Code words for 'Get ready for some layoffs', ranked

Big news on the corporate M&A front announced this morning with the news that Disney has reached an agreement to acquire substantial portions of the Fox media empire (including Twentieth Century Fox film and TV studios, a bunch of cable and international TV businesses), for approximately $52.4B in Disney stock.

While most of the coverage I read and heard this morning focused on the business and content strategy implications of the deal (basically these assets strengthen and augment Disney's content inventory for their eventual direct to consumer streaming service which will compete with Netflix), less attention was given to the inevitable 'people' costs of these kinds of transactions. Namely, the almost certain reductions in headcounts from the newly combined (and larger) entity as execs look for ways to try and pay for the huge acquisition cost, and wring more profit and efficiency from the combined entity.

And the fun part (it is not really fun, I am being sarcastic), is that when the 'people' issues are discussed in these M&A deals the word 'layoffs' is never, ever used. No, we get other, less direct and more corporate-speak words and phrases that more or less try to mask what is really going to happen to a whole bunch of people that through no fault of their own become part of the costs (ironically savings to the corporation), of these transactions. This topic will always resonate with me because a few years back I was caught on the wrong side of one of these transactions myself.

In that light then, I present my unscientific, unresearched, incomplete, subjective, and 100% accurate ranking of 'Code words for 'Get ready for some layoffs''...

5. More than one appearance in a Press Release of any of the following words - 'Nimble', 'Optimize', 'Simplify', 'Align', ''Strategic', 'Targeted', (I could keep going but you get the idea). The key is the more corporate buzzwords you see, the more you need to worry.

4. 'Refocus', 'Restructure', or for a modern spin 'Pivot to (insert something slightly different from what the company has been doing here)' - The 'Pivot to' something else one is my new favorite. Somehow most corporations equate 'trying something new' with 'get rid or everyone who was doing the old thing'

3. 'Cost savings from efficiencies' - this phrase is actually used in the Disney-Fox press release. But be certain that most of these cost savings will come from the fact that the new entity won't need separate administrative and back office functions. Running payroll for 12,000 employees isn't that much more labor intensive than running it for 9,000 employees.

2.'Rightsizing' - Ever notice that getting the company sized 'right' always means 'making the company smaller?'

1. 'Synergies'- Any time 'synergies' are mentioned anywhere in the Press Release, time to polish up your LinkedIn profile 

Of course you could disagree with these rankings, but sadly, you would be wrong.

Happy Thursday. Hope you don't get M&A'ed before the holidays.

It doesn't matter if the robots aren't coming for your job, they are coming for your neighbor's job

After reading a flurry of pieces over the last few days about the progress being made in self-driving vehicle technology, I was reminded that one job category that seems likely to be highly pressured by this type of automation is commercial vehicle driving. You don't have to be a genius to realize that once Tesla (and others), get enough of their new commercial trucks into service, that Generation 2.0 of these trucks will attempt to not just eliminate diesel fuel and noxious emissions from their products - they will try to eliminate the driver too.

And you probably caught something about Amazon's newest experiments with retail stores that have no cashiers. Or maybe you have heard about fast food giants like McDonald's or Panera pushing more self-service kiosks into their locations, to reduce the need for human cashiers and order-takers. Or the hotels that are using mobile robots to deliver room service meals to their guests. And the list goes on and on.

And maybe after reading all these stories you say to yourself: "Self, these technology advancements are amazing. But good thing I am a (insert the white collar 'knowledge' job you have here) and not a truck driver or a cashier.' 

And whether or not the robots are coming sooner or later for whatever 'knowledge' job you have today is probably debatable, let's pretend for the moment in the words of Big Brother, (yes, I am fan), - 'Knowledge worker X, you are safe'. Phew. That is a relief.

But here is the thing, the kinds of jobs that are most vulnerable, most likely to be adversely impacted by automation are ones that are held by millions of people. Have a look at the chart below, from BLS data from May 2016.

Look closely at that list of the Top 10 'most-held' job categories in the US and think about which of them, (Clue: It is almost all of them), are going to be increasingly pressured by technology, automation, and 'self-service'.

There are about 150M people in the US labor force give or take. The Top 10 job categories in the above chart represent about 21 or 22 million workers - roughly 15% of all US workers. That is a huge number, especially considering that half a percent or a full percent moves in the unemployment rates are such big news.

