WHO'S THE BOSS?

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By the time Skye Perry graduated from the University of Florida in May, he had no fewer than five job offers to choose from. He opted for Semtor, Inc., an eight-month-old Internet consultancy in Weston, Florida, which offered him the proverbial New Economy package - including a $1,000 clothing allowance and a personal shopper. But that's not why the 22-year-old business and information science graduate accepted Semtor's proposal. The company's main selling point wasn't the number of stock options, but the quality of the overall work experience. In fact, Perry turned down other higher-paying jobs to work at Semtor. "After looking at different companies, I realized the kind of culture and value system I needed to be happy," he says. "At Semtor, there is so much importance placed on forming good relationships between managers and employees. I knew they'd listen to me and let me use my skills the way I want."

Perry chose to work for Semtor the same way many of us choose to buy a product these days: We weigh the pros and cons, and buy where we think we'll get the most value - whether that's at a startup or a traditional Old Economy company. Consumer-like attitudes such as these are seeping into the way we look for, and choose, a job. Increasingly, more of us have begun to "comparison shop" for employment the same way we do for, say, home electronics. Says Iris Goldfein, a principal at PricewaterhouseCoopers: "The biggest vendor that exists is the employee. He's the one that's evaluating on a daily basis `Do I need to work here?'"

How times have changed. Just decades ago, when job security was the top value offered by organizations, employees bartered their commitment and loyalty for assurance of a permanent place in the company. Today, we want and expect more from the transaction. Our consumer mentality has spread beyond the realm of grocery store aisles and into arenas as far-flung as education, health care, and now employment. The American worker today, although not fully in the driver's seat when it comes to his position in the job market, is nonetheless doing more of the driving. "For the first time in history, the majority of people are questioning how we work," says Fran Rodgers, CEO of WFD, Inc., formerly Work Family Directions. "It's not just women anymore."

Is this the employment market of the new millennium or a temporary perk of today's unprecedented economic conditions? Certainly, much of this attitudinal shift is due to the tight labor market - there aren't enough skilled and educated workers to fill all the vacant jobs created by the current economic expansion. But that will eventually change. First, more older workers will stay in the labor market longer, well into their retirement years, to support those extra years of human life that modern medicine has enabled. (By 2025, workforce participation in the 55- to 64-year-old segment of the workforce will grow to more than 30 million, from 22.3 million in 1998, according to researchers at NPA Data Services in Arlington, Va.) Second, the large Gen Y population (71 million strong) will continue its push into entry-level jobs and beyond.

Then there's the economy, which will inevitably slow - whether it be tomorrow or two years from now. But a recession will not significantly hamper many of the gains workers have already made - flexibility, portability, autonomy, knowledge, skill, and self-confidence. Each has evolved from sources much more durable than economic tides, experts say. And each may be strong enough to sustain a reversal in the supply/demand equation. More workers vying for jobs won't mean that employers will necessarily return to command-and-control management styles. Today's employees, both young and old, have become accustomed to flexibility in the workplace, and are not about to relinquish control of such perks. New technologies have made old ways of working quaint and inefficient. And savvy employers have started to realize that a happy employee is a productive one.

Even skeptics such as Gary Burtless, an economist and senior fellow at the Brookings Institute, concede that the gains workers have made thus far are likely to stick around. Using history as a guide, he points to the gradual increase in pensions and health benefits given to workers between the 1950s and 1970s. When the unemployment rate soared in the mid-1970s and early-1980s, there wasn't a regression, he notes. Those who had already received the benefits, held onto them; there just wasn't any spreading of those gains to more people, he says.

So far, business has responded to the current "war for talent" in various ways. Some companies, believing that their upper hand will be restored when the next recession hits, have opted for the perk-and-bonus quick fix, to lure and retain top candidates. But others are taking more concrete steps. Take PacifiCare Health Systems for example. In 1998, the Santa Ana, California company was experiencing a 29 percent turnover rate, says Wanda Lee, senior vice president of corporate human resources. Lee knew something needed to be done, but making her case to the powers-that-be in a 20-year-old company stuck in its traditional ways was difficult. So, she pleaded in the only language they could understand: money. She calculated that by eliminating turnover, the company could be saving as much as $62 million every year. "That got everyone's attention," she says.

