because the interplay of government regulation and HR practice will focus us all on whether particular policies will enhance or diminish middle class living.

Two questions: Do you have a good definition of “middle class”?  Do you ever think about this a filter for your HR strategies or policies?  Please let us know what you think.

3 Comments | In: HR Strategy, Multiple Markets | tags: Middle Class; Policy; HR Strategy. | #

     Swine Flu is here.  Resist the temptation to over react. At this point, sadly, over 100 people have died in Mexico.  Although 20 people have been diagnosed with Swine Flu in the United States, none have died.  This is an opportunity for HR to be helpful by acting, but acting with restraint.

A good suggestion is to simply pass on to your employees the common sense that most of us learned in kindergarten.  If you look at www.cdc.gov  you can get a list of symptoms (the CDC themselve summarize them as simply “flu-like symptoms”).  You can also get a succinct, responsible list of good hygenie procedures.  Key among all of them is of course good ol’ fashioned hand washing. For now, isn’t that about it?

   Especially if you were not around last time, it is a good idea to recall the lessons of Avian Flu from 2006.  A great deal of time, attention, money and HR credibility was spent for not so much return.  The pandemic never came – which is good.  But, the Chicken Flu jokes lived on.  HR in many organizations was seen as the “Chicken Little” people.  There was a crisis and HR jumped in early in order to help their companies avoid disaster.  The problem was that the preparations in many organizations were not proportional to the threat.  It was an “all or nothing” reaction.  It felt like a bueuracrat’s response, not a business persons response.  (Easy to say in 2008 when in fact the pandemic never materialized.)  As an old mentor used to say, “perception is reality.”

So today, take action to communicate.  If you are in a public contact business communicate a bit more.  Make sure that there is soap in the rest room; put tissues in the break room and on the sales floor.  Don’t distribute bio-hazard suits; don’t even order them.

The HumanMarkets thought is this – if you project panic, or worse, opportunism with a response to Swine Flu that is disproportionately high, you convey that you are competing in the market for “people who want to be in charge of telling other people what to do.”  There is a market for that.  You want to win in the market for, “people who identify, measure and mitigate risk – proportionately.”  If you win in the former, you almost certainly are not even a competitor in the second one.

Gesundheit.

6 Comments | In: HR Strategy, How to do HR | tags: pandemic, risk management, Swine Flu. | #