While workers still hold most of the bargaining power, the pendulum is shifting a bit. Here's how executives can best handle the current labor environment.
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After three years of coping with a poor hand in a labor-squeezed economy, which followed a decade of gradually deteriorating leverage, companies are seeing that this year's slowdown may have nudged the pendulum back in their direction. But CEOs expecting a quick rebalancing of the relationship between labor and management are likely to be disappointed, according to a special report for Chief Executive, "Leading the Labor Bubble," which finds that the newly empowered American employee likely will remain the newly empowered American employee for some time, even if there is a slowdown in the U.S. economy.
But that doesn't mean employers have no hand at all. Below are ideas for CEOs to navigate an empowered workforce and a simultaneous slowdown in the economy:
1. Watch for more shifting. The Great Resignation is waning, but the changes aren't over. "People who switched jobs for monetary reasons are starting to say, 'Did I make the right choice for my life, and is this job aligned with my values?'" says Tom Barry, managing partner of GHJ in Los Angeles. "People are making more critical assessments of their long-term commitments."
2. Score productivity. Digitization has meant greater ability to track productivity; eight of the 10 largest private U.S. employers do so, according to The New York Times. They even include Amazon and others that are unionized or where unions are nibbling. At the same time, some workers are revolting at Big Brother–style monitoring.
3. Project concern. "There's a desire for people to feel like leadership can see them, understand them and are concerned about them and their pains," says Jeff Jolton of Kincentric. Failing on that front may prompt workers to seek a place where they will be recognized.
4. Display empathy. "That creates the kind of workplace that employees can be loyal to today," says employment attorney Claire Deason. "Assume no one is going to work for you just because they have to or because they feel like they owe you something, and instead think, 'Would I want to work for me?'"
5. Replace labor smartly. "Our clients are looking more at labor augmentation and replacement technology as they grapple with challenges on the labor front," says Matt Armanino, CEO of Armanino, an accounting firm based in San Ramon, California.
6. Look in new places. Salt Lake City–based Teem partners with Brigham Young University Pathways to contract college-educated students who live in Argentina, Brazil and other countries. They're top earners in their home countries, but these knowledge workers cost employers only one-third to one-half of their American counterparts "while bringing diversity of thought," says Teem CEO Cory Pinegar.
7. Use generosity. Medical-equipment maker Medtronic just agreed to pay all undergraduate college tuition costs for employees in the U.S. and Puerto Rico. More than 1,100 of its 44,000 staffers expressed interest.
8. Consider spot bonuses. "We prefer to reward people in the moment," says Antonella Pisani, CEO of Eyeful Media, a digital-marketing outfit in Dallas. "I think it's more meaningful. People feel we actually care about them as a human and about their good work, versus an annual cycle where it feels like you're going through the motions."
9. Go back to the basics. Reignite manager training, mentorship programs and positive feedback, which were mostly lost during the pandemic. "They go a long way toward building a new version of loyalty," Deason says. "You want folks to wake up in the morning and at least feel okay about going to work, and there's no substitute for positive feedback."
10. Give voice to workers. Create worker councils and even put employees on boards. "That's a way to have workers ask questions about issues and raise concerns," says MIT labor professor Tom Kochan. "If workers feel employers are responsive over time, that reduces the incentive to organize. But if workers don't feel they're adequate, history shows they increase in stronger forms and lead to unionization or some other mechanism."
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other business publications. He lives in Michigan. This article is adapted from www.ChiefExecutive.net with permission from Chief Executive. © 2023. All rights reserved.
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