Skills & Jobs: Lost in Tandem

The average duration of unemployment in the U.S. jumped to a record 35.2 weeks in September, up from 16.5 weeks when the recession began in December 2010, according to the Labor Dept. Today, almost half of unemployed Americans have been out of work for 47 weeks or more (the official definition of long-term unemployment), vs. 30 percent in June 2009.

PERISHABLE SKILLS 

Industries with highly perishable skill sets include health-care technology, telecommunications, and finance, where regulations have changed dramatically in the past year. The toughest, though, may be information technology. Companies in that sector have cut payrolls for 32 of the last 33 months, through June, for a cumulative loss of some 312,000 jobs, or about 10 percent. In technology, "if you've been out of work for a year or two, you're probably somewhat outdated," says Shami Khorana, president of HCL America, the U.S. arm of New Delhi-based HCL Technologies, which employs about 5,000 workers in the U.S. He plans to hire at least an additional 600 people as the economy improves and anticipates retraining some candidates with obsolete skills.

Unemployed workers in construction, retail, low-level health-care jobs, and teaching are more likely to be attractive to employers once hiring picks up because such jobs don't change as quickly, experts say. "You don't get the sense that residential construction has changed that much in the past decade," says Harry J. Holzer, an economist at Georgetown University and the Urban Institute in Washington. The skills needed to work at a grocery or clothing store—running the cash register, for instance—are "rudimentary," he says.

There are downsides to switching careers, because doing so can push workers into fields where their training isn't valuable, creating a less skilled workforce, says Daniel S. Hamermesh, a former Labor Dept. official who is now an economist at the University of Texas. "It's tremendously difficult [for workers] to decide when the skill is no longer valuable," he says.

When employers start hiring, they'll want to see prospective employees who have done more than pump out résumés trying to find a new job. Accenture (ACN), for example, will want to see "how the applicants used their time" to stay marketable, says Catherine S. Farley, a Seattle-based managing director at the consulting firm. "Did that person do something to keep their skills fresh?"

The bottom line: As more workers remain jobless for half a year or longer, they risk losing skills needed to get hired.

A sad situation that can cost this country dearly in the end. Solutions need to be proffered up and implemented as soon as possible. But will it be soon enough? 

Why Small Business Fails

One of the least understood aspects of entrepreneurship is why small businesses fail, and there’s a simple reason for the confusion: Most of the evidence comes from the entrepreneurs themselves.

I have had a close-up view of numerous business Failures —including a few start-ups
of my own. And from my observation, the reasons for failure cited by
the owners are frequently off point, which kind of makes sense when you
think about it. If the owners really knew what they were doing wrong, they
might have been able to fix the problem. Often, it’s simply a matter of denial
or of not knowing what you don’t know.

In many cases, the customers — or, I should say, ex-customers — have a better understanding than the owners of what wasn’t working. The usual suspects that the owners tend to blame are the bank, the government or the idiot partner. Rarely does the owner’s finger point at the owner. Of course, there are cases where something out of the owner’s control has gone terribly wrong, but I have found those instances to be in the minority. What follows, based on my own experiences and observations, are the top 10 reasons small businesses fail. The list is not pretty, it is not simple, and it does not contain any of those usual suspects (although they might come in at Nos. 11, 12 and 13).

1. The math just doesn’t work There is not enough demand for the product or service at a price that will produce a profit for the company. This, for example, would include a start-up trying to compete against Best Buy and its economies of scale.

2. Owners who cannot get out of their own way They may be stubborn, risk averse, conflict averse — meaning they need to be liked by everyone (even employees and vendors who can’t do their jobs). They may be a perfectionist, greedy, self-righteous, paranoid, indignant or insecure. You get the idea. Sometimes, you can even tell these owners the problem, and they will recognize that you are right — but continue to make the same mistakes over and over.

3. Out-of-control growth This one might be the saddest of all reasons for failure — a successful business that is ruined by over-expansion. This would include moving into markets that are not as profitable, experiencing growing pains that damage the business, or borrowing too much money in an attempt to keep growth at a particular rate. Sometimes less is more.

4. Poor accounting You cannot be in control of a business if you don’t know what is going on. With bad numbers, or no numbers, a company is flying blind, and it happens all of the time. Why? For one thing, it is a common — and disastrous — misconception that an outside accounting firm hired primarily to do the taxes will keep watch over the business. In reality, that is the job of the chief financial officer, one of the many hats an entrepreneur has to wear until a real one is hired.

