From the Friendly Skies: A Lesson in Workforce Planning

Here is what can happen in an industry when labor market conditions, regulatory changes, shifting compliance requirements, are mixed with a generous dose of a 'Just like the Republicans we should have seen this coming' demographic shift.

Check this out from the Wall Street Journal this past weekend - 'Airlines Face Acute Shortage of Pilots':

U.S. airlines are facing what threatens to be their most serious pilot shortage since the 1960s, with higher experience requirements for new hires about to take hold just as the industry braces for a wave of retirements.

Federal mandates taking effect next summer will require all newly hired pilots to have at least 1,500 hours of prior flight experience—six times the current minimum—raising the cost and time to train new fliers in an era when pay cuts and more-demanding schedules already have made the profession less attractive. Meanwhile, thousands of senior pilots at major airlines soon will start hitting the mandatory retirement age of 65.

Another federal safety rule, to take effect in early 2014, also will squeeze the supply, by giving pilots more daily rest time. This change is expected to force passenger airlines to increase their pilot ranks by at least 5%. Adding to the problem is a small but steady stream of U.S. pilots moving to overseas carriers, many of which already face an acute shortage of aviators and pay handsomely to land well-trained U.S. captains.

It's a proverbial 'perfect storm' for the airlines, and not the familiar kind that simply traps passengers for hours on the tarmac waiting for a gate, but rather the kind from which there are no obvious or simple answers and remedies.  The workforce is aging, the requirements for new entrants are getting even more rigorous, the training or feeder systems for new replacements are drying up, (the piece cites some disturbing statistics about a dramatic drop-off in flight school training program participation), and global competition for scarce talent is driving up the salaries for many current pilots, making them much more likely to at least consider opportunities outside the USA.

This story is about airline pilots, truly probably always a pretty tough role to source for and fill, but increasingly we will see versions of this story playing out in other industries as well.  It isn't just experienced airline pilots that are getting ready to retire - it is engineers, skilled tradespeople, teachers, HR bloggers - no class of workers is immune.  And I certainly don't need to remind anyone of the ongoing drama and saga about the 'skills gap' - a topic for another day but relevant to this discussion as a reminder that an aging workforce is just one of many challenges facing the talent professional in the coming years.

Last week I had a post on some trends shaping global people management, and in that post we talked about how it was surprising and disappointing that adoption of 'Web 2.0' modern and social technologies was rated incredibly low in importance and relevance by global HR and business leaders.

One of the commenters (rightly) pointed out that the better story was another of the 'trends' that was also ranked extremely low in importance - 'Managing an Aging Workforce.' I think the airline pilots piece in the WSJ helps to reinforce that point and to remind us all, (as if we really needed a reminder), that while business, strategies, customers, technologies, and markets are constantly changing and are usually unpredictable - that one factor in this volatile planning mix is pretty constant and reliable. 

Everyone in your organization is getting a little bit older each day. And some days it feels worse than others.

Hopefully the airlines will make the needed changes and adopt new strategies to meet their resource needs - and hopefully it will give the rest of us a bit of a warning that we may not be as secure in our talent plans and sourcing strategies as we think for the time when our folks start to retire.

A Tale of Two Job Actions

Two different labor negotiations caught my attention recently and the differences in how they were resolved, (or have not been resolved), paint a nice contrast in how tipping the balance of power in any negotiation continues to be a function of scarcity and ability to add unique, distinct, and not easily replaceable without significant switching costs value.

Exhibit A - The three-month long strike at Caterpillar by the International Association of Machinists and Aerospace Workers.

Points of Contention (simplified and abbreviated) - The company wants the union to accept a new six-year labor agreement, with wages essentially frozen for the duration of the contract, and with workers contributing an increasing percentage of pay towards healthcare costs. The union is countering that in a time of record corporate profits, that the company should not be demanding concessions from the union, and should consider the union and the workers as partners in success, and share more equitably the fruits of a great run of results.

(Likely) Outcome - hard to say for sure, but the recent history of labor actions in the industrial US suggests that Caterpillar management will emerge with all or most of the concessions they are seeking.

Exhibit B - Adult cast of the ABC TV comedy 'Modern Family' form a united front and stage essentially what amounts to a strike to achieve a significant pay rise for the coming and subsequent seasons.

Points of Contention - The cast, realizing the success of the show, and the strong bargaining position they held, basically wanted to maximize their earnings.  The show's producers, also understanding the success of the show, wanted to continue to ride what is often elusive popularity in the entertainment world, while of course, keeping production costs as low as possible so as to maximize the show's profits.

Outcome - The Modern Family cast all won hefty wage raises, although not fully what they were originally seeking. They also won a small stake in 'back-end' money, essentially a form of profit sharing, and agreed to one more year on the contract length than they originally wanted.

The moral to all this?

No, not the completely obvious conclusion that it is better to be a highly paid entertainer than a industrial factory worker, although in many ways that seems true.

No, I think the real story is that no matter what you do your negotiating power, leverage, and ability to extract the absolute best deal in any situation is almost completely a function of how easily replaceable you are.  And the corollary is that we now live in a climate with a persistent and stubborn economic slowdown, and where the basic math doesn't seem to make sense.

A world where finding about 800 new and cheaper machinists seems like a more realistic possibility than finding 6 different funny actors.

Whatever you decide to do, better make sure there aren't 800 more just like you waiting for you to slip up or make a tactical negotiating blunder.

Happy Monday!

Off Topic - The Flames of Discontent

Spotted from the always inspiring 'If Charlie Parker Was a Gunslinger, There'd Be a Whole Lot of Dead Copycats' blog:

Are you fanning the flames of disconent today?

Contributing to them?

Will you win?

Have a Great Weekend!

