Why Some Fund Managers Prefer Dividends Over Share Buybacks

Now that the full extent of the market rout in 2022 is coming into view, some investors are reassessing their strategies and, in some cases, starting to consider dividend stocks and dividend-focused funds.

Record dividend payments in 2022

It’s no secret that 2022 was a bleak year for stock returns. However, companies in the S&P 500 paid out a record $565 billion in dividends throughout the year. Data from S&P Dow Jones Indices reveals that dividend payouts from the index grew an impressive 10% year over year.

In a press release in January, analyst Howard Silverblatt of S&P Dow Jones Indices said 2023 should bring another record year for dividend payouts—even in the event of a “full recession.” He expects rising interest rates and bond yields to “exert upward pressure on dividend payouts,” adding that competition for income will increase.

Of course, dividends aren’t the only way company managements incentivize shareholders to own their shares. Buybacks are another popular strategy, although some fund managers prefer dividends over buybacks for several reasons. In fact, investors who are considering buying into a company because of share buybacks should watch for a red flag.

Former PIMCO portfolio manager Austin Graff of Opal Capital, which just launched in 2022, warned that while many tech companies are buying back shares, they’re not reducing their share counts because they’re handing out stock-based compensation to executives and key employees — and issuing new shares to do it. In some cases, these companies are increasing their share counts even though they’re repurchasing shares.

A moral contract

Graff also prefers dividends because they act as a “moral contract” with management.

“For management to return capital to shareholders, it’s very public,” he added. “What companies are paying every quarter or year, they’re creating a moral contract to keep that up, or their stock faces negative ramifications. But they do buybacks when they want to, and there are negative consequences to buying back stocks at highs, not lows. It’s the opposite of what we would want to do with our own money.”

Warren Buffett and other high-profile investors speak very highly of dividend stocks. He added that if management teams did repurchase their shares at lows rather than highs, it would be great, but that’s not something most companies end up doing.

While dividends are anti-dilutive, many tech companies are in unique situations with heavy stock-based compensation. As a result, their stocks have declined as such companies lay off significant numbers of workers.

“Think of what that means,” Graff explained. “If they pay X dollars, and their stock’s at $100, they issue fewer stocks to that employee than if they’re paying X dollars and the stock is at $50. If the stock goes down, it creates more dilution for stock-based compensation than what was experienced at higher stock prices.”

How Warren Buffett rakes in billions on dividend stocks

Warren Buffett also likes dividend stocks, and it’s easy to see why. In fact, dividend stocks are one of the reasons the legendary value investor outperformed in 2022. Buffett’s Berkshire Hathaway is expected to generate over $6 billion in dividend income in the next 12 months.

Nearly half of Berkshire’s dividend income is estimated to come from only three stocks: Chevron CVX , Occidental Petroleum OXY and Bank of America BAC . Other top dividend payers for Berkshire include Apple AAPL and Coca-Cola KO .

Aside from Graff and Buffett, others started to see the value in dividend stocks in 2022. According to Morningstar MORN , investor interest in dividend-focused funds has jumped after the robust performance put up by dividend-paying names last year. Monthly net sales of the 128 U.S. equity funds with “dividend” in their names have jumped since the fall of 2021, while sales of those without “dividend” in their name have dropped.

Morningstar reported that dividend funds averaged a loss of 6.68% in 2022, versus the Vanguard Total Stock Market Index’s 19.6% plunge, which was similar to the average loss of other U.S. equity funds that don’t focus on dividends. One reason dividend funds performed better in 2022 is the lack of technology exposure.

Another reason is valuation. Last year, investors started to refocus their attention on valuations and multiples. Morningstar revealed that the price multiples of the companies that dividend funds tend to own are below the stock index average.

Protecting their dividends

At the end of the day, fund managers aren’t the only ones with a preference for dividends over buybacks. When the going gets tough, corporate managements have demonstrated a preference for protecting their dividend payments at all costs, meanwhile sacrificing their share repurchases to ensure their ability to keep paying their dividend.

S&P Dow Jones Indices reported that buybacks reached a new record in the first quarter of 2022 at $281 billion but declined in the second quarter to $220 billion and in the third to $211 billion.

