Offering Flexible Work Brings Benefits

Businesses that offer flexible hours are hiring twice as fast as companies that don't.

Good Morning!

Here are today’s highlights:            

• The biggest attraction for luxury rentals? Pet amenities.

• There are few places where Americans of different income classes come together—places that offer free breadsticks, for one.

• What impact will China’s economic problems have on businesses around the world?

PROGRAMMING NOTE

Friday’s Morning Report will be the last one until Tuesday, September 5: Next week, 21 Hats will be on vacation (paid subscribers will not be charged for the week). There will be no Dashboard published this Monday or on Labor Day, but our flagship Tuesday episodes will continue as usual. See you in September!

HUMAN RESOURCES

Companies that offer flexible work are hiring twice as fast as those that don’t: “It's still plenty hard to hire good people if you're an entrepreneur. Could being more flexible in your approach to where people work help you lure top talent? A new report from software firm Scoop Technologies and data-technology company People Data Labs -- hat tip to Insider -- suggests the answer is definitely yes. The analysis of more than 4,500 companies that collectively employ more than 10 million people found that firms with flexible work arrangements (either fully remote or some type of hybrid schedule) are adding headcount over twice as fast as those that require employees to be in the office full-time.”

• “‘There is a strong correlation between days required in office per week and headcount growth. Companies requiring one day in office/week grew headcount by 4.8 percent over the past 12 months. That drops to 3.8 percent for companies requiring four days in office and 2.6 percent for five days in office," reports the companies' Flex Index.”

• “Fully flexible companies, where employees can choose where they work, grew the fastest at 5.6 percent over the same period—though the report notes that these companies tend to be smaller, which might explain their quicker growth.” READ MORE

For some reason, today (August 24) is the most popular day for office workers to call in sick: “Perhaps it's the inexplicable craving for a day off ahead of the big Labor Day holiday. Perhaps it really is a stomach bug, or that more recent fiend — the coronavirus. And of course, it might just be the blues at the end of summer. Whatever the reason, Aug. 24 is when American workers most often tell their bosses they simply cannot work that day. The other day workers typically fail to show up? Feb. 13, usually around the Super Bowl and Valentine's Day. Tough to guess why.”

• “Some 300 businesses with over 10,000 employees participated in the study which found an average 0.9 percent of those employees were out sick on Aug. 24, a higher percentage than on any other day of the year, according to David Hehenberger, Flamingo’s founder.”

• “Beyond physical ailments, Paaras Parker, chief human resources officer at payroll software company Paycor, said her organization observed a notable uptick in workers staying home with anxiety or stress-related conditions, which accounted for almost 9 percent of sick leaves in the Flamingo survey.”

• “With employee burnout reaching a post-pandemic high earlier this year, workers feeling emboldened to take mental-health sick days is a “welcome change” in workplace attitudes, Parker said.”

• “The advent of remote work is also changing the culture around sick leave. A new survey by WFH Research shows that workers feeling ill but without an option to work remotely are nearly twice as likely to come to the office with symptoms as their hybrid counterparts.” READ MORE

MARKETING

Luxury apartment buildings are attracting renters with pet amenities: “For years, pet needs tended to be an afterthought for the firms that managed luxury apartment towers. Landlords believed that showering tenants with deluxe amenities such as fitness centers, swimming pools, basketball courts, and outdoor grilling stations was the way to fill up a building and command high rents. Covid-19 altered that calculus after an explosion in pandemic pets. Millions of Americans adopted dogs as companions for long stretches stuck at home. Pet mania has unleashed fierce competition among property owners to lure new tenants by offering the most generous—and sometimes over-the-top—dog perks, from dog schools to pet happy hours and giant rooftop dog parks.”

• “‘From the moment you start thinking about your business plan and start thinking about the design, you’re thinking about pet owners,’ said Raul Tamez, a senior director for Greystar Real Estate Partners, the largest U.S. apartment manager, which operates more than 2,800 rental properties.”

• “A survey of 1,170 apartment renters this year by developer Cortland found that dog owners rank a building’s pet policies, such as size restrictions and fees, as more important than even the cost of rent or a property’s location, according to the Atlanta-based firm that manages more than 250 apartment properties.”

