1. SHRM Survey Findings: 2014 Economic Conditions—California Overall Financial Health and Hiring October 30, 2014

2. This is Part 1 of the California results from a series of SHRM survey results about the state of jobs and skills in the current economic condition, which relates to a SHRM survey series about the ongoing impact of the U.S. and global recession from 2007 to 2012. California and U.S. results are compared, and statistically significant differences are indicated in separate slides in the report. California results will be reported separately in three different topic areas:  Overall financial health and hiring.  Recruiting and skills gaps.  Global competition and hiring strategies. Overall results (including industry-specific information) for 2013 can be found on our website at http://www.shrm.org/research/surveyfindings/articles/pages/shrmpolltheon goingimpactoftherecession.aspx http://www.shrm.org/research/surveyfindings/articles/pages/shrmpolltheon goingimpactoftherecession.aspx Economic Conditions—California Overall Financial Health and Hiring ©SHRM 20142 Introduction

3. How is the financial health of California organizations? The majority of organizations in California are doing well—one-quarter (26%) reported excellent financial health, and one-half (49%) indicated their organization was in good financial health. Just 6% said their organization was doing poor financially.  Over the past 12 months, three-fifths of California organizations had seen mild (45%) to significant (15%) improvement in their financial health. Have California organizations been losing staff due to layoffs, attrition, restructuring, etc.? Over the past year, only 5% of California organizations had lost 21% or more of their employees. Two-fifths (40%) of organizations had lost 1% to 5% of staff, and one-quarter (26%) reported no staff losses. Regardless of the status of their current financial health, what actions have California organizations taken as a result of financial challenges? Nearly two in five organizations (38%) had not implemented any changes in the past year. For those that did, the most common strategies were to lay off employees (32%), implement budget cuts (26%) and freeze hiring (21%).  Organizations in California (32%) were more likely to lay off employees as a result of financial challenges compared with the rest of the U.S. (25%). Regardless of the status of their current financial health, what actions have California organizations taken as a result of financial stability or growth? One-third of California organizations (34%) did not take any actions, but for the two-thirds that did, the most common actions were to increase salaries (37%), provide bonuses (30%) and fill positions that had been lost (26%). Economic Conditions—California Overall Financial Health and Hiring ©SHRM 20143 Key Findings

4. Are organizations in California hiring? The vast majority of California organizations (95%) had hired full-time employees in the past year, and two-thirds (67%) had hired contract/temporary workers on a full-time basis. For part-time work, 61% had hired regular employees, whereas about one-half (52%) had hired contract/temporary workers.  California organizations were less likely to hire part-time employees compared with the rest of the U.S. Which factors are important when considering whether to hire full-time staff? When given the four following factors, California organizations indicated that maintaining normal business operations (76% extremely or very important) was the most important factor, followed by organizational growth (69%), changes in business strategy (63%) and an improved economy (34%). These results were similar for the rest of the U.S. Are California organizations creating new positions or adding new duties to existing jobs? Over the past year, California organizations were most likely to have hired direct replacements (79%), but three in five (62%) had hired for completely new positions, with 45% indicating they had hired replacements that required new duties.  Additionally, two-thirds of California organizations (67%) indicated that hiring for completely new positions had increased over the past year, and hiring replacements with new duties had increased for 47% of organizations. California was more likely than the rest of the U.S. to have had an increase in hiring for replacements (32% and 25%, respectively). Economic Conditions—California Overall Financial Health and Hiring ©SHRM 20144 Key Findings (continued)

5. Are California organizations requiring new skills for full-time regular positions? One-half (50%) of organizations in California indicated that new skills—either for the position or for the organization—were required for at least some of the full-time positions they had hired in the past year. Why are new skills required for some positions? The top three reasons were due to changes in the organization or its operations: growth (56%), new products/services (43%) and expanding business into new markets (41%). Two in five organizations (41%) also cited changing technology as a reason for requiring new skills. However, organizations in the rest of the U.S. (51%) were more likely to require new skills because of changing technology compared with California. How difficult is it to find qualified candidates for positions requiring new skills? About two-thirds of California organizations said it was very (15%) or somewhat (53%) difficult to find qualified individuals for full-time regular positions requiring new skills in the past year. What are the most common job categories for which California organizations are hiring? Similar to the U.S. overall findings, around one-half of California organizations had hired administrative support staff (58%), accounting and finance professionals (52%), and managers and executives (50%) in the past year. Over one-third had hired IT/computer specialists (39%), customer service representatives (34%) and HR professionals (34%). The rest of the U.S. was more likely than California to have hired hourly laborers (30% versus 24%) and skilled trade positions (24% versus 18%) in the past year. Economic Conditions—California Overall Financial Health and Hiring ©SHRM 20145 Key Findings (continued)

