Workforce strategies and the changing employer/employee relationship
Employment and career journalist John Rossheim sat down with The Seamless Workforce to discuss the current status of the ever-evolving relationship between employers and employees, especially with the rising number of contingent workers joining the workforce.
The “mega trend” Rossheim has seen over the past 10 to 12 years is a shifting of risk. In addition to the increased number of temporary and contract employees in the workforce, employers no longer provide pensions and are, in some cases, not contributing to 401(k)s. As a result, the investment responsibility is now resting on the employee. This lack of balance in the relationship is a big factor for a lot of workers who are looking to leave their jobs for a new one in the recovering economy.
Seamless Workforce: Joining us today on the Seamless Workforce is John Rossheim. John is a journalist who covers career and employment trends. Over the past 10 years, he has written hundreds of articles for a variety of leading news sites, magazines, and newspapers. One of the topics of particular interest to John is the changing relationship between employers and employees. In light of recent economic recovery, and its impact of the workforce, we thought this would be a great topic for John to expand on with our readers. Thanks for joining us today, John.
John Rossheim: Well, thanks for having me.
Seamless Workforce: One of the things that we’d like to start off with is you telling us a little bit about your work covering employment over the years and the trends that you think have had the most significance on the workforce.
John Rossheim: Sure, so I’ve been covering employment and careers for really about 12 years now, and that means through a few recessions and through some long-term trends that have just become more and more important.
And I think really one of the big trends overall is the shifting of risk from employers to employees. I don’t know if you understand what I mean by that, but if you look at things like the increase in use of temporary employees, temp to perm contract employees, all kinds of contingent workers are now in much more use than they were, say a decade ago. I think that’s probably a permanent shift. Another kind of risk shift that you see is in benefits. The continuing demise of pensions with defined benefits in light of the way we do another take of that.
Seamless Workforce: Sure.
John Rossheim: So as pensions have really gone away, 401(k)s have come up. The exception to that is in the last couple of years when a lot of companies were in trouble financially or were taking advantage of the situation, and cut their 401(k) contributions. But the overall point there is that there the investment risk for a 401(k) is completely on the employee, rather than on the employer. So overall, I think this shifting of risk from the employer to the employee is really the mega trend of the century so far.
Seamless Workforce: And so this is not a shift that you’ve seen after previous recessions? This is one that’s specifically unique to the current, the most recent downtrend.
John Rossheim: I think that this trend has existed, but it’s really accelerated in this recession that we recently came out of. It’s something that has been going on, but employers have been in a hurry to make it happen even faster.
Seamless Workforce: Any particular reason behind that?
John Rossheim: I would say companies are just doing what they’re supposed to do for their shareholders, if they’re public companies, which is to maximize their returns. Of course, part of that is eliminating as much business risk as they can, and a lot of that comes in the form of what they would have to pay for pensions. And we see how government on so many levels now is really in trouble, and a big piece of it is these unfunded pension liabilities. The private sector really wants to get away from that.
Seamless Workforce: Now that we’re seeing the beginnings of a recovery, a lot of employees might be looking to jump ship and move to greener pastures. Do you think this will further impact that relationship and change that risk even more?
John Rossheim: I think it will impact the relationship. I hope it does. I think frankly, employees–unfortunately, understandably–have become kind of gun-shy. I think they’ve become afraid to tell employers what they want, what they want from their work, what they need, and what kind of work life balance they’re looking for. I’m hoping that as employees get some more power in the labor market, they will use that power to take up some of their own interests again and not just silently do what they think their employers want them to do.
Seamless Workforce: Do you think that if employees are able to take back some of that power that they’re less likely to look for new jobs in the next few months?
John Rossheim: I think that’s possible, although of course, we’re human. As soon as we sense that we have power in one sphere, we’re naturally tempted to see if we can use it elsewhere. So I’m not sure it will have that effect of making people want to sit still. They may say, “You know what? I got something that I was looking for from my current employer by asking for it. Maybe I can get even more by going somewhere else.”
Seamless Workforce: Do you think that there’s any way for employers to retain the talent they already have?
