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Employee Loyalty

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Methlife’s 10th annual survey of employee benefits, trends and attitudes, released in March, puts employee loyatlty at a 7-year low. The survey shows one in three employees plan to leave their job by the end of the year. According to a report conducted in 2011 by Careerbıilder.com, 76% of fulltime worker would leave their job if the right opportunity comes along, even tough they havent been actively seeking for a job. Other studies Show that each year the average company lose its 20%-50% employee base.

A big amounf of employees do not feel connected to their work. The reasons cited fort his ; the recession ( during which companies laid off big swaths of their employees with little regard of loyalty) , a whittling away of benefits , training and promotions for those who remain. And another reason is ; a young generation of millenials ages between 15-30, whose expectations are different about their career. When talking about employee loyalty, the subject should not be considered one-sidedly. A management professor Adam Cobb’s words set as a great example to the status of loyalty between employer and employee : ‘My loyalty to the firm is contingent on my firms loyalty to me’ Cobb says loyalty should not be a value that companies rely on. But it is not right to say employees have no loyalty. If the companies took care of their employees and loyalty was reciprocal, would employees stil be job hopping? Peter Capelli, director of Wharton’s Center for HR, agrees that recently, employers’ attitude towards theit employees has changed.

Employers see the employees as short-term resources. This behaviour ended life-time employment and job security depends now on continuing usefullness to the employer. Payment cuts, increasing workload ocur when it is beneficiary to the company. Wharton management professor Matthew Bidwell divides the term into two parts: “One piece is having the employer’s best interests at heart. The other piece is remaining with the same employer rather than moving on.” Management experts, he says, describe this as “organizational commitment.” And that, he notes, is changing. “There is less a sense that your organization is going to look after you in the way that it used to — which would lead you to expect a reduction in loyalty as well.” But Bidwell questions how much loyalty people ever felt to their organizations, in good times or bad. “Employees are often more loyal to those around them — their manager, their colleagues, maybe their clients.

These employees have a sense of professionalism — and loyalty — that relates to the work they do more than to the company.” Loyalty, which can be considered a component of employee engagement, is based on a number of factors, says Harter, including whether the employer “looks out for employees’ best interests, pays attention to their career path, gives them opportunities to improve their well-being and so forth.” In this equation, managers play a crucial role, he adds, referring to a survey done several years ago that analyzed all the reasons people stay with or leave an organization. “If you’re looking for a silver bullet, it is the quality of the relationship between an employee and his or her manager that determines the overall level of employee engagement. Good companies develop a growing list of great managers over time…. It’s local level teams and how they are connected together by leaders and managers” that have the most impact. Research also shows that not all behavior is self-interested, Small adds. “Sometimes people do things at considerable cost to themselves, like sticking to a job with lower pay when they could move on and potentially earn more money.

It’s because we care a lot about relationships and the welfare of others. When we have a relationship with our firm or colleagues, there is a social cost to leaving.” To the extent that an employee is well treated by a firm or a boss, “that might, on the margin, make a difference” in his or her decision to stay or leave. Growth of the global marketplace is another factor in workplace mobility. “There is a tremendous amount of competition, both domestically and internationally, which has forced firms to be more nimble with respect to hiring and firing,” says Guay. “It is now a two-way street: Employees recognize that firms are not going to be able to offer lifetime employment, and companies recognize that employees will feel free to move around.” Social and business networking plus the explosion of available information on companies and career paths have helped that process along. “In the last 10 or 20 years, it has become so much easier to find jobs in other industries or regions than it was 10 or 20 years ago when we didn’t have the Internet,” he notes.

Do organizations need to be concerned about fostering loyalty when some employers simply want their employees to do what is asked of them? Cappelli would answer “yes.” The big challenge for employers, he says, is that “employees have discretion, more so now with jobs that have more autonomy. Bosses aren’t, and can’t be, looking over them to tell them what to do all the time.” In addition, notes Cobb, some workers have brought with them, or acquired, skills that are very difficult to replace. “You don’t want that knowledge and expertise to walk out the door.” Also, disloyal employees can be a risk for an employer if they spread the word that their company is an undesirable place to work. “It affects the perceptions your customers have of you,” he adds.