5. Lack of a cash cushion If we have learned anything from this recession (I know it’s “over” but my customers don’t seem to have gotten the memo), it’s that business is cyclical and that bad things can and will happen over time — the loss of an important customer or critical employee, the arrival of a new competitor, the filing of a lawsuit. These things can all stress the finances of a company. If that company is already out of cash (and borrowing potential), it may not be able to recover.

6. Operational mediocrity I have never met a business owner who described his or her operation as mediocre. But we can’t all be above average. Repeat and referral business is critical for most businesses, as is some degree of marketing (depending on the business).

7. Operational inefficiencies Paying too much for rent, labor, and materials. Now more than ever, the lean companies are at an advantage. Not having the tenacity or stomach to negotiate terms that are reflective of today’s economy may leave a company uncompetitive.

8. Dysfunctional management Lack of focus, vision, planning, standards and everything else that goes into good management. Throw fighting partners or unhappy relatives into the mix and you have a disaster.

9. The lack of a succession plan We’re talking nepotism, power struggles, significant players being replaced by people who are in over their heads — all reasons many family businesses do not make it to the next generation.

10. A declining market Bookstores, music stores, printing businesses and many others are dealing with changes in technology, consumer demand, and competition from huge companies with more buying power and advertising dollars.

In life, you may have forgiving friends and relatives, but entrepreneurship is rarely forgiving. Eventually, everything shows up in the soup. If people don’t like the soup, employees stop working for you, and customers stop doing business with you. And that is why businesses fail.

Leadership in the 21st Century

At the most basic level, a leader is someone who leads others. But what makes someone a leader? What is it about being a leader that some people understand and use to their advantage? What can you do to be a leader? Here's what you need to know and do.

A leader is a person who has a vision, a drive and a commitment to achieve that vision, and the skills to make it happen. Let's look at each of those in detail.

The Leader's Vision

A leader has a vision. Leaders see a problem that needs to be fixed or a goal that needs to be achieved. It may be something that no one else sees or simply something that no one else wants to tackle. Whatever it is, it is the focus of the leader's attention and they attack it with a single-minded determination.Whether the goal is to double the company's annual sales, develop a product that will solve a certain problem, or start a company that can achieve the leader's dream, the leader always has a clear target in mind.

This is a big picture sort of thing, not the process improvement that reduces errors by 2% but the new manufacturing process that completely eliminates the step that caused the errors. It is the new product that makes people say "why didn't I think of that", not just a toaster that lets you select the degree of darkness of the toast. Edison did not set out to build a better candle, he wanted to find a whole new way to illuminate the darkness. That's the kind of vision a leader has.

The Drive to See It Through

It is not enough to just have a vision. Lots of people see things that should be done, things that should be fixed, great step forward that could be taken. What makes leaders different is that they act. They take the steps to achieve their vision.

Is it a passion for the idea, an inner sense of drive, or some sense of commitment? Whatever it is, it is the strength that lets leaders move their vision forward despite all the obstacles, despite all the people saying it can't be done, it's too costly; we tried that before, or a dozen other excuses. The true leader perseveres and moves forward.

Trait and Skills a Leader Must Have

There are things that set leaders apart from other people. Some people are born with these characteristics. Others develop them as they improve as leaders. These are not magic bullets. They are things you can do and be if you want to be a leader.

Traits of a Leader

There are as many traits of a leader as there are lists of what makes a leader. Here are the fundamental traits of a leader from my perspective:

Has Integrity….. People have to believe that you are pursuing your dream because it's the right thing to do, not just because you are ego driven.

A People Person….Understands the differences that make people unique and is able to use those individual skills to achieve the goal.

Is Positive…. A leader encourages and rewards people. They make you want to do it and do it right. A leader is not a negative person and doesn't waste time/effort telling everyone what they're doing wrong.

Leadership Skills

Beyond the personal traits of a leader, there are specific skills someone must master if they want to be a leader.

Effective Communication - It's more than just being able to speak and write. A leader's communication must move people to work toward the goal the leader has chosen.

Motivation - A leader has to be able to motivate everyone to contribute. Each of us has different "buttons". A leader knows how to push the right buttons on everyone to make them really want to do their best to achieve the leader's goal.

Planning - The leader has a plan to achieve the goal. He/she doesn't get too bogged down in the details, that are what managers are for, but rather uses a high-level plan to keep everyone moving together toward the goal.

Bottom Line

Leaders dream dreams. They refuse to let anyone or anything get in the way of achieving those dreams. They are realistic but unrelenting. They are polite but insistent. They constantly and consistently drive forward toward their goal. You can be a leader. You will be - when it matters enough to you.