‘Quiet Quitters’ Are Half the Workforce

A Gallup survey finds that the number of employees who are doing the bare minimum to earn a paycheck continues to rise.

Good morning!

Here are today’s highlights:

• Gene Marks says buying a small-business CRM from Salesforce is like buying a salad from McDonald’s.

• What do you do with employees who insist on leaving at 5 p.m. regardless of whether their work is done?

• Especially in a labor shortage, there can be huge benefits to extending an opportunity to a second-chance employee.

• There’s a reason weed companies aren’t making money.

MARKETING

New York Fashion Week is an opportunity to observe entrepreneurs using guerilla marketing tactics to leverage a big event: “[Alyssa] Coscarelli and [Abby] Price decided on a pop-up shop to create an intimate, in-person experience for customers to connect with the brands, the products, and one another. ‘Getting their hands on something that they feel like they discovered and no one else has, that's a really special feeling,’ Coscarelli said. Both Infinite and Abbode have built their missions on uplifting other small businesses run by women and BIPOC founders through curation. The pop-up will include a curated collection of brands including clothing and jewelry company Stewart Enslow and knitwear brand Maddi&Danii.”

• “When she founded Abbode, [Price] took a guerrilla-marketing approach by dragging a wagon full of disco balls through the West Village and giving them out for free if people posted a photo on Instagram and tagged Abbode.”

• “Anything that allows people to create their own content and promote themselves while sharing your brand is a great tactic for events like NYFW, she said.”

• “Small-business owners should consider inviting a few micro influencers or local fans of the brand to a small dinner party to showcase any new products, Coscarelli suggested.”

• “Or hold an apartment-style showroom where people can come see the products while having a place to put their feet up and relax during the week, she added.” READ MORE

HUMAN RESOURCES

Only a third of workers describe themselves as engaged: “The number of workers who say they are actively disengaged from their jobs—defined as workers who are unhappy about their work and resentful their needs aren’t being met—is rising, according to new research by Gallup, which has tracked workers’ investment in their jobs since 2000. Nearly one-third of workers described themselves as engaged, or enthused about work, while just under 20 percent described themselves as actively disengaged, according to Gallup’s June survey of 15,091 U.S. workers. The rest are ‘not engaged’—people who do the minimum required and are psychologically detached from their jobs.”

• “The results are an about-face from the summer of 2020 when U.S. worker engagement levels calculated by Gallup hit their highest level ever, at 40 percent. People under 35 reported the sharpest drop in engagement.”

• “The data may help explain ‘quiet quitting,’ where employees coast at work and draw a paycheck. Gallup said quiet quitters now make up half the U.S. workforce.”

• “Managers are calling employees back to the office in part to resolve this disconnect, yet those in-office requirements are among the biggest sources of tension between bosses and employees.”

• “Gallup said workers who reported declines in engagement cited a lack of clarity about expectations from managers, not feeling connected to a company’s mission or purpose, little to no recognition for hard work, and receiving little career development as key reasons for their disengagement.” READ MORE

What do you do with employees who insist on leaving precisely at 5 p.m. even if they have work that needs to get done? “I'm constantly pushing back deadlines because the work doesn't get done. I look up at 5 p.m. and she's gone. Sometimes I wish I could just tell her to put in a few more hours to catch up and get the work done.”

• “You can tell her that! In many salaried, exempt jobs, it's expected that people may occasionally need to put in a bit more work to get things done. If that were happening regularly, you would need to revisit your expectations and people's workloads. (That's important!) But if it's just occasional, it's not unreasonable to expect.”

• “Just keep in mind that you need to be flexible in the other direction, too; if you expect people to occasionally work late, you can't nickel-and-dime them about their hours when a lower workload lets them knock off early.”

• “You should say, ‘You've been missing a lot of deadlines and that can't continue. That may mean that you sometimes need to work a little longer to ensure your work gets finished. This isn't a job where you can expect to always leave precisely at 5. The expectation is that you'll stay to get the job done if something is pressing.’” READ MORE

The secret sauce propelling a fast-growing chicken chain is its second-chance workforce: “Kevin Fisher had only one place in mind for his first meal as a free man: Hot Chicken Takeover. Upon his release from prison in January 2019, Fisher ordered boneless chicken, mac and cheese, and coleslaw at the chain’s location in a downtown market in Columbus, Ohio. But it was the company’s mission, not just its menu, that drew him. Fisher became acquainted with Hot Chicken Takeover a few years earlier when founder Joe DeLoss spoke to inmates about his company hiring people who’d previously been incarcerated through its equal employment policy.”