• “New York developer Related hired a designer to build a 5,600-square-foot rooftop dog park atop a San Francisco apartment building. The park is matted out in artificial turf and includes a replica fire hydrant to encourage bathroom breaks. Staff take care of cleaning. In New York and other cities, Related also created Dog City, a daycare with activities including art, gardening, and baking, aimed to accommodate dogs that live in its buildings.” READ MORE

Where do Americans come together? At Chili’s, actually. And the Olive Garden: “These days, Americans seem divided by almost everything. But you know what has proved successful at bringing Americans of different backgrounds together? Unlimited soup, salad, and breadsticks. Also: Riblets, Bloomin’ Onions, Chicken Crispers, and other crowd-pleasers from affordable chain restaurants such as Olive Garden and Applebee’s. Though sometimes banned by municipalities wanting to ‘preserve neighborhood character’ or slow gentrification, these chains actually provide a hidden social service: They promote much more socioeconomic integration than do independently owned commercial businesses — or, for that matter, traditional public institutions.”

• “That’s according to a provocative new working paper from Maxim Massenkoff of the Naval Postgraduate School and Nathan Wilmers of the MIT Sloan School of Management. The authors analyzed a massive trove of geolocation data to assess where and when Americans come into contact with people of different income classes than themselves — if they do at all.”

• “In general, the paper finds that those at the very bottom and top of the income distribution are much more socioeconomically isolated than those in the broad middle. That is, the lowest and highest income classes shop, dine, worship, and educate their kids at their own distinct, income-segregated establishments.” READ MORE

FINANCE

California has barred deceptive practices in small business lending: “A new California regulation will bring consumer-style protections to small businesses seeking loans, giving regulators in the state the ability to go after unfair, deceptive and abusive practices. The rule appears to be the first of its kind for small businesses. It could be copied in other states, extending regulators' ability to crack down on lenders with questionable practices. There are generally fewer protections in place for U.S. small business borrowers than consumers. Consumer lenders can already be penalized by state and federal regulators for engaging in unfair, deceptive, or abusive acts or practices, or UDAAP.” READ MORE

The Justice Department has charged more than 3,100 with pandemic relief fraud: “For more than two years, Leon Haynes, a New Jersey tax preparer, told some of his clients that the federal government was giving out ‘free money’ in the form of pandemic relief to people who owned businesses. According to federal prosecutors, Mr. Haynes filed more than 1,000 false tax forms, fraudulently claiming more than $124 million in Covid-19 employment tax credits for businesses that he and others owned. Mr. Haynes was arrested at the end of July. The complaint is one of several Covid-19 fraud cases detailed on Wednesday by the Justice Department, which has been cracking down on businesses and individuals who inappropriately pocketed federal relief aid.”

• “As of this week, the federal government has charged 3,195 defendants for offenses related to pandemic fraud and seized more than $1.4 billion in relief funds, according to data released by the department. That included the results of a three-month ‘sweep’ to combat Covid-19 fraud, which ended in July and involved more than 50 U.S. attorney’s offices and dozens of federal, state and local law enforcement agencies.”

• “The exact amount of stolen relief funds is unknown, but the Small Business Administration’s inspector general estimated that more than $200 billion — or at least 17 percent of the roughly $1.2 trillion in pandemic loans the agency doled out — had been disbursed to ‘potentially fraudulent actors.’”

• “He added that some fraudsters were still actively trying to obtain funds through the employee retention tax credit program, and that he expected to see more prosecutions in the coming months related to those schemes.” READ MORE

THE ECONOMY

What will China’s economic problems mean for the world? “Only eight months ago China’s economy was expected to roar back to life. Zero-covid had been abandoned; the country’s shoppers and tourists allowed to roam free. Yet the rebound has fizzled out, with weak growth and deflation the result. This will not only affect its people. What happens in the world’s second-largest economy matters beyond its borders, too. Because China is so big, its changing economic fortunes can drive overall global growth figures. But a slowing China also directly affects other countries’ prospects. Its households and companies will buy fewer goods and services than they would have otherwise, with consequences for both the producers of these goods and other consumers of them. In some places, China’s difficulties will be a source of pain. In others, though, they will bring relief.”

• “Weak spots in the West include Germany. Faltering demand from China is one reason why the country’s economy has either contracted or stagnated over the past three quarters. And some Western companies are exposed through their reliance on China for revenues. In 2021 the 200 biggest multinationals in America, Europe, and Japan made 13 percent of their sales in the country, earning $700 billion. Tesla is more exposed still, making around a fifth of its sales in China; Qualcomm, a chipmaker, makes a staggering two-thirds.”

