Episode Transcript
[00:00:00] You.
[00:00:07] Hello, everybody. Happy 2024. We're off to a fast start in this new year, and today I want to talk about two very, very contemporary issues. One is the diversity and inclusion chaos going on around the world as a result of the resignation by Claudine gay from Harvard, the affirmative action decision by the Supreme Court last year, and many, many other things. And then I want to talk about the unemployment rate and the job numbers that just came out in December and what that implies for the year ahead. So, on the first topic, I wrote an article that a lot of you can read, essentially discussing the issue of whether corporate DEi is under attack. And it is. We have a pretty big movement around the world, particularly the United States, including other countries, to demonize or undermine the diversity and inclusion programs we have in companies under the guise that they are discriminatory against non minorities. And now that Harvard got called out and Penn and other universities for not being willing to deal with antisemitic issues, I think there's a very, very important topic in discussion, and this is going to affect DEI. DEi jobs are down 48% year over year. The number one or number two jobs being eliminated and companies are doing layoffs have to do with DEI. So those of you in corporations that are in DEI roles, I'm sure you know this, there's a lot of pressure against investing in this initiative, and I think there's good reason to change it, because thinking of DEI as an HR specific program run as training or monitoring or target setting or even policing diversity and inclusion initiatives sort of runs counter to most companies beliefs that we want people to act in a positive and inclusive way, not penalize them for something that they may not even be aware that they're doing. And I've heard people tell me that even courses that talk about unconscious bias can have negative impacts on people's behaviors at work. So there's a long history of this. The diversity and inclusion initiatives and affirmative action initiatives have been. Companies have been going on since the 1960s, and we studied this in the elevating equity course and the program we have, which, by the way, is one of the best courses we've ever developed in the academy. And what you see is that when you don't focus on diversity and inclusion, in hiring and promotion and pay, in development and opportunity, people behave in biased ways because of their particular biases. And that hurts the performance of the company, and, of course, hurts the performance of individuals, creates retention problems, and oftentimes customer service problems. And so the conclusion that we came to, and I certainly believe is that we can't frame Dei as a social agenda. It really isn't a social agenda. It's a business agenda. By having a more inclusive and diverse workforce, we can hire a larger slate of candidates. We can have a better leadership pipeline. We can have a more sustainable supply chain. We can reach new customer segments. We can build more inclusive and interesting and creative leadership, many, many things. And at least in the United States, in California, we're already in a demographic environment where the majority of Californians are not white. And that's going to be true in state after state around the country. So companies that don't behave this way are going to find themselves isolated in their hiring and their opportunities in the market. But that all said, if you read what's been going on the last couple of weeks, the big argument against Dei from many of the people who are associated with Harvard, a lot of right wing people, Elon Musk and others, is that it's a oppressor, oppressed dialogue, where we've somehow moved beyond the issues of inclusion and diversity towards the issue of you are the oppressor of the oppressed people. And that is, in my opinion, the reason why this anti semitic conversations have come up relative to Israel is a lot of younger people in particular believe that Israel is the oppressor of the Palestinians. I'm not going to get into this or make my opinion clear or even discuss my opinion here, but once you come to that conclusion that there's an oppressor, then you start to alienate the people who you've decided are the oppressors, and they don't want to take responsibility for something they didn't do. And the whole Dei thing goes upside down. And honestly, I think this has happened in business. I'm not saying it's happened everywhere, but I think some of the people who came into the DEI career frame had those mentalities, and they wanted to teach employees about oppressors versus oppressed people. And honestly, that's not helpful. So I think we're in a cycle where we're not going to do as much Dei in HR and we're going to have to figure out how to get this embedded into the company. And as I discussed in the article, that doesn't mean DEI strategies are going away at all. They're obviously very, very valuable and important. But having a head of DEI in HR who is somehow trying to promote this across the whole company, it's probably not the right solution. I mean, it goes back to the days when we had chief digital officers trying to teach everybody how to be digital. I don't think too many companies do that anymore because we're all digital and we're all thinking digital stuff constantly. Maybe we've reached that point in DEi, and as a result of the Supreme Court decision last summer, many law firms are filing lawsuits against companies that have particularly unique diversity programs for hiring or pay or even vc firms that invest in all black companies or all women companies can be sued. So there's legal reasons why these programs are going to get ratcheted back, too. Your response to this