Econ_Sep_22

58 Business

The Economist

September 22nd 2018

equivalent of property rights in the digital

realm) and what types of data, including

commercial ones, need to be made open

because of their social value—much as

European banks must give fintech startups

access to certain data if customers agree to

this. That couldmake Europe the preferred

home for new types of data firms.

To get there, Europe has to get a lot right.

On paper, things look promising. The

French and Finnish national

strategies

make formore interesting reading than the

American and Chinese plans that inspired

them, offeringa balancedmixofmeasures,

ranging from public spending on research

and training data scientists to rules for the

data economy and using

in govern-

ment. The European Commission’s com-

munication on

is long on such useful

things as “making more data available”

and “bringing

to small businesses”.

Plenty could still gowrong in the imple-

mentation stage, however. To become

more of a force in

, Europe will have to

pool its resources in research and data. But

the

tends to spread things out in order

to satisfybothnational and commercial in-

terests. Expect the commission at some

point to announce the launch of a loose

research network rather than anything

with a central hub.

Another reason for pessimism is insti-

tutional inertia. Much of the money ear-

marked for

researchwill end up in exist-

ing academic institutions, which may not

be the best place for it. Many European re-

search institutes founded decades ago sur-

vived the long

winter in the 1990s and

2000s, when reduced interest and funding

killed off efforts elsewhere. The German

Research Centre for Artificial Intelligence,

founded in 1988, claims to be the world’s

largest with more than 1,000 employees,

but it is certainly not the best known. Its

strengths lie in robotics and classical

ORKERS are in a phase of being

footloose and fancy-free. The pro-

portion of Americans leaving their jobs

voluntarily is at a17-yearhigh. Asurveyby

Gallup in 2017 found that around half of

American employees were hoping to

leave their current job.

Some of this is cyclical. Theunemploy-

ment rate is 3.9%, close to its lowest level in

the past 50 years. Workers rightly think

that it will be easy to find a new job. But

there is also a structural problem in some

industries. The hospitality sector, for ex-

ample, is largely staffed by low-paid, low-

skilled young people. In Britain the indus-

try’s annual job turnover is as high as

90%, says Polina Montano, co-founder of

Job Today, an app that links employers

with potential workers.

It is tempting to blame this restlessness

on millennials—people who reached

adulthood after 2000 and who are some-

times portrayed as being less committed

to their careers than their seniors. Anoth-

er Gallup survey, this one in 2016, found

that 21% of the American millennial co-

hort had changed jobs within the previ-

ous 12 months. But in fact workers aged 25

to 34 have always had the shortest aver-

age job tenure, at around three years. The

low for this measure, at 2.6 years, was

reached back in 2000, when the first mil-

lennialswere starting college.

High turnover is not great news for em-

ployers. Nick South of the Boston Con-

sulting Group says a certain amount of

churn is good for bringing fresh blood

into a company. But anything over 20% a

year can be disruptive. Even in low-

skilled jobs, replacing workers can be ex-

pensive. The post must be advertised;

managers spend time interviewing; new

workers take awhile to learn the ropes.

The costs are particularly large for

high-skilled workers. A survey in 2016 by

Deloitte, a consultancy, suggested that a

combination of hiring costs and lost pro-

ductivity added up to $121,000 per depart-

ing employee. Figures from the second

quarter of 2018 showed that employee

turnover in the American software sector

was running at an annual rate of 24%, with

two-thirds of thoseworkers leaving volun-

tarily. Thatmust be aproblemgiven the dif-

ficulties in recruitment. Asurvey in 2018 by

Manpower found that global talent short-

ages were at their highest since the em-

ployment agency began collecting the sta-

tistics in 2006. Two-thirds of large

organisations said they could not find

workerswith the right skills.

So howcan companies hang on to their

staff? An obvious answer would be to pay

more than the competition. Despite low

unemployment, overall wage growth has

not risen much in America, perhaps be-

cause a large army of discouraged low-

skilled workers have been rejoining the la-

bour force. Given the shortage of high-

skilled workers, those employees ought to

be in a strong negotiating position, but

even among them there is little sign of a

surge in compensation.

Another approach is to convince em-

ployees that the company has a positive

social impact. The idea that a business

can help a community wider than just

shareholders and customers has been

dubbed “inclusive growth”. It may sound

woolly but, according to a new survey by

Deloitte, 38% of businesses have found

that inclusive-growth initiatives boost

employee engagement, encourage them

to stay and bringmore talent in.

Technology can also helpmanagers to

spot particular individuals who might be

planning to quit, and to head off the pro-

blem with some well-chosen words of

encouragement or improved benefits;

some Silicon Valley firms are looking into

this approach. One academic paper*

looked at the language people usedwhen

communicating with colleagues, and

how closely they cleaved to the linguistic

style of their organisations, a process the

authors call the “enculturation trajec-

tory”. (In academia, business-school pro-

fessors will fit in only when they start to

use terms like enculturation trajectory.)

The survey looked at over 10m emails

exchanged over five years at an American

tech firm. It found that new employees

who were slow to learn the corporate lin-

go were more likely to get fired, and that

long-lasting employeeswho veered away

from the culture in their messages were

more likely toquit for another job. But this

raises the Orwellian prospect of manag-

ers using artificial intelligence to comb

through employees’ emails. Instead, to

make an old-fashioned suggestion, they

could just stop by their desks for a chat.

Workers are losing their chains

Bartleby

High staffturnover is costly

Economist.com/blogs/bartleby

..............................................................

* “Enculturation Trajectories: Language, Cultural

Adaptation, and Individual Outcomes in Organisations”

by Sameer B Srivastava, Amir Goldberg, V Govind

Manian and Christopher Potts