Labor Markets: Moving Parts and Search Friction

One of the best and most consistent sources of information and analysis of big picture data about the US Labor Market is the Federal Reserve Bank of St. Louis. The regional reserve bank was established in 1914, after the creation of the Federal Reserve System in 1913. The Eighth Federal Reserve District is headquartered in St. Louis and has branches in Little Rock, Arkansas; Louisville, Kentucky; and Memphis, Tennessee. Aside : Those cities sound like the stops on an epic barbecue tasting tour.

Recently the bank issued an updated version of its 2011 report titled Many Moving Parts: The Latest Look Inside the U.S. Labor Market, an examination of the dynamics of the labor market, the problems with “one size fits all” type recommendations to 'fix' the unemployment problem, and some of the challenges facing policy makers, businesses, and individuals who all are motivated and interested in getting more people back to work.

It is a really interesting, and not terribly long but probably a weekend-type read, and I'd encourage anyone that wants additional macro-perspective on US labor markets to give it a read. The key takeaway, I think, is that even though high unemployment rates have persisted for some time, it is erroneous to think of unemployment and the unemployed as a static state. The data in the report illustrate the incredible energy and transition in the labor market -  even in times of rising total unemployment many millions of people find jobs, and millions of others lose jobs, and still others exit the labor force entirely.

This chart from the report helps illustrate these labor market flows:

The charts show from Nov. 2007 until the end of 2011 that even while total Unemployment rose from 8M to 13M, and Nonparticipation also climbed by about 7 million, that in the last 4 years on average over 5M people per month actually found employment. In fact even in the depths of the recession, an average of 5.6M workers per month got jobs.

The report further examines the influence of highest level of worker education attained and the duration of unemployment and their impacts on the ability for workers to find jobs. As you'd expect two conclusions are apparent - one; the more education you have, the more likely you can find and keep employment, and two; the average time spent in unemployment is increasing, and feeding into a cycle that for many millions of people, is making a return to employment more difficult, as skills erode and optimism withers.

All told, while we mainly read and talk about unemployment, (especially in the popular media), in the context of one number - the rate of unemployment, the underlying market dynamics, the labor market flows, the 'search friction' between workers and openings, attitudes about risk from corporations, as well as national economic and political policy decisions all combine and conspire to make it difficult, in the opinions of the authors of the St. Louis Fed paper, to arrive at simple solutions to these problems. 

But I do think while simple answers simply don't exist for this problem, a good first step is understanding more about the data, the history, and how decisions about policy impact these markets. And the only way to get started is to do the homework.

So this week, if you are at all interested in these issues, your assignment is to read  Many Moving Parts: The Latest Look Inside the U.S. Labor Market, and let us know what you think.

How much do you know about your industry?

Another great 'Corner Office' column from the New York Times this past weekend, this one an interview with Jim Whitehurst, president and chief executive of Red Hat, the provider of Linux and other open-source technologies.  As is typical in the Corner Office series of CEO and executive interviews, writer Adam Bryant asked Whitehurst about recruiting. Have a look at Whitehurt's take on what questions he likes to ask prospective candidates -

Bryant - Let’s shift to hiring. What questions do you ask? How would you interview me, for example, if I were in your office?

Whitehurst - I would be all over you about understanding the economics of the newspaper business — where it’s been, where it’s going, what do you see as the future of it? How is The New York Times positioned? Because I want to know if you have enough innate curiosity, and analytical and conceptual skills, to be able to frame strategically where you stand. And a lot of it is about discovering if you are curious enough to care and want to know. Because I don’t want somebody working for me who doesn’t care, right? To me, it also signals that the person isn’t in it just for himself or herself. Are they really going to be a team player?

If you’re really trying to understand the whole business and you’ve thought about it and you clearly have opinions around it, that says you’re not spending 100 percent of your time just making sure you nail your own job. It means you’ve clearly had to build relationships and talk to other people within the company. So I think that’s a real telltale sign.

