An Open Letter to Job Growth Naysayers

July 20th, 2016

Dear People Who Think There are No Good Jobs Available (this includes pundits, government officials, economists),

I own and operate a manufacturing firm.  We have approximately 190 employees scattered across seven locations throughout the country.  We are hiring for many positions in several of our locations.  (If you are interested in a position, check out our website, www.idimages.com and send a resume to hiring@idimages.com.)  This letter will focus on manufacturing positions in our Brunswick, OH, facility.  These are considered skilled (press operator) and unskilled positions (material handler).  Brunswick is located approximately 20 miles from downtown Cleveland, a labor market that has supposedly been left behind in the recovery we’ve had since the great recession.  We have had employees celebrate their 10, 15, and even 20 year anniversaries with us.  If you count time employed by companies we have acquired, we have employees whose tenure exceeds 30 years.  I believe this is evidence that these positions can develop into rewarding careers.

From June 13, 2016, until July 16, 2016, a period of a little over one month, our HR team reported the following data for manufacturing positions in our Brunswick facility:

 

Scheduled interviews: 56

No show for scheduled interview: 22 (39% of total scheduled to be interviewed)

Failed test (math test and/or attention to detail): 13 (23%)

Rejected after interview: 8 (14%)

Failed pre-employment screen (offered job but failed drug test or background check): 2 (4%)

Offered job but turned us down: 3 (5%)

Hired: 8 (14%)

Remaining open positions: 4

 

It shocked me, as I hope it shocks you, that over 62% of applicants failed to show up for an interview (I’m quite confident many of them put the interview on their unemployment applications despite not showing up.) or failed a simple math and/or attention to detail test.   Passing our math test requires the math skills of a sixth grader.  As an employer, I’m willing to invest in training people, but I don’t think we are equipped to teach basic math.  I would also like to point out that 13 of the 21 applicants that showed up and passed the initial screening tests were offered jobs.  Basically, if you show up and can do basic math, there’s a good chance we’ll hire you.

In my conversations with people in various industries and various locations, I have come to realize our experience is not unique.  Virtually everyone I talk to agrees with me that is a challenge to hire people.  Yet, the conventional wisdom persists that there are no “good” jobs available.  I am definitely biased, but we do have good jobs available!

The economist in me says the solution to this problem will be twofold: wage inflation and automation.  Wage inflation is going to occur because we (this is a collective we – all employers) will have to attract people who are already employed in order to fill our positions given our inability to meet our needs.  The simplest way to hire people who already have jobs is to pay them more.  Automation will follow.  As the cost of labor increases, machines become relatively less expensive.

In the meantime, stop being so negative.  If you know someone who cannot find a job, they either aren’t looking hard enough or they lack basic skills.

Sincerely,

A Business Owner

Xerox interested in RR Donnelley? 

July 12th, 2016

Bloomberg reported that Xerox is in talks to merge with RR Donnelley.  This potential merger would be a combination of both entire companies with a potential spinoff after the merger.  Both companies had previously announced plans to split up each of their respective businesses later this year – Xerox into two separate entities and RR Donnelley into three.  If this merger happens, the splits would not occur.  I know it’s confusing, but the  strategic premise is pretty simple:  As I’ve written many times, unless you have a strong and defensible niche, the appropriate strategy for your business is to get bigger and get more wallet share from your customers.  Xerox customers buy more than copiers and document management services.  RR Donnelley customers buy more than print and marketing services.

When I have discussions about business strategy with a wise, more experienced friend, he says this consolidation wave reminds him of the 1970s, when conglomerates were all the rage.  He reminds me that most of those failed.  I believe transactions in the print/marketing services/packaging industries don’t fall in that trap.  In many companies, the same buyer controls spend in those categories (or those buyers report to the same person).  There is a convergence of strategy and technology occurring in the world.  For a nerdy example related to my world, not even twenty years ago it was a challenge for flexography to match offset colors.  A prickly brand manager could see the difference in colors in marketing collateral and their product labels. Twenty years ago, the internet was in its infancy and no one talked about a “consistent brand message” across numerous platforms.   Now, it’s a given that print colors will match across websites (including mobile!), packaging, printed marketing collateral, and everything else you can imagine.