6. After a lengthy recession that saw the loss of more than eight million jobs, the U.S. economy is clearly in recovery, albeit in a tempered period of growth. Three out of four respondents to the California survey, as well as 80% in the U.S. overall, reported that their organization is either in “excellent” or “good” financial health, an extremely positive indicator for the economy’s current expansion. Despite improved conditions, many employers and sectors of the economy are still struggling. Certain industries, such as high-tech, are seeing increased demand for their services, whereas others—particularly government entities—continue to face budget deficits. And though hiring has improved in the U.S. labor market overall, some employers have still been forced to cut staff to make ends meet. One quarter of overall U.S. organizations laid off workers in response to financial difficulties during the past 12 months, and that action was taken at a slightly higher rate among California organizations (32%). Despite recent job gains, millions of positions are still going unfilled and, consequently, impeding the growth of some employers. In July 2014, there were 4.7 million job openings in the United States, up nearly 800,000 from the beginning of 2014, according to federal data. With millions of people seeking work, it is clear that many jobs are not being filled due to a skills mismatch between job seekers and open positions. Two-thirds of respondents to the California and overall U.S. surveys indicated that they were having some level of difficulty hiring for their full-time openings. Economic Conditions—California Overall Financial Health and Hiring ©SHRM 20146 What Do These Findings Mean for the HR Profession?

7. Organizations’ Overall Financial Health Economic Conditions—California Overall Financial Health and Hiring ©SHRM 20147 Note: Respondents who answered "don't know" were excluded from this analysis.

8. Organizations’ Change in Overall Financial Health Compared to 12 Months Ago Economic Conditions—California Overall Financial Health and Hiring ©SHRM 20148 Note: Respondents who answered "don't know" were excluded from this analysis.

9. Organizations’ Loss of Regular Full-time Workforce in the Last 12 Months due to Layoffs, Attrition, Restructuring, etc. Economic Conditions—California Overall Financial Health and Hiring ©SHRM 20149 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages do not equal 100% due to rounding.

10. Actions Organizations Have Taken as a Result of Financial Challenges in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201410 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages do not equal 100% due to multiple response options.

11. Actions Organizations Have Taken as a Result of Financial Challenges in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201411 Note: Only statistically significant differences are shown. California responses were excluded from the United States group for this analysis. United States—California Comparison Organizations in California are more likely to lay off employees as a result of financial challenges compared with the rest of the U.S. Lay Off Employees California (32%)>United States (25%)

12. Actions Organizations Have Taken as a Result of Financial Stability or Growth in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201412 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages do not equal 100% due to multiple response options.

13. Organizations Hiring Staff in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201413 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages do not equal 100% due to multiple response options.

14. Organizations Hiring Staff in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201414 Note: Only statistically significant differences are shown. California responses were excluded from the United States group for this analysis. United States—California Comparison In the last 12 months, organizations in California were less likely to hire part-time employees compared with the rest of the U.S. Part-Time Employees Hired in the Last 12 Months California (61%)<United States (68%)

15. Importance of Certain Factors in Organizations’ Decision to Hire for Full- Time Regular Positions Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201415 Note: Respondents who answered "don't know" were excluded from this analysis. Only respondents whose organizations were hiring full-time staff were asked this question. Percentages may not equal 100% due to rounding. CA (n = 489) U.S. (n = 2,873) CA (n = 508) U.S. (n = 2,984) CA (n = 506) U.S. (n = 2,890) CA (n = 516) U.S. (n = 3,055)

16. Types of Full-Time Regular Positions That Organizations Hired in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201416 Note: Respondents who answered "don't know" were excluded from this analysis. Only respondents whose organizations were hiring full-time staff were asked this question. Percentages do not equal 100% due to multiple response options.

