13. Treat Employees as “Volunteers”

Although we, as the executors of business strategy and expert tacticians, find and hire the talented people at all levels who perform the tasks that move the wheels of our companies forward, we are really not as much in control of our “human assets,” as we once were. You see, we are the buyers, and it is no longer a buyer’s market when it comes to talent acquisition.

Generational differences, attitudes toward loyalty, and the reality that employees have no reasonable expectation of career-long employment with one (or even two) companies, are just three of the factors that contribute to making this a seller’s market. That said, the biggest factor is the simple but undeniable law of supply and demand.

So I want to revisit the persistent (and wrong) notion that there are consistently more job seekers available than there are jobs to be filled.

A couple of decades ago, 1987 to be exact, the Hudson Institute published an influential study called Workforce 2000. It was updated in 1997 as Workforce 2020. The reports are heralded as a wake-up call to employers in the United States, because they clearly state that the supply of skilled and talented workers is shrinking year after year and will continue to do so until the middle of this century. In 2000, there were more high-tech, high-knowledge, high-touch jobs than there were people to fill them, and that trend continues today. Key jobs in many companies go begging, and the average time to fill rate (a metric used by HR and staffing professionals to measure how long a job stays open from the time it is first advertised till the new employee’s first day of work) has stretched from two to three months to as long as one year for many professional and technical positions. Statistics from the Department of Labor projected that from 2000 to 2010 there would be a 23.7 percent rise in demand for workers with PhDs (to 353,000), and a 22.5 percent rise in demand for workers with bachelor’s degrees (to 4,006,000), with no reasonable expectation that the supply of candidates would match the need.

If that does not impress you, maybe this will: 84 percent of baby boomers (people ages 44 to 62 in 2008) participate in the labor market, and those boomers make up nearly 50 percent of the 2008 workforce. But over the next 30 years, 76 million of these baby boomers will retire, and only 46 million new workers from Generations X and Y will have entered the labor force. That’s a possibility of 30 million empty job slots. And the government’s current stand on legal immigration and work visas doesn’t offer much hope, for sure; and neither does the growth of economies around the Pacific Rim, the Indian subcontinent, and Eastern Europe, where the United States has always found talented candidates, eager and willing to emigrate to the United States to walk the “streets of gold.”

In a January 2003 survey of 3,800 employers nationwide, 51 percent of employers said they have a “hard” or “very hard” time finding qualified employees (Rising to the Challenge, U.S. Chamber of Commerce, 2003).

Peter Capelli of the University of Pennsylvania’s Wharton School of Business, is on record as saying that the Workforce 2000 and Workforce 2020 reports are in error and that there is no real need to panic about whether there will be a sufficient number of talented job candidates to go around. But I, among others, disagree. My disagreement stems from my personal talks with business leaders and HR execs, and from the results of CEO surveys, which consistently list finding and keeping talented people as one of the three most prominent business issues that keep them awake at night. They know from experience that good employees are hard to find—and hard to keep.

So let me reintroduce this rule by saying that you really need to begin thinking of your employees as volunteers, and treating them as such. If you come from a mind-set that thinks the labor market is always in favor of the employer and that workers are much like modular and interchangeable parts that can be dealt with as chattel, or if you think that behind one departing employee is a large group of equally valuable potential candidates lined up to take her place, I hope to persuade you otherwise.

It’s true that some low-skill, repetitive-motion jobs—especially in boom-bust sectors such as construction and simple production manufacturing—are not begging for applicants. But most positions that require midlevel skills, serious education, training, problem-solving, and decision-making go begging for talent. This problem is particularly evident among the talented professional classes, or among the “creative classes,” the hires who bring your organization real innovations, new products, reliable growth, and long-term relationships. Within these groups, anyone with real talent can go find a new job, more money, bigger office, “nicer” geography/climate tomorrow. No matter what the unemployment rate, whether it’s 1 percent or 17 percent, there is always a market for talent.

So, what does it mean to treat employees as volunteers? Where do we find examples? Well, I suggest you look at those organizations you come into contact with nearly every day that by design are cash-flow stressed, or use their cash for purposes external to the organization itself. I am speaking of charities, or community improvement enterprises, or others cut from the same cloth. Yes, I am talking about “do-gooders.”

For a number of years my father-in-law, Art, a retired auto parts salesman and WWII vet, volunteered his time every week at the large VA hospital in Durham, North Carolina. He didn’t have a lot of money to contribute, so his way to give back was to volunteer at a place, and to a purpose, with which he could identify and where he felt a connection. It was also a social connection for him, and so it gave back to him and the other men and women who volunteered with him.

At the hospital, he performed a simple task—he escorted patients to doctor visits or to lab tests, by pushing or accompanying their wheelchairs to the appropriate hospital locations. His “job” was to get them there, and on time, and get them back. No title, no pay, no problem!

