What should matter to people during the new year

January 17, 2012
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West Michigan is recovering, but has not yet recovered. Unemployment rates are falling, but new job creation has brought employees with requisite skills into the market, so the number of people seeking work has not changed significantly.

The skill gap within this region must be overcome through adequate (and appropriate) training — both within the educational institutions and within businesses seeking qualified employees — if business is to meet its growth potential. Concurrently, individuals may have to take a step backward before they can charge ahead. That is, they may have to invest time and sacrifice short-term income in order to reap long-term rewards. 

Beyond regional challenges, international markets, an upcoming political “event” in November (that will probably distract us most of the year), and our “social support infrastructure” that has been modified significantly through limits placed on unemployment compensation, welfare and other aid programs will all have major impacts on our economy.

Health care costs are skyrocketing, doctors are retiring or merging practices (hinting of an upcoming physician shortage), and funding for public services is continuously threatened. We are a nation of compassion but must draw a line between equality and equity: While created equally, we should not expect to receive more than an equitable return on the investments we make. 

Are we in for a boom or should we prepare for tough times this year? Will we experience an economic turnaround or are we turning toward depths from which we might not return?

Last fall, most thought 2011 would be a better year than 2010, and it would seem 2012 will continue that positive trend. Our region is poised to grow, but many factors could affect the precarious perch upon which we balance.

Thoughts and observations from “the sidelines” would include the following:

Employment should increase slightly during the first quarter, led by continued increases in traditional manufacturing jobs. Health science (nursing, eldercare, medical assistance, etc.), information technology and engineering specialists will continue to be in high demand. Though we may see a pullback during the second and third quarters as organizations take a “wait and see” attitude toward the fall general elections, we should return to measured growth during the fourth quarter, once business realizes that “the sky is not falling” regardless of who wins or loses.

The reliance upon contingency workers hired through staffing agencies will continue to expand as more companies slowly enter the waters of growth. Business is gaining efficiency through technology and needs skilled individuals to make the transition. Work-force development agencies will continue to evolve as they seek to better link educational and skill development programs with employer needs.

New construction will remain flat, holding down potential expansions within the office furniture industry (an industry that will never return to the strength once experienced within this region), while remodeling and refurbishing may gain a bit of traction.

Smaller organizations will continue to thrive due to their ability to respond to supply and demand changes. New start-up organizations will draw upon (and stretch thin) existing talent, to the point that critical shortages may begin to adversely affect the ability to meet service and production demands.

Most organizations will provide an “average” pay adjustment of around 2.5 to 2.8 percent during the year, but “spot adjustments” may be required throughout the year as the market shifts and grows. “Across the board” pay adjustments will be less prevalent as they tend to de-motivate high achievers while encouraging “average” employees to continue their average performance. Companies will invest in the development of compensation administration plans that recognize and reward preferred behavior.

Health care premiums will increase nearly 25 percent this year, with employees paying 20 to 25 percent of individual and 40 to 50 percent of dependent coverage costs. Though the country has realized individuals not now insured must somehow receive coverage (other than through emergency rooms), more study will probably refine the Healthcare Recovery Act prior to its full implementation in 2014. More employers will offer wellness discounts to reduce insurance costs, should employees participate in healthy lifestyle and exercise programs — with those unwilling to participate paying more for insurance coverage.

Organizations wishing to remain viable must provide competitive pay and benefits and good working conditions, and must work to involve a “new breed” of worker in the decision-making process.

Diversification within our work force has created a need to embrace cultural, generational and gender-based differences, leveraging the cumulative effect of divergent individual contributions. We must anticipate the future by identifying needs not yet recognized and then developing solutions not yet tried if we wish to experience success not previously achieved.

Those unwilling to adapt and accept will struggle to maintain the high-quality work force needed to be competitive, and may not share in the anticipated rewards that lie in store for 2012. 

Have a happy new year — and celebrate the people that matter most in your life.

David J. Smith, CAE, is president and CEO of The Employers’ Association in Grand Rapids.

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