We will continue to see consolidation.  Make sure your business and you personally are prepared.  Talk to your customers about what else they need from you.  Don’t be afraid!

 

It Bears Repeating: Following Up is THE Key to Sales Success

July 5th, 2016

I attended a conference last week with several other manufacturers and  several distributors.  During a session with only manufacturers present, the speaker asked what we, the manufacturers, thought were the biggest complaints distributors had about us.  Answers were yelled out: “Price,” “Lead times,” “Lack of flexibility,” “Freight charges,” and more.  The speaker played the room quite well.  He’d respond to each one, “Price is number 3 on the list.”  “Lead times are number 2.”  “But no one has named the number one frustration your distributors have with you.”  Finally, someone said, “Follow up.”  Bells started ringing, confetti dropped from the sky, and a new car appeared from behind the curtain!  Not really, but that was the answer.  (He did give the person who answered correctly a book.)  He told us lack of follow up is by far the most common complaint customers have with their vendors across all industries.  I can attest to that.   Our biggest frustration as a manufacturer is going through hoops to get samples/quotes done and never hearing back from our distributor partner.

We all spend tons and tons of money finding new customers, developing new products, and improving our operations.  Yet a simple follow up, probably less costly than most initiatives we embark upon, will have the biggest impact on our businesses.  It’s not that hard if we make it a priority.  Too often, sales and customer service personnel spend their time putting out fires instead of proactively talking to customers.

As we move into the second half of a year that has gone way too fast, schedule fifteen minutes a day to follow up with your customers.  Check in on opportunities.  Make sure they got the sample you sent.  Thank them for a recent order.  After all, following up is simply a way of saying, “You’re important to me.”  Make your customers feel important!

We’ve Officially Entered Bizzaro World!

June 28th, 2016

In Superman and other DC comic books, an opposite world exists called Bizzaro World.  I think we’ve officially entered that world.  In the last two weeks, a Cleveland sports team won a championship.  After experts predicted Great Britain would stay in the EU, the British people voted to exit and then promptly searched Google trying to understand what the EU is.  In the US, the presumptive Republican party nominee commented about how Brexit is a victory for nationalism and people taking their countries back. The presumptive Democratic presidential nominee expressed concerns about national security.  What happens next is anyone’s guess!

I submit these seemingly unrelated events have a common theme running through them.  We’ll start with the Cleveland sports team.  They were counted out when they were down 3 to 1.  As I wrote last week, one individual who led by example, LeBron James, changed the course of the series.  (Yes, he had help.  But even a novice basketball fan could see the Cavs relied more on individual performances for success vs. Golden State’s team approach.)  The pundits said James and his cronies were no match for the “team” basketball played by the Golden State Warriors.

Despite being told over and over by their political and business leaders (and US political and business leaders) that staying in the EU was the best course of action, British citizens voted the way they thought was best for them as individuals.  The EU and globalization might be good for British society but has it helped the individual steel worker?  Try explaining the positives of trade to a guy whose mill just shut down. That his kids’ toys cost less doesn’t really matter when he doesn’t have a job.  It is telling that the industrialized areas of England voted overwhelmingly for Brexit while Londoners voted overwhelmingly to stay in the EU.  Don’t underestimate the power of a determined individual.

Those same dynamics have brought us what is going to be the craziest presidential election ever.  The Republican “team” completely underestimated Donald Trump’s abilities to captivate primary voters.  This time last year, the big question being asked was who was Jeb Bush going to pick as his running mate.  Oops.  Hillary Clinton, the Democratic nominee, had a much more challenging contest with Bernie Sanders than anyone envisioned.  She is now searching for a message that appeals to Sanders’ socialist leaning voters and works against Trump’s individualistic/nationalistic message.  That’s not going to be easy.

We are in a world that will test the power of the individual vs. the advantages of cooperation/collectivism.  Voters in all countries are starting to realize that their elected officials have ceded power and control to unelected bureaucrats.  That’s not how the system is supposed to work.  Western civilization has been built by individuals and has protected individual freedoms.  People think that has been lost over the last several years, resulting in the Brexit vote and the Trump candidacy.  All of this creates uncertainty which businesses hate but it also creates opportunities.  Focus on the opportunities.  For example, create individualized experiences for your customers.  As the Brits said during the dark days of World War II and continue to say today, “Keep calm and carry on!”