While share buybacks ticked higher in the fourth quarter, Silverblatt said it may have been because companies accelerated their purchases to avoid the new 1% buyback tax that went into effect this year. In fact, that new 1% tax is one reason some fund managers prefer dividends over buybacks.

On one hand, a 1% tax isn’t much, but on the other, once a tax is in place, it creates the possibility of increasing that tax over time.

I am the founder and CEO of ValueWalk. What started as a hobby ten years ago, has turned into a well known financial media empire with millions of monthly

Source: Why Some Fund Managers Prefer Dividends Over Share Buybacks

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Is Passive Income Truly Achievable?

 LiudmylaSupynska | Getty Images

For the last several years, passive income has been hailed as a near-perfect approach to generating wealth, appealing to entrepreneurs, investors and average working professionals alike. But the promise of effortless income generation sounds suspicious on its surface. Is there really a way to generate revenue without hours of work? And if so, is it accessible to the majority of the population?  

The Idea Behind Passive Income

Strictly speaking, passive income is any kind of recurring income that is generated without ongoing demands for your time and effort. Wages are paid hourly and salaries are paid on an annual basis, with both forms of compensation contingent upon your working a specific number of hours; these are not passive. Instead, a passive income source would be one that sends you a check in the mail periodically, without any effort on your part.

Related: 7 Ways to Make Extra Income Even With a Full-Time Job

Common Examples of Passive Income

To better understand what passive income is and how it works, let’s look at some of the most commonly cited examples of passive income in action:

  • Dividend-paying stocks. First, there are dividend-paying stocks. Stocks represent fractional shares of ownership in public companies. In many cases, those companies decide to distribute profits regularly in the form of quarterly dividends; shareholders can count on a set amount of quarterly income based on the number of shares they hold.
  • A monetized blog. If you start a blog that generates a sizable amount of traffic, in the realm of thousands of visitors per month, you can start monetizing it with the help of ads, affiliate links, premium content or other paid features. You’ll earn a share of revenue based on the number of people you attract, the number of sales you make or other factors.
  • Rental properties. With rental properties, you can buy a property, attract a tenant and collect an amount of rent that exceeds your monthly expenses. With a decent profit margin and a few properties under your belt, this can add up to be a lot of income.
  • Digital goods. You can also make passive income with the help of digital goods, like eBooks or stock photography. After developing these digital goods and marketing them consistently, you may be able to generate recurring revenue from all their future sales.

The “Passive” Income Myth

All these methods are proven to be capable of generating income. More than that, they’ve been responsible for developing many self-made millionaires. But it’s not the “income” part of the term we’re concerned with as much as the “passive” part of the term.

Passive income is rarely passive in the truest sense; while these (and other) passive income sources may require less effort than a full-time job, they may require effort in other formats and in other contexts.

Let’s take a look at each of these:

  • Stock research and initial capital. It’s not hard to get involved with dividend stock investing, but you’ll still have to spend time researching which stocks are available so you can maximize your return. Additionally, you’ll need a sum of initial capital to achieve a meaningful stream; many dividends only pay 2 to 4 percent annually, so investing $100 won’t give you much of a return.
  • Blog setup and maintenance. According to The Blog Starter, “It’s easier than ever to start a blog — but even with a good plan in place, there’s no guarantee you’ll be successful. It takes a lot of time to create content for the blog, research your target audience and refine your approach over time.” Since you’ll also need to produce new content on a regular basis, even a successful monetized blog will require at least a part-time job’s worth of effort.
  • Property research and maintenance. Investing in rental property requires significant upfront capital (not unlike investing in stocks), and to be successful, you’ll need to carefully research and vet each prospective property. You’ll also need to maintain your properties and manage tenant turnover, or else cut into your profits by working with a property management firm.
  • Digital good development. If you want to sell an eBook or stock photography, you’ll need to produce those assets first, then find a service like Shutterstock where you can sell them. This often requires dozens, or even hundreds of hours of upfront effort, and then you’ll need to market your work.