Art hardly ever missed a volunteer day, and he was usually early. On days when he was scheduled to work, he turned down offers from me and other friends for lunches or day trips to museums, because the hospital needed him. I knew that he was performing a service for the VA, one that helped reduce the need for additional paid staff, but until the day I attended a volunteer luncheon with Art and my wife, I didn’t really understand the full measure of his dedication to his service.

The luncheon was a simple affair with no cloth napkins or gourmet foods, but it was special, really special. All the heads of hospital administration were there, and a few of the doctors attended. Those busy and important people spent the majority of the 90 minutes giving out awards for attendance, or friendliness, or whatever. But more importantly the officials from the VA spent the time telling the volunteers how special they were, and how important their service was to the facility and to the patients. The volunteers were given lavish praise for their consistency and their loyalty, and were told that they counted, that their input and suggestions were important, and that they made the world of that VA hospital a better one.

Art and his fellow volunteers beamed, although slightly embarrassed by the attention and said privately afterward that they were honored to be associated with that institution. They wanted to be there to continue to render service. For free!

Why? Each of them could be otherwise occupied, tending a garden, playing golf, reading books, or doing any number of satisfying and enjoyable things to pass retirement hours. But they chose to go back to volunteering again and again, because the staff made it a priority to make them feel wanted, needed, and valuable. The administration showed respect for the volunteers, their service, their input and ideas, treating them like precious cargo, rather than an unimportant business necessity.

So the challenge for leaders becomes to get their own employees to want to come back to work each week, to want to boost the competitive advantages of the employer, to want to contribute at the highest level possible for the tasks assigned. And since the shortest distance between two points is still a straight line, you can meet that challenge by treating employees as though they are volunteers—by behaving as though you really need them to show up again tomorrow and by acknowledging that they do have choices. If you have hired the right people, as long as they choose you, you can win.

And now for an Andy Rooney moment: Have you ever noticed...that in times of stress or economic turmoil or market downturns, the best companies grow and even thrive, increasing the size of the gap between themselves and their competitors? Have you ever wondered how they do it? It’s largely because they have the best people. The dedication of those people to the success of their employers is the difference—the secret sauce.

Now, if the scenarios presented to us by Workforce 2000 and Workforce 2020 play out, job seekers will recognize that the playing field tilts in their favor, and they will feel it, see it, and know it before the staffing administrators within corporations have the first clue. Then the job seekers will look for jobs within companies that treat employees “right.” Those people-centric employers will pick from the best-suited candidates and move on. The rest of the pack of employers will be left to fight over the rejected many.

It’s not only wrong to make rash assumptions about supposedly endless pools of talent, it’s expensive to do so as well. In other rules discussed in this book, I have cited the consensus estimation of the cost of recruiting and training a replacement employee—the costs of voluntary turnover. (Oh, let’s call it what it is: defection!) For professionals and managers, it’s upwards of 150 percent of their salaries. So, as you march some unwanted fellow off the plank and think that you can bring on another ready shipmate eager to take his place, get out your checkbook, because you’re going to need it. You’ll be writing checks until you go broke.

Another widely circulated employer-employee workplace dynamic (except this one is true!) is that cradle-to-the-grave employment is long gone. It’s been destroyed by decades of plant closings, mergers and acquisitions, and the exportation of jobs to cheaper overseas labor markets. That’s not news. But what might be news to you now is that this dynamic has changed both sides of the employment equation. Understanding this cultural shift is crucial to the points I make in this rule. The fact is today’s workers don’t expect long-term employment. As ideal it may have been to work 25 years for Big Blue or Ma Bell and retire with a lake house and an irrevocable pension package, it just doesn’t happen that way any more. That has changed the way the employer looks at the employee. But here’s the key: It has also changed the way the employee looks at the employer.

These days, employees operate in what is essentially a barter economy. The employees, particularly Gen X, Gen Y, and the newest kids on the block, offer to barter their skills and give themselves wholly over to an employer in exchange for fair pay, benefits, and opportunities for professional growth. These employees come to work, and they see each day as an opportunity to provide intellectual capital, hard work, and services. In exchange for that, they want fair pay and ample fringe benefits, advancement, and the ability to learn and grow. This differs substantially from decades past. In those days, the baby boomer went to the pay window, accepted his pay, and said to the employer “Thanks for the opportunity to work here.” But the new generation of workers, the one in barter economy mode, goes to the pay window, accepts the check, looks the paymaster straight in the eye and says, “We’re even. I believe I’ll see you Monday.”

Employees are far more willing to consider other work options, all the time. They are willing to risk their skills and aptitudes in the marketplace, including the skills that their current employer paid them to learn! In this barter relationship, anything—especially any violation of trust or fairness, any hint of a plantation mentality on the part of management that breaks the barter bond between the employer and the employee—is justification for the employee to seek work elsewhere at the drop of a hat, and at the aforementioned enormous cost to the employer.