The potential and the consequences of labor automation are concerns for everyone - whether or not your job is 'safe'.

And one last bit of food for thought. This issue, this challenge of automation and technology threatening jobs is also going to be a local one. Check out this chart below that shows the largest private employer for each state in the US. See any cause for concern?

When Walmart decides to move more aggressively into online, self-service, robot customer service pods, and Amazon-like efficiency in their distribution centers there will be an impact too.

But that's ok. You don't work at Walmart.

But I bet you know someone who does.

What do you think you know about job hopping?

Probably my favorite movie of the last few years is The Big Short, the adaptation of the Michael Lewis book detailing the run-up to the financial crisis/meltdown in 2007 - 2008.

If you have not seen it, take some time this weekend and do so, you will be glad you did.

But why I bring it up is that the movie opens with an on screen quotation, which is attributed to Mark Twain and that reads as follows:

It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.

If you know the story of The Big Short you'll know why the Twain aphorism resonates. Again, take some time this weekend and catch the film if you haven't.

But back to the point, or, rather, here's the point I want to make and why I thought of that quote this week.

What do you think you know about job hopping? Meaning, do you think, as I suspect most of us do, that younger generations of workers, (younger Gen X, Millennials, etc.), are more likely to 'job hop', i.e., have shorter average tenures in their jobs than prior generations?

I mean, that seems to be the convential wisdom, that the Millennials in particular have shorter job tenures, are much more likely than us older types were to leave a job that either is not working out for them, or for what they perceive is a better opportunity, and overall are less attached to workplaces and employers than we were in the past.

Do you think that is more or less true?

I admit, I did, (without ever looking it up), until I caught this piece in the Economist recently, Workers are not switching jobs more often. Here is a quick chart and excerpt from the piece:

EVERYBODY knows—or at least thinks he knows—that a millennial with one job must be after a new one. Today’s youngsters are thought to have little loyalty towards their employers and to be prone to “job-hop”. Millennials (ie, those born after about 1982) are indeed more likely to switch jobs than their older colleagues. But that is more a result of how old they are than of the era they were born in. In America at least, average job tenures have barely changed in recent decades.

Data from America’s Bureau of Labour Statistics show workers aged 25 and over now spend a median of 5.1 years with their employers, slightly more than in 1983 (see chart). Job tenure has declined for the lower end of that age group, but only slightly. Men between the ages of 25 and 34 now spend a median of 2.9 years with each employer, down from 3.2 years in 1983.

And here is a quick chart showing tenure not really moving, at least at younger cohorts, over time.

So yes, Milennials switch jobs more frequently than older workers. Younger workers have always switched jobs more frequently than older workers. The data shows that the phenomenon hasn't really changed much over the last 30 years.

What's really striking from the chart is not just that the 25 - 34 age cohorts is basically exhibiting the same characteristics with respect to changing jobs than they did 20 or 30 years ago, but that the largest and steepest declines in job tenures are seen in the Men aged 45 - 54 group. That group's average job tenure has declined from 12.8 years in 1983 to 8.4 years by 2016.

There are tons of possibly reasons for this, primarily how the events so well portrayed in The Big Short put so many of this group into unforeseen unemployment, as well as how technology, automation, and outsourcing have seem to affected this group more significantly than other labor cohorts.

But that is a post for another day.

The main reason this one stood out for me is that the data shows pretty clearly that what we think we know for sure, that Milennials are job hopping, low attention span miscreants, probably really isn't true.

What else about work, and careers, and employees do we know for sure that might be, in the words of Twain, 'Just not so?'

Have a great weekend!

CHART OF THE DAY: This labor market data point just hit a 44-year low (and low is good)

It feels like its been awhile since I have busted out a new Chart of the Day post so what better to dust off the fan favorite feature than another look at one of my pet subjects, namely, the US labor market.

While I have posted a ton of labor market charts over the years, I am pretty sure I have not talked about today's data point - Weekly Initial Jobless Claims. This data point is the total number of people making new claims for unemployment assistance for the weekly measurement period. And as you can surmise from the definition, lower is better with this metric. The fewer folks making unemployment claims the better.

