I Quit

According to an article in Wall Street Journal, this announcement from employees is likely to increase now that the market begins to loosen up.

The article points at the number of employees who voluntarily quit their jobs in February. For the first time since October 2008, this number surpassed the number being fired or discharged, according to the Bureau of Labor Statistics.

Recent research indicates that the number will continue to grow. In a survey conducted by Right Management at the end of 2009, 60 % of workers said they intended to leave their jobs when the market got better.

This might be surprising to many, but in fact it should not be. Let us look back a couple of years. These are the findings from Boston Globe in 2004:

•          “83 percent of employees are likely to seek new employment once the economy improves”

•          48 percent of managers are likely to seek new employment once the economy improves

•          75 percent of those managers are actively looking now

•          56 percent of HR professionals indicated it is likely that voluntary turnover would rise due to the improving economy.

Employee engagement tends to fall at times when there are fewer employees to contribute to the tough job of keeping the company alive. This statement is also supported in the article in Wall Street Journal where a survey for the Conference Board found that the drivers of the drop in job fulfillment included less satisfaction with wages and less interest in work.

In 2009, 34% of workers were satisfied with their wages, down more than seven percentage points from 1987. About 51 % in 2009 said they were interested in work, down 19 percentage points from 1987.

Let us combine this with the increasing shortage of talents.  In the United States, there are approximately 40 230 000 people over the age of 65. There are approximately 30 700 000 aged 18-24.

According to Financial Times (May 2009), 800 000 people aged 55+ have returned to the workforce due to the decreasing value of their savings and pensions. Many more are postponing their retirement for the same reasons. My prediction is that this group is temporary back, but will soon be out.

This could, and probably will, lead to:

•          Attrition boom

•          Retirement boom

•         Increased recruitment costs due to shortage of talent and severe competition

It is estimated to cost 30-50 % of the annual salary to replace entry-level employees, 150 % for middle level employees, and astonishing 400 % for specialized, high level employees.  Interesting times..

What is next for Toyota?

Maybe one of the most discussed business cases the last six months has been the situation at Toyota. I have therefore tried to analyze what exactly are the problems at once one of the most respected companies in the world, and it looks like there are more underlying problems at the organizations than simple floor maths and accelerators. 

First of all, it is interesting to see how Toyota has changed their strategic focus over the years; the company was near bankruptcy in the 1940s, but through an obsessive focus on quality in the manufacturing process (with the development of the famous “Toyota Way”), they managed to earn themselves a vital position in the automotive industry.

From the 1980s however, there seems to be a change in focus in their strategic direction; with market share as the indicator of success, they expanded their production systems into western countries – and this might be the root of the problem. And when the downturn in financial markets came around year 2000, they were forced to cost-cutting activities within manufacturing and human resources. Have Toyota finally paid a price in terms of quality for their increased quantity?

What is interesting is that Toyota tried to copy their success in Japan to other countries – completely ignoring cultural differences that are well documented. Already in the 1990s there were some signal of dissatisfaction from Toyota’s employees in the United States; a Tayloristic approach combined with arrogance from the top-management in terms of ignoring and accepting cultural and language barriers seem to split the organization.

It is interesting to see how a well-respected organization seem to completely have ignored basic management assumptions. Although sales are increasing at the moment, it will be interesting to see how they will prevent such a crisis to happen again; will they continue ignoring less quantifiable social benefits of an organization, or will they follow in the footsteps of Chrysler who, through a higher level of empowerment and less level of standardization, managed to reduce it’s time-to-market ratio at the same time as they managed to increase product quality significantly?