Focus on Tomorrow, Not Yesterday

June 21st, 2016

I have a very close friend I’ll call Michael.  Michael and I grew up together.  We’re both avid sports fans, especially of Cleveland teams.  Anyone not from Mars knows being a Cleveland sports fan has been painful for the last 52 years.  The Cleveland Cavaliers helped assuage that pain Sunday night with a thrilling come from behind victory in the NBA Finals over the vaunted Golden State Warriors.

Over the course of the playoffs, Michael and I had many conversations.  After the Cavs cruised to the Eastern Conference championship, he told me, “We’re on a roll.  Cavs in six.”  I was shocked by his optimism.  Cleveland fans are normally not an optimistic bunch.  We have many years of futility to support our pessimistic nature.

The Cavs got blown out the first two games of the series.  Michael’s tone changed.  He left me a voicemail, which I still have.  “Stick a fork in them.  They’re getting swept.  It’s a complete embarrassment and I don’t know what’s worse: getting blown out or having our hearts broken.”  Note the language change from “we” to “they.”  “We” were going to win.  “They” were embarrassing us, the dedicated fans.

The Cavs had a resounding victory in game 3, prompting a slightly better attitude from my buddy.  He said, “At least we’re not getting swept but we need to win game 4 to stand a chance.”  That didn’t happen.  Golden State rebounded and took game 4, creating what seemed to be an insurmountable 3 games to 1 lead in a best of 7 series.  “It’s over.  They blew any opportunity they had,” he told me.  No team had ever come back from a 3 to 1 deficit in the NBA Finals to win the series.  I agreed with him – the series was over.

Against the odds, the Cavs won game 5 at Golden State, creating a glimmer of hope.  Game 6 was back in Cleveland.  The Cavs pulled it off with a strong fourth quarter, setting up an improbable game 7.  Somehow, someway (OK, the will of LeBron James and some clutch shooting by Kyrie Irving and JR Smith.), the Cavs pulled it off and won the title.  I texted Michael, writing, “I’m speechless.  I can’t believe it.”  His response, “How about saying, we’re WORLD CHAMPIONS!”  Back to “we” again!

Throughout the first two games of the  NBA Finals, many national sportswriters opined about how the Cavs would need to be dismantled.  Many opined about Golden State being the best team ever and how they stacked up against other sports’ dynasties.  Once the Cavs won game 6, many opined about how Golden State had everything to lose.  The roller coaster ride was quite intense.  Throughout all this hoopla, the Cavs’ leadership, coach Tyronn Lue and franchise player, LeBron James, stayed calm and focused on the next day.  When the team was down 3 games to 1, they didn’t talk about game 7.  They focused on the task at hand.

One of the reasons I like sports is the life lessons they provide.   We live in a here and now world that over emphasizes short term results.  Our emotions often take control, clouding our judgment.  We’re quick to make summary judgments based on a current situation.  We need to take a lesson from the Cavs’ leadership: focus on tomorrow, not yesterday.  Nothing will change what happened yesterday.  Our attitudes can impact what happens tomorrow.

 

Creating Trust Leads to Creating Value

June 13th, 2016

We frequently board our dog.  I frequently comment (ok, complain) that I’ve stayed in hotels in my adult life that are cheaper than his kennel.  Our dog has epilepsy and is on a DEA controlled substance, which I also comment about:  the price is different every time we fill his prescription!  I recently picked him up from the kennel and was told, “We have some new people.  Someone inadvertently gave him a pill at the wrong time.  We called his vet and were told to monitor him and get him on his regular dosing schedule.  If you are short one pill, that’s why.  We monitored him and he was just fine.  We apologize for this situation and we’re going to better monitor how we dose medication.”

