February 5th, 2010
06:42 PM GMT
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New York - The latest jobs report provided more confusion than clarity about just where the U.S. economy is headed.

Twenty thousand more Americans found themselves out of a job in January. Over the course of this recession 8.4 million jobs have been lost - much more than originally thought. And it's a gigantic hole to climb out of.

But buried in the report were some rays of light. While overall payrolls dropped again, the number of temporary workers jumped and hours worked increased; two things that typically happen right before companies start hiring permanent workers.

Another reason for hope - the unemployment rate dropped to 9.7 percent.

Sure, some of that may be due to the fact that discouraged workers, people who have been out of work for an extended period of time, simply stopped looking.

But some economists say the household survey, which is used to calculate the unemployment rate, is better at picking up small business hiring and may be better at signaling a turn in the economy.

That is encouraging. But I can't help but worry that it is going to take a long time for the consumer to feel confident about jobs.

The severity and speed with which companies slashed workers in this last recession was a clear indication that employees are viewed as little more than a commodity.

I heard someone call it the evolution from just-in-time inventories to just-in-time firing.

Companies may be start to hire, but workers know they won’t think twice about letting them go the minute business dips or profit margins come under pressure.

This isn't completely new. Anyone who has worked in construction knows that when the project is completed it is time to look for work again.

But the approach seems to be spreading to the white collar world. Job security, to the extent it existed at all, seems to be dead.

And the unemployment rate will have to get a whole lot lower before managers worry that staff isn’t easily replaceable.

That worry is bound to weigh on consumers and impact their spending decisions. I guess it is what people mean when they talk about the new normal.

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soundoff (6 Responses)
  1. Andreas Stockholm

    I have observed the same phenomenon for some time now but this recession has made it more evident – employees as a commodity. Hopefully we are entering a new paradigm of work and this now is the 'death spasm' of the old. New businesses, especially in the forefront of innovation, know the importance of having relaxed, enthusiastic employees that drive business forward. Often the work environment of these new businesses seem almost unreal when compared to and viewed from old more stale hierarchy structures. I honestly think we are witnessing the beginning of the transition from the old assembly-line work mindset to the new idea-centric mindset when defining 'work'. Once this becomes clear to more people I hope that education and training becomes more available so that people can find their calling. Too few today work with what they really want as opposed to what they must in order to survive.

    February 7, 2010 at 9:18 am |
  2. Andrew Trovaioli

    We are already in a recession and, in the past, CEOs made serious mistakes in trying to cope with a slowing economy.
    Here is a list of What Not To Do.
    All of them hurt innovation. Unless you really want to compete on price the ability to do sustained innovation is the one competitive edge left.
    Innovation is the driver of performance, growth and stock market valuation.
    Here are the 10 worst mistakes you can make in a recession that will hurt innovation:
    1) Fire talent.
    Investments in talent are expensed, not capitalized, so cutting back on people, especially
    really smart, high-priced people, is a quick way to cut costs. The accounting rules only hurt companies who follow them. Talent is the single most important variable in innovation.
    2) Cut back on technology.
    Xerox and others report that companies are already curbing investments in technology to
    save money. Banks especially. The rise of social networking and consumer power means that companies have to be part of a larger conversation with their customers. This means big money spent on IT.
    3) Reduce Risk.
    Innovation requires taking chances and dealing with failure. Recessions push managers to be more conservative. They need to fight this instinct.
    4) Stop New Product Development.
    Saving money often means cutting back on new products and services during an economic downturn. This hurts companies when growth returns and they have fewer offerings in the marketplace to attract consumers.
    5) Boards Replace Growth-Oriented CEOs with Cost-Cutting CEOs.
    Sudden declines in revenues and profits often leads boards of directors to search for managers with experience in pinching pennies. Boards forget that most recessions last only two or three
    quarters and, these days, are relatively shallow. Penny-pinching CEOs don't have the skills to grow, when growth returns.
    6) Companies Retreat From Globalization.
    It's expensive to expand globally and managers often save money by cutting back on emerging markets. It's a big mistake. Emerging markets are sources of new revenue, business models, and talent.
    7) CEOs Replace Innovation As Key Strategy.
    By turning defensive, top managers take innovation off the top of the official agenda and replace it with systems management and squeezing costs. The entire organization follows.
    It is extremely hard to reverse this when growth returns.
    8) Performance Metrics Are Changed.
    To Save money and cut costs, managers shift employee evaluations away from rewarding riskier new projects toward sustaining safer older goals. Risk-averse behavior follows.
    Again, this is hard to change.
    9) Hierarchy Is Reinforced Over Collaboration.
    Sudden drops in revenue and profit often lead companies to panic and mobilize to stem the decline. The need for fast decision-making often leads to a return to command-andcontrol management. This alienates creative-class employees, young Gen Y and Xers and
    stops the evolution of corporation organization toward a flat, collaborative, open source model.
    10) Retreat Into Walled Castles.
    Cutting back on outside consultancies is seen as a quick way to save money. Yet one of the key ways of introducing change into business culture is to bring in outside innovation and consultants. They know what companies across a broad range of industries around the world are doing to promote change. Not receiving this information can hurt a
    company's global competitive position.
    Winners always emerge out of recessions and they almost always beat their competition on the basis of something new.
    Apple for example worked on iTunes, iPod etc and its retail stores during the last recession and came out swinging once growth returned to destroy its competition. Apple didn't make
    any of the top 10 innovation mistakes. Your company shouldn't either.

