Thursday, May 5, 2022

Maybe You Don’t Want to Hire the Prostitute

 Okay, I got your attention. But here’s the “rub”: if an employee candidate is only interested in the wages and benefits, including hiring bonus, etc., maybe you don’t want to hire them. They will leave you for the next higher bidder. 

You hate it when customers reduce the negotiations to price “only”. They’re not interested in quality, technology, delivery, service, effortlesssness, etc. They just want the lower price. If that’s the only dimension in play against your competitors, you want to walk away. If the customer can’t appreciate the extra value (hence willing to pay more) on the other dimensions, then you should fire them.

If you take this principle for hiring, you shouldn’t hire people who only ask about the “price” you’re willing to pay for their labor. You want candidates who will recognize your value of providing choice (some autonomy), content (tailored job to fit their strengths and passions) and collaboration (working with other engaged—i.e. enthusiastic and committed—employees) and managers who help them make progress each day/week (the #1 method of increasing motivation). We know that money is a good incentive only for routine work. If that’s what you’re hiring then, like a commodity, you might have to compete on price. But if you’re trying to derive business success by tapping into people’s creativity, innovation, performance and process improvement, then you want to offer more than financial incentive.

So compete for the candidates who recognize that value. Certainly, it will take longer to fill the spot. But won’t you be better off than hiring a warm body to fulfill a need?

Additionally, since 80+% of people don’t like where they are currently working—and a significant portion is due to burnout, stress, management style, etc.—offering an employment experience that can counter some of that is also a plus.

Wednesday, May 4, 2022

Inflation and Globalization 2.0: Worker-Focused, China Plus 1

I heard a bit of the interview with US Trade Representative Katherine Tai. She asserted we need Globalization 2.0, a form of economic trade that’s worker-focused instead of Globalization 1.0 which has been consumer-focused, i.e. emphasis on lower consumer prices, lower producer costs. Since the COVID-19 pandemic, she has observed that  a lot of companies have gone to a sourcing strategy of “China + 1”: less total dependence on Chinese production with additional sourcing in another country including the US. The idea is that producers’ sacrifice lowest cost for a hybrid cost to create a more robust supply chain. 

This, however, will increase overall costs and overall consumer prices, adding to inflation.

And since inflation is the biggest bugaboo in today’s economy, these seems like a more difficult, long-term strategy to implement if consumers decide to fight this trend. 

Now I haven’t had to research off-shoring options since the pandemic but, from the little I have seen, some analyses remain true. On-shore, more developed industrial country labor content in products is about equal to low cost labor country. Productivity equalizes the lower hourly cost from China. One report shows Chinese wages are now higher than Mexico’s and so if you must off-shore, do it closer to home. Obviously if the level of automation is equivalent in US, China and Mexico, the US will have a harder time competing. But transportation cost, warehouse inventory, market-introduction, product revision costs and so on may offset any higher labor costs even in those types of operations.

What I hope the US Trade Rep means by 2.0 being worker-focused is not a return to more tariffs that hurt the consumer and producer, but a focus on where worker well-being, worker productivity, worker skill development and workers’ community well-being is considered when we look at trade policies, like “Most Favored Nation” status.