In Part 1 of the Scotch Game (cf. MIT’s Beer Game), I touted the richness of the smoky, peaty Islay (“eye-luh”), Ardbeg, but this time I would to spotlight a sweet, creamy, vanilla-tinged Speyside single malt I discovered at Whisky Fest: Pebble Beach. Its only iteration, the 12-year-old, can be found in Safeway. Cut it with a mix of cream soda and water so as not to dilute the vanilla taste. It is an excellent “starter Scotch” because of its smooth, nutty richness.
At the end of the last post, we looked at steps CreaTech, our fictional web design company, could take to ameliorate the problem of Oscillation, the cycling of hiring and laying off employees, and one of the three classic problems of supply chains. One solution we didn’t mention was use of a contingent workforce. Since “just in time” strategies are useful in dealing with delays in general, it makes sense to use “just in time” staff, also known as temporary workers. Solves the problem, right? They’re there when you need them, gone when you don’t. It might help the employer’s “station,” but in the big scheme of things (the overall labor market), it just shifts the problem down the line.
The 2002 article, “Temp Firms Champing at the Bit,” from HR.BLR.com gives us the broader view:
Jeffrey Joerres, chairman and president of Manpower, noted that the temporary staffing industry is “a leading [economic] indicator in and a leading indicator out” of recession. Joerres said he believes the current hiring crunch “is absolutely cyclical” and conditions will improve.
In 2001, Joerres said, “we experienced a decline never before felt in our company, and we’ve been in business 55 years and have gone through several recessions.”
Employers in 2001 slashed their use of temporary and contract workers by 16 percent, the worst downturn in the history of the industry, says Richard Wahlquist, president and chief executive officer of the American Staffing Association. New hiring by employers was so lethargic some staffing firms canceled newspaper advertising to attract job applicants.
A September 2001 article from the Economic Policy Institute, “Scattered Showers for Labor Day 2001,” states, “The unemployment rate, which usually increases relatively late in a slowdown, has already risen to 4.5% from 3.9% in the last eight months.”
In 2001, CreaTech cut its workforce, but long before it did that, it stopped using the services of its favorite temp staffing firm, TechNow. And business dropped off from all TechNow’s other clients, too! This is an example of Amplification.
Because TechNow is later in the chain, it has a delay. Its recruiters were probably still scrambling to ramp up with more workers about the time CreaTech’s managers were telling HR they don’t need that last contract developer anymore. If we were graphing the cycles of CreaTech’s staffing and TechNow’s pool of workers, TechNow’s crests and troughs would probably be higher and deeper than CreaTech’s curve or that of any of its clients. The Oscillation problem is amplified throughout the component parts.
What else is going on in this system?
Well, someone is training all those would-be web designers: universities, community colleges, Regional Occupational Program, independent training companies, adult education. Let’s just look at UC Extension. As demand for web tech classes goes up, UC Extension adds more and more classes and hires more and more instructors. As demand goes down, they cut classes — but not right away. They can’t anticipate the weakened demand any more than the temp staffing firms can. “UC Extension Programs Get Shorter” from the East Bay Daily News paints the picture:
In 2000, shortly before California’s high-tech economy went belly-up, the UC Berkeley Extension catalog was a 376-page book.
Today’s catalog is a lighter read, at just 144 pages, and listings of computer- and electronic engineering-related courses have dropped from about 90 pages to 10. With about 1,000 fewer courses than it had in 2002, the fee-financed UC Berkeley Extension owes more than $10 million in borrowed funds to its parent campus, a couple of blocks away on University Avenue.
Want to take a guess when this article was published? 2003? 2005? Nope. This change was making news in February of 2007! This is the third phenomenon of supply chains: Phase Lag. At first glance, it seems like we’re erroneously looking upstream; after all, people get trained in a field before they go to work in it, right? But keep in mind that schools, especially those for adult learners, are reactive organizations; classes are created after there’s a demand, so it’s really downstream.
Later in the article, they even admit being reactive is problematic:
The program, which is supposed to sustain itself with fees, was geared heavily toward technology classes during the dot-com days. That strategy proved disastrous when tech companies started shutting down, leaving Extension with fewer students needing updates on the latest software and systems.
With at least a year generally needed to start new Extension courses, administrators had trouble adapting to the rapidly changing economy. The program kept spending money on courses that became harder sells with each corporate failure, said Judah Rosenwald, Extension’s finance chief.
“The letting go is tough, but that’s something we need to do better,” he said. “It’s basically being even more flexible, both in the bringing in and the letting go.”
The solution? One is for school to have an industry advisory council — working professionals who meet once or twice a year with program chairs to inform them of trends in the workplace, so schools can plan better. I served on such a council at the City College of San Francisco’s Computer Science Department. It made a difference. I was at the meeting where a programmer said, “You really need to offer classes in C#.” Now they do.
I asked Robert Karrmann, SPHR, if there was anything I was missing. He noted that when there’s more work, it’s harder to find working professionals to be instructors at extension classes. I’m not sure I agree. Perhaps doing extra contract programming would pay more than teaching, but I think people teach for reasons besides money. Some teach for prestige, and I hope that all teach for the joy of passing on knowledge to a new group of learners.
The man who taught me about Oscillation, Amplification and Phase Lag, Todd Slingsby, revealed that this was his prime motivator.
