When evaluating a company its employees are often the most important factor. Along with customers, the supply chain, and technology they shed light on the continuity of profit.
The Fed looks closely at the number of open jobs compared to the number of unemployed workers. Some economists don’t agree this is the most important factor. These raw numbers can be misleading, just like any broad-based statistic. What rarely gets mentioned is the skill level of the unemployed and how those skills match up with the job openings.
In my opinion the tech industry hoarded workers to make sure they had them if growth continued. Now that growth has tempered, we’re seeing downsizing at Microsoft, Twitter, Meta, and others including Amazon, where managers told employees to, “double down on frugality.
Small businesses (lower middle market and below) don’t have the luxury of over hiring. Often they run with fewer people than is really needed. As one client, owner of a company with solid 2022 growth, said, we know we need one more person but are waiting to see what happens. And in many cases, it’s the accounting department that is understaffed (which is why sophisticated buyers will often bring in a controller or CFO.
So where is all this going? It means when you have good people take care of them, build their skills, and give (those who want it) career advancement opportunities. Losing one or two great employees when you have 25, 50, 100 people is a lot more hurtful than when you have thousands and thousands of people. For those thinking of exiting, a good employee base is one of the key value drivers.
“The more obviously one’s work benefits other people, the less one is likely to be paid for it.” David Graeber
“Any long-haul flight can plausibly be described as an act of violence.” (Travel writer) William Atkins
PS This was sent as our Weekly Memo just before the start of our Getting the Deal Done Breakfast Conference with guest speaker Jasmine Donovan, President of Dick’s Drive-In Restaurants. Talk about taking care of people; starting pay of $20 per hour, raises up to $25, full health care benefits, education scholarships, childcare assistance and more (see www.ddir.com). All with a menu having no items over $5.