Newsletter #10 (November 18, 2024)
Last gasp of public DEI, no tuition increases in Texas, ADM accounting struggles, more layoffs, and we see you, Arthur Blank
Welcome to Newsletter #10, my twice-monthly, long-form newsletter where I write about all things HR and L&D, the business world, and/or other interesting current events.
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1. This is likely the last time I’ll write about DEI programs.
I’ve written about DEI programs in prior newsletters and I feel exasperated at this point talking about them any further. The reality is the 2024 election likely signals the *official* end of at least publicly traded companies and government entities having DEI programs for the sake of having programs.
In recent days, the New York Post has opined about this very desire, saying, “It’s time to pull the plug and let DEI die.” Other outlets like the Harvard Business Review and the Washington Post are staking out their spots in the fight (so to speak), while others have also echoed this call for DEI “to die”, with the President-Elect even going so far as to suggest there could be (in effect) reparations for ‘victims of DEI’.
Josh Bersin can be a lightning rod for some HR practitioners, but I listened to his recent podcast episode titled, “Diversity, Inclusion, DEI and Wellbeing in the Trump Era (Episode 197).” He made a good point, essentially saying every single person belongs to a certain group which can be sidelined by someone under the right conditions. Bersin noted he himself is Jewish, which has its own historical and current discriminatory concerns. BUT, there are, without a doubt, certain groups of people who have been more affected by discrimination in the United States than others, and that was the premise of DEI.
What began as affirmative action and affirmative action plans years ago, culminating in specific programs and actions under the DEI (and DEIB) umbrellas in 2020, all are now accused of doing the same thing: inflaming concerns about racism and wasting taxpayer (or investor) dollars, time, energy and effort.
Like all things though, DEI must evolve to survive. In my prior musings here, I’ve elaborated on the need for DEI to be baked into business processes, and not have glorified programs just to have programs. As an aside, skills-based processes are one of the most democratic equalizers in the workplace, ensuring all employees have access to skills development and promotional opportunities, not just certain people.
That said, having DEI or really any other types of programs for the sake of programs, will always attract outsized attention no matter the subject matter: costly programs which are or do not appear to have a direct correlation to the business (or the government agency) in driving revenue (or other metrics). When you have a public entity like the U.S. Department of Health and Human Services and their 80,000+ employees spending more than $35 million on roughly 300 employees to only conduct DEI work, it is just going to attract attention, rightly or wrongly. When certain groups are looking for efficiency, perceived waste, or even a political stance different than their own, they will find those things and seek to change them.
DEI must change in order for the message – and the intended impact – to cut through the noise around it. Seek to lead that change and you will take your company to where it needs to go.
2. Kudos to the State of Texas for continuing to freeze the cost of attending college.
The State of Texas froze tuition in 2023, with the Governor signing a bill into law blocking tuition increases for the 2023-2024 and 2024-2025 university years. In recent days, the Governor has announced the Legislature will likely tackle the same in the upcoming 2025 legislative session, pre-emptively telling the Board of Regents for all university systems to not increase tuition in 2025-2026 or 2026-2027 school years either.
Putting aside any political implications, sending the message to the university systems that they must find ways to keep college affordable for Texans should be something most everyone can support.
3. That answers that on the 2024 back-and-forth potential salary threshold changes.
We got our answer: going from $36,000 to roughly $58,000 was just too high for businesses to absorb in such a short amount of time to update the salary threshold for exemption status.
The irony is the pre-July 2024 level is now back in effect, as the judge in this particular case said “by substantially raising the salary level, the rule improperly jettisoned the duties requirement written into federal law.” Curiously, he did note the following, “The Department may impose some limitations on the scope of the EAP Exemption’s operative terms, but it cannot enact rules that replace or swallow the meaning those terms have.”
So, we are back where we started: can the Department of Labor unilaterally update the salary threshold through additional rulemaking, or can only an act of Congress do so? The answer is, ”it depends on what the appetite is for the amount of an increase”, since this ruling allows the Trump-era update to stand, but shuts down the 2024 changes from the Biden-era. So, in other words, it’s Groundhog Day, again.
4. Yet another Wells Fargo lawsuit ends in a settlement.
In what seems like a never-ending carousel of lawsuits against Wells Fargo (see prior newsletters), here we are again with more of the same. This time around, 17 current and former Hispanic employees alleged Wells Fargo pressured them to induce predatory practices on Spanish-speaking customers.
Terms of the settlement of course are not disclosed, but it is interesting to note that Wells Fargo did the right thing and went to mediation with the parties. This by itself is an act of good faith on the part of the bank and showed they were interested in resolving this case without going to trial.
