Is It The Economy Or The Manager?

Hiring and retention of employees are difficult for demographic reasons, I’ve argued in a series of articles on Forbes. But a management expert offers a different perspective: “The issue is not about people, it is really about owners and leaders, managers being cops instead of coaches.” That’s the view of Rudy Miick, shared from an email with his permission.

The demographic issue is captured in this image, showing that the growth of the working-age population in the current decade, from 2020 to 2030, will be the lowest since the Civil War. Note the contrast with the huge increases from 1970 through 2010, when the baby boomers were entering their working years and the children of boomers entered their working years. At that time we also had women choosing to work. After World War II about one-third of adult women worked. By 1999 the proportion was up to 60 percent. This was an era of labor abundance. With many applicants for every open job, managers could be sloppy or even downright rude. Now, however, old management practices don’t work because of the demographics.

The poor management theory also has good basis. Miick argues for only hiring A+ workers, but also emphasizes that to do so the manager needs to know what an A+ worker is. If we don’t define excellence, he writes, we won’t get it. These ideas are not “tight labor market” principles; they will help any business in any economic environment. An abundant labor force enables managers to hire and retain workers easily, but just hiring what Miick calls a “pulse” won’t provide great value to the customer nor low cost to the employer.

It appears to me (Miick may disagree) that hiring and retention problems show up more in a labor-constrained economy. The labor-abundant economy enables easy hiring, so that management problems are masked. They would show up by a careful look at metrics such as customer satisfaction and cost per unit produced. In the current labor-constrained economy, poor practices slap managers across the face—though they often don’t know what hit them.

The long-term labor challenge, which will only improve a little in 2040, implies that investing in good management today will pay off for years to come. First-level managers play the largest role in employee productivity and retention. Retention expert Dick Finnegan relates his actual experience when responsibility for retention is pushed all the way down to team leaders. All too often business owners or senior executives pile so many responsibilities on first-level managers they are in a hurry to hire, skimp on coaching and take little time to provide feedback. The solution is for top level managers to understand the problem and then provide the training and resources that low-level managers need to be A+ themselves.

So is hiring and retention difficult because of the manager or the economy? The answer is clearly Yes.