“The world is in a pretty bad place,” intoned State Street CEO Joseph L. Hooley at a September 13th panel held in Boston under the auspices of the National Association of Corporate Directors/New England Chapter. He, Marcy Reed (President of National Grid in Massachusetts) and Niraj Shah (CEO of Wayfair) discussed our economy, and their major business problems, as we move out of the summer doldrums.
Hooley noted that Japan is in a decades-long recession, the UK is growing at only 1%, the BRICs are in trouble or have slowed growth ( except for India which is “too small to matter”), and that central banks have run out of tools to provide economic stimulus. He sees this as the fifth year in a row of below-average world business growth; the United States remains steady but is impacted negatively by global developments.
It should be noted that State Street garners more than half its income from non-US operations. Reed runs a utility centered in New England and New York, and is enjoying the relatively robust United States economy, where utility bills are getting paid (defaults are at half the rate suffered during the 2008 recession). Her problems have to do with an aging blue collar work force and a lack of sufficiently trained younger employees (the Grid used to hire high school graduates but now there are “computers on top of poles”).
Wayfair is an online vendor of relatively mundane products. Although most of their products are discretionary purchases, Shah noted that his company has benefited from the explosion of online sales (Wayfair’s business grew even during the recession years). Additionally, during times of financial pressure consumers become more “value-conscious.”
There is clearly a hiring crunch in the United States. Hooley noted that we have college graduates who need jobs, and businesses which need workers, but the grads can’t fit into those jobs; a failure in training. Shah says much of the training in his company is done onsite, they just try to hire smart people. Reed, interestingly, noted that they used to assign senior workers to train younger workers but now (with an average worker age at Grid of 49 years) she assigns the younger employees to train the older ones in “new economy” skillsets.
Finally, there was discussion of how to hire and nurture millennials, who are “wired differently” with shorter attention spans, a desire to change jobs; and their “paper is already on the street” by reason of social media. 78% of millennials report that they enjoy some version of flex time. They also care about the community and the environment. In order to attract and retain millennials, companies are attempting to adjust to these differences.