Stop Blaming the Employer!

Over the past few days I’ve had several people tell me that business is taking advantage of employees. When recessions hit, the employer exploits the situation in his favor, to the employees’ detriment. While this may be the case in some situations I don’t think it is in the majority of cases.

The employer may be an easy target in this situation, but the anger and frustration is misguided. The ability of an employer to pay an employee stems from demand for the employers product. If the demand shrinks, then his demand for employees with the skill to produce the product shrinks. With shrinking demand comes shrinking revenue. Without revenue to pay the bills, including payroll, expenses have to be reduced. There really is no other choice here if the business wants to remain viable.

There are several reasons why demand might shrink. There are two overwhelming reasons in the current situation that I see. First is that consumers (including businesses) have reduced or are reducing their spending, this directly translates into reduced demand. The second is globalization is providing real competition for technology related skill sets. If you can’t differentiate yourself and provide real value it is hard for any employer to justify regular salary increases. Remember the employer must compete with other companies that can and will take advantage of these cost differences.

Another cause of reduced revenue is the inherent idea of consumers to want to buy the cheapest items possible that satisfies their need. With companies competing for the limited spending, this directly translates into less revenue for the company that you are buying from. The reduced revenue means reduced employment, but also means the most efficient business will be successful and will add jobs once demand increases. In a world of global competition keep this in mind when you think that your employer is not being fair. He is working in a world where to survive he has to make the best economic decisions to keep the business operating and competitive.

What can you do to change this and improve your situation? Learn new skills that makes your company more competitive. If you can show that your new skills bring value to the company then most employers will be willing to share that with you (remember it may take some time to actually realize revenue from your new skills). If they aren’t then maybe it is time to find a new employer. You can bring value by selling jobs, learning new skills that are in demand by current clients or by increasing efficiency and thereby reducing costs. If you are not willing to do anything then you really only have yourself to blame.

If you are feeling like a victim of the current recession my advice is to get up and do something about it. Learn something new, at no time in history has there been such valuable information available for free. Help make your company more competitive and you will come to realize that taking action is a much better path than dwelling on your perceived misfortune.

Business Value

Last night we went to the BMA Awards dinner, the keynote speaker was Keith Pigues. He gave a very good speech about delivering value. Here are a couple of the key points that I wanted to remember.

The top priorities for marketing companies should be to either increase their clients revenue or decrease their costs. This brings real value to their clients.

Don’t make up a need, build a product for that need and then try to sell that product. This is backwards! Figure out the need first, then create the product that fulfills that need. If it creates real value, then you will have no problem selling it.

Larger organizations are moving toward partnering with service providers so they have some “skin in the game”. This would mean setting some kind of base cost and then using a bonus structure that was based on specified measurements of the company’s performance. Seems like a good idea, but how does the service provider evaluate the client and all their other vendors to ensure they are pulling their own weight?