• “Finding work after serving 26 years for murder was tough for Fisher, who’d argued during his trial that he was defending himself from an acquaintance who attacked him with a knife in an attempted sexual assault.”

• “The prior conviction was a deal breaker for some employers, but not for Hot Chicken Takeover, where he eventually landed a job.”

• “Fisher started doing what every new employee does—washing dishes—and now the 60-year-old is general manager of the Columbus Crew Stadium location.”

• “Critical to Hot Chicken Takeover’s model is the support it offers employees, who can face overlapping challenges. The chain helps with referrals to mental health counseling and housing services, emergency cash assistance, and a savings-matching program.” READ MORE

LOGISTICS

Supply-chain challenges are largely the result of the labor shortage. Automation may supply the answer: “A day spent wandering the Home Delivery World trade show inside the Pennsylvania Convention Center revealed how supply-chain companies are pursuing automation and flexible staffing as antidotes to rising wages. They are eager to embrace robots as an alternative to human workers. Robots never get sick, not even in a pandemic. They never stay home to attend to their children. A large truck painted purple and white occupied a prime position on the showroom floor. It was a driverless delivery vehicle produced by Gatik, a Silicon Valley company that is running 30 of them between distribution centers and Walmart stores in Texas, Louisiana and Arkansas.”

• “Lean Solutions, based in Fort Lauderdale, Fla., sets up call centers in Colombia and Guatemala — a response to ‘the labor challenge in the U.S.,’ said Hunter Bell, a company sales agent.”

• “Nearby, an Israeli start-up company, SafeMode, touted a means to limit the notoriously high turnover plaguing the trucking industry. The company has developed an app that monitors the actions of drivers — their speed, the abruptness of their braking, their fuel efficiency — while rewarding those who perform better than their peers.”

• “‘This shortage narrative is industry-lobbying rhetoric,’ said Steve Viscelli, an economic sociologist at the University of Pennsylvania and author of ‘The Big Rig: Trucking and the Decline of the American Dream.’ ‘There is no shortage of truck drivers. These are just really bad jobs.’” READ MORE

LOCATION, LOCATION, LOCATION

San Francisco is bracing for an epic commercial real estate crash: “The root of this—of course—is the pandemic and the way that it has completely transformed work patterns in the city, hollowing out a downtown core that once accounted for most of San Francisco’s GDP, 70 percent of its sales tax revenue and 40 percent of the city’s jobs. And there’s an uneasy feeling among a coalition of business groups that city leaders are sleepwalking into an economic calamity with far-reaching consequences. Signal lights of the city’s tenuous fiscal future are starting to flash. Major tech employers like Yelp and Airbnb have fled or gone fully remote, leading to mass office vacancies. A swath of commercial landlords are seeking massive reductions in their assessed property values—and associated tax bills.”

• “Dan McNamara, founder of New York hedge fund Polpo Capital, became known for the lucrative short bets he made against regional malls run into the ground by e-commerce and Amazon.”

• “Now, McNamara is eyeing the commercial office market for another short bet, and San Francisco is near the top of his list.” READ MORE

SMALLBIZ TECH

Salesforce has released a new CRM product, Salesforce Easy, specifically for smaller businesses, but Gene Marks isn’t buying it: “The first reason is that Salesforce is not a small business-focused company. It’s a company that has many products which include a small business product. If you’re a small business, be wary of this. It’s like buying a salad at a McDonald’s — they offer it but you know it’s not the restaurant chain’s main focus.”

• “To really serve this market, Salesforce would need to overhaul its support infrastructure, change how it provides its services, figure out a more affordable service model, and probably hire a thousand psychiatrists to handle the crazy personalities of small business owners like myself.”

