A smooth sea never made a skillful mariner

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Expert Perspective by Grahall’s OmniMedia Editorial Board

expert perspective telescopeIn his January 30, 2010 article in the Wall Street Journal (Wage and Benefit Growth Hits Historic Low) David Wessel writes “Wage and benefit costs, both before and after adjusting for inflation, grew more slowly in 2009 than in any year since the U.S. government began tracking data in 1982, as double-digit unemployment weakened workers’ ability to command higher pay.”

Persistent unemployment (now slightly below 10%) and underemployment (estimated at 15%) have continued in the US even as the overall US shows signs of economic recovery, however weak. But 2010 has ushered in a new worry and new terminology “sovereign debt” that could bankrupt countries, not just companies.  As a recent article in the Christian Science Monitor (Slipping Dow rebounds to close above 10000 on unemployment report) explains:  “In recent days, concerns about the sovereign debt of governments have topped the worry list for investors… Greece has one of Europe’s highest government debt loads, as a share of its gross domestic product… But the troubles of Greece have also revived broader concerns that the world’s financial system remains fragile.”

As we know, in our highly connected world, problems thousands of miles away can impact us quickly and fiercely.  The “shock waves” from troubles in distant countries arrive on our shores and impact our economy in real time with little dampening for all the distance they have traveled.

US companies still reeling from the great recession may see this growing problem of sovereign debt as another reason to hesitate to hire permanent employees even with suppressed wage and benefit costs.  In fact, the continuing economic concerns may portend a wholesale change in the approach that companies take to their people strategies.

We see a new organizational model for the workforce emerging that may help companies to survive and even thrive in the face of continuing global economic concerns.  This new paradigm for organizational structure could act as a “shock absorber” giving companies the flexibility and nimbleness to meet changing demands for goods and services.

The solution to local volatility and global competitiveness is to change the way companies think about their workforces.  The most successful organizations will visualize this structure like the layers of an onion, with the core group of people who are critical to the success of an organization at the center.  These individuals would be paid in the 90% percentile and enjoy the benefits of long-term contracts and long-term obligations and expectations.  Many of them will have what we in Grahall call career incentives. Each subsequent layer will have a different competitive market attachment and will have different employment deals or agreements. 

It is a sophisticated approach to people and rewards strategies that can address a new and more complex and interconnected economic and employment environment.  To find out more about how Grahall Workforce Solutions can help you meet the coming challenges contact us. 

Contact Grahall’s Omnimedia Editorial Board at edie.kingston@grahall.com

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