The New Reality: Taking Ownership
The economy’s effect on the workplace and personal finance has rewritten the rules for success
By Sheryl S. Jackson
Unemployment statistics are on the rise, home sale advertisements announce price reductions and retail stores are riding the up-and-down roller coaster of reduced consumer spending. The recession has affected jobs and consumers’ ability to purchase, but the effects are much deeper, often resulting in changes in perception of life and decisions about lifestyle, according to a survey by the Pew Research Center’s Social and Demographic Trends Project. Responses from the nationally representative sample of 2,967 people show that not only are people changing their spending habits, but they also are worried about the future standard of life for their children as well as their standard of living in their own retirement.
Previous generations could count on pensions paid after working many years at the same company; receiving promotions throughout one’s career; homes that increased in value without fail; easily obtained credit; and investments that earned reliably high interest rates. That was the “old normal,” and it is time to learn to live in the “new normal,” according to experts interviewed by Black MBA Magazine.
The recession and the new reality in which we live is not confined to the United States, points out William Wells Jr., chairman of the National Black MBA Association (NBMBAA) board of directors and vice president of Strategic Inclusion Solutions for InclusionINC. “This is a world-changing phenomenon that gives all of us an opportunity to leverage our position into a better normal,” he says. He remembers hearing motivational speaker Lisa Nichols talking about the recession when it was first declared. “She said she refused to invite the recession into her home, so she was recession-proof,” he laughs. This attitude is important because it gives you strength to find a way to succeed in a tough environment, he adds.
A key part of the work Wells does with his clients is helping them adapt to cultural change as they evaluate ways to improve diversity and inclusion. “Cultural change is also an effect of this recession,” he says. “The real challenge is the need to change the ethical landscape of business. We’ve seen blips on Wall Street and Main Street that are due to people who did not lead with integrity and accountability. Fortunately, we are now seeing the emergence of solid leaders with a focus on regaining the trust of their customers, their community and their constituency.”
Although many people are looking for jobs, Wells has noticed that potential employees are interviewing companies as much as companies are interviewing them. “The millennials who are just starting their careers and other generations who are looking for new careers as a result of the recession are looking for employers that share the same goals, offer opportunities and embrace individual talents and skills,” he says. The focus on job-seekers finding the right match for their individual goals is a sign of the new normal. “People in today’s workforce don’t want the cookie cutter lifestyle of previous generations that worked at one company for an entire career,” Wells explains.
Younger generations are handling the upheaval of the recession more easily than baby boomers because they entered the workforce with no expectation of a 30-year career at the same company, Wells notes. “Baby boomers are having a more difficult time because the changes are new to them, and they are having to adjust their expectations,” he adds.
Contract Positions Increase
Not only are 30-year careers no longer a realistic expectation, but also fewer full-time positions are available as more companies rely on contract employees for expertise on specific projects, says Stephen C. Lewis, interim president and CEO of the NBMBAA and director, strategic planning and manufacturing executive office of the Ford Motor Company. “The first significant change as a result of the recession is the increase in the number of contract employees we use in our industry,” he says. This is a strategic change for businesses as managers look for ways to control workforce costs. “Businesses have always faced the challenge of covering employee costs during the ups and downs of business cycles,” Lewis continues, explaining that contract employees can work on specific projects for as long as their expertise is needed. “This is a cost-effective and productive approach for the company.”
Denise Edwards, MBA, knows firsthand about companies making the switch to hiring contract employees rather than full-time employees. She is currently in her second contract position in marketing. “I’d prefer the security of a full-time position, but contract work is not a bad option,” she says. “Both positions have enabled me to pay my bills, keep my skills up-to-date and increase my network.”
Contract positions can last for months or years, depending on the project or the company’s need, which means you know you will be looking for another position at some point, but Edwards points out the benefits. “There is always the possibility that the contract position converts to a full-time position, so you have an opportunity to continue if you like the position and the company,” she says. “If you go through an employment agency to find your position, you often have access to benefits packages through the agency,” she adds. This is an important option for many people who need access to health insurance at group rates because companies don’t pay benefits for contractors.
Edwards has used her time between contract jobs to improve her skills and open up other options for future positions. “During one period when I wasn’t working, I attended a seminar on digital marketing,” she says. Not only did she meet more people with whom she could network, but she was able to leverage her new knowledge during an interview for another contract position. “My first position was basic marketing forecasting and managing a product line that was already up and running,” she says. “Now, I’m in a position in which I have more exposure to e-commerce and online initiatives than I had in previous positions.”