The twenty-first century employee doesn’t feel beholden to the organization. She knows that, even after all the kind words and encouragement, if the board and the CFO say, “We are going to cut the entire division to save costs,” the employee is gone. And no kind words or good relationships with a local manager are going to change that. On the other hand, the employee reads the same media reports and books that managers read, and she, too, is acutely aware of the labor market. She also knows the prohibitive cost of finding, hiring, and onboarding replacement workers for the employer. So, she calculates that into her value, as well.

So, with today’s workplace culture and the forever-changed nature of the employee-employer dynamic, it is essential for employers to recognize that employees are volunteers. They volunteer to work for you and vote, sometimes daily, whether to show up for work. If the relationship between the employee and the employer is productive for both sides of the equation, the employer sees the value of keeping that employee on board, while always calculating the cost of a replacement. And the employee is constantly looking for the demonstration of continued commitment by the employer to his growth, and to his overall value. Any employer who intends to profit in the barter economy (or at least not incur unreasonable labor costs) must recognize why employees stay, and the employer must nurture employees with a special focus on these “sweet spots.”

Why do they stay? I’ve said it elsewhere, and I’ll say it again. Employees stay if they love what they do; if they have positive social relationships at the workplace; if they have a good relationship with bosses. Overall, they stay if they are engaged, and I use the word engaged to encompass, in a summary way, everything I have detailed in this book, such as the alignment of the employee’s personal concerns and the company’s concerns; a sense of trust, transparency, honesty, and respect in the workplace. If one or more of these things is missing, breaks down, or is taken away, the bond is loosened and at risk, and strains of “Take This Job and Shove It” become the background music of all thoughts about work. And sooner or later your “talent” is on the way down the street to work for your competitor.

For people-intensive companies, about 90 percent of your assets walk out the door every day. (For machine-driven or real-estate dominated companies, your people asset percentage may be as low as 40 percent to 50 percent.) But, regardless, people are the repositories of institutional knowledge and intellectual capital. I have seen that truism play out at every place I have worked, and especially with my nearly two decades at SAS Institute. In fact, in the late 1980s, after I had been at SAS for the better part of a decade, a local newspaper sent a reporter to talk with me. He had heard about all the people-focused and family-friendly policies we had at SAS. In the course of our discussions, he posed this question: “Do you think it is necessary to have all these programs to get people to come to work for you?” I told him that Dr. Goodnight and I had had a brief but revealing talk early in the meteoric growth curve of the company to determine what kind of place he would build and be remembered for. His request, no, his mandate was a simple one: “Let’s make this a place where coming to work every day is as meaningful, challenging, and as much fun for the employees as it is for the owners!” That statement harkened back to a desire that Dr. Goodnight had expressed to me when I first started working at SAS when there were just a few dozen employees. He said that he wanted the people who worked there “to feel like owners.” As humanistic as these intentions were—and they have had a marked and positive impact on the lives of thousands of families—it was in the end a financial boon to implement these philosophies at SAS. That’s because if the people who left each day decided not to come in the follow day, we were toast. We would have no competitive advantage, and the company would have collapsed. That’s not an exaggeration. We knew it, and the employees knew it. The employees were bartering their services with a highly eager and motivated partner.

Don’t get me wrong. The reason for building a great people-focused infrastructure at SAS came authentically from the heart, and these policies have always expressed the sincere and best intentions of the leadership. That said, the philosophy of caring for people was coupled with the enlightened business self-interest that also compelled us to engage employees in this way. And it paid off. The results of the policies, programs, and behaviors were easy to see. Our employee base—which grew to nearly 7,000 before I retired—developed a psychological ownership of the company, and of the software and services the company produced. They also took ownership of the customer relationships and engaged our customers and products on every level as owners would.

What inspired them to do this? It’s really rather simple. Their response was typically human. We treated them fairly, as adults, with respect, and as volunteers. They responded fairly, as adults, acting with respect, and...as volunteers. In multiple areas of their work and family life, we inspired them to wake up each day and say, “I’m going to go to work today and do a great job for someone who respects me, helps me take care of my family, and treats me well. I can’t see any reason to move on...so far.” The spirit of employee engagement at SAS was extraordinary, and extra effort, the kind of effort you see from volunteers, was a relatively common feature of our workplaces, globally.

Yet, like any wise person who won’t be played the fool, the employees were always watchful of anything that would break the barter bond I alluded to earlier. And they were always aware (but not defensive), because they knew that they were gaining increasingly valuable skills as they grew in their professional development at SAS. Given the demographics for people in their practice areas (software development) many of them knew that they had highly marketable skills. So we continually responded, and our response resonated with them. And it continues to do so today. Year after year the employee turnover rate at SAS is around 17 percent below the industry norm, and that turnover difference saves SAS millions of hard dollars each year.

So, my advice to you is this: Heed the warnings of the Hudson Institute; pay attention to the management behaviors of the enterprises that cultivate volunteer workers; and learn from the world’s most noted people-focused workplaces. Finally, teach your executives, particularly your CFO, to regard resources spent on attracting and retaining talent as investments rather than expenses. The returns are phenomenal.