Steve comment -  I really like this take, as the answer to this kind of question can be really telling and indicate how engaged and interested the candidate is about what he or she does, and the larger economic and competitive environment in their industry. It pushes the candidate off of 'Let me tell you more about me', which is what most of us who sit in interviews are prepared to discuss. 

More from the Times piece, as in the follow-up question Whitehurst pokes holes in traditional and behavioral interviewing approaches - 

Bryant - It’s an interesting bank shot to get insights about someone.

Whitehurst - It is indirect. Here’s what I find: If you ask the traditional questions — things like “Tell me about a situation where you failed” or “Tell me about a situation where you were particularly collaborative” — most people have answers that really come off as scripted.

Steve comment -  Again, asking questions that the candidate already knows are coming, (most of the 'Tell me about a time..' ones), can sometimes slip into well-rehearsed, coached, and crafted responses that don't do all that much to help gain insight and even more importantly, to draw distinctions across candidates. I am not saying these kinds of questions should not be used at all, but rather that since in a way they are telegraphed, that digging into some more broad conversations about bigger and larger issues can be more telling and instructive as you compare the various candidate responses.

Now I imagine the kinds of positions and candidates that a CEO like Whitehurst is personally interviewing are for more senior or executive roles, and these more big picture and strategic type questions seem more appropriate. But I think they could make sense at deeper levels of the organization as well, particularly in an age where the next great big idea might come from anywhere in the organization.

What do you think, do you ever ask candidates about the economics and the strategies of your industry?

Social Media and the Company: Which picture is worse?

Tonight on the HR Happy Hour Show we will be re-visiting the topic of 'Social Media, The Company, and The Law', with special guest, Employment Law expert Eric Meyer.  It has been some time since we covered this ground on the show and tonight I am sure that Eric will do a great job getting us all back up to speed so to speak, with the ever-changing and fast-moving world that is the intersection and tension between social media, social networking, company objectives, employee rights, and the law.

It will be an interesting and fun show, and I do hope you can join us tonight at 8:00PM ET as we kick around the topic.

You can listen to the show tonight on the show page here, by calling in to the listener line - 646-378-1086, or via the widget player below:

Listen to internet radio with Steve Boese on Blog Talk Radio

This week, as luck would have it, another great set of 'possibly inappropriate examples of social media use by employees' popped up - from my favorite professional sports league no less, the NBA.

Submitted for your consideration are two Twitter status updates, both that originally contained a linked picture or 'Twitpic', and both from current NBA players, (though not from the same team).

Exhibit 'A' - New York Knicks forward J.R. Smith tweets a very NSFW picture of a female friend in a state of very little dress, with an accompanying joke commenting about an aspect of her physique, (note Smith has since deleted the original Tweet).

Exhibit 'B' -  New Orleans Hornets center Chris Kaman tweets a picture of himself holding up what appears to be a very lifeless cat along with some commentary along the lines of 'Look what we are going to do to the Bobcats tonight').

Both tweets were sent from the player's personal Twitter accounts, and not in conjunction with any official team or league activities. Just a couple of goofy NBA players messing around on Twitter in their free time. No doubts that Smith's and Kaman's updates and shared pictures could be described as (depending on your point of view), as inappropriate, crude, classless, vulgar, offensive, etc.  And depending on the NBA or the individual team's written policies and contracts perhaps these kinds of updates would put the players in some kind of 'official' trouble with the league brass.

But here is the interesting thing, and the tie back to tonight's HR Happy Hour Show on social and the company and the law - the league fined Smith $25,000 for his actions, and as of this writing, has not taken any action against Kaman.

And that's the tricky part with dealing with employee's personal use of social media as an organization. Sometimes you have to make the tough call deciding what is more offensive - a NSFW picture of a woman not really dressed, or a guy on the starting five swinging a dead cat.

Fun times...

