Saturday, October 25, 2014

Turnover, and how HR is a corporate tool.

Think companies care about turnover? Think again.
Turnover, as a corporate strategy, has both its costs and its benefits. Benefits you say? Yes, benefits! If you are prepared for a high turnover rate, you can get away with treating your employees how you want. More to the point, though, employers commonly see employees as widgets to be replaced if they quit or "malfunction." They can get away with this because of extended high unemployment. You see, the official government unemployment rate was redefined in 1994 (from U5 to U3). So despite the official (U3) 5.7% number that suggests near full employment, the classic measure (U5) stands at 7.1%. Even during the recession of the early 2000s, U5 never rose above 7.2%. So by the true classic economic measurement, we are a fair ways off from full employment.
It's not just continued high unemployment that has contributed to the "widgetization" of employees, but the "commoditization" of labor. For all but the executives and the most creative professions, employers are taking a "Hamburger Helper" approach to labor: engineer the division of labor within the organization to provide each employee with a static set of tasks and the routine training and reference tools to complete them, and then just add warm bodies! Enforce compliance within this prearranged set of affairs with draconian attendance policies and quick punishment for not staying strictly within the established policy and procedure.
The result is that there are enough acceptably qualified warm bodies that need a job that the job will always be filled. Experience and skill are devalued in favor of compliance, so a new employee that can follow the rules is just as good as a 10-year veteran, actually better since he has not developed an opinion and can be paid less. In this paradigm, who cares about turnover? Just treat employees well enough so they don't walk out the door their first year and you're set.
Even technical jobs can be commoditized. Consider the hapless level one technical support rep who reads from a script and always has at least three pat answers to your problem. That's just the start. Sony Corporation of America eventually disbanded all US-based high-level technical support operations for its VAIO line of computers because they felt they had developed a knowledge base sufficient for Philippine outsourcers to handle all support needs.
As the classic paradigm of unending capitalist growth increasing collides with a world with shrinking cheap energy sources, companies are just going to get more cunning and brutal in their quest for profitability and maximizing shareholder value. As the end of cheap oil restricts growth, companies will find their profits not so much through innovation, but through financial games like reducing costs and stock buybacks.
So when I hear HR professionals on LinkedIn talk about "talent" and "retention," the disconnect is striking to me. The game has changed. Outside of headhunters for executive, creative, and programming professionals, HR is really all about paperwork and job postings and compliance. It just is. The worth of an HR department is the worth of the company's workforce, and companies are valuing their workforce less and less. I dare say that most HR these days is no more vibrant and innovative than Accounts Payable.

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