Episode Transcript
[00:00:00] Okay. I want to wade into the topic of corporate culture and leadership today, particularly with a reflection on politics in the United States as an example. And I'm not here to talk about the US politics in particular, but to use it as an example of what's going on and what we're seeing. First of all, for those of you that participated in my predictions webinars the last couple of weeks or last couple of days, we're in a very tumultuous economic climate. So companies are very, very concerned about their transformations to the new world of AI, whatever that means, as well as industry convergence and rapid obsolescence of products and services. Because of the changing nature of consumers, 53% of CEOs believe their company will not exist in 10 years. We've got Starbucks going through a turnaround, Nike going through a turnaround, Boeing going through a turnaround, Southwest Airlines going through a turnaround, intel going through a turnaround. These are really well run companies that have somehow inadvertently fallen off track for some reason, and they're trying to turn themselves around. And there's many others, of course. Now this always happens, but it's particularly problematic now because the rate of change of the economy and the labor market and consumers and AI. Forget that for a minute and put it aside. I'll come back to it in a minute. The thing I really want to talk about is this DEI stuff and what's going on in the federal government. Now, it's a little bit shocking to reflect on what's happened in the last 10 days, but all of the federal employees have been told to work that if they want to work from home, they have to quit. And then they can get an eight month severance if they resign, although no specifics have come out. So it's not clear if that's a real offer or if that's just a threat. They've explicitly told all of the agencies through the Office of Personnel Management, which is basically the umbrella HR function for the federal government, that if your job title is DEI or related to dei, stay home, don't come back to work, and they're going to figure out some way to terminate all those jobs. They have explicitly, in one of the presidential executive orders stated that the government will make an example of at least nine private companies that are over investing in DEI and sue them. Nine. Now the number nine is explicit enough that they're trying to scare people, of course. And then the new head of the Defense Department basically was more or less nominated on the thesis that the Defense Department has been too diverse and that the DEI agenda has reduced the United States Defense Department's effectiveness. So, you know, without getting into the topic of dei, which, you know how I feel about this, I've written about it a lot, what's really going on is a strange form of change management, I suppose I would call it, where the leadership, in this case the federal government, but this happens in companies too, is trying to flood the zone, as they say in football, with a hundred things, or 200 things, actually, in the case of the executive orders that deliver a whole variety of messages to people. There's more than a million people in the federal government, and then there's all the contractors, and so there's many million to the people that are affected by this to deliver a whole bunch of messages to create change. Now, you know, if you're a change person, and I'm not an expert at it, but I certainly know a lot about it, what you know, and this comes out in our predictions report, is that nothing changes unless the people want it to change. So if you want to change the way the military works, the way the FAA works, the way the federal government works, regardless of the policy itself, you have to convince the people to make that change. Just jettisoning people who are doing something that may or may not be in favor of probably doesn't create that much change. It might create some amount of compliance, but the organization gets much weaker. And using the business context as a, you know, sort of a model. If the new CEO of Starbucks, who I don't know him, but he's pretty, pretty good from what the articles about him say, issued a blanket edict to Starbucks that we were going to, you know, be nicer to our employees or something like that. It may or may not have much effect at all if there are other factors preventing them from doing that. So the role of a leader is not just to fire messages and initiatives to the organization, but to find ways to create or enable or facilitate the change they're trying to implement.
[00:05:09] So I know the federal government's big, and there's a lot of labor unions and bureaucracy, but the people working in the federal government are no different than anybody else. They're workers who want to do a good job, they want to be rewarded. They like to take care of the public. That's the reason they're in the government for the most part. They like the benefits and other reasons, and threatening them or scaring them probably doesn't create that much of the right change.
[00:05:36] Now, I don't want to get into the political issues of what's going on in Washington. But in the corporate world we're seeing this very odd acceptance of this. And I understand that businesses want to be on the right side of the federal government because nobody wants to get sued by the feds and nobody wants to get in trouble with legal authorities. But a significant number of companies that I over the years have found to be very, very well run, ethical, honest, forward thinking companies have immediately complied with these anti DEI policies and formally issued statements to the market that they're not going to invest in dei. Now I don't believe that's true. I believe they're just saying that to stay out of trouble. But the fact that they did it is some indication that maybe they believe that this approach makes sense. Because you know, if I'm Walmart or Target or Harley Davidson and I've been threatened by political actors to eliminate a certain amount of my DEI investments and then I capitulate and I make a public statement that we're not going to do this anymore. By the way, Apple did not do this, Microsoft did not do this, Salesforce did not do this, but some people did. You're basically sending a message to your employees and your customers that's not actually that subtle. It's subtle in reference to the federal government and the politics of it, but it is not subtle to them. So what we're really sort of observing and trying to make sense of is does top down leadership and management actually influence change when it takes place in this way? Now my guess is that for this particular topic, the DEI one, this is a, you know, maybe a one or two year firestorm that will settle down over time. You know, is transgender a thing or not? Is diversity good or bad for companies?
[00:07:47] Are women capable of operating effectively in the military? I mean, those are politically issues that are being debated politically. I don't have any concerns about my beliefs in them, but. And when I was in South Africa a couple weeks ago, I spent a lot of time talking to a lot of people about the history of apartheid. And as you would observe if you went there, there is no more apartheid. But the ramifications of apartheid are still everywhere, very clearly built into society.
