Monthly Archives: November 2016

Executives think about the economy

This continually updated interactive tracks how executives around the world have viewed economic conditions and the economic prospects of their companies, and how those views have differed over time and across industries, regions, and types of company.

Every quarter since early 2004, McKinsey has asked executives from around the world about their expectations for the global economy, national economies, and their own organizations. Since September 2008, as these topics have grown in urgency, we have added additional questions, including some on customer demand and company profits.

This interactive feature will allow you to explore how different regions, industries, and types of companies have been affected by recent changes in economic conditions, and what executives expect to see in the future.

The development of automation, enabled by technologies including robotics and artificial intelligence, brings the promise of higher productivity, increased efficiencies, safety, and convenience. But it also raises difficult questions about the broader impact on jobs, skills, wages, and the nature of work itself. Many activities that workers carry out today could be automated. Job-matching sites such as LinkedIn and Monster are changing and expanding the ways individuals look for work and companies identify and recruit talent. Independent workers are increasingly choosing to offer their services on digital platforms such as Upwork, Uber, and Etsy; in the process, they are challenging conventional ideas about how and where work is undertaken.

For policy makers, business leaders, and workers themselves, these shifts create considerable uncertainty alongside the potential benefits. This briefing note aims to provide a fact base to stimulate discussion. It highlights recent findings from research by the McKinsey Global Institute and others on technology, jobs, and the future of work.

Green energy jobs

The latest failure of liberal employment remedies should encourage the oil and gas industry.

According to liberal theory, governments create jobs by spending money. History suggests otherwise.

When governments spend money to create jobs they move funds and workers into activities with limited or no ability to create wealth. Whatever economic goodness comes about proves unsustainable.

Governments must raise taxes to pay for the increased spending. Businesses, anticipating the new burden, trim spending. Then employment suffers as economic activity slows, and governments face new fiscal pressures.

While governments can employ many people, they can’t create jobs. New jobs require new wealth, which requires profits. Governments don’t generate profits. They employ people with money taxed away from profitable activities in the private sector. They don’t expand the workforce; they nationalize part of it.

In the latest demonstration of these effects, stimulus spending by the US government has failed spectacularly to create jobs.

As Rea S. Hederman Jr. and James Sherk of the Heritage Foundation point out in a Sept. 4 report, new job numbers refute promises by the Obama administration that spending would halt unemployment and lead to labor-market recovery by the third quarter.

According to the Bureau of Labor Statistics, the unemployment rate rose to 9.7% in August from 9.4% in July—well above the administration’s prediction of an 8% peak. The number of workers employed fell by 216,000.

BLS data further debunk recent administration claims about 500,000-1 million jobs created by stimulus spending. In fact, the share of the workforce represented by newly hired workers fell to 2.9% in June from 3.2% when Congress approved the spending spree in February, which was down from 3.8% before the recession began.

These failures do more than discredit liberal assumptions about governments and job creation. They also discolor those green jobs the administration touts in support of its state-centered energy program.

Revitalizing growth in Europe

After receiving several hundred essay submissions on how to pump life into Europe’s economy, the judges awarded prizes in a McKinsey Global Institute contest.

What reforms does Europe need to restore dynamism to its economy? How could it implement them in a way that would be palatable to the public and politicians alike? The McKinsey Global Institute (MGI) report A window of opportunity for Europe, published in 2015, included a targeted set of measures to answer that first question, about the what. To address the complex issues of how, we decided to throw the second question open to a much larger global audience by crowdsourcing the answer.

The result was an essay contest: the MGI Opportunity for Europe. Launched in March 2016, it offered a first prize of €60,000 for ideas to translate economic theory into political measures that would both appeal to voters and help restore Europe’s pep. The contest also offered a €25,000 prize for the best submission by an author under the age of 30. Jean-Claude Juncker, president of the European Commission, agreed to serve as contest patron.

By our deadline, July 31, we had received 401 submissions from all over the world. Just under half of them came from outside Europe, and entries by authors under 30 years of age were not only plentiful but also among the best. Overall, the essays touch on a wide range of subjects. Whatever the diagnosis, a common refrain is the belief that Europe currently lacks an imaginative vision or a clear sense of purpose, that its leaders can seem aloof from the daily concerns of ordinary people, and that in a changing world the very idea of Europe no longer inspires or comforts ordinary citizens. “Europeans don’t fear change; they just fear being left behind by it,” as one essayist put it.

Interview Questions That You Need to Know

There is much advice on how to deal with a lowball offer from a prospective employer. We talk about how to avoid being on the receiving end of a lowball offer, and how to negotiate your way out of one. But what we don’t talk about all that often is how candidates sometimes lowball themselves. This is a tactic often borne out of desperation, and one that should be avoided at all costs.

When unemployment protracts and unemployment benefits exhaust, it can be tempting to reduce your asking price in the hope of getting an offer. It may seem counterintuitive, but often, candidates who lowball themselves wind up unemployed for longer than those who stick to their guns. There are a few reasons for this:

It is suspicious. If you were shopping for a house in a neighborhood where all the homes were selling for $220K, and your realtor took you to see one that was listed for $160K, you would immediately wonder what was wrong with it. It might appear to be just fine, but you would wonder if there was an underground oil tank, a crumbling foundation, or if its well water was contaminated. You probably wouldn’t think, “That’s a bargain! I should jump on it now!” It’s the same when candidates present themselves at a price that is below market. The buyer—in this case, the hiring manager—will wonder what’s wrong.

A willingness to accept a below-market salary or a position that is below your experience level may send the message that you lack ambition. Fair or not, hiring managers sit in judgment of candidates every day. Let’s say that you are a project manager, who earned $90K in your last position. If you’re interviewing for a project coordinator role at $60K, a few things are going to go through the hiring manager’s mind:

Why would this candidate be looking to take a step back?

Can she not handle the responsibilities of the higher level job, and in that case, is she viable as a longer-term hire?

What Are Your Salary Expectations

Answering this question too specifically can lose you a lot of money, or an opportunity. Naming a figure that’s too low can result in a lower offer, or even loss of the opportunity if your answer creates doubt about your value. A figure that’s too high can immediately disqualify you.

This is one of the few questions where formulaic, memorized verbiage may be the best approach.

First, as soon as you apply for a job make sure you understand the range of typical salaries for the position and geographic area, because this may be one of the first questions you will be asked in a phone screen, which could happen at any time.

You can research salaries via websites like Salary, Payscale, Glassdoor, Indeed, CareerOneStop, JobSearchIntelligence, a simple Google search, and sometimes via word of mouth. Use more than one source, since a broader range may give you more negotiating flexibility.

When the question is asked, respond with “Can you tell me what range you have budgeted for the position?”

If they tell you a range, say something like, “That seems like a reasonable ballpark. I’m sure once we agree I’m the right person for the job, we’ll be able to agree on a salary that’s fair.”

If they won’t state their range and put the question back onto you, say something like, “I’ve done some research and I’m seeing salaries anywhere from X to Y. I’m sure once we agree I’m the right person for the job we’ll be able to agree on a salary that’s fair.”

More Help with Common Interview Questions

Earlier posts in this series explored the common interview questions “What are your weaknesses?”, “Where do you see yourself in five years?”, “Why did you leave your job?” and “What’s the biggest mistake you’ve made on the job?”