Related: 10 Ways to Make Money While You Sleep

Some people have claimed that passive income is a myth, but that may be a little extreme. Instead, a more accurate assessment may be that passive income isn’t truly passive. No matter what, you’ll still need to put in the time and effort to make your income-generating strategy work; it’s just in a different format than your conventional job.

By

Source: Is Passive Income Truly Achievable?

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Related contents:

3 Ultra-High-Yield Dividend Stocks to Supercharge Your Passive Income in 2023 The Motley Fool

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How To Increase Your Range of Motion And Why It’s Central To Your Health

(Image credit: Getty Images)

Heard of the phrase: range of motion? This term, which is often shortened to ROM, refers to how much joint and muscle movement you have.

How much flexibility you have in your joints will differ from person to person, with one study conducted by the CDC (opens in new tab) revealing that your ROM can be influenced by your gender, age and lifestyle. If you’re trying to improve your ROM, massages, stretching and using some of the best foam rollers can help you work towards increasing your overall flexibility.

Along with helping you complete daily tasks, like bending down to tie your shoe, your ROM can also help to reduce the feeling of joint stiffness, improve muscular function and help you live a better quality of life.

So, to discover how to increase your ROM we decoded the science and spoke to certified fitness trainer Nicole Thompson from the American Council on Exercise (opens in new tab) (ACE) and Helen O’Leary, physiotherapist and Pilates instructor at Complete Pilates (opens in new tab).

What does range of motion mean?

Thompson says: “Range of motion can be defined as ‘the number of degrees through which an articulation will allow one of its segments to move’.”

But to help understand this term a little more, Thompson recommends thinking about the meaning of flexibility, as the two concepts are closely related. “Flexibility is the ‘ability to move joints through their normal full ranges of motion’,” Thompson tells us. “So typically, the more flexible you are, the better your range of motion. Essentially, ROM is a reflection of flexibility.”

How do you know whether you have a good ROM? “There is an ideal length of muscle fiber in which the muscle will function optimally,” Thompson says. “However, if the fibers are too short (or sometimes too long) that can cause stiffness in the muscle and therefore limit the range of motion a joint will have. If the muscle fibers are at an optimal length and have enough elasticity, the muscles will allow the joint to move to optimal degrees.”

Nicole Thompson is an ACE Certified Personal Trainer, Medical Exercise Specialist, Group Fitness Instructor, and Health Coach as well as an ACE Senior Fitness Specialist and Fitness Nutrition Specialist. She holds an M.A. in Sport and Performance Psychology and studied Fitness Instruction/Exercise Science at the University of California, San Diego. Her love of health, fitness, and learning landed her at the American Council on Exercise in 2015 where she continues to cultivate those passions.

Why is range of motion important?

As we’ve seen, maintaining good flexibility is super important, especially as we age. And the best flexibility exercises can help you stay on top of your ROM.

As Thompson explains: “Range of motion is the result of flexibility. And flexibility is an essential component of fitness and one’s ability to perform activities of daily living. A flexibility routine can help improve ROM, reduce stiffness and injury, improve muscular function and can even improve your mood.”

But not staying on top of your flexibility can lead to health and wellbeing problems later down the line. Thompson tells us: “If there are muscle imbalances, as a result of altered muscles lengths/length-tension relationships around the joint, that alters the joint mechanics, which result in postural misalignments, faulty loading, and ultimately pain, injury, and/or compensation.”

How can you improve your range of motion?

1. Massage can help with your range of movement

If done consistently and by a professional, massages can help increase your ROM. Thompson says: “Massage can help relax muscles by increasing blood flow to muscles, decreasing knots (which are believed to be inflammation or microtrauma to muscle fibers that can restrict ROM), and can help fascia be more pliable. Fascia is a connective tissue that covers all the body’s compartments like a web.”

And research backs this point up. The Journal of Physical Therapy Science (opens in new tab) published a study which looked into the effect of massage therapy on the range of motion of the shoulder and concluded that massage therapy ‘significantly improved the shoulder range of motion, especially the flexion and abduction’. While a second review, published in Frontiers in Physiology (opens in new tab), concurred, stating that even with just 15 minutes of massage some increases in ROM were spotted.

2. Use of a foam roller

Foam rollers are a form of self-myofascial release technique and can be adopted as part of a warm up or recovery program.