Another change in the process of career development is a need to develop an expertise in an industry, observes Lewis. “Work hours have extended, and there are more challenges for all businesses, so it is important to have a passion for your industry,” he says. “This is the difference between work being something you want to do rather than something you have to do.” In the automobile industry, this does not mean that you have to work for only a manufacturer. An engineer who works for suppliers to the automobile manufacturer can have opportunities to move to the manufacturing side of the industry because the emphasis on developing products that are cost-effective and high quality are the same, he points out. “A commitment to and understanding of the industry are important for today’s leaders and potential leaders.”
Entrepreneurship is also an increasing option for people who find themselves out of work, says Wells. “Some people are willing to take the risk of starting their own business as a way to gain more control over their career,” he points out, adding that technology enables small businesses to compete on a national or global basis, opening up opportunities for everyone.
Save for Yourself
An increasing number of people are concerned that they will not be able to retire as planned because of the recession’s effect on their investments and potential income, according to the Pew Research study. Lewis is not surprised and says that retirement is another area in which there have been significant changes.
“You must assume responsibility for your retirement income,” says Lewis. “Set up a 401K and manage it well by making regular contributions. Start the 401K early in your career and don’t take money out of it as you would a regular savings account.” In the past, employees could rely upon a company pension to supplement Social Security income, but now the norm is a company-sponsored 401K that requires the employee to make contributions. A combination of continuous 401K contributions as well as personal Individual Retirement Accounts (IRAs) are the best ways to ensure the ability to retire as planned, he adds.
In addition to long-term savings such as retirement accounts, don’t forget to put money away for a rainy day, suggests Lewis. The ease with which people could obtain credit and create great debt for themselves meant that when the recession hit, they had no backstop, no way to handle their debt. “If we save regularly to fund a savings account that we can use to pay off debt or handle an emergency, we are forced to live more economically,” he says.
“I don’t save as much as I should be saving, but I do put away a small amount each week for my emergency fund,” says Edwards. “I’m also careful about not taking full-week vacations because, as a contractor, I don’t get paid for vacation,” she explains and adds that one of the advantages of her contract position is a weekly paycheck, which does make it easier to manage her budget.
Homes Still Good Investments
According to a December 2010 report by Zillow Inc., a home data tracking company, home values may drop by more than $1.7 trillion this year. Rising foreclosures and tax credit expirations are responsible for much of the decrease, according to Zillow.
“The downturn in housing is just a bump in the road,” says Lewis. “I believe that over the next five years or so, prices will reset and stabilize.”. According to Lewis, at this time, it is a buyer’s market, so someone who is ready to buy a home can find a house at a good price in an area that will hold its value.
“I did own a home in the Northeast and was able to sell it, but I’ve not felt comfortable about buying a house now,” says Edwards. Not only is she cautious because her position is a contract position, but also because she wants to remain mobile and able to easily take a position in another location.
Edwards and every other person who has looked for a job throughout the recession may have noticed changes in human resources departments as well. “As companies downsize, the first reductions in staff often hit human resources departments,” says Wells. “This has greatly affected diversity and inclusion initiatives throughout all companies.”. The impact of fewer initiatives focused upon changing corporate culture to embrace inclusion; fewer human resources professionals to manage the interviewing and hiring process; and an increased number of people applying for open positions means a greater challenge for the job seeker, he adds.
This challenge has implications for NBMBAA, Wells continues. “We have to find ways to support our members as we address all of the issues raised by the recession,” he says. “We have to make sure our organization is relevant to the new reality faced by our members.”
Going forward, Wells sees NBMBAA focusing on development of strategic partnerships with other organizations, so time and money are not spent “reinventing the wheel.” He explains, “There are many organizations that offer education and training opportunities as well as other services that will benefit our members.” Just as the recession is creating changes in the way people plan their careers and spend their money, the association has to make the same changes in order to offer more services to members, he notes.
“This is the biggest recession for our country since the Great Depression of 1929,” says Lewis. The effect of the Great Depression was a renewed fiscal responsibility with a commitment to frugality and saving money that could be passed on to the next generation. “This recession has been a rude awakening, but the economy is growing again, and we have all learned from it.”