2011 Business & Workplace Predictions

/2011 Business & Workplace Predictions

2011 Business & Workplace Predictions

We’ve been doing annual business and workplace predictions for our clients since 2005. This year we are sharing them with a broader audience.

We’ll begin with a review of our 2010 predictions. Here’s are the five predictions we made going into last year:

• Politics will continue to trump leadership. This is one where you hate it when you are right. Washington, DC is a train wreck, and it took a major loss for the Democrats in the November 2010 for anything remotely resembling bi-partisanship to occur. And yes, both parties are at fault.

• The end of the recession will not immediately ease the pain. We predicted that the recession would officially end in October 2009 and the pain would continue for some time to come. The official date provided by the National Bureau of Economic Research was June 2009. Either way, the economy continues to feel the pain even though we are technically out of the recession.

• Employee loyalty comes home to roost. We said that companies who have balanced their balance sheets on the back of employees by forcing them to work multiple jobs at reduced pay are vulnerable for an exodus when hiring begins. Surveys from Deloitte and others suggest that up to 50% of employees will look for new opportunities when hiring kicks back into gear.

• Leaders rule the day. Pockets of brilliant performance existed in 2010, and in every case, there were effective leaders who kept their teams and colleagues focused, motivated, and refusing to allow circumstances to define their reality. These superstars were not boasting or calling attention to themselves. Instead, they focused on doing the little things that set them apart from their competitors.

• 2010 is a transition year. We predicted that 2010 would present an opportunity for organizations and individuals to re-calibrate and re-invent. This was evident in increased savings rates and changes in buying habits for individuals and families. And, it continues to be evident in the way companies are re-thinking products and service offerings.

What’s Ahead for 2011
• It’s beginning to feel like a recovery. The economy drives everything on this list, so let’s get to it.

The number one question I am asked by my business clients and audiences is, “When will things get back to normal?”

My response is, “What if this is the new normal?”

All the signs are pointing in the right direction. Consumer confidence has improved in the last year. Unemployment has leveled off and first time jobless claims headed down in December 2010. Profits are up in the publicly traded companies, and the holiday shopping season was a noticeable improvement from last year.

The recovery is here, and it is still both fragile and volatile. We could be derailed by a debt crisis (Europe or the U.S.); inflation in China; global conflict; or any number of other calamities. But assuming no extraordinary catastrophes and with hopes that the banks ramp up their lending to businesses, main street will feel like a recovery is in place by the end of 2011.

• Jobs: improving but no where close to being back. It will be years before job growth catches up to the carnage that happened in this recession. A significant number of jobs – maybe as high as 30% – won’t ever return. It will take sustained growth in the range of 450,000 jobs per month for the next 18 to 24 months to return to unemployment rate to something close to what we remember just a few years ago. That won’t happen.

A home run for the unemployment rate would be 7.5% at the end of 2011. Realistically, we should expect something in the 8.2% to 8.5% range if current trends continue. Even then, don’t look for much noticeable improvement until the second half of the year. That said, there will still be pockets of hiring in specific jobs and locations. Check out North Dakota, for example.

• Battle for the best heats up. This is a continuation and expansion of last year’s trend toward keeping your best team members engaged. In fact, it seems that 2011 could be the “Year of Engagement” from the Human Resources perspective. There will be activities that focus on everyone – especially around building a culture of engagement. But the best organizations will pay special attention to their high performers. Compensation will start growing again with more emphasis on incentives than wages. Also, we expect to see training budgets start to grow again. They won’t be back to 2008 levels, but they will start moving up.

• Organized labor and substantial immigration reform shut out in Congress. Two years ago we discussed what was then a small window of opportunity for organized labor to get its “Employee Free Choice Act” through Congress. This was a big goal for the labor movement and the Republican party’s ability to invoke a filibuster was a significant barrier. That small window has now been slammed shut, and the only opportunity to open it will be as part of a significant negotiation on an important issue. We don’t see that happening after the Republican takeover of the U.S. House of Representatives. Likewise, don’t expect any meaningful immigration reform unless it is part of a deal on another issue important to the GOP. The United States needs to address immigration issues. It affects the overall economy and jobs.

• The 2012 Presidential election has begun. There will be talks and even a few examples of bipartisanship between the Democratic White House and the heavily Republican Congress. Don’t kid yourself. Every action will be filtered through the lens of the 2012 Presidential election. This means that you can look for more centrist priorities to prevail. The Republicans can’t repeal the Healthcare bill, but they will try to starve it to death. The Democrats and the Republicans can’t afford to be the blame for delaying the economic recovery so we’ll see some cooperation there. It is a shame, but true bi-partisan leadership has been hijacked by the base of both political parties.

I am optimistic about the opportunities in 2011. And, I am absolutely sure that, collectively, we have an opportunity to make things better.