The Jobs Churn Rate

Americans are quitting their jobs like crazy.

The latest monthly “Job Openings and Labor Turnover Survey” (JOLTS) showed that in December, the total number of quits was 3.1 million, the highest level in a decade, while the quits rate was 2.1%, the highest since April 2008. The rate takes the number of quits divided by the number of employees who worked or were paid for work.

If people are quitting their jobs, it may suggest that they are confident in the labor market and are receiving better-paying opportunities elsewhere. However, it may suggest a higher level of mismatch between opportunity and ability.

The report also showed that there were 5.6 million job openings during December, the second-highest ever, and more than the expectation for 5.41 million. The hires rate was 3.7%, and the layoffs and discharges rate was 1.1%.

Designing Ability Placement from First Principles

I spend a fair amount of time reading and thinking about disruptive innovation because I need to understand the past failures to place human capital at best-fit. And here’s a great post by Ketan Jhaveri that dissects Elon Musk’s approach to disruptive innovation which is based on reasoning from first principles.

So, here’s the problem: According to Gallup, 53% of American workers are “not engaged” and 19% are “actively disengaged” at work. In The Coming Jobs War, author Jim Clifton writes:

The 53% of not engaged workers are not hostile or disruptive, and they are not troublemakers. They are just there, killing time with little or no concern about customers, productivity, profitability, waste, safety, mission and purpose of the teams, or developing customers. They’re thinking about lunch or their next break. They are essentially “checked out.” Most importantly, these people are not just part of a support staff or sales team. They are also sitting on executive committees.

And then there are the 19% of actively disengaged employees who are there to dismantle and destroy employers. They exhaust managers, they have more on-the-job accidents and because more quality defects, they contribute to “shrinkage” – as theft is politely called, they are sicker, they miss more days, and they quit at a higher rate than engaged employees do. Whatever the engaged do, the actively disengaged seek to undo, and that includes problem solving, innovation, and creating new customers.

I’ve come to realize that designing solutions around first principles might allow for looking at a problem from a more foundational level—where the seed of disruptive innovation can be planted.

Musk is quoted as saying:

“First principles” is a physics way of looking at the world…what that really means is that you boil things down to the most fundamental truths…and then reason up from there…”

The utility about Musk’s approach is that it provides a framework with which to do this. Breaking a problem down to its core components and then building back up from there helps me arrive at very different designs than relying solely on analogs.

The other really nice benefit of reasoning from first principles is that it can get me out of the “it can’t be done” mentality. And that’s especially handy when I’m trying to understand the failures in the human services industry. If I reason by analogy and I can break the problem down to its core first principles, then I can logically state “If all of these things are true, then there’s a problem that can be solved.”

I’ve identified the following first principles that will lead to the improvements we are looking for to place ability at best-fit at scale.

Abundance: Every abundance creates a new scarcity. For example, a wealth of information creates a poverty of attention. Attention can be monetized.

Information: Scarce information wants to be expensive. That is, the price of context is valued at marginal utility—what it’s worth to talent seekers or candidates—the customers. Scarcity can be monetized.

Context: Context is embedded with experience, license, proxy, credential, or reputation and the like and is distributed far down into the long-tail of ability placement markets. Context can be monetized.

Search & Influence: The advice and counsel of a trusted and liked person is always searched for when a placement process decision is important enough. Search and influence can be monetized.

Goodwill: Enlightened self-interest motivates goodwill. There are enough people who want to help others gain a commitment at best-fit in their community* if only to improve their status. Reputation can be monetized.

Less is More: As technology reduces coordination costs it enables more small placements and interactions—monetizable actions, reactions, and transactions—that had been previously dismissed below the economic fringe. In aggregate the monetized value of these small placements exceed that of high-dollar placements.

Business Model Generation: Businesses don’t fail; business models do! Designing around ability development as the value proposition is too risky. It has never been the most viable and sustainable monetized value proposition. Development is merely a key activity—a related job to be done—that plays a supportive role to placement at best-fit—the job to be done for the customer. (Note: Until higher education solution providers make that shift on their business model canvas their innovation will only be sustaining, not disruptive. That is, they are merely rearranging the deck chairs on the Titanic.)

When a problem is broken down to it’s component parts at a fundamental level it becomes possible to see how seemingly disparate themes, when connected, can be part of the solution. Placement Loop is a platform forged from these first principles for solution providers on the supply-side to solve problems for talent seekers and candidates on the demand-side.

Which of these ‘first principles’ resonate with you?

*Community can be defined geographically, by industry or by common interests.

Recruiter vs. Referrer

First, let me just say to all the recruiters in the industry who will read this post and immediately say that successful recruiting depends on a skill set earned from professional training and experience. To those, let me suggest that they are motivated to service the elite segment of markets otherwise known as the short-head. For they simply can not afford to service the long-tail of markets in a traditional recruiter business model.

On the other hand, we are in the midst of a seismic shift in business models, powered by the internet and a generation of connected users. Today, platforms are being developed that connect diverse participants with one another and enable them to interact–act, react, and transact. They aid the creation of entirely new solutions to solve market problems and many times involve the contributions of every day people. Every day people with tacit knowledge and spare capacity that consumers value.

In ability placement markets three forces are powering the rise of new solutions that can reach farther down the long-tail of opportunity and ability: ubiquitous network access with ever-increasing mobile penetration, reputation systems that enable trust among distributed strangers, and access to low cost shared infrastructure with tools and data to capture and coordinate interactions. These are going to have a huge impact on how ability will be placed at best-fit.

As I build the Placement Loop platform I think about the role of the referrer, not the recruiter, and what they have that can be monetized.

So, here are some of the capabilities that I believe are essential for referrers to have to distinguish themselves in ability placement markets:

Sales and marketing capability. Referring opportunity or ability as best-fit involves sales and marketing. Referrals want to feel confident that the referrer knows and understands what they’re looking for in a match. But does it have to be done in a way that recruiters do it? Nope. In the long-tail the expectations and therefore the behavior of placement process participants is nothing like in the short-head.

Network building capability. There are members in every industry with deep domain expertise and the will to place ability at best-fit in that industry. I like to describe these people as network entrepreneurs, motivated by their empathy for the domain, whatever and wherever it may be. Influence coupled with empathy resonates with community members like no other. It is tacit and only found distributed in community membership.

Social media capability. Just behaving normally and being yourself will attract those like you. Share. Give. Help others. Those who want to become the go-to person in a community to place ability at best-fit will build trust and a reputation. They will be rewarded for their efforts in ways not imagined when they started.

Context production capability. I am not saying that distinguished referrers have to become prolific content producers. What I am saying is that talent seekers and candidates alike are bombarded with all the content being thrown at them. This creates so much noise that they can’t hear a signal that resonates. A distinguished referrer, as a deep domain expert in their industry, can share their understanding of content within the marketplace. Messages from community-based referrers resonate with community members more than any alternative.

Technology capability. This where Placement Loop comes in with a motivated ecosystem of suppliers that work hard to earn referrers attention by making their life easier. The whole ecosystem of suppliers on the platform is motivated to assure referrers are able to provide advice to employers/talent seekers and candidates accurately, quickly, and affordably.

I hope I have stimulated your thinking that it is time for anyone to have the opportunity to become a distinguished referrer in their industry and get rewarded for it.

Do you think community-based referrers will help make improvements we are looking for in ability placement markets?