Two studies released last week continue to illustrate that employee/employer dynamics are in disarray.
First, Bloomberg announced that the rate of promotions last quarter dropped to 1.3%– the lowest it’s been in five years. The editors at LinkedIn called it a promotion recession. It’s true that the job market is cooling, and there is no “competitive pressure” to keep promoting people. However, limiting employees’ opportunities to grow and climb increase the chance they quit. Worse than that, some grow bitter, disengaged and stay.
Could no upward mobility be the reason for the results in the second report? Employees have begun quiet vacationing. According to a Resume Builder study, employees are traveling to lovely places when they are supposed to be at work. From their idyls, they log into a few meetings each day, and hide the fact that they are on holiday by blurring their backgrounds. Then, the logic goes, they hit the beach or the trail or lie by the pool. This allows them to recreate and be paid as if on the job. Employees say if they overtly vacation, they are perceived as less hardworking, which affects their chances for promotions or layoff protection.
Incessant commentary about trying to shift the workplace power balance makes me feel like I am reading old folklore where the secrets to a thriving workplace have been lost, strife and chaos reign and the kingdom is lost. I searched for a relevant fable to illustrate the situation; I found nothing—so, I wrote one.
Once upon a time, in a bustling kingdom where great businesses flourished, there existed a magical book filled with the secrets to prosperity and happiness for all who toiled within their walls. This book outlined the sacred principles that ensured the well-being of workers and longevity of companies. It spoke of fair promotions, generous wages, comprehensive healthcare, ample time for rest, and continuous learning opportunities.
Generations passed, and new leaders arose with different ambitions—driven more by a focus on the immediate success than by the enduring welfare. The revered book was soon forgotten, its pages gathering dust in a forgotten corner of the kingdom’s archives.
Years slipped by, and discontentment began to seep through the businesses. The workers, once joyous and loyal, were now adrift in a sea of uncertainty and dissatisfaction. Yet hope flickered in the heart of one humble squire. Learning of the ancient book, he embarked on a quest to unearth its buried truths and restore the kingdom’s prosperity.
Just like the tale suggests, I think to improve workplace effectiveness, it’s worth looking to the past. If not for the answer to more successful organizations, at least to appreciate how we got here.
Understanding the design of earlier workplaces requires knowing a bit about what was going on in mid 20th century America. During World War II, the government mandated various planning requirements for its subcontractors. To help them adhere, they taught their vendors operations-research and project planning. Several large companies that had learned these techniques started to think about how these tools could be applied their companies’ people systems. In the 1950s some organizations started experimenting with robust human demand planning. models
By the 1970s many companies were using a complex mathematical modeling tool called MANPLAN. It was a manpower optimization tool that evaluated the expected macro-economic growth, the business forecast, the accompanying demand for talent and the talent supply.
One of the assumptions in the model was that the company would give employees lifelong careers and promote them on a regular schedule. Regression models of the time evaluated the number of retirements, other exits, regularly scheduled promotions and company growth. This information was then used to outline the manpower needs from the top levels down to the number of new college grads.
The bulk of hiring was focused on those entering from college. It’s easy talent to find because they did not need specific work experience. New hires were taught relevant skills. Almost all job changes past entry level were via internal promotion.
To make the model work, organizations had to have robust hiring, training and succession programs. Because employees saw a career path and their hard work paid off through raises and promotions, employees stayed for decades.
These over-arching workforce planning programs were largely abandoned in the 70s as macro- economic growth slowed. This shifted the forecasting lens from a long term economic overview to a short-term budget plan. According to Peter Cappelli, As a result of the more limited evaluation horizon, companies did not see the need for the cost associated with elaborate workforce planning, training and promotion programs. They were jettisoned.
While eliminating these programs resulted in an immediate cost savings, the unintended consequence was that employers did not have a qualified pool of internal candidates for open roles. Without tailored training or promotion planning, employees were not prepared to do their bosses’ jobs. Now, when someone left, employers had to start recruiting people from outside the company with specific skill matches to fill the gaps. Since many external candidates had stable jobs at other organizations, the hiring companies had to offer higher salaries and more perquisites to entice them to move.
Turning to external hiring is what started the war for talent we have today. In the past, employees retired from their initial employer. Currently Employee tenure is 2.8 years for workers ages 25-35. Even worse, 38% of all new hires are quitting within the first year. In the past, employees felt they had a career path so they had no reason to leave. Now we have scores of workers who think they can only advance if they change jobs. The old system created a pipeline from college to retirement. Now, the randomness with which promotions are given is blocking entry level workers from even being getting jobs. Nevertheless, employers cling to the lore that training, and succession programs are costly, and investment should be small.
Sadly, the contemplated savings are likely an illusion. In the current model, there is the significant cost associated with lost productivity. Employee disengagement, vacant positions and ramp-up time for the new, more expensive hires adds up. Because this is rarely tracked, these costs are often overlooked.
Reproducing the old design is expensive and maybe anachronistic. However, I see a clear line from its disappearance to today’s jousting matches. Hopefully we can look backwards to better move forwards. If we honor history, maybe the story can end like this:
Through trials and tribulations, overcoming challenges both mundane and magical, the squire journeyed until he discovered a tome hidden deep within the royal library.
He shared the forgotten wisdom with the realm’s leaders. They embraced the timeless principles, harmony returned to the kingdom and workers found fulfillment once again.