    February 9, 2010 at 8:32 am |
  3. just me

    I have seen for many years the ways that companies as a general rule have very little regard for their employees. Upper management will make a decision to slash thousands of jobs rather than slash a percentage from the top paid 20 – 30 executives. 1-2 million a year deducted from the paycheck of a person that makes 10 million dollars a year or more could go a very long way towards keeping jobs. It also does not hurt the executive to the same degree it does a person making 40k a year loosing their job completely.

    It amazes me that so many companies do not do more to protect their investment in an employee. In many cases their is an investment of time and money in an employee before he or she is actually a productive member of the companies work force. Even before this recession (in my industry) I know of plenty of people that will take whatever training they can and never think twice about leaving that company with the training. In most cases I do not blame the employee, due to the fact that most of us know the company will lay anyone off in a "New York Minute", to look better for their shareholders.

    Loyalty is a two way street, but for those of us that are the employed, we need to have a sense that our employer will stand by us through the hard times as well. That the employer will do everything they can to keep jobs and the company in the black. Most of us would rather worry that our hours may be cut but the "Company" will try to keep everyone.

    I know I will feel much more secure knowing my employer wants to protect his investment in me and will stand by me as long as possible. I will also give that employer 101% as well as my loyalty, rather than get what I can and use it to benefit another company as well as myself.

    February 9, 2010 at 12:20 pm |
  4. Engel Tan

    1) CEOs rather cut employees than their own salaries & bonuses or
    make every one take across the board cuts,
    2) Wall Street loves headcount cuts. See how the stock price shoots
    up once CEOs announce head count cuts.
    3) With Wall Street being quarterly focussed, the CEOs are under
    constant pressure. Between doing the right thing (longer term fix),
    they go for quick fixes (normally means closing factories & head
    count cuts or mergers which result in head count cuts).
    4) Recessions are the best time to spring clean and get rid of people
    you don't like.
    5) Witness IT company CEOs do 15K, 20K, 25K head count cuts – any
    dimwit can do that. Then merge departments that are totally alien
    to each other. Wonder how a person from department A can run
    the department B's business in the merged entity. Skillsets totally

    Welcome to the new reality! CEOs fatten & protect themselves. Others are just diapers – to be peed & shitted on & thrown away after that.

    February 19, 2010 at 4:01 pm |
  5. Pamela

    To me, there was no such thing as job security. I was never a slave to the hype. What I did was take courses in the latest of technologies and I did not take things for granted. I was not complacent and I prepared for the very worst. Workers are a dime a dozen and are easily disposed of. If the employee costs more to maintain for the employer-the employee will be out. Its dollars and cents.

    February 23, 2010 at 8:10 pm |
  6. real marketing magic

    Job security is a term for people who under perform, I am employer and have been an employee for a long time before that. Some managers don't have the right to warrant such a title, but at the end a company must survive. In general people must be more aware that they need to look after themselves more and make sure that they become irreplaceable or start their own ventures. It is completely pointless crying over split milk.


    January 25, 2011 at 6:28 am |

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