How to Handle Quiet Quitters

In a survey, half of U.S. employees said they are quiet quitters, but most employees want to be engaged.

Good morning! 

Here are today’s highlights:

• Inflation shows some signs of cooling off.

• Letting employees work from anywhere can get complicated.

• If you can, this might be a good time to pay down debt.

• The NBA is looking to invest in companies.

ELECTION DAY

Here are some updates on the ballot proposals that matter most to businesses: “Americans in 37 states weighed in on measures that have either been referred by state legislatures for a popular vote or backed by voters themselves through successful petition campaigns. Those initiatives include everything from abortion access and marijuana legalization to changes to the minimum wage. Most of the proposals will only affect small businesses in states where the measures are passed, but a few could create ripple effects across the country's entrepreneurial ecosystem and set precedence for new laws to come.”

• “Minimum wage: Initiative 433, in Nebraska, for instance, raised the minimum wage from $9 an hour to $10.50 per hour, and beginning January 2024, the minimum wage in Nebraska would grow to $12 an hour, followed by an hourly wage of $13.50 in 2025, and $15 an hour in 2026. In Nevada, voters approved a minimum wage boost to $12 per hour by July 2024. Currently the minimum is $9.50 per hour if an employer offers health benefits, and $10.50 per hour if the employer does not.”

• “Legalization: In five states the decision to legalize recreational marijuana was on the ballot: Maryland, Arkansas, Missouri, North Dakota and South Dakota. The initiatives in Maryland and Missouri were approved, but similar efforts in the other states were shot down. In Colorado, meanwhile, the passing of Proposition 122 decriminalized the possession and use of certain psychedelic plants and fungi for people 21 and older.”

• “Taxes: In California, Proposition 30, which would have increased taxes on personal incomes of $2 million or more to fund the state's electric-vehicle transition and wildfire prevention, was rejected. In Massachusetts, a decision on whether to add a 4 percent tax on personal incomes of $1 million or more is still too close to call, as of Wednesday morning. The move would raise the state's flat tax rate to 9 percent.” [Update: the measure did in fact pass.] READ MORE

HUMAN RESOURCES

Here’s what it takes to engage employees: “‘Quiet quitting’ has evolved from a life hack on social media into a global phenomenon. But all the discourse and the alleged newness of an age-old problem distracts leaders from the real issue: a lack of employee engagement. Quiet quitters—employees rethinking their relationship with work and are unwilling to go above and beyond basic job requirements—are not slackers. Most likely, they feel mired in the workplace mud because they aren’t getting the direction, recognition, or motivation they seek from their leaders, managers, or mentors. A recent Gallup survey revealed how widespread employee disengagement is, cutting across industries and generational lines.”

• “For example, half of U.S. employees surveyed consider themselves quiet quitters. And another 18 percent aren’t so quiet; these are actively disengaged employees who are, most likely, seeking another job.”

• “Communicate early, often, and transparently: If the only time you and your employees discuss their progress and goals is during performance reviews, they are destined to become quiet quitters. No one wants to feel isolated or ignored—schedule regular one-on-ones to discuss their work and aspirations.”

• “Democratize decision-making: Give day-to-day decisions to those closest to the work and interact directly with clients and customers. Employees are incentivized to actively participate when given this level of ownership.”

• “Give them a project that fits their skills and goals. A great way to avoid or extract someone from workplace malaise is to provide a new assignment that aligns with their skills, interests, or career goals.” READ MORE

More businesses are learning that letting your employees work from anywhere is complicated: “Many managers took a lax approach to remote work at first, and workers took advantage. The ranks of self-described American digital nomads swelled 49 percent in 2020 from the year before, reaching 10.9 million, and have since climbed to an estimated 16.9 million people, according to MBO Partners, a business-management software company. If employees scattered to states or foreign countries where a business wasn’t registered or insured, well, that didn’t seem like a big deal amid a pandemic. That carefree attitude has waned as executives wake up to potential legal and cybersecurity liabilities, and impose restrictions on where their remote employees can be.”

• “Labor lawyers, accountants and human-resource specialists warn that working while roaming isn’t simple. It requires as much planning and paperwork as it does whimsy and wanderlust.”