should not be to kill the program. Your response should be to make sure your DEI strategy is pragmatic, it's business focused, it's embedded into the business areas of your company and not isolated in HR. And that the CEO and the operational leaders in the company are continuously discussing this and that you're opening the lines of communication between employees and within employees in employee research groups and other areas to talk about things that are on their minds. We can't be isolated from politics in business. We are a part of the political environment in the economies in which we do business. And when there's anti immigration or whatever it may be that happens at the political level, the employees want to talk about it and they want to know what the company's position is. And so we need to stay vigilant and stay on top of this. The other angle to me in DEI is many companies in Europe have folded diversity and inclusion into sustainability. In the United States, sustainability seems to have a little bit of a black mark, but it actually makes a lot of sense to me that if you have a long term sustainability strategy for your business, and it has to do with supply chain and global warming and water and rights and human rights, diversity is part of that. Because if you don't have an inclusive company, you have risks. You have risks of not being able to do business in certain countries and communities. You have risks of high turnover, you have risks of missing markets. And so, as the Europeans in the EU define it, this is people sustainability, not just environmental and supply chain sustainability. And that's another way to bring the DEI agenda out of this political sphere into a business conversation. And I know a lot of companies that have done that very successfully. We are going to talk about this at irresistible in May. We're getting some great DEI leaders to come, and I'm going to bring this topic to a forefront. In the meantime, if you're a DEI leader or you're involved in any of these topics, we would love to talk to you, because I know this is a very sensitive topic for every company that I've talked to now. Second topic is the job numbers. And most of you probably saw this, that we created 230,000 or more jobs in December in the United States. Unemployment rate is back down to 3.7% again. And what this essentially does is reinforce the conversation we've been having for the last year or two about the secular labor shortage. We're going to have a shortage of workers for a long time to come. The fertility rate, the birth rate, the hybrid work policies, contingent work, flexible work, all of these factors have given workers more autonomy, more power, more flexibility, and they are feeling their oats. They are joining unions. They are pushing back. They're asking for more money. They're expecting more support from you as an employer, and you need to get used to it. And one way to think about this trend, and we discuss it in the post industrial age. You really need to read that research. The post industrial report, which is free on our website, is one of the most important things I think you should look at is imagine a world where every employee has 15 job opportunities every day, and they wake up in the morning going to work at your company, and when they get upset or they get unhappy or something isn't working well for them, they pick up this list of 15 job opportunities, and they look at it every day. How would you run your company? How would you run hr? How would you run your pay? How would you run your employee experience programs if that were the case? Well, that is the case. And that is going to be the case for a while. And that means we have to think about employees not as replaceable parts as if we can replace one with another if they leave. But as members of our organization, I'm not going to use the word family, but the more committed and engaged and involved and empowered people are, the less likely they are to look around. And now, of course, they have to be paid well. They have to be paid fairly. They have to feel that their manager is paying attention to them, and there will be times when they're going to leave just because the opportunities that they want are not available. But generally speaking, we are family oriented animals. Human beings want to be a part of something bigger than themselves. They want to feel included. They want to feel they are adding value in a bigger way than their individual contributions. And when you create that kind of environment and you give people a sense of safety, that even if the company is doing poorly, which sometimes every company does, we're going to take care of them. And this is a lot of what the irresistible organization is about, then they won't look around and they won't look at those other jobs. Because even though there are 15 opportunities, you don't really know if they're any good. You don't know if those companies are going to be the right fit for you. Maybe you'll work for somebody you don't like. Maybe the company is just overselling what they have to offer. So there's uncertainty there, and what we need to do is remove uncertainty from the work environment of the people we have in the company. Now, that does not mean we don't hold people accountable. I think there's generally, if you think about the various theories of management, theory x versus theory y, all of the books that have been written on management, there is a philosophy of management which is more or less out of date, which says that every employee is trying to goof off and get as much as they can out of the company every day. And so we need to treat them as if they're to be contained and managed and controlled. I do not believe in that. I don't believe that philosophy works over