The HR Whisperer

It’s that time of year again when kids are starting to fill out college applications, deciding if they don’t want college but would rather be a dental hygienist or fire fighter instead, or just plain freaking out that in a few short months their high school career will be over.  I’ve got one of those at home right now and it ain’t pretty.

What do these kids really have to look forward to anyway, career-wise?  With unemployment ravaging the workforce, organizational changes drying up the already few and far between entry-level opportunities, major competition for jobs driving highly experienced people to do desperate things and college tuition rates soaring, just what is out there for new grads?

Not much says an article in the October 19^th issue of BusinessWeek.  Author Peter Coy points out that newly minted high school, college and MBA grads are bright, eager – and unwanted.  The U.S. unemployment rate for 16- to 24-year-olds is around 18% and with the lack of jobs for those kids, their lifetime income potential is plummeting.  It seems like we are creating our own death spiral.

You’d think that with all this cheap labor out there companies would be snapping young people up by the dozen and getting rid of the more expensive employees.  Tain’t so.  We all know nobody’s doing anything in light of the unstable economy. But we weren’t doing a good job of bringing in the new kids to begin with anyway.

Part of what is scary about this too, is that so many of these young people are well-educated, enthusiastic and raring to go.  They’re the ones who are going to be funding Social Security, Medicaid and Medicare in the years to come.  We’re all living longer and many of us lost a ton of retirement money over the past several years due to the bouncing stock market.  So, that means that the older generations are going to have to keep working– which leaves even less for the new kids on the block, never mind our societal coffers.  And let’s not start on the loss of creativity and diversity in organizations.

Some people think the government should intervene before things get worse by subsidizing education, cutting minimum wage, offering more job training, or instituting apprenticeship programs for skilled blue-collar jobs.  Good ideas all, but require some more thinking on my part before I profess an opinion one way or another.

What I will opine though, is that we need to take care of our “pack.”  All organizations should be hiring or interning young people to keep the talent pipeline viable in spite of the wishy-washy economy.

Yea, I know these are great words…reality of business life…who’s going to train them…where do we put them…blah, blah, blah.

If we only focus on short-term and not look toward the horizon, how many organizations are going to miss the sunset and not see the dawn?

I was reading about the fed’s Car Allowance Rebate System and started wondering about its applicability to human capital in organizations.

The “cash for clunkers” program in a nutshell: it’s a $1 billion program that provides a voucher of up to $4,500 to help offset the cost of a new fuel-efficient car purchase or lease.  You can only trade in drivable vehicles made in the last 25 years that have been continuously insured by the same owner for at least one year leading up to the trade in, so no junkyard finds or used cars can be bought to be “flipped.”

With all of the layoffs, right sizings, competitive build-downs, reengineering, release of resources, negative hiring, de-recruiting going on (we have lots of terms for “dirty” words, don’t we) , it occurred to me that organizations have their own cash for clunkers program.  Except many of the folks who are being traded in today are not clunkers – even if they were “insured” by the same business owner for the past 10 or more years.

What I’m talking about here are the people who, for one reason or another, are being let go by their organizations because of the perception that they are paid too much, cost too much, are too old, etc.  At the beginning of the year, CNNMoney.com reported that at the end of 2008, 2.6 million jobs were lost; the highest level in more than six decades.  And 2009 ain’t looking so pretty either.  The Washington Post reports that,

“The number of job losses had decreased every month since January before spiking again in June, and economists think it is highly likely that the jobless rate will hit double-digits later this year. A broader measure of unemployment, which includes people working part time who want full-time work and those who have given up looking for a job, has already risen to 16.5 percent. The nation now has the same number of jobs it did in 2000, meaning that nine years of employment gains have disappeared.”

We know that organizations downsize to reduce costs, generate positive shareholder reaction, increase productivity, or to better decision-making – or so they say.  Estimates are that each laid-off employee will cost the company 50% of the person’s compensation and benefits for each week the position is vacant, even if other people are performing those duties.  So, short term, save some cash.  Long term, cost savings are obliterated, especially when new folks (no matter how old or young they are)  are brought back into the job.

More importantly though, what is the cost of this “cash for clunkers’ to our society, nevermind our economy?  I read this statistic – pretty scary – that for every 1% rise in the unemployment rate, the U.S. suffers  36,887 additional deaths, 20,240 heart attacks, 495 alcohol-related deaths, 920 suicides, 648 homicides, 4,227 admissions to mental hospitals, and 3,340 state prison admissions. 

So, who are we helping here folks? 

Our challenge as HR pros is to help our organizations react to outside threats and strategically manage people to help prevent talent flight and the deterioration of morale.  But I believe we have a much larger role to play – shouldn’t we be coaching our business leaders to look at the bigger picture and rather than use a “cash for clunkers” program, employ “cash for care” instead?  You decide.