So here's the data, initial weekly jobless claims for the last 10 years or so, courtesy of our pals at the St. Louis Federal Reserve, then some comments from me after that. As always, my comments are absolutely free of charge but sadly, are non-guaranteed.

The data please...

Three quick thoughts about the data...

1. The number of people filing for unemployment benefits for the first time totaled 222,000, the lowest since March 31, 1973. That's a long time ago. So long ago that the Knicks were about to win the NBA title in a few weeks.

Lower initial claims leads to lower (over time) unemployment rates, fewer people truly out of work, and the need for HR and recruiting to essentially have to make two arguments when attempting to fill open roles. One, that the role itself presents the candidate great opportunity and value. And two, that the new opportunity and value somehow are better, more compelling than their current set up. Fewer and fewer of your candidates and prospects are going to be desperately seeking something new. You job continues to get harder.

2. I know you, or more likely your CFO, won't want to hear this. But if you have persistently hard or long to fill roles you are working on, you have to sweeten your offering. And for the most part that means compensation. Fewer unemployed folks, more candidates already not sure they want to leave the good thing they have, and like the real estate market in San Francisco, potentially juggling multiple good offers. All that adds up to you left with empty chairs if you can't/won't compete on compensation.

3. In a tightening labor market you know what else becomes important? Yep, retention. At the same time you are scouring LinkedIn profiles of people working at your competitors to see who you can poach, their recruiters are doing the same with your folks. What can/are you doing to strengthen your own value prop to try and build a moat around your best people? Because with each passing week, it is going to get harder and tougher to fill the spots of the faithful departed.

When talent gets scarce, and their options multiply, the HR/recruiter role becomes that much more important in the organization.

In fact, you might be getting offers yourself right now.

Because in a really tight, competitive market the only thing that might be more valuable than talent to the organization are talented HR and recruiting people.

Happy hunting.

What should an employer do when the state reduces the minimum wage?

While confessing to not knowing any of the back story or local details behind this, I read with interest this piece in the Atlantic about the state of Missouri rollback of the city of St. Louis minimum wage from $10/hour back down to $7.70/hour. The Atlantic piece is solid, if a little long, so if you don't have time to dig in to it the essentials are as follows:

1. The city passed an ordinance which was designed to gradually increase the minimum wage in St. Louis from $7.70 to $11. The wage had hit $10 just three months ago, in May.

2. The state of Missouri, whose governor and state legislature were not in favor of this increase, passed a so-called 'preemption' law, effectively barring cities and other local jurisdictions from setting local minimum wages at a level greater than the state level minimum wage.

3. The preemption law went into effect on this past Monday, reducing or re-aligning the minimum wage in St. Louis back down to the state level of $7.70.

Got all that?

Why this was interesting to me was not because of the politics of it, the local control vs. state level authority issues, or even the economic benefits and/or constraints that minimum wages place on labor markets.

What is interesting is the dynamics at individual employers who just three months ago were forced/compelled to raise wages to $10/hour for anyone earning less than that, and who know are allowed, by virtue of the preemption law going into effect, to cut wages back, as far back as $7.70.

These numbers might seem small, but a cut from $10 to $7.70 is almost a 25% reduction in pay. I don't care what you are earning, if the boss cuts you by a quarter, you are going to feel some pain.

So back to the interesting, (to me) stuff. Employers in St. Louis have three (maybe more, but they would be variations of these), options with respect to the wages of any folks they had to give increases to back in May,

1. Cut everyone who was bumped up to $10 back to their wage level as of May. 

2. Keep everyone at $10 who was given the bump in May.

3. Pick and choose who gets to stay at $10, (the better performers, more essential folks), and bump others back to their May hourly rate, or some other rate less than $10 that better reflects their performance, value, and position relative to their peers.

Options 1 and 2 are the easiest to implement, and for different reasons, the easiest to justify back to the employees. Which is why I would expect that the vast majority of employers will opt for one of these approaches,

Option 3 is harder to effect, requires better understanding of employee performance and value, needs managers that know what is going on and can communicate clearly why decisions are being made the way they are, and could possibly drive better overall performance, as better workers feel more rewarded, and the others see a way to work towards the wages they desire.

Yep, Option 3 is definitely much harder to pull off. Which for some cynical reason seems to me the one that the fewest employers will pursue.

Have a great day!