• “Say your company is sued over a data breach and has to reconstruct where, when and which sensitive information could have been compromised. The task might be harder if employees are hopping from place to place, says attorney Angela Kovach, senior director of public-sector solutions and operations at Everlaw, which makes software for lawyers.”

• “The rules for business registrations, payroll and income taxes, and workers’ compensation insurance vary from state to state. In general, an employer and employee should check their obligations if the worker spends a month or more in a different state, says Brad Gastineau, a tax partner at the San Diego accounting firm Gatto, Pope & Walwick.” READ MORE

THE ECONOMY

Inflation shows signs of easing: “The Labor Department on Thursday said that its consumer-price index increased 7.7 percent in October from the same month a year ago, the smallest 12-month increase since January 2022. The reading was down from 8.2 percent in September. June’s 9.1 percent inflation rate was the highest in four decades. On a monthly basis, the CPI rose 0.4 percent in October from September, the same pace as the previous month. The CPI measures what consumers pay for goods and services. The so-called core CPI—which excludes volatile energy and food prices—climbed 6.3 percent in October from a year earlier, down from 6.6 percent in September, which was the biggest increase since August 1982.” READ MORE

FINANCE

With interest rates rising, some businesses are trying to pay down debt before a recession hits: “Companies across industries and credit ratings are accelerating their preparations for a potential economic downturn, analyzing how a revenue shortfall could affect their finances. As a result, some are taking steps to rein in expenses and cut interest costs, while others are looking to put cash reserves to work as their bank deposits continue to generate minimal yields. Cosmetics company e.l.f. Beauty plans to pay down about 25 percent of its outstanding term loan during the quarter. The Oakland-based company had $88.3 million in long-term debt on its balance sheet as of Sept. 30, made entirely up of a floating-rate term loan.”

• “Before the Fed’s latest rate hike, e.l.f. Beauty paid an annual interest rate of 4.9 percent on the loan, according to Mandy Fields, the company’s chief financial officer.”

• “That rate, which adjusts quarterly, is set to increase to nearly 6 percent during the current quarter, she said. ‘It felt like a good time to step back and say, We built this great cash balance. How can we put it to use in a better way?’ Ms. Fields said.”

• “Smaller companies are making similar calculations. Toy and costume company JAKKS Pacific during the third quarter made an advance payment of $17.5 million on its floating-rate term loan, chief financial officer John Kimble said.”

• “The interest rate on the loan was about 7.5 percent as of June 2021, when the company refinanced, and during the current quarter increased to 10.2 percent, Mr. Kimble said.” READ MORE

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VENTURE CAPITAL

The NBA has created an investment arm: “‘What we are trying to do is identify companies that are really focused on something that fits strategically with the NBA with our brand with our business model, where we can align with them investing in the company to help spur innovation, help them develop products that are going to benefit our fans, benefit our customers, help them use the NBA’s brand and all the assets that we can bring to the table to really grow their business and continue to support the growth of the game and that we think has been really, really successful strategy for us.’”

• “[Head of the equity team David] Lee said the league has invested in companies that create sports technology, media and fan engagement, data analysis, apparel, and sports betting. Last year, it signed a long-term partnership with SportRadar to manage its data globally and to be its distributor of NBA and WNBA betting data; the league also took a three percent stake in the company.”

• “This summer, the NBA closed several deals. It took equity stakes in Sorare, an NFT fantasy sports company, QuintEvents, which creates fan experiences, and in New Era.”

• “Launchpad serves as a compliment to NBA Equity. It can help the league identify companies that could serve as eventual partners. Last year, Launchpad focused on companies that could help solve for health and performance for basketball players of all ages.”

• “Nextiles is a smart fabrics company that came out of the league’s new incubator and is another company in which the NBA owns a stake.” READ MORE

THE 21 HATS PODCAST

There’s Big Money All Over the Place: This week, Shawn Busse tells Jay Goltz and Sarah Segal that he sees all kinds of opportunities for small businesses, including his own, in the coming wave of climate-related government spending and tax credits. Count Jay among the convinced. He’s got four buildings, five vans, a truck, some Sprinters and a parking lot where he could put a charging station. If there’s government money available for upgrades, he asks, “Why wouldn’t I do that?” Plus, Jay explains how he’s rethinking his search for an HR person. And Sarah tells us she’s ready to meet in the metaverse.

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

Thanks for reading, everyone. — Loren