As I drove home, I pondered the situation.  Did they think I counted his pills?  Should I be counting his pills?  Did they have anything to gain by telling me this?  They surely know I don’t count his pills.  I have enough useless information clouding my thinking already so I’m not going to start counting his pills.  I came to the conclusion that their honesty increased my trust in them.  They really didn’t have to tell me what happened; I would have never known.  I feel better about trusting our dog to them knowing they felt compelled to tell me what happened.  I might continue to comment about how much I pay them but I probably won’t complain anymore.  I’d happily recommend them to others.

It is easier to create trust in an emotional purchase than in a non-emotional purchase.  Despite some of his annoying quirks, we love our dog.  It is often quite difficult to create trust in a non-emotional purchase, such as someone buying labels for business purposes, for example.  But it’s possible and it’s necessary to get away from the “can you match a price” discussion we all have every day in the business to business world.  Creating trust starts with honesty.  If you screw up, tell your customer that.  Don’t hide it.  Think about your go-to suppliers.  I guarantee you trust them.  Part of the challenge in the b to b world is we quote something and then cave to pricing pressure if the customer comes back to us.  If I know I can get a better price from you, why would I trust you?  After all, I know you’re lying about your initial price.  Our lack of confidence in our value proposition undermines our ability to create a trusting relationship with our customers.  I know it’s easier said than done to hold the line on pricing.  I know competitive dynamics create difficult pricing situations.  Those situations become easier to handle if you’ve built trust with your customers.  I also know many b to b interactions involve a negotiation and price is often part of that negotiation.  If the negotiation starts from a position of trust on both sides, it will go a lot smoother.  In the meantime, if you need a kennel, I’ve got one that earned my trust.

The Great Disconnect: Slow Growth But It’s Tough To Find People

June 7th, 2016

I’m at a conference with several companies in the packaging industry.  Virtually every conversation I’ve had with someone here ends up in the same place.  “Many segments of the economy are slow but there’s still a little growth.  It is hard to find people for any position.  To grow and even maintain our business, we need people.”  The pundit world went crazy last week when the May jobs report showed hiring slowed.  Yet everyone I interact with laments how hard it is to find quality people.

I’ve written before about our demographic problems.  We’re an aging population.  That’s the main driver of the people problem – less supply.  The economy is losing talented people to retirement faster than it can replace them.  In addition to the demographic problem, a few other factors that are within our (or our politicians’ control) are creating the talent shortage.

First and foremost, the government has created huge incentives for people to work for cash.  From our tax system to our myriad of government aid programs to increasing onerous employer compliance requirements, there are many incentives for both employees and employers that encourage working for cash.  It’s a problem no one likes talking about but it’s reality.

Another big challenge that makes it tough to fill positions is our short-term focus.  We want results yesterday.  We’ve cut back on training programs.  Managers are stretched thin so new employees don’t get attention.  We see resumes of people and it looks like they’ve hopped around, so we don’t interview them to find out if it’s their fault or not.  On the other side of the hiring equation, seemingly every job candidate thinks he or she should be in the corner office in six months with an expense account.

Packaging and most “old line” industries are considered boring and out of touch.  We need to do a better job of marketing ourselves to young people.  There are great career opportunities in many industries that people need to be informed about.  GE is doing a great job with their ads talking about software development jobs within its organization.  I predict others will follow suit.

Of course, price adjustments will help clear the labor market issues in the long run.  Expect wage inflation to start ticking up.  There hasn’t been much traditional wage inflation but the costs of employing someone have increased, which is wage inflation to an employer.  But if a business wants to grow, it needs to grow its people.  To do so will cost more soon.  Get ready.

Is a Doom and Gloom Mentality Impacting Your Performance?

May 31st, 2016

Consider these 3 facts.  All are verifiable.

  1. As of 5/27/16, the S&P 500 is up 3.67% for the year. Not huge returns but the stock market is up year to date.
  2. US Q1 GDP was revised up last week. Yes, the numbers are still low (0.8% growth vs. 0.5% initially) but it’s still growth.
  3. Consumer confidence is at its highest level since June 2015.

