Job Creation and Recovery

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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.

Government entities may have the luxury of hiring without corresponding demand for goods and services, but for-profit companies no longer feel they have that option. In this economy, it may not be reasonable to expect companies in the US to hire until demand for goods and services improves. Perhaps that is the intent of the various economic stimulus packages, but the connection, other than providing cash, between stimulating the economy and stimulating hiring is cloudy, perhaps as indicated by the tepid hiring and slow recovery.

If the federal or state governments want to stimulate hiring, the stimulation needs to be directed at demand and not simply at providing funds to act on assumed demand. The large cash hordes in so many companies may be the best indication that cash is available but demand is growing weakly, if at all.

Should we be talking about “Jobs Created or Saved”?

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After 25 years of speaking with companies about the work associated with positions and about improving the productivity and other metrics associated with those positions, I continue to be intrigued by the on-going conversation about the number of “jobs created or saved” by various economic stimulus initiatives in the United States. I continue to hold the position that people in Washington DC either have no idea what they mean by the phrase “jobs created or saved” or they mean something entirely different than most people I talk to in the private sector.

A job is the work somebody does to earn money.  On the surface getting people jobs appears to be a good thing. Get people to work. Get them paid for doing work. Get the money into the economy to pay for other goods and services. In the short run, creating work for people to get paid for doing may be necessary and appropriate. Longer term, however, shanghai job creation may not be sufficient.

One challenge with job, or work, creation by the federal government is that the sustainability of the work may rely on the continuation of funding by the federal government unless the work created has its basis in the underlying economy. Ideally, for a federal government job creation program to be sustainable and, in the long run, a good thing, the created jobs should fill sustained needs within the respective communities. Jobs associated with a stimulus-funded construction project may be a good thing short term, especially for the individuals hired by the firm, but when the project is complete what work fills the new void for those individuals?

The other challenge associated with the current “jobs created or saved” is that it generally does not seem to consider whether the people doing these new jobs were employed doing something else before coming into the new position. Combined with reports of miscounting, the credibility of the reported results is questionable. On the other hand, if self-reporting of “jobs created or saved” the only metric available for a quick assessment of progress, then that metric should be used with care and with the recognition that the perceived improvement may be short term at best.

As for the sustainability factor, we eventually need to get community leaders, elected and non-elected, looking at long-term community needs and long-term solutions. It seems surreal to be using economic stimulus money, for example, to be addressing long-standing issues associated with the disruptive change experienced by the auto industry and the steel industry in Michigan, Ohio, and elsewhere. Using stimulus money may help people short term, but a short-term infusion of cash cannot remedy 20 years or more of troubled economy. Leaders in long-suffering regions need to identify industries that can be sustainably stimulated, not just jobs. While some argue that “clean coal technology” is unattainable, it is an example of the type of industry that may be needed to sustainably stimulate the economy. While fixing a few roads may provide short-term relief, for longer-term impact somebody might want to look at how to fix roads better or to build roads that need fewer repairs, if at all.

If Leaders Require Followers, How Do I Lead So That Others Will Follow?

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At the risk of stating the obvious, if a person wants to become a leader, and, consequently, wants others to follow her or him, the would-be leader must provide the would-be followers with a reason to follow her or him. Some people label that reason “vision,” a term that has become controversial perhaps through overuse or misunderstanding. Some might be more comfortable with the term “direction” rather than vision; if you want to lead somebody somewhere, most people might consider it reasonable to know where you want to go with them. So, if you want somebody to follow you, having someplace to go is a good starting point.

Having someplace to go is necessary but not entirely sufficient to becoming a leader. The would-be followers eventually need to decide that your chosen destination is interesting, if not desirable, to them. Some leaders need to convince the followers to head in the chosen direction; other leaders may have followers who are more willing. A former pastor of mine was fond of observing that when a crowd is determined to run you out of town get in front and make it look like you are leading a parade! While that is cute, if not humorous, in such a scenario I would argue that the person in front is not the leader but the led. The direction or vision apparently needs to be compelling, if not clear.

The direction does not need a clear or pre-determined path. Since the advent of participative management, leaders seem more inclined to seek input from the followers in determining how to get to the chosen destination. The leader may actually begin to manage a process of determining the appropriate path, including how to overcome obstacles along the way. The leader’s job is to keep everybody moving in the appropriate direction. When the followers are in doubt or disagreement, the followers may look to the leader for guidance. Here, an important distinction seems to emerge – while managers can be imposed on subordinates, leaders lead at the discretion and by the permission of the followers. If followers choose not to follow a would-be leader, the followers are implicitly or explicitly choosing a new leader.