Always a pleasure to join the CBC News Network Weekend Panel, alongside Sherena Hussain and John Northcott, talking rising interest and inflation rates and the latest directive from Elon Musk regarding the end of remote work at Tesla; watch our segment here.
Here are some quick thoughts on our discussion.
One of the interesting things about the perspective of organizations such as central banks, financial institutions, and large firms is how little it tends to reflect the realities of what is happening at the front lines of business. Although there are exceptions to this, such as when the viewpoint is expressed by someone who has extensive experience operating a small business, the overall perspective gap is evident. An example of this is the commentary from a while ago about inflation being “transitory” (some admitted the error if this comment earlier this week); a pronouncement that seemed oddly dismissive at the time, given the numerous real world problems, such as COVID, supply chain delays, and the scarcity of labour and materials that only serve to raise uncertainty.
Small businesses are the backbone of the Canadian economy and it is important for the owners and leaders of these companies to never assume that people in large organizations and government understand their reality. Looking solely at macro factors, such as unemployment or inflation levels, does not always reflect what companies are experiencing. As an example, a low unemployment rate is generally viewed as favourable at a macro level, however, it doesn’t reflect the scarcity of labour that small businesses might be experiencing; something that is very much the case today. Operating realities at the business level, such as the challenges associated with acquiring materials and labour and getting products to customers in a timely fashion, suggest that macro level factors, such as inflation and increasing interest rates, may be with us for a while.
Related to this point, Tesla CEO Elon Musk’s demand that employees return to the office is something that appears out of context, when considered at the front line level. In the case of jobs that “can be done from anywhere”, the labour market is extremely tight, as employees (especially the top performers) have more job opportunities than the norm, with flexible work arrangements and salary rates being of particular appeal. Business leaders who draw a line in the sand on employment arrangements might find themselves in a position of losing their best employees, with only the average and marginal performers remaining. This reality might not appear to have a pronounced impact in the early days, but can be highly damaging to a company as time goes on, as the quality of work and information decline. Examples include poor financial reporting, products/services that don’t meet quality levels, and costly mistakes due to inexperience. When this happens, business leaders tend to have more work on their plate, as well as the difficulties associated with trying to find better qualified staff members in a challenging labour market.
In the case of Tesla, it’s true that some staff members may choose to comply with the directive to return to the office full time, simply because they want to work there. Others, however, might find the draw of their current role to be less powerful than expected, valuing work flexibility and other arrangements much more. Business leaders need to remember that employees and customers might value corporate “culture” much less than they do, as markets are always competitive; either way, there is a cost.
Thanks for watching and see you again soon!