PacifiCare conducted a series of employee focus groups, and found that what staffers really craved was career development and increased feedback from their supervisors. In the course of a year, the company instituted leadership-skill classes and career coaching. They also created an individualized in-house assessment tool, called the Individual Value Equation, in which employees sit down with their supervisors at least two to four times a year to discuss concerns and goals. The result: Turnover decreased to 20 percent, for a net savings of $12 million for the first year of the program. "It's really pretty basic," says Lee. "Even if you work for a good company, if you have a lousy boss, you have a lousy job." And these structural changes will outlast any inevitable downturn, insists Lee. "Once people receive this kind of environment, they expect it, and it's not just the employees. Once leaders learn this way of doing things, they like it. It's a much more pleasant job when you can have that kind of open relationship with your workforce."

Whether or not it feels good, most businesses can't argue with the bottom line. "Having an aligned, pumped up, enthusiastic workforce is good for business," says Dr. Bruce Pfau, national practice director of organization measurement at Watson Wyatt Worldwide, an HR consulting firm in New York. "Firms that do are better able to deliver service to their customers and profits to their shareholders." Companies with highly committed employees have a 112 percent three-year total return to shareholders compared with a 76 percent return for companies with low employee commitment, according to the firm's most recent work trend study. Trust and confidence in senior management are the key drivers of employee commitment. In fact, employees who had high trust and confidence in their senior managers had a three-year total return to shareholders of 108 percent, compared with a 66 percent return at companies with low trust and confidence levels.

The key to gaining employee trust, say experts, is showing it in return. Until recently, Allen Salikof, president and CEO of Cleveland-based Management Recruiters International, Inc. was a self-described "old school" boss. But the dot-com raid, he says, forced him to become more flexible. When a candidate recently requested that she be allowed to work from home one day a week, Salikof felt he had no choice but to give in. "She had everything I was looking for," he says. "What could I do? I didn't necessarily like it at first, but I've been finding that the people who work at home tend to be more productive during the day anyway because they have less distractions."

In fact, 45 percent of companies offering one or more flexible work arrangements perceive a positive return on their investments, according to a Families and Work Institute study. Another 36 percent perceive the programs as cost-neutral, while only 18 percent say the costs outweigh the benefits. According to the Bureau of Labor Statistics, the percentage of workers who are now able to alter the hours they work has increased from 12 percent in 1985 to 28 percent in 1997. And now that the costs of computing have become relatively inexpensive - falling nearly 25 percent a year - more companies are giving workers the freedom to work from home. Nearly 18 percent, or about 21 million people, did some work at home as part of their primary job in 1997, compared with about 4 million who did so in 1990. By 2003, close to 30 million people will be doing their work someplace other than the cubicle, say forecasters at JALA International, a telework consultancy.

The potential cost savings of telecommuting are substantial. The International Telework Association and Council estimates that $10,000 can be saved per worker, annually, in reduced absenteeism, increased productivity, and recruiting costs. It's a lesson managers at Ernst & Young know well. There, 1,700 employees of its 23,000 U.S. workforce are on flexible work arrangements, including Dennis Marcel, a team member at the company's office of retention. "People don't mind working long hours, but they want to have more control over how they get the work done," says Marcel. "People coming out of college today have expectations about being able to integrate their personal and professional lives. But it's not just the younger people. I'm in my 40s and I want flexibility too."

By 2010, less than half of the work performed in U.S. organizations will be done by full-time employees, predicts Christopher Meyer, director of Ernst & Young's Center for Business Innovation, and co-author of Future Wealth. Jeff Schmidt, managing director at the Chicago office of HR firm Towers Perrin, agrees. "The whole nature of work is going to change, because the whole idea of what a company is, will change." A recent survey found that 65 percent of top executives plan to increase emphasis on cross-functional teamwork in the next two years and 49 percent expect to increase the level of employee empowerment in their workplaces. "More and more, companies are going to be looking to hire people on a contract, or project-by-project basis," says Schmidt. "That's a trend that will definitely pick up steam in the years ahead."

The Internet and technologies that allow for portability have obviously played a huge role in creating the climate for workers to have this sort of "free agency." But it's also a change in the perception of self-employment, says Terri Lonier, CEO of Working Solo, Inc., a consulting firm for self-employed persons and home-based businesses. "Twenty years ago, entrepreneurs were seen as renegades, now they're cultural icons. They're the folk heroes of the new millennium. Now, for $2,000 you can have a laptop and a connection to the Internet and do business in an airport or in the back of a truck. That kind of flexibility and freedom is very appealing to people."