For Cobb, the debate over employee loyalty comes down to the actions of the more dominant side of this equation — the firm. “The employee/employer relationship has changed because of the firms. Maybe I’m naive, but I don’t think humanity changes that much.” The rhetoric of the 1980s, he says, was all about “‘taking control of your career, and your life.’ I have a hard time thinking my father is that different from me [in this regard]. It doesn’t make sense to say that individuals who were born in the 1970s experience a [huge] epiphany that they need to be in control of their lives, and that people born in the 1940s don’t think that way. People have always wanted to be more in control of their lives.” What’s different now, he notes, is how firms treat employees. “It seems strange to me to be loyal to a firm that I know has no loyalty to me.”


What went wrong with the initial public offering of Facebook? When the social network giant known as Facebook presented itself ready on for the stock market at may 18 it had a estimated value of $104 billion. Its stock barely rised above $38 as an opening price, by may 22 the stock value was reduced by 18% leaving it a value of $31 at closing. reducing the value of the stocks sold during the $16 billion IPO by more than $2.9 billion. Although the stock has bounced back slightly since then, some investors have filed lawsuits over how the company and Wall Street banks handled the IPO. According to media reports, stock market analysts at Morgan Stanley — the investment bank that guided Facebook through the IPO process, and other banks lowered their expectations for the company’s earnings just ahead of the IPO, but only informed select investors.

In its IPO Facebook already warned about the challenges it had in mobile advertisement, since there is a
rising use of mobile applications like Facebook and other social networks. They felt the growing competition from Google and uprising networks as Pinterest, with big possibilities that users could just switch to these networks . With all the risks aside nobody would have expected that it had such shifting debut at the stock market. But according to Wharton faculty and other observers, the problem is fairly clear: No one knows how to value the company’s 901 million users.

Andrea Matwishyn” a legal study’s and business professor at Wharton says; “Facebook certainly has a tremendous user base, which is more locked in than any social network before, ustomers stay because the stories of their live photos, videos and status updates are stored on Facebook. And although all of that personal information has value, she notes, advertisers still don’t know how to use it. For now, “valuing companies based on customer data is more art than science.

What Is All That Data Worth?

Facebook noted in its IPO prospectus that, as of the most recent quarter, it garners $1.21 average revenue per user (ARPU) globally. In the U.S. and Canada, the company has an ARPU of $2.86. For 2011, Facebook reported earnings of $1 billion on revenues of $3.7 billion. For the first quarter of 2012, its earnings were $205 million on revenues of $1.06 billion.

In a way tells Matwyshyn, Facebook is more sort of a data collection mechanism, the problem is how to value the data, how to value one “like” much of that data is not usefull for calculating the value of Facebook, Moreover, she says, the valuation process becomes much more nuanced when you begin to compare one user who has 500 “likes” and 1,000 photos with another who logs on only once a week and doesn’t post. What would each user be worth to advertisers?

According to Luke Taylor finance professor at Wharton, The value of Facebook can maybe be estimated by the time it steals from mediums as TV and Radio, how much is that time worth nd how much can Facebook steal of that time. The value of a Facebook user should take into account the total hours spent on Facebook relative to TV, the cost of producing entertainment and ad revenues. He adds that Facebook could evolve more like a TV network, with ad rates that vary depending on prime-usage timeslots.

Wharton marketing professor Peter Fader agrees that valuing a Facebook user is almost impossible under the current circumstances. Unlike a subscriber for a telecommunications or cable company, Facebook users generally are not directly connected to revenue. “Valuing a Facebook user is incredibly difficult. You can’t value a ‘like’ unless there’s a clear link to revenue-producing behavior,” he notes. The challenge for Facebook is that its users don’t appear to be visiting the site for commerce or to view ads. “Facebook has the sheer size of its footprint, and that’s worth something we’re just not sure how much.”

The trick for Facebook in the future will be connecting its 901 million users to revenue, says Fader. Facebook’s best opportunity for growth will be by charging people real money, he adds. For instance, the company could launch a premium service that would offer more control, customized content and perhaps an ad-free experience. “The answer for Facebook could be a subscription model,” he notes.

Indeed, Facebook is in the early stages of launching a new offering for “Promoted Page Posts,” which allows organizations that administer Facebook pages to have their posts seen by more of the people who “like” the page than would normally be reached for a fee ranging from $10 or so up to much larger amounts, depending on the total reach of the post.