[00:08:21] So you would have to ask yourself that even though we're whipsawing on the definition of dei, the relevance of dei, what to do about gender and so forth, the long term trend is towards a more inclusive society and those companies that are led by leaders who are very human centered and very ethical haven't lost that at all. So what do we do with this information as HR people, I know you all have opinions about this, and I'm sure I could guess where most of you are on it. But I think the lesson to me that I continue to believe we haven't learned in some cases is that culture and change comes from the bottom up, not the top down. When individuals in an organization, and I don't. I mean, this can be a baseball team, a basketball team, a small company, a large company, a government agency, whatever. When the individuals believe that their work is important. When the individuals believe they have opportunities. When the individuals believe that they are, are going to be better off by participating in this endeavor or enterprise or mission. When the individuals get the support they need to do their work. When they don't feel threatened and they feel that they can speak up, particularly in the military, by the way, where it's encouraged, where. When the individuals feel that they have the time and the freedom and the flexibility to do their work and their jobs without overly sacrificing their personal lives. When the individuals feel like things are fair. And I don't mean equal, I mean fair. By the way, on this topic of equality versus equity, our pay equity research found that people are more than 10 times more interested in pay equity than pay.
[00:10:21] They want to know that things are fair. They know that everybody's not going to make the same amount of money. There's clear evidence everywhere I've gone for the 30, 40 years that I've been doing this that great organizations, great companies, great businesses are filled with people at the ground level who understand what's going on, what the mission is, and they believe in it and they support it and the company is supporting them. And that is, by the way, sort of the thesis of my book. But beyond that, I am questioning in my mind whether a lot of the leaders in these companies think that way. Now, the one that sort of struck me on my way to the Middle east today was I was reading the commentary about Mark Zuckerberg's strategy memo or strategy meeting inside of Meta. And it's about change and TikTok and AI and stuff. And one of the things he says when he talks about getting rid of fact checking and DEI is that we need to be in compliance with the federal government because it'll make our jobs a lot easier. So based on the evidence coming from the press, they have eliminated a lot of DEI programs and stopped fact checking to accommodate the theme of leadership coming out of Washington. Now, I don't know that many people that work at Meta. I've run into people here and There it's a bunch of really smart people, it's a great company. And in the San Francisco Bay area where a lot of the employees are, these are somewhat left wing people, not completely. I just wonder how they react to that kind of messaging. We'll find out. Their revenue's gone up and once again they're proving to be a exceptionally well run company financially. But is that the type of change that creates long term sustainability for that company?
[00:12:21] When I look at the companies going through turnarounds I mentioned earlier, and I compare them to the businesses that we talk to in Europe for example, or even in Japan, by the way, where they have lots of issues about diversity and in Japan they actually are looking at diversity as a survival strategy because of the shrinking of the workforce and the need to get more women into the workforce. I find that the companies that are hundred year companies, and by the way, I think there's kind of a type of organization that lasts for hundreds of years that's different than a company that's really successful for 20 or 30 or 40 years, that they don't waver on these organizational issues. Not because they're trying to be social activists, but because they've learned over decades of leadership and years and years of growth and many, many customer sets and many environments that principles like inclusion, we don't have to call it diversity, we can call it inclusion if we want, are vital to respect, which is vital to growth. At IBM in the 1980s, when I worked there, we all had to read the Thomas Watson manifesto on respect for the individual. I posted it on the article I wrote the other day. It's old, it's from the 1950s, 1960s, but things weren't that inclusive back then. And he concluded that for IBM to grow, they needed to empower the front line, whether it be blue collar or white collar. And he explicitly says that in there. And they're still around. Now I don't know that IBM is a stock, has been anything close to Meta, but we'll see in a hundred years if META exists. I tend to doubt it, to be honest. So what we're seeing in the United States is an observation of leadership and culture. And I have opinions about a lot of this, but I think as a researcher studying organizational change and growth and leadership and hr, we have to sort of go with the story that enduring companies, enduring companies means companies that are around for a long time, which provide very high rates of return to investors for long periods of time, believe in change from the bottom up. Now, you know, different leaders come and go. And during periods of stress, there have to be layoffs and difficult decisions. But even, you know, during those times, the great companies tend to endure. I mean, Hewlett Packard, now, hp, hpe, Boeing will turn itself around. Starbucks will turn itself around. Nike will turn itself around. These enduring companies learn that change comes from the bottom up. Now, relative to AI, as we write about in the Super Worker, the reason that I've been spending so much time on the Superworker story, and I've been doing it all over the place the last couple of weeks, is because we have to be careful that we don't think AI is a technology to eliminate or reduce the number of people it feels like it is. But that's a little bit of a commoditization strategy. If you decide you want to do that, fine, so will everybody else. The way to think about AI is it's a way to add value and improve efficiency and productivity and do more of what you're doing now, faster and better to get bigger and great, create new markets, go after new markets, become more profitable and grow and out compete your competitors. That is an empowering strategy that comes from the bottom up. So all of the workers, employees, human beings in your company should look at AI as an empowering tool. Now you have to help them see that. And we have to put together programs and systems and solutions and new job designs that enable them to do that. But in some ways, that goes back to the very beginning of what I've been talking about on this podcast, is if you set a blanket, you know, send out a blanket message that says we're going to get rid of all routine work. And if you're doing routine work, please submit your recognition, your resignations.
[00:16:45] That's not going to happen. Right. So, you know, we're kind of witnessing this in real time. I know this is a little bit of an odd podcast because I didn't have a super strict agenda of topics because I've got a whole bunch of things that are very specific next week. But I just want you to think about these things over the weekend and, you know, send me your ideas and reflections as you have thoughts. Thank you.