John Rossheim: Sure. I think they need to really start asking employees what they want in terms of work life balance and in terms of the work itself. They need to encourage employees to really be frank about what they’re looking for and not to just say, “Oh, whatever you need me to do that’s what I want to do.” I think if they can be honest, if they can honestly say we want to know what you’re looking for in your career at this point, that employees will react positively to that and that does potentially have some power to retain workers.
Seamless Workforce: Now one of the other items that you had mentioned in the shifting risk was the impact on benefits. Do you think that that’s something that will bounce back in recovery or is that forever changed, similar to the makeup of the workforce?
John Rossheim: I think it will come back if we take again the example of 401(k) contributions. I think employers do need to bring those back up to par and if they do, that will have an effect on retention. That’s something that comes with a number attached to it, an employer match. So that’s something that employees really tune into because it’s so easily measurable. I think they do, employers do need to do that in order to try and keep people.
Seamless Workforce: Okay, great. And at Yoh, we’ve been talking a lot about the recession’s impact on the workforce including the increase in temporary and contingent workers. In your experiences, have you seen a difference in the type of relationship between full time employees and their employers compared to those of contract employees?
John Rossheim: Well, I’ve seen it, and in fact, I’ve lived it. I’ve been on all sides of this. I’ve been a full time employee manager with a number of direct reports. I’ve been a contract worker, working alongside full time employees. And yes, there are real differences.
One of the most interesting differences I find is that it’s much easier for contractors and employers to be honest with each other. There are certain forms of dishonesty that are almost built into the employment relationship. For example, if I have a job interview, I have to trot out or make up another grandparent funeral to go to. It’s something that most employees cannot tell the truth about. It’s got to be a dentist appointment or something. And there are good reasons for that. Obviously, they can’t betray their own current lack of loyalty to the company. So that’s a lot easier for contractors to be honest about that stuff.
And I think in a way, I’m prejudiced because I do contract work now, but I think contract workers have a more grownup relationship with their clients than employees tend to have with employers. By which I mean contractors are not expecting some sort of parental guidance from their employers the way some employees do. So I think there are big differences, and of course there is sometimes friction between contract workers or temporary workers and their colleagues who are full-time employees.
Seamless Workforce: Okay, great. And do you think that the introduction of more contract workers into the workforce has impacted the relationship between full-time employees and their employers?
John Rossheim: I think it has. I think on the one hand, those employees look at what the contractor’s situation is. And I think they’re of two minds. On the one hand, they’re jealous because the contract employees are likely to be earning a higher hourly rate, maybe much higher. On the other hand, it seems in some ways like a nightmare to an employee to not have an employee-employer relationship, to not have the benefits that come with it and so on.
Seamless Workforce: Thank you for that insight. Do you expect the relationship between employers and employees to go back to what it was pre-recession, and what best practices can you offer to maintain and build these strong relationships?
John Rossheim: I think it’s definitely not going to go back. As I look at what goes on and I see the rise of contractors and free agents, which by now seems almost like an old-fashioned phrase, and temp to perm, and all these contingent work arrangements. I think those arrangements are really well suited to substantial proportion of the American workforce, especially people who are in creative services: writers, graphic artists, and all kinds of folks who are some kind of individual contributor and really can mainly work on their own or are good at working that way. So I think that arrangement is naturally suited to a contract arrangement.
I think in a way, we’re headed to even more of a two-tiered system, where you have a really sizable workforce that is contributor level and on a consulting level. Then, you’ve got really key people at the core of what a company does who are really important to the success of the company. And in exchange, the company continues to offer them really strong incentives to be employees and all the things that go with that; to show up 9 to 6 every day, day in and day out to make that kind of commitment.
Seamless Workforce: Great. And then did you have any best practices you’d like to offer for employers or employees in maintaining these relationships?
John Rossheim: Sure, it sounds almost silly, but I really wish that employees and employers could be more honest with each other about what they want, about what they’re looking for so that their professional relationship is based on the reality of what is motivating them each day, rather than on fictions about how excited they are about doing the same work that they’ve been doing for 10 years together.
Seamless Workforce: Great. Well thank you very much for your time today, John.
And for our listeners, you can read some of John’s work at his website: www.Rossheim.com or you can follow him on Twitter at @Rossheim. Thank you very much again for your time today, John.
John Rossheim: Thank you.