17. Change in Hiring Certain Types of Full- Time Regular Positions in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201417 Note: Respondents who answered "don't know" were excluded from this analysis. Only respondents whose organizations were hiring full-time staff were asked this question. Percentages may not equal 100% due to rounding. CA (n = 373) U.S. (n = 2,254) CA (n = 201) U.S. (n = 1,114) CA (n = 291) U.S. (n = 1,655)

18. Change in Hiring Certain Types of Full-Time Regular Positions in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201418 Note: Only statistically significant differences are shown. California responses were excluded from the United States group for this analysis. United States—California Comparison In the last 12 months, organizations in California were more likely to increase hiring of full-time regular positions for replacements (e.g., due to turnover, layoffs, attrition, restructuring) compared with the rest of the U.S Increased Hiring Full-time Regular Positions for Replacement in the Last 12 Months California (32%)>United States (24%)

19. Organizations Requiring New Skills for Full- Time Regular Positions Hired in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201419 Note: Respondents who answered "don't know" were excluded from this analysis. Only respondents whose organizations were hiring full-time staff were asked this question.

20. Reasons That Positions Require New Skills Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201420 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages may not equal 100% due to multiple response options. Only respondents whose organizations were hiring full-time positions that required new skills were asked this question.

21. Reasons That Positions Require New Skills Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201421 Note: Only statistically significant differences are shown. California responses were excluded from the United States group for this analysis. United States—California Comparison Organizations in California were less likely to indicate that changing technology as a reason that full-time regular positions require new skills compared with the rest of the U.S. Require New Skills due to Changing Technology California (41%)<United States (52%)

22. Level of Difficulty in Finding Qualified Individuals for Full-Time Regular Positions That Require New Skills over the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201422 Note: Respondents who answered "don't know" were excluded from this analysis. Only respondents whose organizations were hiring full-time positions that required new skills were asked this question. Percentages may not equal 100% due to rounding.

23. Types of Full-Time Job Categories Organizations Hired in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201423 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages do not equal 100% due to multiple response options. Only respondents whose organizations were hiring full-time staff were asked this question. California (n = 525) United States (n = 3,023) Administrative support staff 58%60% Accounting and finance professionals 52%53% Managers and executives50%49% IT/computer specialists39%42% Customer service representatives 34%31% HR professionals34%38% Engineers26%25% Sales representatives25%22% Hourly laborers24%30% Skilled trades18%24%

24. Types of Full-Time Job Categories Organizations Hired in the Last 12 Months (continued) Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201424 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages do not equal 100% due to multiple response options. Only respondents whose organizations were hiring full-time staff were asked this question. California (n = 525) United States (n = 3,023) Community and social service workers 12% High-skilled medical12%14% High-skilled technicians12%15% Hourly service workers12%15% Lawyers, judges and legal support workers 11%10% Drivers10%13% Production operators9%13% Scientists9%7% Educators8%12% Protective service workers4%8% Other6%5%

25. Types of Full-Time Job Categories Organizations Hired in the Last 12 Months Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201425 Note: Only statistically significant differences are shown. California responses were excluded from the United States group for this analysis. United States—California Comparison In the last 12 months, organizations in California were less likely to have hired hourly laborers compared with the rest of the U.S. In the last 12 months, organizations in California were less likely to have hired for skilled trades, such as electricians, carpenters, machinists, mechanics, welders and plumbers compared with the rest of the U.S. Hourly Laborers California (24%)<United States (31%) Skilled Trades California (18%)<United States (25%)

26. Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201426 Demographics (California)

27. Demographics (CA): Organization Industry Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201427 Note: n = 572. Percentages do not equal 100% due to multiple response options. Percentage Professional, scientific, and technical services16% Accommodation and food services, retail/wholesale trade11% Health care and social assistance11% Manufacturing11% High-tech10% Other industry9% Government agencies9% Finance, insurance, real estate and rental and leasing8% Educational services7% Construction, mining, quarrying, and oil and gas extraction6%

28. Demographics (CA): Organization Sector Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201428 Note: n = 572. Percentages do not equal 100% due to rounding.

