An ongoing study of leadership roles, practices, and behaviors explores distinctions between individuals who disclose that they personally or their companies were financially harmed in the recent economic downturn and those who indicate that they or their companies experienced no financial harm. The responses vary by country.
Economic harm seems more likely among residents of Europe and North America than in Africa, Asia, Australia, or South America. Respondents from North America to date see 70% of 280 reporting financial harm while residents of Europe to date see 58% of 36 reporting a negative financial impact from the economic downturn. Africa, Asia, Australia, and South America reported 43%, 47%, 42%, and 71% respectively. If leading during economic recovery is different from leading at other times, and residents of Europe and the Americas are more likely to have experienced economic trauma than residents in the rest of the world, then we might expect leadership in Europe and the Americas to look differently than leadership elsewhere as the economic recovery proceeds.
Two somewhat universal themes emerge from research and experience. The first theme is that leaders rise to the surface. People display leadership that is disconnected to the position that they hold. When looking for leaders in organizations, we should not limit our search to people in somewhat traditional positions of leadership. It may be that future holders of positions of leadership come out of the ranks of leaders whose leadership is unrelated to their position. At the moment, these leaders have followers and these followers, rather than organizations or communities, give them power or authority based on the value that they bring.
It appears to me that the public discussion, at least coming out of politicians and the press in Washington, DC, seems to be missing several key points in the encouragement of businesses to create jobs.
For 25 years, I have, among other things, helped companies and government entities to improve productivity and operational and financial performance. For decades, companies have pursued improved productivity, leaner operations, and more efficient processes, with less waste, less rework, and less labor content. Consultants like me have helped government entities and companies in most, if not all, industries tie staffing levels to demand for products and services. I’ve helped insurance companies align staffing with sales activity, policies in force, and claims caseload. I’ve helped an accounts payable department in a government entity tie staffing to incoming bills to be paid. I’ve helped startups understand the timing of when to add staff, add executives, expand offices, and open new offices, all tied to workload.
Of course, I have done many other things but the point is that the mindset of people in the US economy is geared to connecting hiring to increased workload and demand for products and services. For fifty or sixty or more years, companies have been trained to avoid speculative hiring and to not add staff until existing staff is “fully” utilized with an acceptable level of overtime.
In the January 25, 2010 issue of Time, Nina Easton questioned the advisability extending jobless benefits indefinitely. Ms. Easton suggested that allowing eligibility for periods approaching two years may extend unemployment while providing a modest cushion to the unemployed who would prefer to be working. Ms. Easton’s article raises in my mind the question of the extent to which jobless benefits and job creation and economic stimulus are, and should be, synchronized.
Why is nothing said about creating sustainable jobs in sustainable new ventures that have two special objectives in addition to those you would find in most business enterprises: meeting an acknowledged need in the community and providing long-term employment to the chronically unemployed and under-employed?
The official jobs created data at Recovery.gov is categorized as recipient reported or agency reported. Recipient reported data is categorized as contracts, grants, and loans. Agency reported data is reported by ten individual departments: CNCS, DHS, DOC, DOD, DOE, DOI, DOJ, DOL, DOS, and DOT. As of 12/31/09, the federal government’s various recovery programs reported 20,368 contracts, 203,010 grants, and 986 loans.
Of the 20,368 contracts, 9,225 contracts provided no indication of jobs created and 1,437 (12.9% of the 11,143 and 7.1% of the total) that did provide job creation figures indicated fewer than 0.5 jobs created as a result of the contract. The 20,368 contracts totaled $25,081,315,704 in federal government funding to create 33,941.1 jobs for an average of $ 738,965.91 per job. The 5,310 contracts reporting 0.5 jobs created or more totaled $15,501,184,696.22 in funding and 33,684.4 jobs created for an average of $460,188.83/job while the 1,437 contracts reporting less than the equivalent of one-half of a job created received $855,094,999.83 in funding and created 256.7 jobs for an average of $3,330,976.59/job.
Leaders worldwide somehow recognized the presence of an economic crisis in September 2008. The crisis was at least in part precipitated by poor leadership. Disagreement seems pervasive about the source and the specific indications of poor leadership. Some blame greed while others suggest the housing bubble and mortgage credit woes have their root in the easing of credit in the late 1990s to enable home purchasing by people previously not qualified as homebuyers. Some in the U.S. propose expanding government spending while others express concern about growing federal budget deficits.
Agreement seems rather widespread that job creation is crucial to recovery from a global economic downturn. The focus of the U.S. media is, perhaps understandably, economic recovery and job creation in the U.S. From the perspective as a business consultant for 25 years, mentoring startups and improving productivity in established companies, very few elected representatives in Washington, DC and in state capitals, or in the media for that matter, seem to have much of an understanding of job creation. The White House’s official tally of “jobs created or saved” treats monthly payroll numbers as if one person working for one month is the equivalent of a job created. Whether this is just an example of clerical errors in tabulation or indicative and symptomatic of widespread miscalculation, the integrity and credibility of reports of jobs created or saved is no better than doubtful.