BONUS CONTENT - My spot on the Oracle Apps Blog

Please indulge a quick spot of self-promotion - today I have a post up over on the Oracle Applications Blog with some thoughts around the impact of social media and social technologies in HR, and the great opportunity and potential for HR leaders to leverage these technologies inside the organizations.

The post is titled, Beyond Record Keeping: What Social Means for HCM, and I hope you will check it out and share your ideas and comments about Social HCM there. And while you are at it if you are interested in staying connected to what is happening in the Oracle Applications space, the world of HR Technology, (or just want another opportunity to internet-stalk me), drop the Oracle Apps Blog in your feed reader.

The Oracle Applications blog is meant to be a resource for the HR community and will feature guest posts from key executives, strategy leaders, and Fusion Applications customers. And I will be posting there from time to time as well.

You’ll be seeing some new names and some names that you probably already know. The goal is to provide you with the information you need to get the most out of Oracle Applications today and identify new opportunities for your business in the future.

Thanks for the indulgence - tomorrow we will back to our regularly scheduled hijinks here on the blog.

Foundation

As a parent of an 11 year old I have had the fun of building helping to build quite a few Lego sets over the years. Sets ranging from a few dozen pieces for the simplest small projects, to at least one set that consisted of over 2,000 pieces, and that I think took me about a month, working in small batches toLego Taj Mahal complete. A quick Google search masquerading as exhaustive research of the company history indicates the largest Lego set in terms of individual pieces to be the 2008 Taj Mahal set, an amazing likeness of the iconic building checking in at over 5,900 total pieces.

Certainly for anyone that has spent time constructing and playing with Lego building sets over the years would attest to just how more evolved, detailed, and fantastic they have become, (insert the requisite 'Back in my day, we only had plain blocks and could build square houses' lament here). By continuously innovating and expanding the possibilities of what could be re-created and re-imagined with plastic blocks, Lego has carved a unique place in the toy industry, and by some accounts is now the 4th-largest toy manufacturer in the world. 

But the really cool thing about Lego I think is not solely or even primarily the amazing sets like the Taj Mahal, the Tower Bridge, or the almost 4,000 piece Star Wars Death Star. It's the way that the company still recognizes and embraces the elegance and importance of the simple, classic, and foundational Lego brick. You know the one I am talking about right? A simple rectangular building brick, a little Lego version of the real world builder's 2x4, the simplest and yet most fundamental brick of them all. The kind of brick that form the basis for walls, towers, and really for anything that can be imagined by the builder.

On the right is the image of the 1958 patent drawing for the Lego brick, (click on the image for a larger size), and while you might be thinking that the humble brick in the drawing has nothing at all to do with wonders like the Taj Mahal set, I think you might be wrong. Rather than me trying to explain why, let's get the Lego company's take on it - the following is directly from the Lego.com 'History' web page: Lego patent drawing - 1958

The LEGO brick is our most important product. This is why we are proud to have been named twice – “Toy of the Century”. Our products have undergone extensive development over the years – but the foundation remains the traditional LEGO brick.

The brick in its present form was launched in 1958. The interlocking principle with its tubes makes it unique, and offers unlimited building possibilities. It's just a matter of getting the imagination going – and letting a wealth of creative ideas emerge through play.

The folks at Lego have realized that no matter how far they can push the creativity and design that goes into new building sets, the foundation that is the simple brick from 1958 is the source of it all. It makes Death Stars and Taj Mahals possible, but it also does more that that. The 5,900 piece Taj Mahal set is essentially designed to do one thing - to become a miniaturized, detailed, and accurate version of the actual Taj Mahal.

But a pile of simple bricks, the foundation elements that Lego still sees as the most important part of their portfolio, well these are designed to become anything that the builder can imagine. And that is probably why over 60 years later, the 'system' no matter how much it has advanced, still works on a fundamental level. 

When the core of a system is simple, essential, and 'right', well, almost anything is possible from there.