• “When set against this backdrop, China’s slowing growth should even provide a measure of relief for the world’s consumers, since it will mean less demand for commodities, bringing down prices and import costs. That in turn will ease the task faced by the Federal Reserve and other central banks. Many have already raised rates to their highest level in decades and would not relish having to go further still.” READ MORE

RETAIL

Alphabet is opening a Google store in Boston: “The company has targeted a ground-floor storefront at 149 Newbury St., a new five-story mixed-use building developed by Chicago-based L3 Capital LLC at the intersection of Newbury and Dartmouth streets, according to the sources. Alphabet right now has only two Google retail stores, both in New York. The locations sell Google hardware like Pixel phones, tablets and computers and Nest smart devices. The first Google store opened in Chelsea Market in Manhattan in 2021, while its second store debuted last year in an L3 property in Brooklyn’s Williamsburg neighborhood.” READ MORE

CLIMATE

In Massachusetts, utilities and businesses seem to be rethinking their stance on climate issues: “As state officials and climate advocates have tried to push forward with major climate initiatives, powerful forces, including gas utilities and prominent business organizations, have for years worked to delay or undermine them. Now, in a boon for climate action, that appears to be changing. As business opportunities in a burgeoning clean economy grow, two influential lobbying groups now have leaders with strong environmental credentials. Meanwhile, a prominent business group parted ways with an executive who had represented gas interests, and the state’s two largest utilities have made moves that advocates believe could lead them to deemphasize their fossil fuel based operations.”

• “Perhaps most significant among the moves, the major gas and electric utility Eversource has left the American Gas Association — a powerful industry association known for blocking climate action nationally — to focus on decarbonization. The 2022 decision by Eversource to take this step is unprecedented among utilities nationally.”

• “The Associated Industries of Massachusetts, a powerful industry group that lobbied for natural gas and against climate action in the state, has likewise hired new leadership and parted ways with its longtime energy lobbyist. A handful of other organizations across the state also appear to be leaning toward stances that favor climate action.”

• “Kyle Murray, Massachusetts program director at the clean energy advocacy group Acadia Center, who has observed the changes happening across the state’s business community, said they are driven less by the escalating urgency of the climate crisis than by a growing sense of economic opportunity.”

• “To be blunt about it, the business community will go where they see an opportunity to make money,’ he said. ‘The green transition is providing a ton of jobs and a ton of new investments.’” READ MORE

Only half of CEOs see the climate as a potential threat to their businesses: “If this summer has made one thing clear, it’s that extreme weather is becoming more common. The U.S. has suffered with floods and extreme heat and wildfires. Yet just half of CEOs think of climate change as a risk to their business and just 19 percent think of it as a serious risk, according to a recent PricewaterhouseCoopers survey of business executives. That figure’s actually down from 23 percent last year. The survey also found that fewer than a quarter of businesses are preparing for potential climate-related disruptions in the next 12 to 18 months. But the climate crisis can affect businesses in all sorts of ways.”

• “‘From supply chains to the location of plants, to even things like, Do I have enough water in my vicinity in the future the next couple of years that I need for my manufacturing?’ said Sanjay Patnaik at the Brookings Institution.”

• “There are a bunch of surveys like PwC’s that show most companies still aren’t doing much to mitigate those risks, Patnaik said — except in industries that are more obviously and immediately vulnerable.”

• “‘For instance, food,’ he said. ‘Because if you’re in a business of chocolate and coffee, you start seeing the impacts already, and so you start preparing for a supply chain for this.’ But those companies are in the minority.” READ MORE

THE 21 HATS PODCAST

The Toughest Conversation: This week, Paul Downs, Jay Goltz, and Laura Zander don’t hold back. Laura and Jay both say their sales are coming in well below expectations. Not surprisingly, Jay has a five-point checklist that he’s using to assess and address his shortfall. Laura’s situation involves a marketing team that she says has been feeling stressed and is coming apart, with lots of crying and arguing. “They’re just collapsing,” she tells us. Paul, meanwhile, says his sales aren’t bad, but he’s got one employee who’s been holding them back. The employee, who’s been with Paul for 10 years, has been spiraling of late, says Paul, who’s dreading what he calls “the toughest conversation,” a conversation he fears will leave the employee devastated.”

• “I've done it a few times in my career, where you have a conversation with someone, and you just see you just drove a stake through their heart. And it's not like it didn't need to be said, but it's just such an ugly thing to watch. So it's really hard for me to pull myself to it.”

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

Thanks for reading, everyone. — Loren