Human auctions - like those found on Monster.com's Talent Market and Bid4Geeks.com - will also be a huge trend in the coming years, says John Challenger, CEO of outplacement firm Challenger, Gray & Christmas. On these sites, people post their skills and abilities, then sit back and watch employers bid for their services and time. The first glimpse of an auctionable labor market was seen last April on eBay, when a team of 16 employees from a major Internet service provider attempted to auction themselves off as a group. No one bid, and the attempt failed, but eventually the idea won't seem so farfetched, says futurist Christopher Meyer. He predicts that within 20 years, human brains and talent will be traded on an open stock market, just as future performance of corporations is now traded via stocks and bonds. "Individuals will come to see the labor market as controllable because they, and not their would-be employers, hold the desired resource," he says. "We will put our 52-week trading range on our resumes."

That's why education, typically a decisive factor for job advancement, is expected to become even more important in the coming years. The number of occupations requiring an associate degree or higher, which accounted for 25 percent of all jobs in 1998, are projected to account for 40 percent of total job growth from 1998 to 2008, according to the Bureau of Labor Statistics (BLS). Yet, according to the National Center for Education Statistics (NCES), while the percentage of 25- to 29-year-old high school grads who completed some college has increased from 44 percent in 1971 to 66 percent in 1999, just 32 percent of them had received their bachelor's degree in 1999.

"Knowledge rules," says Professor Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University. "Because of the pace of change in this global economy, the people who have it, are more in demand and are in a better place to negotiate the conditions of their employment. That is not going to change with any changes in the economy." And today's workers know it. The percentage of adults 18 and older participating in adult learning courses has increased significantly over the past decade, from 38 percent in 1991 to 50 percent in 1999, according to the NCES. And according to a study conducted by Rutgers, 61 percent of workers express interest in receiving education and training by distance learning in the future. Forty-nine percent of workers agree, or strongly agree, that they will need more computer skills to achieve their goals. This could potentially open the door to marketers, software developers, and Internet publishers who create new course materials and self-education opportunities.

The next generation of workers is mindful of what they'll need for job advancement. Ashley DiResta, 17, from Hudson, Florida, has no idea what she wants to be when she "grows up," but she does know what it will take to succeed. "I don't think I'll be able to get away with just a college degree," says DiResta, who already spends two to three hours a day online, doing research for school and chatting with friends. "Skills get outdated after a while, so you need to keep up-to-date with that stuff all the time." In fact, the percentage of 12th graders who say they "definitely will" complete a bachelor's degree increased from 35 percent in 1980 to 56 percent in 1997. And the proportion who say they "definitely will" attend graduate or professional school nearly doubled during the same period, from 11 percent to 21 percent, according to the NCES.

But perhaps more important than formal knowledge is the knowledge of one's worth on the job market. And thanks to the Internet, workers have more power over that than ever before. Over 500 resume clearinghouses and almost 30,000 job boards currently give potential employees ways to check out the marketplace. Fifty-one percent of heavy computer users strongly agree that they are likely to use the Internet for their next job search, according to a Rutgers study, and 35 percent of 18- to 29-year-olds strongly agree that they will do so.

The Internet has forever changed the way companies control information about themselves, says Mark Oldman, co-founder of Vault.com, a Web site where employees have the opportunity to learn the real deal about who they work for or who they might like to work for. Employees hang out in chatrooms, or "electronic water coolers," gossiping about company politics and airing their grievances. Over 100,000 messages have been posted this year already, says Oldman. At the "Am I Worthy?" area of the site, people can submit their resumes and get a literal price on their heads. Now that they know their worth, employees are better prepared for negotiations with the boss.

As more people become masters of their own working worlds, their daily needs will inevitably change, giving marketers a whole new consumer base to tap into. The typical home office household will spend an average of $1,870 on computer and electronic products in the next year, according to eBrain Market Research. And 43 percent of those purchases, or $870 per household, will be spent at online retailers. Of course, companies that supply office furniture and supplies, a la Staples and Office Max, will continue to thrive as well, says Monster.com CEO Jeff Taylor. "It's not just big corporations buying pens and paper anymore, and I bet the people that make suits are bumming out too."

Behaviors will change as well, says futurist Joseph Coates, president of the Washington, D.C.-based consulting firm, Coates and Jarratt, who predicts that 20 percent of all workers will be working at home by 2005. Since the daily commute will become obsolete for many workers, fewer people will own cars. If they want to take a trip, they'll rent, he says. Thus, businesses, like fast food restaurants, would be wise to build neighborhood kiosks that are within walking or biking distance of the new "office." And service-related businesses that deliver to the home will have a very positive future, insists Working Solo's Lonier, thanks to self-employment's time-starved lifestyle. Grocery deliveries, laundry pickups, even the milkman could make a comeback. Because while the working world continues to evolve, one core business philosophy will likely remain intact: The customer is always right.

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