Discover more from The 21 Hats Morning Report
Are You Taking Care of the Employees Who Stayed?
At many companies, there is a real divide between what newcomers get paid and what veterans get paid.
Here are today’s highlights:
A study suggests there’s a way to improve brainstorming over Zoom.
The decline in digital advertising indicates consumers are pulling back.
Do you know how many days employees have to work for you before you’re liable for all of their unemployment compensation?
Adam Neumann is taking another shot at elevating the world’s consciousness.
LOCATION, LOCATION, LOCATION
The pandemic triggered a shift in businesses from cities to suburbs: “From February 2020 to March 2022, more than 2,300 businesses moved away from downtown D.C., The Post’s analysis shows. Another few hundred more left major commercial corridors that include Shaw, Logan Circle and Georgetown.”
“But the pain hasn’t been felt across all parts of the region. Data shows many businesses relocated to less densely populated areas of the region — many to Maryland and Virginia.”
“BLS data show that the region saw a noticeable increase in the number of new establishments in the next few quarters after the pandemic began — with increases in educational services, health care, construction and finance.”
“The business exodus to the suburbs has forced D.C. officials to grapple with the city’s budget, which is projected to see a dramatic decline in tax revenue in the coming years.” READ MORE
Are you taking care of your employees who didn’t leave? “Over the past year, the red-hot job market has forced employers to dole out huge paychecks to lure new candidates — and that's created a deep divide between the rookies and the veterans at companies across the US. LaborIQ, a compensation data provider, estimates that salaries for new hires are 7 percent higher, on average, than the median pay for people already employed in similar positions. For many in-demand occupations across tech and finance, the disparity is in the double digits. In the Great Resignation, longtime employees — the ones who have stuck around through good times and bad — are paying a secret tax for their loyalty.”
“In April, the wages of job switchers rose 5.6 percent from a year earlier, compared with a 4.2 percent increase for job stayers. That difference of 1.4 percentage points is the biggest since the dot-com bubble in 2001. It's so big, in fact, that switching employers makes all the difference in whether your pay has kept up with inflation.”
“‘Almost every company out there is in one way or another having to deal with this dynamic,’ Jay Denton, the chief labor market analyst at LaborIQ, told me. ‘Companies are struggling across the board. They're playing catch-up.’” READ MORE
The gap between minimum wages in blue and red states is widening: “A grocery store cashier who’s guaranteed $15 per hour in California can legally be paid $7.25 in Texas and 19 other states—a gap in state minimum wages that’s set to widen further in the year ahead. It’s a geographic disparity that concerns pro-worker economists, while business interests say minimum wage laws alone don’t tell the whole story.”
“California, the District of Columbia, and much of New York already require wages of $15 per hour or more. Massachusetts, and likely Washington state, will join them in 2023.”
“On the other end of the spectrum, 20 states stretching from Georgia to Idaho don’t require employers to pay more than the federal minimum of $7.25 an hour.”
“‘The market is still driving up wages in those states that haven’t raised their minimum wage, Goodrich said. ‘It’s good for workers, but it’s also pinching small businesses.’” READ MORE
The decline in digital advertising is a strong indicator that consumers are pulling back: “Every 5 or 10 years, the internet industry gets a painful reminder. Rather than saving the world, or changing the future through technology, most of the sector sells ads—a business that relies on the fickle whims and fluctuating financial health of consumers. This time, Snap CEO Evan Spiegel delivered the reality check. Late on Tuesday, he wrote a memo to staff saying ‘the macro environment has deteriorated further and faster than we anticipated,’ denting revenue growth.”
“Consumer transactions are a major driver of ad spending, so when the economy slows, marketing budgets often contract.”
“Consumer packaged goods, video streaming, financial services, and travel are all important advertising segments for Snap's business, and the analysts noted that ‘the weakness they are seeing is broad based across verticals and geographies.’” READ MORE
Gene Marks says “Conversational CRM” isn’t just a gimmick: “Every few years the customer relationship management industry seems to come up with buzz phrases to try and generate enthusiasm. Back in the day it was ‘Sales Force Automation.’ Then ‘Social CRM,’ ‘Collaborative CRM,’ ‘Operational CRM’ and ‘Analytical CRM.’ Just this month CRM and service desk platform Zendesk announced that it is unveiling new solutions ‘that put conversations at the center of customer relationship management.’ The company’s new tools promise to better roll-in communication and collaboration services into its core CRM offerings as part of its push to be better at ‘Conversational CRM.’”