According to one review published in Frontiers in Physiology (opens in new tab), foam rollers can also be used to ‘increase your ROM’ by performing simple back and forth movements over the roller to ‘exert mechanical pressures on soft tissues via the weight of the body (or the force of the upper limbs)’.

And Thompson agrees, adding: “Myofascial release, whether done by foam rolling or massage, attempts to relieve tension and thus improve flexibility.”

3. Drinking more water

We all know that drinking water is important to our overall health. But it’s believed that guzzling down some H2o can also work towards increasing your ROM.

“Since water is present and needed in tendons, ligaments, and muscles — proper hydration can help optimize muscle performance,” Thompson says. “Water can also help lubricate joints and tissues so they can be more elastic.”

In fact, a study published in the Journal of Human Kinetics (opens in new tab) revealed that collagen fibers are influenced by hydration levels and might be responsible for the cause of stiffness.

Thompson adds: “Conversely, it’s common to get muscle cramps (involuntary contracting/shortening of the muscle) when you are dehydrated. Muscle cramps usually indicate to endurance athletes that they need water and electrolytes. Which further supports the idea of water contributing to muscle pliability.”

4. Stretching

One of the best ways to improve your ROM? By having a first-class stretching routine. According to Thompson, flexibility programs should include various forms of stretching such as:

  • Static stretching (which involves stretching a muscle to near its furthest point and then holding that position for at least 15 or 20 seconds).
  • Proprioceptive Neuromuscular Facilitation (PNF). This is a passive form of stretch that requires contraction and relaxation of muscles to their limit against a prop or partner.
  • Myofascial release (using a foam roller).

Best stretches to increase your range of motion

Wondering where to start when it comes to your stretches? O’Leary recommends adding the below to your routine to hit different areas of your body.

Helen O’Leary is a chartered physiotherapist and Pilates instructor/director of Complete Pilates (opens in new tab) in London. She graduated from Birmingham University in 2008 and in 2010 completed her Polestar Pilates Rehabilitation course and began to teach both mat and equipment Pilates. At Complete, O’Leary works with clients before and immediately after surgery to optimize their recovery.

  1. Bouncing roll down. This will help you touch your toes easier. O’Leary says: “Roll down towards the floor and let your arms hang, accepting that you probably aren’t touching the floor. Let one knee bend and keep the other straight to reach towards the floor. Lift your body up a little, switch knees and bounce back down again. Keep repeating 10 times before letting yourself hand and slowly coming back up. Try to keep the bounce smooth and not force anything.”
  2. Cat cow. This will stretch out your spine. O’Leary explains: “Get on all fours, tuck your tailbone under and allow your spine to arch towards the ceiling. Press into your hands to encourage your mid back to lift as well. From your tailbone, open your sit bones and let your spine go the other way into extension. try to keep pressing into your hands so that you don’t sag between them and lift your chest up and towards the ceiling. Keep your gaze somewhere in front of you so that you aren’t overextending your neck.
  3. Banded dislocations. This stretch will tackle your shoulders and chest. O’Leary adds: “Hold onto the ends of a long band. The longer or lighter the band the easier the movement will be. Take your hands up in front of you, pull apart and then go towards the ceiling and back behind you. Reverse the movement bringing them back up towards the ceiling and down in front of you. The more you pull apart the more you are likely to get round so make sure you find a place that is a challenge but possible without you bending your elbows.”

By: Becks Shepherd

Becks is a freelance journalist and writer writing for a range of titles including Stylist, The Independent and LiveScience covering lifestyle topics such as health and fitness, homes and food. She also ghostwrites for a number of Physiotherapists and Osteopaths. When she’s not reading or writing, you’ll find her in the gym, learning new techniques and perfecting her form.

Source: How to increase your range of motion — and why it’s central to your health | Live Science

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Big Tech Employees Are TikToking On The Job — and Their Bosses Don’t Always Like It

An illustration of a woman holding her phone up, selfie-style in a conference room while a meeting appears to be happening. Several co-workers are seated at a long table, watching her record a video.Jarett Sitter / The Verge

A day in the life of a 20-something on TikTok who works in tech might look something like this: start the day with free breakfast and a latte. Immediately go out for a multihour lunch break. Return to the office and wander around the spacious, light-filled space, visiting the nap room or the Harry Potter-themed meeting space. “Finish up work.” Then head out at 5PM.

