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CEO Daily Brief – Dec. 21, 2010

Some Businesses Opt for Temporary Employees as Unemployment Remains Relatively High Many businesses, reluctant to hire permanent employees, have opted …

Some Businesses Opt for Temporary Employees as Unemployment Remains Relatively High

Many businesses, reluctant to hire permanent employees, have opted to turn to the staffing industry for temporary employees. It appears that companies conclude using temporary staff gives additional flexibility and costs less, according to Bloomberg.

Bloomberg also reports that hiring by private companies in the United States during November was the lowest since January, with 50,000 workers.

John Silvia, chief economist at Wells Fargo Securities, explained to Bloomberg that many companies remain unsure about the strength of the economy and may be reluctant to hire permanent employees. Several CEOs are blaming government mandates, increased regulations and health insurance reforms for the lack of hiring.

Silvia predicts the unemployment rate will reach 10 percent early next year compared to 9.8 percent in November.

Outsourcing is likely to increase in 2011, Elliot Clark, chief executive officer of SharedXpertise Media LLC, told Bloomberg.

There is additional hiring planned for 2011. Some 14 percent of U.S. employers plan to add workers in the first quarter of 2011, while 10 percent expect to cut the number of employees, Bloomberg reports citing a recent survey from Manpower Inc. The level of new hiring was described as “slight,” according to Manpower.

A Bloomberg survey of economists said that unemployment was expected to be at 8.7 percent in 2012.

Federal Reserve Chairman Ben S. Bernanke predicts the labor market may be worse than normal for five years, based on comments he made during a “60 Minutes” interview, says Bloomberg. But the recovery is continuing, says the Federal Reserve.

For more from Bloomberg News, about outsourcing and unemployment, please click here.

SEC May Be Investigating Mark Hurd’s Departure from H-P

The U.S. Securities and Exchange Commission is looking into Mark Hurd’s departure from the CEO’s post at Hewlett-Packard, news organizations have reported.

The inquiry may relate to whether Hurd leaked – to a contractor – information about the possible acquisition by H-P of Electronic Data Systems Corp., according to The Wall Street Journal.

The SEC is also looking at Hurd’s expense reports and possible destruction of evidence, The Journal reported.

Hurd left H-P after it was revealed that a relationship he had with an event coordinator, who was under contract with the company, raised concerns about standards of conduct, says Bloomberg.

Hurd also allegedly filed inaccurate expense reports. But H-P concluded that Hurd didn’t violate the company’s harassment policy.

Oracle Corp. hired Hurd as co-president in September.

For more about the SEC inquiry on Mark Hurd, as reported by Businessweek, please click here.

Innovative Start-Ups Look to the Future to Compete with Established Companies

Too often, big companies lose ground to smaller, innovative start-ups. How does that happen? Bill Taylor says that the smaller start-ups “are successful precisely because they don’t look, talk, behave, or compete like other companies in their fields.”

“They are outliers, extremists, game changers,” Taylor said in a blog post from the Harvard Business Review.

The innovative start-ups “often leave the old guard baffled, confused, and unable to muster an extreme makeover.” They can respond much quicker and more creatively in markets where there are quick changes, frequent upgrades in technology, and customers who have grown used to getting their demands met.

“Most big companies fail miserably at making big change, and the biggest obstacle is the pull of old mental models,” Taylor said.

Taylor gives the example of one smaller, competitive company, LifeUSA, where Robert MacDonald, concluded that “starting something new” relates to “reminiscing about the future.”

Taylor explains that MacDonald came up with practices and ideas that made more established companies almost confused and they could not respond to them.

“If we had listened to the experts,” MacDonald says, “we would have limited our goals and focused on the states around Minnesota, where we were based. But because we reminisced about the future, we started out as a national company competing against the giants of the field. We painted a picture of the future we wanted to create.”

With the current challenges of the economy and advances in technology, start-ups may often have the edge over the more established companies. Coming up with an innovative future and being flexible would likely help the smaller companies compete successfully.

For more about smaller start-ups and innovation, from the Harvard Business Review, please click here.

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