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Social Contract
(November 09, 2004) - We talk about it all of the time but it never quite seems real. By 2007, if growth remains as sluggish as it was last year, there will be 10,000,000 more jobs than workers in the American economy. As a percentage of the workforce, the situation will be worse in all of the countries we'd be likely to tap (except India). 

We quickly adjust to some things. It wasn't all that long ago that a visit to a "filling station" included a somewhat friendly greeting, a windshield wash and the filling of the gas tank by a person. Self-service, now considered the norm came as the result of intersecting trends. As gasoline costs rose in the 70s, one way to save a little per gallon was to fill the tank yourself. The gas station attendants were usually from the pool of mechanics who fixed the cars of customers. As car quality improved and the tools required to maintain them became prohibitively expensive, the number of mechanics with necessary skills declined. It is now nearly impossible to find a mechanic outside of a dealership and the friendly smiles have been replaced by grumpy cashiers.

Labor shortages, whether caused by demographics, shifts in quality or technological obsolescence mean that the fabric of our lives changes as a result. In the old days, there was never a chance that you'd turn up in a meeting smelling like gasoline. 

There are little hints everywhere. It's not so much of an inconvenience to fill your own cup with soda at a fast food joint (although it's irritating that the price didn't fall when we began supplying the labor.) We fill our own cups because labor is scarce in the low end of the status ladder. We will all do little more of this and that as a compensation for missing service help. At some grocery stores in our neighborhood, they already expect us to bag our own groceries. We do our own typing, answer our own phones, make our own copies, self-serve our benefits, and use the net to make our travel arrangements. Unless you are in downtown Manhattan, coffee-to-go means fixing the additives yourself.

The labor shortage will have more subtle consequences like these in the early days. More buffet lines, more self-service, more additional assembly required, more pick it up at our dock, longer waits, longer lines, less service in general. The acute nursing shortage is liable to result in the certification of family members to provide services in a self-serve hospital. It already has produced shorter hospital stays and higher incidents of hospital generated disease.

It's the tip of the iceberg. The very difficult work of acquiring and maintaining the "talent that makes the difference" is going to get harder and more time consuming. Old fogies will see at as the radical reinvention of the term "Prima Donna". The dissonance between old established players and the new, young, privileged "fair haired girls" will rock the internal political structures of older and larger companies. Although we've had some experience with disparities in pay during engineering shortages, walking the line that prevents age discrimination will be the governing mechanism.

The degree to which employees have a say in the direction and policies of the company is on the line. Because the cost of switching jobs will be so low, the work required to continually re-recruit the workforce will have immediate and measurable payoffs. We're talking about a world in which 20% attrition rates are considered excellent examples of how to do it. We're talking about  doubling and tripling the recruiting staff and budget just to stay even. We're talking about three or four years from now.

This is the calm before the storm. Once we begin moving people around the economy this time, it will be the beginning of an ever accelerating cycle that just gets harder and faster. The demand for measurable results in service quality and production will increase as the ability to deliver them declines.

This would be an awfully good time to carefully consider your five year recruiting strategy. What are the demands? What are the sources? How are you going to compete?

 -John Sumser

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Materials written by John Sumser © TwoColorHat. All Rights Reserved.
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