The CEO's dilemma

Having watched yet another TV news program probing the deep mystery of why the U.S. economy isn't producing more jobs, I want to offer a simple explanation in the form of a quiz. It's called "The CEO's Dilemma."

Naturally this quiz, which appears below, is off-limits to the readers who are C-level executives; you already face the tricky challenge outlined below daily. Come to think of it, the quiz should also be off-limits to the much larger group of business or IT managers, because you too are familiar with making the hard choices. OK, that doesn't leave many quiz takers -- but here goes.

Imagine that you are CEO of a company that has just survived the worst tech recession since the collapse of the Nifty Fifth in the early 1970s -- and one of the deepest prolonged stock market slumps since the Great Depression.

Your revenues have fallen by as much as 70 percent. You -- or perhaps your predecessors, given corner-office turnover at such times -- have had the experience of laying off up to 70 percent of your employees, many of whom were hired amid exaggerated promises in the late 1990s.

Most of those who are still working are simply happy the company survived. And in addition to the regular payroll, your company now supports a small army of consultants, and part-time and contract workers. All depend on your good judgment for their livelihoods.

Now you survey business conditions and see a decidedly mixed picture. The recession has ended and the economy appears to be expanding. But short-term interest rates remain at dangerously low, Japan-like levels. The cheap dollar has made it easier to sell goods overseas but has jacked the price of everything you import. And you, your suppliers, and your customers still suffer a mix of fat and lean months, good quarters and those you soon hope to forget.

So here's the dilemma: In putting together your headcount plan for next quarter, should you:

(a) hire wildly and spend the company's money like a drunken sailor, because it's right for America?

(b) go back to "normal" hiring practices, circa 1995, confident that things will get better?

(c) hire sparingly to fill clear needs or to staff programs that have a substantial chance of improving earnings?

(d) hire warily if at all; meet needs instead by outsourcing or adopting new technology to make existing staff more productive?

If you answered (c) or (d), then you understand why job growth hasn't roared back. You also grasp that, as painful as they may be, those approaches are likely to lead to a longer and stronger recovery later on.

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