A LinkedIn employee’s workday includes making face masks for “a little self-care moment,” followed by eucalyptus hand towels and kombucha in the office. A Google employee’s day involves scooters, rooftop views, hanging out with a dog, and meeting up with co-workers.

This is the “tech girlie” side of TikTok, where lifestyle vlogging has given rise to a cottage industry of creators who’ve made working in tech — and showing followers the ins and outs of their workday — a key part of their personal brand. The videos often follow a standard format: cheery, upbeat background music plays over quick shots of meeting slides, themed workrooms, and snack drawers.

Viewer comments oscillate between contempt and yearning, with many mockingly pointing out how little work is shown in the videos. But invariably, dozens ask: are you hiring?

Tech employees have racked up millions of views on these glossy aspirational videos. But messy boundaries around filming at work have led to HR warnings and even firings from tech firms that creators say are ill-prepared to navigate the influencer-slash-corporate employee. Corporations, meanwhile, essentially get free promotion — they just have to risk their influencers showing too much or revealing things they may not want the whole world to see.

“Me and my tech creators friends, we all have been flagged before at [our] company to be like, ‘Hey, don’t do that,’” says Chloe Shih. Shih, a YouTuber with over 51,000 followers, says creators must balance crafting their own brand and free expression with demands from their employers that limit what can be shared, either through explicit policies or implicit fears.

What’s allowed and what isn’t isn’t always clear for either side, and companies are “trying to be as stringent as possible” while building out policies and expectations for influencers, according to Shih.

Some companies are more strict than others, forbidding the filming of lobbies, entrances, and security measures like badges. Others bar filming at desks even if the computer screen is blurred — revealing even hints of what you’re working on is off-limits. But creators regularly toe the line in their content, resulting in conversations with HR, co-workers, or managers. Some creators, for example, have shared videos giving tours of offices and workspaces after seeing other creators post similar content, angering security and safety teams.

As Shih has cultivated her own brand of tech industry vlogging, she’s developed tactics to deliver content to followers and keep her employers at least mostly happy. She avoids talking about her compensation, and if she’s currently having trouble at work, she opts instead to discuss it after the fact — as she did in her most viral video, a 14-minute breakdown of all the reasons she quit her job at TikTok.

Shih, who has also worked at Meta, Google, and is now a product manager at Discord, has made videos like “What’s the Discord HQ like? // office tour + meet the team!” and “First Week at Discord as a Product Manager” (the latter sponsored by HelloFresh).

Discord employees who are also creators and influencers are expected to “uphold their responsibilities as shareholders and to each other,” says Lucy Anthony, senior counsel for employment at the company.

“Our policies support personal expression while also protecting the company’s confidential information and our employees,” Anthony says. “If employees speak about or on behalf of Discord externally, it must be in accordance with these policies.”

Anthony didn’t expand on what specific policies Discord has for creators. I think all tech creators do their best to respect their company, because that’s number one, they can’t get fired,” Shih says. For many, that means content ends up not actually reflecting a real workday; one creator who occasionally makes videos about their work at Google says they mostly film the food at their job because showing their actual work isn’t permitted.

“I’ve gotten backlash for filming too much food content and people questioning how much I work,” the employee, who requested anonymity to speak freely about their company, told The Verge in an email. “But in actuality, I just can’t show much of my real work!”

But tech workers who aren’t hypervigilant — even at smaller companies — have found themselves out of a job.

Michelle Serna, who goes by @brokeasshorsegirl on TikTok, makes off-the-cuff, unedited videos including documenting her life running a horse ranch and holding down a full-time job. Serna, who worked at health tech company Visionable, was careful to never disclose the name of her employer on TikTok, instead speaking about her unconventional path in the industry and her experience being a remote employee making a good salary.

