Right now, the US unemployment rate is hovering around 4%. In some areas it’s even lower. That’s very close to what economists call full employment.
For business owners, the statistic has a simple and powerful implication. Labor is scarce, and your best employees are likely to have a lot of other opportunities.
Will some of them consider — or even take — those opportunities? You bet they will. Often, the only way a front-line worker can get higher pay is to change jobs. And if one employee leaves for greener pastures, others are likely to wonder why they’re sticking around.
Most companies’ business is booming at the moment, and the last thing you need are empty slots on the payroll. Nor do you need the lost time, expense and uncertainty involved in hiring new people.
But there’s one powerful insurance policy against a lot of people walking out the door: provide good jobs, 2018-style.
Where front-line employees are concerned, the good jobs of today don’t look like the good jobs of the past.
Time was, plenty of blue-collar workers could find jobs in factories. Maybe they belonged to a union. Even if they didn’t, they typically earned a good wage and enjoyed generous benefits. They might be laid off in a downturn, but they’d be hired back when the economy picked up.
Those jobs have mostly gone away, and they aren’t coming back. Anyway, most companies in today’s economy can’t afford to offer old-style union-scale compensation or job security to their hourly workers.
So, what constitutes a good job in today’s tumultuous economy? What would it take to be the employer that the best people seek out — and never want to leave?
Some of the basics are obvious. At good-job companies, employees are trusted and respected. They’re given the tools and training they need to do their jobs well.
They’re also paid better than their peers at other companies. Maybe the wages are no different — many employers don’t have much flexibility on that score — but the company offers stock, phantom equity and/or profit sharing on top of base pay. Chobani, the fast-growing yogurt company, gave its workers shares worth up to 10% of the company’s valuation in 2016. Southwest Airlines paid $586 million in profit-sharing bonuses that year, increasing every employee’s annual compensation by 13.2%.
But there’s more to a good job than generous compensation. Today, employees can no longer count on working for the same company, or even in the same industry, for their entire careers. So they need an opportunity to learn new skills.
To us, the most important skill a company can provide is the ability to think and act like a business owner. Understanding the big picture helps employees make good decisions. It’s a skill that makes them more valuable wherever they might end up working — starting with where they are right now, your company. It helps the business as well as the individual.
How to build that skill? That’s where open-book management comes in. Open-book companies identify one or two key numbers that reflect the business’s economics. They track and forecast those numbers, week in and week out. Employees come to understand why the numbers are important and what they can do to move them in the right direction. Over time, they start thinking like owners.
Open-book companies also typically pay a short-term bonus based on hitting targets related to the key number. These bonuses don’t cost the company anything, because they pay for themselves through improved financial results. But they put more cash in employees’ pockets, and they focus people’s attention on the economics of the business. Employees get engaged — in making money.
In our experience, very few people voluntarily leave open-book companies. They’re making great money. They’re having fun. They’re learning new skills. They know they have job security, since they know the business’s economics. They know they are trusted in ways that most companies never trust their employees — with the numbers.
Most important, they feel like the company is theirs, not someone else’s. And why would you want to leave your own business?