Economic Instability Haunts People Decision Making
Whether you read the newspapers, news magazines, watch TV or Cable News, or Business Reports; the question of stagnant economic opportunities precludes decisions making about staffing and the needs for full time talent. The thought process of people/talent decisions is veiled behind the weight of continued cost increases in all parts of business operations, including workplace safety, with labor being the largest chunk. Also the unpredictability of geopolitical issues not only is a cost issue, but a safety and security issue. Let's examine a few examples:
During the past week two giant oil industry service providers, where both full time and freelance layoffs in large amounts have occurred, announced their forecast for the second half of 2015. Each had opposite views as report by Joseph Triepke for Oilpro.com.
"Last Friday, Schlumberger could not have been more positive on the outlook, all things considered. The world's biggest oilfield service provider called the bottom for North America activity, predicted that North American rigs would return to work soon, was positive on oil prices, and ruled out any more lay-offs through September.
Schlumberger's optimism is not shared by Baker Hughes, the industry's third largest oilfield service company. While their international perspectives are similar, Baker's CEO does not see the return of activity Schlumberger expects in North America over the next six months."
In yet another oil industry issue is that of OPEC's continued overproduction of crude to hold their market share. What will happen to oil supply/demand when Iran's 4.5 mb/d explodes on the market within six months after economic sanctions are removed? Michael Tagge, BSS Regional Technical Advisor - LAO at Halliburton, says:
"The media, pundits, some financial analysts and a certain percentage of industry experts are giving the OPEC policy credit for depressing the price of oil over the next one to four years, depending on who is doing the talking. However, I think that there are conditions that may put significant pressure on OPEC's ability and desire to continue this policy beyond the short term. Even in a market with soft demand (as now), this policy will only work for as long as OPEC are willing to keep the market over supplied."
A New England global manufacturer of products dependent on oil byproducts has had a hiring freeze since February because decision makers can't forecast the cost of the oil byproduct used in the production of their products. They, like others who use oil byproducts in the production of their products, don't see that changing anytime soon.
These are a small example of how global or geopolitical policies can negatively affect decisions about talent, jobs and growth in BIG numbers.
Here are a few more issues which will factor into HR and decisions about payroll:
The potential seems strong that the US economy will end 2015 with negative GDP, which means we are back in a recession we seem to have never left.
The pool of qualified workers who can't find full time employment keeps growing with many taking one or more low paying part time jobs to pay living expenses.
Business continues to monitor consumer spending and will react swiftly to any shifts downward by cutting costs. When you have squeezed most cost waste out of business processes with technology the only place left is labor costs.
Also the potential threats to global business and homeland security increases in the share of mind of people decision making.
Since 2001, the number of issues which most enterprises have to incorporate in their business strategy and workforce decisions has increased exponentially. Some were from lower costs for technology. Some were from new market opportunities. Most are about the cost of the right human capital when and where needed, benefits costs, and workplace safety. The thinking that past experience, history and gut instincts will "see you through" until the next person's watch, just won't cut it for profitability and shareholder value, let alone internal stakeholders.
It is long past time to start using more statistical data for both kinds of capital. It's long past time to not factor in the cost impacts of federal work regulations, new healthcare rules and costs, outsourced labor, and the increased legal and compliance fees that should be included in the true cost of labor.
The GIG economy of procuring the right talent, when and where you need it, is emerging and needs to be factored into a blended workforce strategy to remain competitive. Do you have the right HR leadership to do this effectively? You will need outside experts with a broader view of these issues with business and statistical capabilities to set you on the right path. Why? Because these issues will only increase the demands of time and attention in the decision making process. If you are not already invested, you can bet some of your competitors already have!