For businesses, it is just too difficult to hire. Since Obama’s speech on the “American Job Act” (September 8th) the Republicans and Democrats in Congress and the Media have been vigorously debating what is the “common sense” approach to job creation. Yes, yes, more jobs. However, there are already some 4 million jobs already open right now. How can we create more jobs if we are unable to fill the current job openings? When addressing America’s top economic concern, unemployment, we must start with the hiring process. “More than 80% of the small businesses we survey (those with fewer than 2,500 employees) tell us they are struggling to find great talent,” reports Josh Bersin, President and CEO of Bersin & Associates. Unless we make hiring easy, any Job Creation Act is going to turn into a Job Vacancy Act.
It’s not like the unemployed will wake up tomorrow, sign into Twitter, and have a direct message from @BarackObama with a link to a job opening that matches their underutilized skills. Hiring is a social activity. To reduce friction in the labor market, we must interact with those who we are connected with. Social networks foster our connections. I participated in #TChat this past week. The topic was Zero Unemployment. One of the questions was so open ended and yet so simple, “What’s your advice on job creation?” I thought about. And I thought about it again. I was Tweetless. Then the answer came to me (in my newsfeed):
Does it really get any more complicated than that? Consider this from the Huffington Post (September 13th): “If one out of every two small businesses (50%) hired just ONE person, we would have Zero Unemployment.” Whatever surplus capital a business has can be reinvested into the business in the form of a new hire. If the right talent comes along – a talent that you know will make your businesses money – it doesn’t matter if there is surplus capital because that type of talent is well worth the price of debt. (A minute later) People investing in people to generate greater output :
Obama spoke of tax breaks for new hires. Yes those tax breaks could slightly increase the purchasing power of a business. But these tax breaks are not the tipping point. The tipping point of hiring occurs when good talent is available. Without good talent, it does not matter if the government offers to save a business from paying 3% of salary. CEOs, Heads of Human Resources, Investors: leverage the fact that someone can produce, and then pay them 60% of what their output is. Job creation is that simple.
Without human resources, there is no economic growth. The economy, above all else, depends upon the labor of man. Opportunity. The virtuous circle is “the self-propagating advantageous situation in which a successful solution leads to more of a desired result or another success which generates still more desired results or successes in a chain” (The Business Dictionary). Hiring starts the economy’s virtuous circle.
See the Virtuous Circle below. I customized this diagram with the fuse that is an increase in hiring. To increase output, and start the cycle, we need more hands working. The economy is that simple. Hungry mouths need tasks for their hands. In a nutshell: a new hire creates more output and more knowledge of how inputs become outputs, followed by increased economy of scales and increased production efficiency, which reduces marginal cost, ultimately leaving the the business with lower marginal expenses. Hiring creates more profit for businesses and lower costs to the consumer. And to the people who say not everyone is talented enough to work, I remind you, standing on the street corner with a sign across your shoulders is a full time job. And to those who say I can’t find the right talent, try recruiting with SmartRecruiters. Free recruiting software takes down one more barrier to hiring. This pay it forward approach stimulates the aggregate economy.
As you may have heard, the Zero Unemployment Movement launched the #GiveLabor Initiative. It’s a call from the Zero Unemployment Founder, Jerome Ternynck, for everyone to give fifteen minutes of his or her time on Labor Day to help an unemployed friend find work. Many participated. Through Twitter alone, approximately 100 individuals – totaling over 350,000 followers – offered their support in volunteering time to help job seekers.
The benefits of good business spread beyond the stakeholders and customers. What I consider to be a “beneficial” good or services, not only is profitable, but also makes markets more efficient. In the business of hiring, creating a more efficient labor market results in higher output and lower unemployment.
“About 6.2 million Americans, 45.1 percent of all unemployed workers in this country, have been jobless for more than six months – at its highest since the Great Depression,” reported CNN. The talent is here – waiting – give opportunity. As Barack Obama said, “The People of this country work hard to meet their responsibilities. The question tonight is whether we’ll meet ours. The question is whether – in the face of an ongoing national crisis — we can stop the political circus and actually do something to help the economy.”
Those in position with the resources to hire, need to hire. Bet on People.
Photo Credit ScapeTV and Wikipedia with “Increase in Hiring” Circle Inserted by David Smooke
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