In August, Serna uploaded a short video to TikTok showing coffee she had spilled early on a Monday morning. Serna says she didn’t realize until later that a company meeting can be faintly heard happening on her computer in the other room (the video has since been deleted). The video didn’t catch on like her others — Serna says it had only a few thousand views — but the next day, she was fired for negligence.

“When I tell you that I was truly shocked that I was fired, I was so shocked because I never was reprimanded for anything,” Serna says. “I was never spoken to about my content creation. I was never spoken to about my performance at work.” Visionable did not respond to The Verge’s request for comment.

Unlike other creators, Serna says she was never warned about her TikTok presence, which can be profanity-laden and straightforward and is part of her appeal. Visionable had even featured Serna in a marketing video sharing her post-work routine on her ranch, and Serna said the company had celebrated her TikTok presence internally, which grew rapidly this year to over 150,000.

While creators build followings from their tech jobs, the companies that employ them also benefit. When Serna shared the news of her firing on TikTok in September, followers were largely supportive. And though she admitted recording the video was a mistake, Serna says companies like her past employer aren’t equipped to navigate having employees with substantial internet followings. Serna says a few other creators working in tech contacted her after she went public about her firing, saying they were scared about how their companies might react to their content.

While creators build followings from their tech jobs, the companies that employ them also benefit from the viral videos showing happy, well-paid employees extolling the benefits of their jobs. An account strategist at Google praises the company for bringing rescue dogs, saying it gave them “an instant boost of serotonin.” A TikTok sponsored by LinkedIn follows a different Google employee from the office to an influencer event, with the creator expressing her gratitude for having “two dream jobs.”

Though Serna didn’t directly say the name of her former employer in TikToks, the information was easily searchable, she says, and followers regularly asked if her company was hiring.

“I’m like, ‘You wanted me for your good press.’ Because if you think about it, I am good press,” Serna says. “I come from a nontraditional background, I don’t have a college degree, I’m a young woman, I have a disability, I’m a remote employee making a lot of money.”

The proliferation of content that exclusively highlights luxurious perks and apparent light workloads can also obscure the reality of working a 9 to 5. Some people will purposely choose to film days when something interesting is happening, Shih says. Other creators are so busy during their actual workday that they’ll put on the same outfit on the weekend to record themselves pretending to work. The highly curated fluff content also doesn’t show that the seemingly generous office offerings can in fact have the opposite effect.

“Look at the Google campus, look at the Facebook campus, look at the LinkedIn campus — they don’t make their campuses that way because they love their employees,” Serna says. “They make it that way so that they can keep you there.”

Google didn’t respond to a request for comment. LinkedIn, meanwhile, has “clear internal policies that apply to all employees,” according to spokesperson Leonna Spilman, though Spilman didn’t outline what those policies are. “We make them available so everyone at LinkedIn can follow them, including when they choose to share their experiences in communities they care about,” Spilman says.

Still, the “tech girlie” genre of content can serve a purpose, especially for women, people of color, and other traditionally underrepresented groups in the industry who hope to land a job.

Nylah Boone, a TikTok creator who considers herself a micro-influencer, sprinkles in workday content with other unrelated vlogs, like travel videos, Trader Joe’s hauls, and follower Q&As. In April, while working as a contractor at Apple, Boone posted a video of her first day working from the Apple office, showing her morning routine and commute along with snippets of the building, an in-office pastry bar, and lunch with co-workers. The video, titled “Day in the life of a Black girl working in tech,” has amassed nearly 400,000 views, with hundreds of comments asking Boone for career advice and questions about her job and daily routine.

“My followers or people that would reach out to me or comment were like 80 percent Black women,” Boone says. “That was important to me to be able to connect with other Black women as well to encourage them, ‘You can work in this industry or work in this role.’”

Shih, too, says she’s motivated to make content about her job to give others like her free career resources. After receiving an influx of pleas for advice, Shih set up a Discord server for tech professionals and hopefuls to meet and connect. Making videos like the one outlining why she quit TikTok is her way of being honest and transparent with followers, she says.

“I kind of did everything by trial by fire,” Shih says of getting her start in tech. “And if I could go back and tell myself to do stuff, it would have changed my outcome so dramatically.”

In May, Boone unexpectedly lost her job at Apple when her contract wasn’t renewed. She made videos about that, too — a trio of clips documenting her job loss has so far gotten around 150,000 views.