time. I think it is a very limiting philosophy. But there are organizations that feel that way that essentially say, if you haven't done something for me as a company this month, this quarter, this year, then you can leave and we'll find somebody else that can do it. Under theory why or the more modern empowered thinking, the opposite is the case. And this is where Peter Drucker came out in a lot of other management theories in the more recent decades, which is that employees are an asset. And when you invest in employees and you give them growth, and you give them development, and you give them opportunities and you give them flexibility and you give them fair pay, they return that investment multiple times through their work, their effort, their creativity, their innovation, their customer service, and so forth. If you're a healthcare provider and you have nurses and they're delivering life saving care and they're burned out or underpaid, you have to invest in them. There aren't enough nurses out there. If you're a retailer and you can't hire people to work in your coffee shop, you're going to close the store or you're going to have under skilled people working in the store, same thing for it. We did a big study of banking last year. What we found is that the companies that have poor technology platforms can't hire good engineers because good engineers don't want to be part of poor technology platforms. So they're in a cycle, a death cycle. You don't want to get into one of these death cycles in an economy where the number of workers is going to be constrained for a long time to come. Now, this is not a simple equation. Today there was a pretty interesting article about union activity in Starbucks, by the way. Union activity is going to go up. You're going to read about this in the predictions, too. But the Starbucks folks who pride themselves on above average benefits and career development and other opportunities for employees are having a really devil of a time with unions. And the reason they're having that problem, based on my research and the people we've talked to, is not that they're not paying people well and giving them great benefits. They've asked them to do jobs that are very hard to do, and they've created the work experience in the Starbucks stores. That is just no fun. And that impacts employees and customers, of course. So they have to look at the jobs themselves. Now, if we continue down this path of very high levels of employment and low levels of unemployment and unions continue to grow and employees continue to be more active and the job market gets tighter and wages go up, there's another big factor, and that is automation. And as much as I don't believe in automation to eliminate work, it does eliminate work, and it sometimes eliminates jobs. So over the next decade, and certainly over the next couple of years, your companies are going to be doing a lot of automation, much of it driven around AI. When I used to work at McDonald's, and I worked at McDonald's through my entire career in high school, including my first year in college, there were 15 or 20 people working in the store, in the hamburger stores, doing different things. Now there are probably five. And everything's done through kiosk and remote order. And those people work very hard, but there aren't very many of them. And they've automated away a lot of the stuff we used to do by hand. That's going to continue to accelerate. And so one of the things that's going to be a big trend in 2024 and on is automation, job design, and work elimination, not job elimination through AI. We need to be a part of that. We need to be part of the design, the pay strategies, the new skills that are needed, et cetera. So there's a lot of implications of this low unemployment environment that we're going to be in for a long time. And even though it feels like it's good for workers, it's hard on them, too, because their expectations are raised. And so their happiness is affected by their expectations. I mean, my experience as a working person for 45 years is there are no perfect jobs, there are no perfect companies, there are no perfect managers. Everywhere you go there are going to be problems. And so if the workforce of today thinks that the grass is always greener, they're not going to have such a great career either. So we need to take it upon ourselves to address that. Now, one more thing I'll just mention before I wrap up, in about a week or two, we're going to publish our big predictions report. I've been working on this for the last 60 days. It's quite detailed. It's designed as a set of imperatives for you to use in your company with your HR team, with your leadership team. Great amounts of detailed research in there. I want to thank our research team for a lot of work they did in the last couple of years preparing us for this. We talk a lot about AI in there and the role of AI. The predictions report will be available to our research members and members of our academy. There will be a summary available to non members. We encourage you to read it. I'm going to be doing a webinar later in January going through the findings and then we will be happy to talk to any of you individually or as a group about the issues and the topics. I'm actually doing a big session next week for a client on this and you'll see that there's a big paradigm change happening in 2024. I think 2024 is in some sense a paradigm shattering year. We're moving to a new economic era of labor shortages, AI, and an even more heightened focus on the employee experience and a whole bunch of other things that I know you guys have been thinking about. So happy 2024. I'm looking forward to talking to all of you this year, seeing you at conferences and let's have a really exciting year together.