• “The CRM platforms that best serve the small business market are focused on serving only the small business market. You know some of these already. They include Zoho, Insightly, Sugar, Nimble, Copper and others.” READ MORE

SECOND ACTS

It’s never too late to buy an inn: “In 2019, Maureen McNamara and her wife, Jennifer Stark, now both 60, took a leap of faith and decided to sell their popular restaurant, Amici’s Kitchen & Living Room, in the Detroit suburb of Berkley, Mich. The couple had owned it for 15 years. They packed up all their belongings — including two Shih Tzus named Junie and George — and moved to the tiny hamlet of Phoenicia, N.Y., nestled in the Catskill Mountains, about 100 miles north of New York City. ‘We had lost our passion and had become extremely burned out,’ Ms. McNamara said. ‘We bought the restaurant from Jen’s brother, so it never felt like ours. We wanted something that was.’ That something was the Phoenicia Lodge, a collection of rustic, 1940s cabins with wooden planks, made up of five rooms, two suites and six independent cottages that the couple bought in the beginning of 2020. (Rates start at $135 a night.)”

• “Two days before Covid-19 was declared a pandemic on March 11, 2020, they welcomed their first Phoenicia Lodge guest. Then the world shut down.”

• “It was crazy. We were completely booked with guests who had stayed at the inn before. Then everyone canceled. Then we panicked. All we could do that first week was unpack.”

• “People who wanted to escape the pandemic started coming; we had the space. That was amazing. For the rest of 2020 there wasn’t a room available. 2021 brought families. This summer was about weddings and groups.” READ MORE

GOVERNMENT CONTRACTING

The Commerce Department released its plan to spend $50 billion to build the domestic chip industry: “About $28 billion of the so-called CHIPS for America Fund is expected to go toward grants and loans to help build facilities for making, assembling and packaging some of the world’s more advanced chips. Another $10 billion will be devoted to expanding manufacturing for older generations of technology used in cars and communications technology, as well as specialty technologies and other industry suppliers, while $11 billion will go toward research and development initiatives related to the industry.”

• “The department is aiming to begin soliciting applications for the funding from companies no later than February, and it could begin disbursing money by next spring,  Gina Raimondo, the secretary of commerce, said in an interview.”

• “Trade experts have called the fund the most significant investment in industrial policy that the United States has made in at least 50 years.”

• “Projects that involve economically disadvantaged individuals and businesses owned by minorities, veterans or women, or that are based in rural areas, will be prioritized, the department said.” READ MORE

CANNABUSINESS

There’s a reason weed companies aren’t making money: “The legal marijuana business is booming — revenues are projected to hit $32 billion this year, more than double what sales were just three years ago. They’re projected to double again in the next six years, propelled by the launch of big new recreational weed markets in New York, New Jersey and Virginia. But that hasn’t prevented most weed companies from continuing to hemorrhage red ink nearly a decade after Colorado and Washington became the first states to establish legal markets for anyone at least 21 years old.”

• “‘It all stems from federal illegality,’ said Anita Famili, who heads the cannabis and CBD industry group at Manatt, a law firm and consultancy. ‘The cost of doing business for weed companies is just much higher than any other business.’”

• “Arguably the biggest barrier to making money is the sky-high taxes weed companies pay because they’re treated like illegal narcotics traffickers under the federal tax code.”

• “The goods also cannot cross state lines, and that lack of interstate commerce means companies must build separate farms, factories and stores in each state where they do business and navigate a rapidly evolving patchwork of state regulations.”

• “That’s led to a glut of product and plunging prices in many of the largest state markets like California, Colorado, Michigan and Massachusetts. Those struggles are being compounded by inflation and an illicit marijuana market that remains robust in many states.” READ MORE

THE 21 HATS PODCAST

We have a meeting with Costco! This week, Hans Schrei and Sarah Segal talk about what it takes to break into Costco. How do you get on their shelves? If you do get there, how do you make sure your product will fly off of those shelves? And if you succeed, will you have the financing you’ll need to ramp up production? Along the way, Sarah offers some tips on enlisting Costco influencers, and Hans explains the inner workings of Wunderkeks’ equity crowdfunding campaign, where you can invest as little as $150 and where the company hopes to raise $1 million. Plus: Sarah responds to listener Buzz Park’s suggestion of how to avoid getting ghosted by potential clients after you’ve prepared elaborate and expensive proposals.

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

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