Boone has since moved on to a job at a marketing agency, where she’s able to continue making videos for TikTok while working. But she says tech influencers are an important way that companies are able to get in front of potential applicants, especially people who might not otherwise look for a job in the sector.

“Imagine if there were no POC creators or Black women creating the content about their jobs in tech. There are so many people on [TikTok]… like middle school, high school [girls],” Boone says. “If they have no exposure to it, they’re not going to know that there are other options out there for them.”

By Mia Sato

Source: Big Tech employees are TikToking on the job — and their bosses don’t always like it – The Verge

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Five Types Of Talent Behind The Great Resignation

Last summer, Shannon Harrell left a marketing role at Nestlé to work in the then booming telehealth industry at Teladoc Health. Several months later, as her new employer’s stock was falling amid disappointing results, Harrell switched her LinkedIn status to “open to work.” By April, she’d been recruited to run strategic communications and channel marketing at pet insurer PetPartners.

“I saw the writing on the wall,” Harrell says. “The growth of that category looked a little uncertain, so I was—as anyone would be—concerned.”

Harrell is what McKinsey would call a traditionalist, one of five types of talent that has spurred The Great Resignation—and may be key to defeating it. In a new study released Wednesday, the consultancy analyzed data and surveyed more than 13,000 workers worldwide to determine what motivated people in different industries to quit over the past two years in order to figure out what might make them stay.

One thing that cuts across all types of workers is a persistent sense of optimism. Three-quarters of respondents felt it would not be difficult to get a job that’s comparable to, or better than, their current role. “People are confident enough that they don’t even need the other job in hand when they do move,” says Aaron De Smet, a senior partner and co-author of the report. “They’re like, ‘I’ll just quit and go find another job,’ and they’re not worried about it.”

Quitting Trend That Just Won’t Quit

With record-low U.S. unemployment and 11.3 million open jobs, it’s easy to understand the optimism. High demand has enabled more than half of those who quit to not only move into new jobs but also move into new industries. Only 6% made what could be considered a lateral move within their industry. The public and social sector had the greatest attrition rate in the survey, with 57% leaving the sector, while healthcare and pharma had the least.

What matters is that many of them aren’t returning to their former industries or even the job world anytime soon. Of those who quit without a new job in hand, only 47% have returned to the workforce, with 29% returning to traditional full-time employment. “Some companies are waiting for those people to come back,” De Smet says. “And they might be waiting a long time.”

The Five Personas of Quitters

That means employers have to recognize who is open to new jobs—and figure out what it will take to hire and retain them. In the study, McKinsey identified five personas:

  • Traditionalists — Like PetPartners’ Harrell, these are career-oriented workers who are willing to make some trade-offs for the right price. They’re less likely to quit without a job to go to and more likely to stay if they get enough money.
  • Do-it-yourselfers — They emerged as the largest cohort in the study, a group that tends to value flexibility, meaningful work and compensation. Typically 25 to 45, they can be self-employed or doing gig work or part-time jobs. They want flexibility and a friendly work environment.
  • The caregivers and others — These are the people at home but are wanting more. Typically 18 to 44, with more women than men, they decided to sit it out at home and are looking for roles with flexibility that allow them to still continue their caregiving and responsibilities outside their jobs.
  • The idealists — Typically a younger cohort of students and younger part-timers, 18 to 24, this persona wants flexibility, strong organization culture and clear career advancement trajectories. They ranked belonging to an inclusive and welcoming community more highly than the other personas.
  • The relaxers — These are a mix of retirees, those not looking for work and others who might return to traditional work if the job is right. They want meaningful work and balance. Many retired workers are increasingly returning to work following a surge in retirement during the onset of the pandemic.

To appeal to these cohorts and address the attrition-attraction issue, companies need to double down on their value propositions—both traditional, which includes pay, title, benefits and career paths, and nontraditional, which involves flexibility, company culture and personalization, McKinsey outlines.

“There are some super talented people out there sitting on the bench because the offer is still the traditional offer,” De Smet says.

Source: Five Types Of Talent Behind The Great Resignation

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