While many may dismiss this move as a classic example of a large corporation considering the settlement payment as a cost of doing business, I do believe this shows they were genuinely interested in what the employees had to say (or maybe not).
5. ADM’s accounting struggles continue.
The issues for ADM (Archer-Daniels-Midland) date back to January 2024, when their CFO was suspended (and later resigned two months ago) after finding material issues with pricing irregularities and booking practices in their accounting function.
ADM, who will be restating their 2023 financials and an additional six years’ worth of statements based on the review dating back to January, does not expect a material difference in their net performance, which means this was likely a controls issue. Misclassifying purchases between business units is certainly a problem for any company, but it does not indicate there was any fraud in this particular case. That said, what has happened to ADM has shaken investor confidence: at $68.19/share before the first announcement in January, the stock had recovered close to that mark, but with the latest disclosure, it dropped another 10% or so back down to $52/share.
If you can trust there are no material impacts to their financials, as their CEO has repeatedly said, it may be worth an investment flyer with the P/E near 10 and EPS just above 5. Note this is not investment advice, merely just an observation: as for me, I’ll sit this one out.
6. In related news, expect unionization efforts to stall and struggle in the years ahead.
With the upcoming changing of the guard in the White House in January 2025, we can likely expect any gains felt by unionization efforts the past few years to stall. The New York Times posted this article in recent days, jumping all over the obvious as a fallout piece from the election, to highlight the stark difference between the Presidents’ viewpoints on organized labor.
From here, it is in a company’s best interest to take care of their people and not take advantage of them to squeeze out additional profits. Your employees may have nowhere else to turn if they feel they are being taken advantage of. At best, if you do not want to deal with constant turnover and a recurring retention nightmare, take care of your people.
7. Stellantis and Nissan sure are whacking a bunch of jobs.
Continuing the recent run of companies trimming back their workforces, Nissan and Stellantis combined announced job cuts of over 10,000 jobs. While Stellantis says theirs is just for efficiency purposes at their Jeep plant, Nissan’s is more pronounced at over 9.000 positions and they cut their CEO’s pay in half as well (which is a nice change compared to the typical layoff announcements).
For these two companies in particular, and for all the other automakers, their current predicament seems that it was all but inevitable. While there are other factors likely at play, from a simplistic standpoint this is the COVID-era hangover for these companies. Have you seen the prices of new vehicles lately? Who the hell can afford a $80,000 Jeep? After hiking their prices so aggressively from 2020 to this year, it should not be terribly shocking that production is now being curbed down and prices adjusted downwards, pinching profits for the automakers. I don’t like to see people lose their jobs, not at all, but the prices have to come down to convince people to buy – let alone afford – new vehicles anymore. With the US workforce readily returning to the office (and for those who never stopped going in), reliable transportation is necessary. And let’s face it, most of our transportation in this country is built around the highway system currently, so vehicles are a necessary evil and they must be affordable for the majority of the working population.
8. And they are not the only ones cutting jobs.
In recent days, ExxonMobil, GM, Boeing, AMD, Advance Auto Parts, and Chegg have all announced staffing cutbacks and/or layoffs in recent days. This still feels like companies adjusting to the post-COVID spending binge under the auspices of efficiency (with the exception of Chegg here, who outrightly blamed AI). The cost of raising capital remains a burden for companies so even if they wish to expand, they are instead looking at cutting costs to grow. We shall see what this looks like when we enter 2025.
9. LinkedInLunatic of the Newsletter belongs to…..
……somehow equating a boxing spectacle to B2B sales haha! By the way, LILunatics is big-time now:
10. It’s not very often being an NFL fan and working in HR cross the streams, but here we are. Looking at you, Arthur Blank.
The allegations in this sordid lawsuit are myriad: misclassified employees, unpaid overtime, falsified time records, conflicts of interest, romantic relationships, and more against the owner of the NFL’s Atlanta Falcons. I doubt this lawsuit will ever see the light of day, but it goes to show even the NFL is not beyond crazy situations happening (or allegedly happening) in the workplace.
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That’s it for now. I’ll be back in two weeks!
© November 2024 Brandon Caldwell, all rights reserved. Hyperlinks are used frequently for proper credit to source material on respective websites, news articles, social media or other sources. Images are used with and in credit to rights reserved to their respective owner(s). While it can be a useful tool, no ChatGPT or other generative AI was used in the production of this newsletter. Opinions are mine and do not reflect the opinion or policy of others including employers past or present.