Pivotal Research analyst Brian Wieser said in a research note that he expects Facebook to diversify eventually into music and film rentals and sales. Wieser predicts that Facebook will have $1.7 billion in media content revenues by 2017. But until Facebook develops its business model along those lines, the company is largely dependent on display advertising and for now, that is the primary challenge facing it. “Facebook has not yet been able to find an ad model to generate revenues commensurate with its valuation,” notes Saikat Chaudhuri, a management professor at Wharton. “Facebook has not articulated a clear mobile strategy in the wake of that platform’s proliferation especially in fast-growing markets and users generally appear sensitive to changes. While the potential to harness the user base is huge, it is not clear how exactly that will or can be done.”

Without state-of-the-art data and ad linkage, Facebook will likely need to plaster its site with advertising to generate more revenue. The risk for Facebook, says Fader, is that it could become another MySpace, a social network littered with ads. Users may then defect to another, less cluttered environment, despite the trouble involved with transporting their personal data.

Can Facebook create a sustainable business model? Definitely, say experts at Wharton. But until the company hones its model, the $100 billion-plus valuation is hard to defend. “I’m more agnostic than skeptic,” notes Fader. “Facebook’s valuation could be right, but there’s a good chance it could be lower.”

Facebook could have taken one more year of preparation time before going for IPO. FB’s Symbiotic relation with Social gaming company Zynga’s would just help either parties to lure more users into the application who would otherwise be glued to TV or gaming zones but how would these ‘foot prints’ be valued by the advertisers? A better business model in terms of revenue generation, a promising ROI model (target/ Niche marketing concept) for corporates who choose FB as a advertising media and a better means to interpret the data collected through FB would have saved the initial fall. If FB had got it right, the initial estimation of $104 billion would not be an overestimate but could have been less. PEOPLE POWER : HOW TO PREDICT A COMPAY’S REAL VALUE

In this article, an analyst typically only considers a corporation’s recent financial history to determine the future value of a business but in this article, research is pointing to the importance of reporting future-relevant information to analysts. According to dean of education at a School, Loretta O’Donnell, the knowledge-era is being analyzed using industrial-era rules. When the economy was heavily based on industry, many accounting principles used today were developed following the industrial revolution. However with the rise of knowledge-intensive, service-based, human-capital-oriented industries, such measures are no longer enough. If we take a knowledge-intensive company into consideration, O’Donnell says “If people are managed and developed well, then it is a sign of an organization that has a level of confidence in its ability to manage its people.” She also explains that the art of developing a strategy and executing a strategy is very complex and fraught and it is the human capital analysis of a business that really gets to the heart of an organization’s ability to execute on its strategy.

As a result, beyond the retrospective profit-and-loss statements – it is such an important factor for determining the potential future value of a firm. Adept organizations are clear and consistent in their human capital strategy. According to managers, the way to get great shareholder value is managing people. More analysts are looking at the people management strategies and how good a communicator and strategy setter and feedback-loop-giver you are as a senior manager. There’s a lot more emphasis being placed upon people management, particularly in service industries.”. Consulting firm Deloitte is good example in talent management and human capital reporting. Due to the company’s talent management strategies, the firm has been recognised as a thought leader in the social media field for several years. The way Deloitte brands it is by talking about what they have done internally around engagement and driving performance, how they have developed their people and talent. They also use their employees for word of mouth. In addition to this, they run an employee referral program that last year filled 40% of their vacancies.”

Deloitte partner Bashinsky also says: “There are two types of reporting that boards focus on these days,””The first is based on communicating externally about the people risk elements – that is, what an organization is doing to protect its assets, such as workplace health and safety. “The second form of reporting is around talent. One problem is that analysts may not know how to interpret human capital management information. It’s a slow process but some progress is being made. As more companies provide such information, more analysts will begin to ask for it from other companies and will come to understand its importance and meaning, Bashinsky predicts. “At the moment analysts aren’t using human capital information enough,” “It’s going to take a bit more time for analysts to begin to recognize that such information is another critical measure of performance because it helps to illustrate what’s happening with people in that organization.” Carol Royal says the stockbrokers who write reports on companies and the fund managers who invest in businesses typically only look through the single lens of financial management.