29. Demographics (CA): Organization Staff Size Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201429 n = 504

30. n = 535 Demographics (CA): Other Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201430 U.S.-based operations only 67% Multinational operations 33% Single-unit organization: An organization in which the location and the organization are one and the same. 30% Multi-unit organization: An organization that has more than one location. 70% Multi-unit headquarters determines HR policies and practices 48% Each work location determines HR policies and practices 3% A combination of both the work location and the multi-unit headquarters determines HR policies and practices 49% Is your organization a single-unit organization or a multi-unit organization? For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both? Does your organization have U.S.-based operations (business units) only, or does it operate multinationally? n = 542 n = 398

31. 31 SHRM Survey Findings 3,655 HR professionals participated in this survey from a randomly selected sample of SHRM’s membership from the entire United States and an additional random sample from California U.S. respondents (including CA) = 3,335, response rate = 13%, margin of error = +/-2% CA respondents = 572, response rate = 10%, margin of error = +/-4% Survey fielded December 16, 2013 - January 16, 2014 Survey Methodology Economic Conditions—California Overall Financial Health and Hiring ©SHRM 2014

32. SHRM California Resources  http://www.shrm.org/hrdisciplines/pages/california.aspx http://www.shrm.org/hrdisciplines/pages/california.aspx SHRM Leading Indicators of National Employment (LINE)  http://www.shrm.org/research/monthlyemploymentindices/line/pages/def ault.aspx http://www.shrm.org/research/monthlyemploymentindices/line/pages/def ault.aspx SHRM Jobs Outlook Survey (JOS)  http://www.shrm.org/research/monthlyemploymentindices/lmo/pages/defa ult.aspx http://www.shrm.org/research/monthlyemploymentindices/lmo/pages/defa ult.aspx SHRM Metro Economic Outlooks  http://www.shrm.org/research/monthlyemploymentindices/pages/metroeco nomicoutlooks.aspx http://www.shrm.org/research/monthlyemploymentindices/pages/metroeco nomicoutlooks.aspx SHRM’s Workforce Readiness Resource Page  http://www.shrm.org/hrdisciplines/staffingmanagement/articles/pages/ workforcereadiness.aspx http://www.shrm.org/hrdisciplines/staffingmanagement/articles/pages/ workforcereadiness.aspx SHRM Foundation: What’s Next: Future Global Trends Affecting Your Organization, Evolution of Work and the Worker  http://www.shrm.org/about/foundation/shapingthefuture/documents/2- 14%20theme%201%20paper-final%20for%20web.pdf http://www.shrm.org/about/foundation/shapingthefuture/documents/2- 14%20theme%201%20paper-final%20for%20web.pdf Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201432 Additional SHRM Resources

33. For more survey/poll findings, visit shrm.org/surveysshrm.org/surveys For more information about SHRM’s Customized Research Services, visit shrm.org/customizedresearchshrm.org/customizedresearch Follow us on Twitter @SHRM_Research@SHRM_Research Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201433 About SHRM Research Project lead: Tanya Mulvey, researcher, SHRM Research Project contributors: Alexander Alonso, Ph.D., SPHR, vice president, SHRM Research Evren Esen, director, Survey Programs, SHRM Research Yan Dong, Survey Research Center, SHRM Research Christina Lee, researcher, SHRM Research Qikun Niu, intern, SHRM Research Jennifer Schramm, manager, Workplace Trends and Forecasting, SHRM Research Joseph Coombs, senior analyst, Workforce Trends, SHRM Research Copy editor: Katya Scanlan, SHRM Knowledge Center

34. Founded in 1948, the Society for Human Resource Management (SHRM) is the world’s largest HR membership organization devoted to human resource management. Representing more than 275,000 members in over 160 countries, the Society is the leading provider of resources to serve the needs of HR professionals and advance the professional practice of human resource management. SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. Visit us at shrm.org.shrm.org Economic Conditions—California Overall Financial Health and Hiring ©SHRM 201434 About SHRM