For four decades, my father operated heavy equipment at construction locations throughout Chicago. He took pride in his labor and his union membership, yet I wouldn't characterize his employment as a fulfilling position. His opinions were disregarded. He felt unvalued. He consistently struggled to improve his financial standing. During evening meals, he'd recount experiences of disputes over pay rates or the classification of lunch breaks as paid versus unpaid time. What I retained wasn't solely the sense of dissatisfaction; it was the clear detriment that such an arrangement imposed on all parties. I recall questioning why employment had to be characterized by conflict.
TL;DR
- A recent study found only 40 percent of U.S. laborers have superior employment based on five key elements.
- Many businesses suffer from high employee turnover, impacting safety, quality, and financial results significantly.
- Employee ownership, combined with training and input, can transform companies by aligning motivations and boosting productivity.
- Distributing ownership aligns company culture, increases engagement, and reduces turnover, benefiting both workers and businesses.
Many years onward, I observe those identical strains unfolding throughout the American financial system. The recent American Job Quality Study, undertaken by Gallup and created by Jobs for The Future, The Families & Workers Fund, and the W.E. Upjohn Institute for Employment Research, seeks to gauge what constitutes a good position “good.” It examines five elements: monetary stability, security and regard, prospects for advancement, influence in choices, and a practical timetable. According to that standard, merely about 40 percent of U.S. Laborers possess superior employment.
From an investor's perspective, I assess numerous businesses annually, and this information aligns with our real-world observations. A significant number of organizations fail to even track staff morale or attrition figures. And what goes unmeasured is certainly not controlled. We frequently encounter businesses with such substantial employee departures that their entire entry-level workforce is replaced every few years. Unavoidably, the consequences of this constant flux permeate other aspects, such as workplace safety, considering that personnel with less experience face a considerably higher risk of injury. In one notably contradictory instance, a producer of safety gear experienced accident rates three times the standard set by OSHA.
For workers, the consequences are obvious. People in quality jobs are healthier, happier, and more satisfied with their lives. But it matters just as much for companies. Every “human” statistic has a business consequence. When you’re replacing your entire frontline every few years, you’re wasting resources on recruiting, training, and onboarding. If you have a safety problem, that’s clearly horrible for workers, but you’re also wasting money on workers’ comp and missed days of work. And if safety is poor, product quality usually is too because both are the direct result of weak processes and disengaged colleagues.
This recent investigation consolidates these factors into a singular, evidence-based depiction. It illuminates the truth: we're caught in a dangerous loop. Elevated employee departures deter investment in personnel, such as enhanced skills, varied training, and professional advancement. Staff members perceive this and contribute only what's necessary. Management begins to view personnel as “heads” – mere components of the workforce. Compassion diminishes. Organizations concentrate on immediate financial results, while employees actively seek superior employment opportunities. All parties become ensnared in a short-sighted approach.
How can this pattern be interrupted? Alter how businesses function; grant employees the authority to consider and behave as stakeholders.
This is the reason my endeavors as an investor have increasingly concentrated on widespread employee ownership as a method to both elevate workers and alter organizational mindsets. Throughout the last fifteen years at KKR, we've collaborated with over eighty firms to grant stock ownership to approximately 180,000 frontline staff members. When executed effectively, it transforms all aspects.
I've observed factory employees begin monitoring output quality with the same focus as chief financial officers. Employee satisfaction levels increase, staff turnover decreases, and output goes up because individuals finally feel valued, believed in, and part of the team. They possess both an interest and an opinion. They can comprehend the company's operations and how their contributions impact the financial results.
Just last month, we completed our investment in an insurance services company called Integrated Specialty Coverages. Employees who had been there at least three years earned stock worth 100 percent of their annual income – a reward that didn’t replace any of their regular pay. More tenured workers did even better, some earning three years of wages. In addition to significantly enhancing its growth rate and profitability, the company was rewarded with engagement scores reaching the top decile of its peer group and quit rates dropping by more than half.
Distributing ownership isn't a simple fix. For employee ownership to be effective, it must be combined with instruction, open dialogue, financial knowledge development, and employee input. Furthermore, it doesn't substitute for salaries or other compensation, nor is it an act of goodwill. It serves as a mechanism for aligning company culture and boosting productivity. It represents one of the limited structural methods available to redirect motivations from immediate gains to collective achievements.
The American Job Quality Study is significant as it provides empirical evidence for what many Americans experience daily: the majority of employment lacks respect, security, or opportunities for advancement, leading to widespread negative outcomes. We should implement the insights gained from this research. It's crucial to reconsider how prosperity is distributed, ensuring those who generate it also benefit from it. I've witnessed the positive results of such an approach. My father would have considered that a good job.
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