“They rarely look at management in any detail,” Royal says. “They take a bush lawyer approach to understanding management and management quality in companies, and they sometimes get it quite wrong. Then they wander off with all of these lag indicators of the previous quarterly period only to find that their forecasts are incorrect.” O’Donnell says financial market analysts, fund managers and stockbrokers are typically trained in very complex mathematical skills. Her research on human capital management with Royal reveals that in one Australian investment bank, 93% of financial analysts had underpinning degrees in quantitative analytical tools. “That is understandable,” she says. “They need to be able to look at the financial data and make predictions. But it is not sufficient to understand the way human capital has to be recruited, developed and created in contemporary, knowledge-intensive organisations. Part of our research is not only saying boards need to disclose more systematic human capital information to the markets, we also say financial markets need to know what questions to ask and how to digest the information.”

Universities and other educational institutions also need to reconsider the essential elements in the professional development of financial analysts and professional associations, insists O’Donnell. Questions analysts should be asking to identify a more accurate future value of an organisation, O’Donnell says, are around leadership, culture, reward systems, succession planning and talent auditing. “If you want to put a value on Google as a company, you would need to understand that the organisation is driven by innovation, creativity and human capital,” O’Donnell says. “You would also need to understand that its success is not just down to a pipeline of new ideas and products coming through Google but also a pipeline of human capital talent that’s driving those new ideas and innovations.

“It’s being demonstrated by the Commonwealth Bank in the fact that they promoted their new CEO from within,” he says. “In many organisations they don’t do enough around their people strategy. How many times do you see CEOs appointed from outside the organisation? It happens all the time. So when you’re promoting from within, when you’re confident you have the people on board to replace the weight-bearing roles – particularly the single most important role – you’re demonstrating to analysts and shareholders that you have a solid plan in place, you have the necessary bench strength and succession planning.”

POPULATION AGEING: HOW TO TURNAROUND ATTITUDES TO OLDER AUSTRALIANS The society’s perception for olderly people is they are fragile, unproductive and are a bit of burden. Old people are being scape-goated as they are viewed as a drain on health resources. This point of view has to change considering ageism is inevitable and today’s 3rd agers are healthier, wealthier and have higher aspirations and expectations. They tend to be more active, sociable and have a positive outlook on life. This article mentions that capabilities varies from person to person and can be influenced and improved. There are number of physical and social factors that can influence the ageing process of a person; such as ‘person’s education, income, and their health habits’. These factors will determine risk factors for serious illness later in life. At this point we see ageing process can be manageable and it is amenable to change. According to WHO, a template for healthy ageing will include a basic level of financial security, age-friendly envionments, availability and accessibility of effective healthcare and maintaining social patterns.

The four key areas which are considered as the cornerstones for ageing well ; healthy living, housing, participation and lifelong learning. Health is obviously a vital enabler for ageing well and the yardstick by which people measure successful old age. Socio-economic factors have probably the most profound effect on healthy-ageing. Poverty, educational disadvantage and unemployment impact on health inequality. The society’s viewpoint considering ageing population as a sick population is wrong. The society is accustomed to think of the area health as a drain, costing money. But the old people think about it as a resource and investment since health is the main enabler so that they can remain independant, contribute and stay socially connected. Many of the old people want to contribute by staying at work. However, demeaning stereotypes are pushing them towards prematüre retirement. Outside of the labor market in Australia, there are 2 millions of Australians who are interested in working.

By not utilising the skills and experience of older Australians, society is dragging down individual’s well-being and the economy is suffering, losing $10,8 billion a year through untapped talent. Hal Kending, an expert in gerontology and chief investigator at the ARC Centre of Excellence in Population Ageing Eesearch, says ‘ older people who want to work for as long as possible, should be able to do so- but there has to be humane income support for those who can’t work. It is not just age, it is capacities’. One of the longest and most comprehensive studies of ageing in the World is the Harvard Study of Adult Development, which has been following 800 men and women from adolescence to old age for 75 years. This study has shown that people over the age of 70 are less depressed than those who are younger. The paradox is ‘fears of ageing are much more stronger in early adulthood than among younger people’. Many people say that it is the best years of their lives. Obviously there is individual variation but old age can be very fulfilling with good health and close relationships.

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