The Robot Syndrome

According to the United States Labor Department, unemployment was 4.8% in December 2005, 4.4% in December 2006, 5.0% in December 2007, and 7.2% in December 2008. Also, the Labor Department reported that we lost 2,600,000 jobs in 2008 and 6,460,000 jobs from the start of the recession in December 2007 through June 2009. This data describes what can only be called a sobering trend.

Moreover, the Labor Department predicts that unemployment will exceed 10.0% by December of 2009. Given that we just reached 9.5% at the end of June, I would say that the Labor Department’s estimate for December is well within reach. Similar reports continue to arrive from around the world as countries struggle with worsening job and economic conditions. Unlike The Great Depression of the 1930s, the U.S. and governments from one end of the globe to the other have rallied to end what seems to be a one-way trip to the next depression. Governments have invoked fiscal, monetary, and regulatory policies of every variety, including but not limited to trillion dollar capital infusions also called bailouts, backstops, stimulus plans, insurance guarantees, and nationalizations. It remains to be seen how much and at what pace these collective actions will positively affect the world’s economies. I for one remain optimistic that better days are ahead.   Still, let’s call this situation what it is – The Great Global Recession. What a difference a year or two can make.

Our country has moved rapidly from a low unemployment rate to a high unemployment rate. Interestingly, both economic conditions can place a great deal of stress on companies to continue to perform and compete for customer loyalty. However, the stresses are different within each scenario.

During times of low unemployment, workers migrate more readily from one job to another. As a CEO in the foodservice industry, my wife witnessed this firsthand, especially with store-level personnel. It was not uncommon for employees who were unwilling to adapt to higher standards of performance and a new culture of accountability to quit without notice. Typically, the next day, or certainly within the week, someone else would hire them. This lack of fear of finding another job quickly contributed to turnover which led to the operational challenge of hiring and training new people continually.

Conversely, high unemployment periods bring with them their own set of challenges. In the 1980’s, when I worked in a division of General Electric, we were experiencing a downturn in business that necessitated what human resources called “reductions-in-force”, or RIFs. The word most commonly used today is “layoffs.” I can assure you that there is nothing pleasant about laying off people, especially when they are productive employees that are being overcome by circumstances beyond their control. Still, the people losing their jobs are the ones who suffer the most.

Because people in companies are connected in ways far beyond just technologically, the negative effects of layoffs ripple through entire organizations. It is as if, and this is especially true within high performance companies, peoples’ professional networks are akin to the root system of a stand of aspen trees. While each aspen appears to be an individual unit, it actually shares its root system with all of the other aspens in the stand.  So, when some blight invades one aspen, it is likely that others will be affected, too.

Similarly, when something bad happens to someone (such as being laid off) or to a group of employees, it can affect nearly every employee left behind. Morale drops, people begin to wonder if they are next, productivity falls, and those left behind are usually asked to take on more responsibility and duties without a commensurate increase in pay. For instance, I read that some restaurants are letting go their server assistants and asking the servers to fill in the gap. The servers may not have to share their tips anymore, but I would wager that if you asked some of them, they would be quite glad to have their teammates back on staff.

Clearly, both economic environments present big challenges for companies to remain competitive and to continue to differentiate themselves. The success of a company winning its rightful place among its competition depends on the lowest common denominator, its people. In virtually every process throughout a company, from logistics, to accounting, to manufacturing, to finance,