“Is this just a gimmick? Should you care? You should. Because Conversational CRM isn’t a complicated thing. But of all the buzz-phrases, it’s actually — at least to me — the most meaningful.”
“So if you or your customers are using text messaging, Slack, WhatsApp, Facebook Messenger or any number of messaging platforms, all of these messages would theoretically arrive in the same place and then get connected to the people or accounts involved. Ask any CRM user and they’ll tell you that this isn’t happening right now.”
“Right now, most CRM systems just integrate email systems out of the box. That’s fine, but this is 2022, not 2012.” READ MORE
A study confirms that Zoom isn’t great for brainstorming—but suggests a fix: “The researchers paired up more than 2,000 volunteers and asked them to come up with as many new ideas for either a new product or feature as they possibly could. Then the teams selected the most promising idea from their list. The twist was that some of the pairs brainstormed together in the same room and some over Zoom. How did their performance compare? Those who did their brainstorming over Zoom came up with significantly fewer ideas than those pairs who shared a room, though they were better at choosing the best idea from their list. The scale of the difference between the two brainstorming methods surprised the researchers.”
“Why were pairs using Zoom so much worse at generating innovative ideas? The researchers believe that it has to do with attention. When you're on Zoom, it's hard to look away from both your conversation partner and the little box with your own image. That means those brainstorming over Zoom are less likely to let their attention wander, which likely holds back their creativity.”
“The good news is that this explanation also points to an easy fix—just turn off your camera. This should free you up to move and look around the room, greatly improving your chances of coming up with more good ideas.” READ MORE
Hybrid office schedules can affect sleep: “About 42 percent of U.S. employees were working in hybrid arrangements as of February, according to a Gallup survey. Hybrid schedules can make it harder to stick with a consistent sleep routine because you have the option of sleeping in later on remote days. Inconsistent or poor sleep could hurt your performance at work. It can be difficult to form professional relationships with colleagues if you are stressed or irritable, says Royette Dubar, a developmental psychologist focused on sleep and psychosocial adjustment at Wesleyan University.”
“‘Sleep is not like the bank. You can’t accumulate a debt and pay it off at a later time,’ says Dr. Walker. ‘Everyone has a 24-hour circadian clock and it expects regularity.’” READ MORE
Adam Neumann, the WeWork co-founder, has a new business: “Neumann is behind a new company whose market is once again as expansive as life itself: the air we breathe and the environment we live in. Reuters reported Tuesday that he’s the force behind Flowcarbon, a trading platform that, in its own words, ‘operates at the intersection of the voluntary carbon market and Web3, leveraging blockchain to scale climate change solutions.’ To translate: Companies can buy a credit on the lightly regulated carbon-offset market through a cryptocurrency called the Goddess Nature Token as a way to make it seem as if they are helping the environment. Great. In theory, this will make it easier and less costly to trade the credits on a market — all Neumann’s company wants in return is a 2 percent cut.”
“Here’s the thing about carbon offsets: They’re not going to save the environment. Under this system, companies that add more carbon into the atmosphere can pay — via the credits — for projects that in theory subtract carbon from the air somewhere else in the world.”
“It’s also supposed to create an incentive for lowering emission overall. But in practice, it’s easy to game. According to Bloomberg, only 5 percent of the credits actually remove carbon from the atmosphere.”
“It’s entirely possible the market could develop into something that has more accountability to it. For now, though, Neumann doesn’t appear to be elevating the world’s consciousness as much as he is making the planet look greener than it really is.” READ MORE
THE 21 HATS PODCAST
The Early Warning Signs: “I see it, and I feel it,” Liz Picarazzi tells Shawn Busse and Jay Goltz this week in a conversation about the looming recession many are predicting. But Liz is not hunkering down. In fact, she has launched an ambitious marketing campaign that relies not on Google AdWords but on Google Alerts. She’s also taking some advice from Carey Smith, the founder of Big Ass Fans, that she didn’t want to hear when it was first offered. Plus: How some owners trap themselves in miserable businesses. And Shawn, Jay, and Liz suggest regulations that need to die—with Jay going off on the way businesses are compelled to pay for unemployment insurance.
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If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren