Episode Transcript
[00:00:08] Hello, everyone. Today I want to talk about the HR tech space, which is getting really hot, and the workday Salesforce relationship and a few other things. Then I want to talk about talent acquisition, and then I want to talk a little bit about what's going on in the workforce. I'm still going to try to finish in 2025 minutes. I'm finishing my three weeks in Europe this week, and I met with a lot of interesting companies. You'll be hearing more about them. We'll be doing what works. Podcasts, by the way, if you don't know. We're starting a second series of podcasts with clients that will be dedicated to their stories.
[00:00:49] I will continue to do this podcast the way I do now because people seem to like it. But that podcast will be client related. So if you're doing something really cool that you would like people to learn about, let us know, and one of us, probably Kathy or someone else, will interview you and we'll get you on the podcast. Okay, number one, tech. So if you're not aware of it, there is a battle brewing. I might even call it a thermonuclear war, but it isn't there yet for the chatbot space.
[00:01:23] And as I talked about a couple of podcasts ago in the Microsoft copilot, you know, the interface that we are going to be using to communicate with our computers is going to be a chatbot. It could be voice, you could type it, but we will be interacting with it in a normal language. And I'm sure when Apple announces the new version of Siri in September and October, everybody's going to have intelligent interfaces right through their iPhone, right into their enterprise systems. Now, the reason this is a thermonuclear war is nobody wants to lose their access to their clients. And so all of the software vendors who write enterprise software are trying to figure out where they fit. Microsoft, of course, is invested very, very heavily in the Microsoft copilot. It's integrated into Windows. There are tools to build applications for IT departments, and it has access to the Microsoft graphs. So those of you that are using it, it's really a super duper AI powered search engine for all of the documents you have in SharePoint and various different systems in Microsoft, which is in and of itself a pretty cool thing. But it's not a specialized corpus, and I'm not sure most of you are going to let your internal systems reach out into the Internet. So think about it as a powerful AI tool for the applications that you build.
[00:02:52] Now, separate from that, there's also ServiceNow, which has built a product called Nowassist. So for those of you that are enterprises, and ServiceNow is a pretty expensive product, but it is also an enterprise class agent, and it's designed to find things that are in the ServiceNow cloud. And ServiceNow connects to HCM systems and other systems, so it's a pretty significant player, and they're putting a lot of R and D into that. And then there's the one we use, Galileo, which is based on Sana, and there are others. Eightfold is building one. SAP has Joule. And the way these things work is they use the LLM natural language interface to access content and transactions in the back end systems. And they have multiple LLMs. They're not only based on OpenAI, for example. Galileo has multiple LLMs behind it, and it decides based on the query which LLM should handle it. And they are designed to access those backend systems. And so what workday announced this week was the integration of the workday assistant, which is workday's AI agent, which is a little bit behind the others, I would say, with the Salesforce Einstein toolset.
[00:04:07] Now, I'm not sure, you know, sort of what the product roadmap of this is going to be, but what workday and Salesforce are basically saying is we're going to try to get our two chatbots to work together. So on the back end, if you're a salesperson or a marketing person using the chatbot from Salesforce, and you're asking information about opportunities and leads and customers, you will be able to access data and workday, which would be financial data or HR data, and vice versa. If you're using the workday assistant, you should be able to access data in Salesforce. Now, that's kind of a lot of work. So nobody knows how quickly this will all get done and how much of it will get done. But that's an example to me of the tectonic plates that are moving around because, you know, you don't want to be, you don't want your employees to go to five different chatbots for five different things, to go to paradox for recruiting, to go to Galileo for HR data and information and advice, to go to the Microsoft copilot for outlook calendar and documentation stuff, to go to the workday one for workday. I mean, nobody wants to do that. So there's going to be shakeout of some orchestration system that will pull these things together.
[00:05:25] My personal opinion, having been in the software industry for a long time, is that there isn't going to be one that wins, quote, unquote, this little bit of a battle that's going on, because these are very different specialized systems. Each of these agents has direct links to many things behind the covers. So, for example, I don't think our tool will ever get you access to every interface in workday, although we are going to do that. We just signed an agreement to be a workday partner, and we are going to connect Galileo to workday to make it easy to use and make it easy to get access to some of the workday data.
[00:06:10] So what we're going to end up with in our companies is number of these systems, each of which are going to find ways to talk to each other. Now, one of the things that I've learned about this from our own experience, because we have a lot of, we have a lot of companies in our own customer base using these things, is that depth is better than breadth. So, you know, if you look at the behavior of chat, GPT, or the Microsoft copilot on wide corpuses of knowledge, you can certainly find things. But the more information it has, the less likely it's going to find the precise answer to your question.
[00:06:48] It's a little bit like going to a generalist or a specialist. When you go to a specialist and you ask them a question on some topic or domain or some system related activity, it knows exactly what you're talking about and it gives you a very refined, clear answer with references around it. If you ask a generalist, it might give you a lot of information that's helpful, but it may not. It doesn't have the necessarily prioritization to understand, you know, how your question might be unique and special. So I think these agents are going to be talking to each other. I don't think one agent is going to subsume all of them. And since the market is still so young, there's going to be a lot of relationships and alliances between them. And I know this because we're talking to a lot of different vendors about how we connect Galileo to various other systems, including payroll systems, HRMs systems, analytic systems, and others.
[00:07:49] Our strategy, for those of you that haven't heard it, is really to build a trusted corpus of knowledge in Galileo. So Galileo really is the world's expert on HR and management related information models, data maturity models, best practices, case studies, vendors, etcetera. We're not turned into an ERP system, although we'll have connections to ERP systems. So you can, you know, add ERP related or connection to transactional related systems to it. So I don't know whether the workday salesforce relationship is as big as it may sound, but they're trying, you know, they're, they're teaming up. They're going to give it a shot. Neither one of them, of course, are going to try to compete directly with Microsoft because they both want to work with Microsoft, too. But, you know, I think this is the nature of an impending, you know, competition for the eyeballs of all of us that will happen over time. And we're still in the early days and we don't know what Apple's going to do, by the way, if, you know, I really do think if the Apple intelligence version of Siri is good and has some sort of programming interface, people are going to jump to that really fast. And I don't know what that means for Microsoft, honestly, since we tend to use our phones an awful lot, you know, it's not necessarily going to change the way we work with our desktop systems. But, you know, Apple's going to be in this game, too, even though they're mostly a consumer company.
[00:09:16] Okay, number two, talent acquisition. I spent a lot of time with talent acquisition teams here and several of the banks I met and others, we talked about the transformations going on in talent acquisition. So there's something very clear to me that we've been talking to clients about, and that is there's an old model of talent acquisition and there's a new one. And as I was talking to one of the clients, I called it the thin model and the thick model.
[00:09:42] The thin model is talent acquisition is an Amazon fulfillment center for people.
[00:09:49] We open a wreck, we fire the engines, we do searching, we do sourcing, we do assessment, we do interviewing. We crank up the talent acquisition machine and we get people in the door and we hire them and we optimize the speed and efficiency of that process. We might outsource a lot of it. We use AI as much as we possibly can and we interact with the hiring manager on issues like the role, the location, the pay, the team, the responsibilities and so forth. And the talent acquisition function is a fulfillment function, not very strategic. We don't expect a talent acquisition people to ask a lot of questions. We expect them to just do their jobs. Well. Now that's a very old sort of level one, level two identity. It's not systemic. It's certainly not level three or level four in our model. But, you know, it works for high volume recruiting where you have a lot of turnover or you have repeatable roles that are relatively easy to train for. It doesn't work necessarily for highly specialized roles, but, but it does create a talent acquisition team that is focused on operations, time to hire, cost to hire and scale.
[00:11:10] And, you know, a lot of companies do a lot of hiring. I mean, some of the banks I talked to over here are, you know, hiring many thousands of people per year in different parts of the world. And it's really complicated. A lot of them outsource it to companies like AMS, who we do a lot of work with. So that's the number one, the number two model is what I call the thick model.
[00:11:31] Thick, meaning we're getting. The process is a little more complicated. And this you could also call the systemic model where we say to ourselves as an organization, yes, we want to hire people. The reason we want to hire people is we want to grow the capability and capacity of the company.
[00:11:51] And hiring is one of the ways to do this. It is an expensive way to grow. There's a risk to hiring new people from the outside. They don't always work out. There's a training period. They're not productive for the first six to nine months, sometimes longer. At Rolls Royce, it takes almost two years for an engineer to become productive.
[00:12:11] We have to affect the rest of the organization. It slows down the rest of the organization. The talent density of the organization can sometimes decrease because new people take time from existing people to get trained. And we might miss opportunities to utilize or leverage people internally that could do those jobs, and we might miss opportunities to re engineer the work we're doing. So one of the big companies I talked with this week, which is a very global company, said to me, you know, we're going to be laying off a lot of call center agents because of our new AI strategy. You know, how do we just, you know, redevelop them? I talked about this last week to move to these new roles. Well, if the talent acquisition function is a fulfillment function, they're not going to even ask that question. These people are just going to be scrambling around looking for jobs inside of the company and probably not having a lot of fun or success. On the other hand, if it's a thick function and the talent acquisition team is more of an advisor role, and the recruiter becomes an advisor, and we just wrote a whole research report on this, how talent acquisition teammates, which are usually called recruiters, can turn into advisors. Then the talent acquisition function becomes a growth function and looks at internal development, redeployment, talent mobility, and even asks questions like, you know, maybe there's some job design that should be done to prevent the scale of the number of people that we're hiring. I mean, all of my experience in business for the last 40 years, or whatever it's been, has been. We don't do nearly enough discussion about what we're trying to do before we decide we need to hire somebody and whether we could do it with the people we already have. Because most businesses, most teams, projects, work groups have a lot of built in inefficiencies that build up over time because we just, you know, we just kind of get used to doing things the way we're doing them. And when we need to grow, instead of rethinking how we're doing it and going back to basic principles, we just pile on with more people and that creates overhead, reduced productivity, etcetera. And the talent acquisition group is going to do that if they're a thin model, the first, but if they're in the second model, they're going to challenge you.
[00:14:30] What happened when I was going through this with these clients is they basically all sort of stared at me and said, wow, we really need to talk about this. This is a big conversation. About two thirds to three quarters of the companies from our survey are in the first model. I'm not saying there's anything wrong with that, but it is not going to work in a labor market like we have today. If the economy continues to slow down like it is, it is slowing down. You saw McDonald's earnings dropped. In fact, their revenues actually dropped a little bit because people aren't spending as much money and, you know, they're pretty global company, then we're going to have to just get better at systemic talent acquisition or systemic growth. I think if you think about the talent acquisition function as a growth function, how do we grow this team, this department, this group, and the many dimensions of growth, recruiting, retaining, reskilling, redesigning the four r's, then we can take talent acquisition and really upgrade it. You know, the other problem with having this, you know, kind of fulfillment role for talent acquisition is those people suddenly get laid off whenever the company stops hiring. What do we do with them? They're not really used and they're not doing as strategic work as they'd like. Some recruiters just like recruiting, but a lot of recruiters want to do much more. They want to be involved in more things. And, you know, recruiters tend to be very, very knowledgeable about the company, about the job market, about roles, jobs, skills, careers. You know, they've talked to a lot of people. So we talked a lot about that. So if you're interested in getting more on this, we've, we've got a large body of research on this. We have a course in the academy on it and more coming in. A brand new white paper on this roll. Let us know. Join the membership. We'll give you access to all this stuff.
[00:16:18] Okay. Third thing is the job market.
[00:16:21] Now, you know, everybody in the United States is worried about the election, and then they're worried about when we're going to lower interest rates. I don't, you know, I would guess there won't be any adjustment to interest rates until that election is over. You know, Germany's economy just went into a slightest dip. I just saw this week the UK economy is doing pretty well, but they have a big debt problem. United States, things are slowing down, but they're still growing. The unemployment rates ticked up a little. Job stickiness has gone up. People are not quitting quite as much as they were before. We're moving from the, from the high quit rates in the pandemic to lower quit rates, but the quit rates are still in the twenties, 20% or higher. And so, you know, these economic cycles are just the way the world works, and people are becoming much more flexible in their work arrangements and their work locations. By the way, we're working on a really pretty in depth study of the four day workweek with the four day workweek folks that we worked with on the first body of research. So stay tuned on that. And so you got to ask yourself, if you're trying to grow your company or hire people, what is the impact of the job market? Well, I think it's pretty clear to me from the companies I've been meeting with that where we're going to have to get to is a little better job of workforce planning. Now, I'm not going to sit here and give you a preaching lecture on why you should be doing workforce planning. Nobody does it very well. I mean, I have done multiple studies on this, and it is just not something companies focus on. In most cases, workforce planning is a financial exercise done through the CFO around the budget process, where we allocate headcount based on budget, and it might change if the company has a, you know, change in revenues. And then managers use their headcount budget to hire. And giving a headcount budget is a form of strategic decision making, because leaders, including the CFO, make decisions on where to grow and where not to grow based on business opportunities as they perceive them. And so then we go and we fulfill on those growth plans from the workforce plan, quote unquote. It's not usually a skills based plan.
[00:18:45] Rarely, although sometimes it is. And it's certainly not based on contingent work or other forms of talent acquisition. It would be nice if it was. And, you know, I know all of you probably thought about it, but I haven't found very many companies that do it. Now, there are companies that do skills based workforce planning very, very well. Professional services companies do this. Accounting firms do this. Defense. Actually, defense contractors do this because they have to bid on large contracts and they know if they don't have the right skills, they're not going to get those contracts. Companies under massive amounts of stress do skills based workforce planning. The oil companies are looking at skills based planning for alternative energy. The semiconductor industry is looking for skills based workforce planning for manufacturing engineers. Software companies are probably doing some skills based workforce planning for AI and data science.
[00:19:40] But across the board, it's usually a head count exercise, which is fine with some of these things kind of added in. But as the workforce gets a little tighter and people stop jumping around from company to company, and even though the economy may slow down, you're going to have to be a lot more creative about your workforce plan. One of the industries that's grown out of this is the EOR industry. EOR means employer of record. Basically. These are companies oyster, the one we work with in Galileo deal, which is a large EOR company, GP, which used to be called Globalization Partners, who I interviewed a couple of podcasts ago, and others. Papaya Global is another one. And what these companies do is they make it easy for you to hire people part time or full time in different countries where you don't have a business and entity set up. There are also obviously all the gig market, workplace markets where you can go find gig and contract workers. There are tools for freelance workforce management. SAP has one. A workday has one for managing contractors. ADP has one for managing contractors. But usually that stuff is run by procurement, not by HR. And even though, like I said, workforce planning has been a frustrating space for many, many years, I think this is going to end up turning out to be important. I think the way the workforce is going and the way the numbers are trending, you're going to have to have a more rich and complete what I call pixelated workforce plan. For all the headcount that you want to hire, is it full time, is it contract? Is it skills based? Is it internal mobility, is it local, or is it global? Or is it in a remote location where we know these people are that we've never done business before. We're going to have to ask those questions in a more strategic way. And guess who knows how to do this? The head of talent intelligence. Now, most of you don't have a head of talent intelligence. Some of you do. Talent intelligence is a new domain that grew out of recruiting, where we have these really rocket science, brainy people who know where all the data is. They know how to use it. They use AI systems like Eightfold and others, and they can make decisions and help you balance these complex factors on where to grow your company. And I actually do believe that in 2025 and for the next few years, using that kind of complete approach to workforce planning is going to really differentiate your company. You'll be able to grow faster, hire faster, be more strategic, avoid over hiring, keep the productivity level high, and keep flexibility high, because, you know, a full time hire is a big obligation, especially if it's in Europe. You can't just let somebody go in five minutes if you've made them a regular employee. So there are times when we have to use these alternative sources. If you're in a company that's doing dynamic workforce planning like this, I would love to talk to you. We've talked to many companies about this in the past. It's been hard to find companies that do it well. There are a few big companies that do, but I think that's going to be a big trend as the economy takes a little bit of a breather and employees stop jumping around quite so much.
[00:23:03] Okay, that's it for this week. I will be back at home this weekend, and next week I'll be back in California. So stay tuned for some new stuff coming in the area of L and D. I want to update you on what's been going on in the L and D market next week. Thanks, everybody.
