Focus, Economic Development, and Human Resources

Businesses and workforce planning learn to be flexible

Training people for the right jobs is crucial to the economic recovery.

May 9, 2014
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Much of the workforce training that will take place in the future will focus on technology as companies reinvent themselves. Courtesy Thinkstock

Economic recovery looks different this time around as a result of businesses adapting during the recession and learning to be nimble.

While sustainable economic recovery can be measured, preemptive workforce planning and training can be more difficult to forecast.

Becca Dernberger, vice president and general manager of the northeast division of Manpower, said two indicators of economic sustainability include the Consumer Confidence Index and demands by employers in the staffing industry. As one of the bellwether markets, the staffing industry can be used to gauge when an economic downturn or upswing is about to occur.

“We start to see a decrease in our demand when there are rumblings of a recession, and then the exact same thing happens on the other side of that when there is an uptick in the economy — that businesses will start seeing an uptick in their demand,” said Dernberger. “They hire temporary employees or contract workers to kind of gauge whether it is really a sustainable recovery or whether it was just a blip.”

Christine Quinn, director of the Michigan Workforce Development Agency, said the manufacturing industry, an increased need in talent and economic development are areas the organization looks at when determining whether there is a positive momentum in terms of economic activity.

“Manufacturing has such a huge impact in our state — manufacturing and seeing individuals picking up on their hiring practices, and projects that are coming into the state as far as needs of talent,” said Quinn.

The National Bureau of Economic Research reported the recession, which started in December 2007, ended in a trough of business activity in June 2009. The Business Cycle Dating Committee based the decision on indicators including: the index of industrial production, Macroeconomic Advisers’ monthly GDP, real manufacturing and trade sales, and household survey employment.

However, sustainable recovery was slow to respond to various initiatives that were used to stimulate the economy. According to Dernberger, what was unique about the recession was the gradual uptick in economic activity instead of a spike in activity, which is more often the case.

“Companies really reinvented how they do business to make sure — especially in West Michigan where it is so strong in manufacturing — that there is more of a flexibility in their business practices,” said Dernberger.

“A key lesson that so many companies learned out of this recession is the importance of being nimble and the importance of being lean and really protecting their bottom and top line. … Companies are smarter after this recession because it was just so devastating to them.”

According to an employment research newsletter published by the W.E. Upjohn Institute in 2009, as a result of the recession, the Michigan auto industry restructured by reducing the number of workers in auto assembly facilities while maintaining the number of plants. However, parts production plants and workers were cut as a result of the restructuring.

As an economic indicator, the Consumer Confidence Index reveals how hesitant or eager consumers are to spend and engage in the marketplace. Reported on a monthly basis by Nielsen, an information and measurement company, for The Conference Board, the index reports on the expectations and outlooks consumers hold.

The most recent Consumer Confidence Survey was released April 29, and reported the index fell slightly from expectations and outlooks in March. According to the press release, 24.4 percent of consumers felt business conditions are “bad,” an increase from 23.5 percent in March. The index also reported consumers who felt jobs were difficult to obtain increased to 32.5 percent, up from 31.4 percent in March; while those assessing job opportunities as “plentiful” declined to 12.9 percent from 13.8 percent.

“I think through this last recession, people’s mothers, fathers, kids and neighbors just couldn’t find work,” said Dernberger. “Even though there was talk the recession was over, people knew enough people who were unemployed that it just didn’t feel quite so healthy as quickly as we maybe would have liked.”

George Erickcek, senior regional analyst focusing on regional economic development at W.E. Upjohn Institute, said instead of trying to predict which industry will hold potential job opportunities for workers, the focus should be on communication between employers and the training community.

“Forecasting is difficult, especially if it is the future. I am not quite sure that we have done a good job predicting,” said Erickcek. “I really encourage the development of a better network. It’s a two-way street: Businesses have to stay at the table, and the training community has to be flexible to meet their needs.”

According to Erickcek, the issue of oversupplying skilled workers in a particular field can arise if employment opportunities are not predicted correctly and, as a result, individuals in the training program will have expectations of jobs that will not be there.

“The challenge is, do we have the employees, the mechanisms, to retrain individuals from one industry to another?” said Erickcek. “Having a training program, training resources, that are flexible to meet the changing needs — I think the demand is going to be there.”

The Michigan Workforce Development Agency is focusing on “up-skilling” individuals who have been trained for jobs that are no longer available, according to Quinn. In coordination with education and employers, the agency is looking at how to accelerate the training of younger people to fit the needs of current demands.

According to Dernberger, one of the challenges in finding the talent desired in workers is that the skills needed are more advanced now and take time to learn.

“The skill set that companies are looking for are a higher-level skill set,” said Dernberger. “There is more of a unique skill set that is required, and that takes time to groom those people.”

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