Despite all this positive news, a feeling of doom and gloom still dominates people’s mentalities.  Every “expert” predicts a stock market crash is coming.  Every “expert” tells us a recession is coming.  Eventually they’ll be right.  Stocks do go down.  Recessions do happen.  I’m pretty sure the US will survive whichever candidate gets elected president.  If you spend your time worrying about events beyond your control, you’ll miss the opportunities in front of you today.  Focus on what you can control, which is your attitude and your actions.  It sounds trite but it works.  Look around at the businesses and people having a good 2016.  I will guarantee you their success is correlated with a positive attitude.

Don’t be Chicken Little.  The sky is not falling.  Embrace reality.  The reality is, the economy is growing.  If your business is not growing, more than likely, it’s time to change your attitude.  A positive attitude isn’t sufficient for success but it is necessary.

 

 

 

A Timely Event in Preparation for Memorial Day

May 24th, 2016

I was driving to a meeting yesterday and heard a news story that brought a tear to my eye and a smile to my face.  An 89 year old Holocaust survivor sang the National Anthem at the Detroit Tigers’ game on Saturday.  Hermina Hirsch survived being imprisoned in Nazi concentration camps, including Auschwitz.  In the interview I heard, she said The Star Spangled Banner was an inspiration during that unimaginable horrific time in her life.  She was freed when the war ended and eventually moved to Detroit and became a Tigers’ fan.   (I won’t hold being a Tigers’ fan against you, Hermina!)  She had on her bucket list singing The National Anthem before a baseball game.  She got her wish on Saturday.  Asked if she was nervous about singing, she said, “If I lived through the concentration camp, it couldn’t be that bad.”

As you enjoy a weekend of family and friends, play the video below.  Take a moment to be grateful for Hermina’s inspiration.  Take a moment to remember freedom is not free.  Take a moment to remember Memorial Day is about those who died so Hermina could sing.

http://abc7news.com/sports/holocaust-survivor-sings-national-anthem-at-tigers-game/1352064/

 

American Flag

New Overtime Rules: A Gift to Lawyers

May 17th, 2016

Any day now, the Department of Labor is expected to release its new overtime rules, which will dramatically broaden the scope of employees eligible for overtime.  Most impacted will be white collar employees.  Among other changes, it is expected that the salary range for administrative and clerical employees eligible for overtime will increase from approximately $23,000 to approximately $50,0000.  So employers now need to track time for a large group of salaried employees.  Oh, and most businesses will likely have to comply within 60 days of the issuance of these rules.  The compliance costs are going to be staggering.  And the government wants more jobs!  Really?

One of the perks many companies (including mine) offer employees is opportunities to work from home and/or flexible time.  I tell people all the time, “I don’t care when and where you work, unless a customer complains.  As long as customers are getting the service they need, you can work from home.”  Guess what?  I now need to track people’s time to make sure I’m complying with the law.  Do I move them to an hourly wage?  Do I take away flex time?  I guarantee you I’m going to do something because “Do we cheat him and how” and all his cronies will be circling this issue like a vulture on roadkill.  Corporate law firms are salivating for the opportunity to re-write employee handbooks.  Our legal system serves a purpose and is necessary for the economy to function properly.  But more and more, our legal system is becoming a wealth transfer mechanism rather than a means to facilitate wealth creation.  More complicated rules equals more legal disputes.

People should be compensated for their time.  Most employers are reasonable and expect reasonableness in return.  A benefit of being a salaried employee is you don’t have to clock in.  If people were overworked and underpaid, they’d leave.  If employees abuse the privilege of flex time or telecommuting, they’d get fired.  Believe it or not, government bureaucrats, the employment market functions pretty well without your interference.  Remember, the laws of physics get amended in a  bureaucracy.  Every action does have an equal and opposite reaction.  But there’s also the law of unintended consequences.  See my examples above.  I’m sure there will be other consequences the bureaucrats who have never had to meet a payroll never intended.

I spoke at an event last week about how public policy impacts middle market businesses.  The costs of complying with employment regulations have increased dramatically over the last few years.  These new regulations will add more expense to the employment equation.  A line I used that was well received last week is even more true today.  I said, “As a business owner, these costs irritate me but I’ll figure it out.  The person who gets hurt is the employee on the margin who would get hired if my costs of compliance didn’t increase for hiring that person.  That’s what is really sad about our current environment.”