The skilled trades need a famous commencement address too

May is commencement time in the USA, and in conjunction with the hundreds if not thousands of college and university commencements taking place across the country we are treated to reports and videos of numerous commencement addresses delivered by a wide range of speakers ranging from famous business people, media personalities, politicians, and more. And each year one or two of the college commencement addresses resonates in some way, whether from the message itself, or from the combination between the message and the speaker him or herself, perhaps making the story more powerful by virtue of their obstacles overcame and ability to reach and inspire the graduating students. Jaime Escalante

My cynical nature tends to mostly ignore these commencement speeches each year, because to me, if you peel back the outer surface layers that differentiate the 'speaker life story/type of personal achievement' from each other and get to their core message, well, that message seems pretty much the same. Again I am a cynic, but after a while and the fourth or fifth re-telling, the admonition to 'be true to yourself, follow your dreams, everything is possible, follow your passion....' message seems to get a little bit stale. I spent enough time in higher education to understand why colleges hire, and make no mistake, most of the commencement speeches are highly paid gigs, a big time inspirational and famous speaker to give the same message the local public school principal gave in 5th grade, it's because the parents want to be entertained and feel like they are extracting the last shred of value for the hundreds of thousands of dollars they have shelled out for Junior's education.

I'll tie this back to two college commencement addresses way back in the day to see if the point can be better made with specifics. When I was just finishing my Junior year in college I hung around to attend commencement as I wanted to take advantage of all the parties witness many good friends of mine receive their diplomas. The commencement speaker was the legendary actor Jimmy Stewart. Most of the parents were really excited to see Mr. Stewart, as he was one of the most famous actors of the parent's generation and the one just prior. I am sure he said some interesting things, he had a great voice and delivery, even at that later stage of his life, and I seem to remember people being pleased with the choice of speaker.

The following year at my graduation the commencement speaker was the high school teacher made famous by the movie 'Stand And Deliver'. Not the famous actor, Edward James Olmos, but the actual teacher who inspired the story, Jaime Escalante, who was not very well known at the time, although via the moderate success of the film at least the story had some familiarity. Mr. Escalante's speech was excellent, and most importantly for then, as indeed for today, I think in many ways the choice of someone like Mr. Escalante more appropriate and relevant, (assuming you can make any kind fo argument for the value of any commencement speaker).

I was thinking about this for another reason as well, the recent release of the Manpower 'What Jobs are Hard to Fill' survey, (I know that is not the real name, but you know which one I am talking about). In the survey we see that some of the Top 10 hardest jobs for companies to fill today are in skilled trades, sales reps, drivers, mechanics, nurses, and yes, teachers. The Top 10 list is mostly those kinds of completely necessary, important for a modern society to function properly, are unglamorous, and typically are not the populations from which fancy college commencement speakers are chosen from.

And that is kind of too bad. While Mr. Stewart was a fine speaker and a good-natured guy, he, and most of the other commencement speakers don't really hold up too well as role models in the sense of graduates' career aspirations and plans.  The country doesn't really need many more aspiring actors or singers or Reality TV stars. 

According to the Manpower report however, the country does need lots more tradespeople, teachers, mechanics, and accountants. Maybe we should be hearting more from these kinds of professionals at commencement time.

Sadly, Mr. Escalante passed away in 2010, so he is no longer able to try and inspire young people to follow down this path.

Edward James Olmos is still alive though. Maybe he can play that role made famous in Stand and Deliver again. He at least still has some name recognition.

Guess which labor market?

Here's a quick game for a Friday, I'll give you three lines from a recent article titled, 'Workforce shortage a structural problem', that assesses macro labor market conditions and you try and guess which labor market the article is referring to.

1. "A lack of skilled technical workers coexists with the difficulty most students and recent graduates have experienced in finding full-time employment, because few of them possess the technical skills required."

2. "Graduates are finding it difficult to get jobs and many enterprises are facing problems in recruiting workers and technicians, revealing structural problems in the employment market, said (redacted to make it harder for you to guess)".

3. "Even then, it is still not easy to attract experienced, skilled workers. So, we have now signed an agreement with some technical training schools so that we get first choice of the best students to become interns in our company. We hope that cooperation such as this will help to develop a talent pool for us." 

So what's your guess?

Could be most any type of technical or skilled manufacturing type job in the USA, right? It possibly could be some areas of healthcare, as the aging population places more demands on the healthcare industry to supply trained workers at the same time many college nursing programs are straining under budget costs constraints and still have long waiting lists for student admission. Maybe it is the US auto industry, that seemingly has emerged from near-death to post robust sales and profits as this classic American industry continues to rebound and confound (hat tip to Walt Frazier).

All good guesses, and all could be correct in the right context, but the actual correct answer is the Chinese labor market, and all three of the above quotes were take from a piece titled 'Workforce shortage a structural problem', on Chinadaily.com.

You should click over and read the entire piece, but the short summary is that many of the same types of problems that we often read and hear about in the US labor markets - the skills gap, the lack of technical training that matches industry demand, the problems with shifting labor pool demographic composition, etc.,  seem to be just as important and profound in China as they are here in the USA.

I am certainly not going to offer '5 tips for solving your Chinese market labor problems', here on the blog, and in fact, if you truly are looking to a blog to try and solve those kinds of problems, well, I'd say you have bigger things to worry about.  

But I will offer this observation, that no matter where in the world you look to source labor and locate production, issues with skills training, development opportunities, and the best talent having lots of options besides yours to choose from seem to be pretty much the same no matter where you end up. I'd offer that you as a talent professional can try to run from talent shortages and skills gaps, but no matter where you run to, you'll probably find the same problems. 

Only you might need an interpreter to help you understand them.

Have a great weekend!