Episode Transcript
[00:00:04] Okay, guys, this week I want to talk about two really interesting themes. One is an article I'm working on called Don't Blame the Workers. And then I want to talk a little bit about the Chro role because we've gotten a lot of feedback on the research that we're embarking on for heads of hr. So there has been a theme for the last month starting the federal government going proliferating through many other companies, including Jamie Dimon at JPMorgan Chase, Meta, Amazon, Workday, Salesforce, other companies that we're going to lay off the low performers. We're going to lay off and eliminate the bureaucracy. There's, you know, too many DEI programs that have hired allowed us to hire the wrong people. We'll clean house and we'll make the place efficient. For example, the narrative is from Elon Musk is that, you know, he bought Twitter, he eliminated something like 70 to 80% of the employees, and now it's profitable, which I believe may be true. So all over the world we're sort of seeing this CEO philosophy that the best way to improve productivity is to get rid of all these low performing frontline workers and replace them with AI because 85 to 90% of CEOs believe AI is going to radically transform their business. And, and hurry up, let's get rid of these guys that are in the way. Well, you know, it's not that simple. I mean, it sounds good and of course in the federal government it's always a good talking point to eliminate bureaucracy. But let's talk for a few minutes about what bureaucracy is and what is a bureaucrat. The way companies and organizations and sports teams and any grouping of people work is that we have collections of human beings who join an organization because they like the mission, they like the role, they like the job, and they feel that they can fulfill their dream of accomplishing something on behalf of the organization that benefits their personal life. And I believe from my work experience of almost 70 years, maybe not 70 years of work, but I did start working on my paperwork in my early days, my paper route, that 99 some odd percent of people work this way, that they don't go to work just to make a paycheck and just goof off a few people do. But it's very rare. And as we build these teams and organizations, it is the leaders who decide who to hire, when to hire, how many managers to create and what kind of organization to build, not the individuals at the front line. And so when you look at a company that appears to be Unproductive. Their products are late, their strategy is behind, they're losing market share, their customer service is poor. Problems like what happened at Boeing, problems that have happened at Nike, problems that have happened at Starbucks, problems that have happened at other companies. These are great, great companies. Right? You can't blame the frontline workers for what's going on. They are doing the best they can. And that goes for the federal government, too. I'm not saying there aren't probably some federal workers that are, you know, sitting around drinking coffee a lot, but the vast majority of the federal workers that I encounter, whether it be the TSA or the other occasional situations I have where I need to deal with the federal government, they all want to do the right thing, but they're working in a system that is holding them back.
[00:03:38] So what is generally unfair and I think incorrect is that when you make statements or you conceptualize that we're going to get rid of or clean out the underperformers, that our company is going to perform better, that usually isn't the problem. Usually the problem is middle management, misalignment, too much hiring, not enough internal mobility, lack of alignment with the culture and so forth. Now the Elon Musk style of management, which I'm sure many, many books are going to be written on this. Going back to Twitter was, we don't have time to redesign the organization. We don't have time to think this through. Let's get rid of 80% of the people and start from scratch. And, you know, it worked for him. If you look at Twitter, from what I can pick up, he did succeed in eliminating 70 to 80% of the original workforce. And the company's profitable, and it's almost valued for what he of what he paid for it, according to the latest research or news. So that was a company that had become very bureaucratic, very inefficient, and very misaligned. And, you know, I don't know the leadership at Twitter, I don't know how it became that way, but you can't blame the individuals for that. You have to blame the management and the leadership. The problem CEOs have and CHROs are part of this is that depending on your work experience and your nature as a business leader, you may or may not understand these dynamics of building talent density. I'm convinced. And we're going to write this up this year and we're going to do a lot of research on this, that the model of success in the business world and by the way, in athletics, in sports, in NASCAR teams In Formula one teams in in racing teams is density. Getting the smallest number of high performers into the company and aligning them on the critical mission areas of the company and not delegating hiring to low level or mid level managers to hire as they see fit. Not that managers are incapable of making good decisions, but as the world transforms quickly towards AI, mid level managers don't know necessarily in their functional areas what the opportunities are for productivity improvement. So they will actually work against it by hiring more people. And that's not because they're ill intended, it's because they don't know. Every job in business is becoming more multidimensional and multifaceted thanks to AI. The routine work of a call center agent, the routine work of a nurse, the routine work of a salesperson, the routine work of a marketing manager is getting automated. Not completely, but pieces of it are. And so now the job of that person is not just to do that thing and to make that system work correctly, but to understand the relationship between that thing they were doing and the adjacent parts of the business with them. I think of companies as chains of activities or tasks they're often called, but I don't like the word task. Chains of activities that build value along the chain. If you're a software company, you come up with a concept, you build a prototype, you do betas, you demonstrate value, you roll it out to customers, you launch it, you market it, you sell it, and then you continue to build new features, new features, new features to add more and more and more value to customers. If you're a retailer, you do the same thing in your retail and your distribution and your locations of your stores. If you're an energy company, you do the same thing in energy. This is what companies are. Companies are value creation organizations. Sports teams are the same way. They're constantly trying to reorganize, reskill, strategize what they're trying to do to succeed as the game changes, as the competition changes. This is why business is so great, to be honest, is because of this constant reinvention. And when you're sitting at the top or in the management or leadership level and you see things that aren't working well, you need to blame yourself first.
[00:07:56] Don't blame the individuals at the bottom. They just came along for a ride thinking you were going to give them something important to do and they signed up for that. And when we demonize or insult or lay off the people at the bottom, we really create the wrong kind of culture. You know, I think if I listen to Jamie Dimon's call a couple of times and what he was basically saying, as I heard it, is not that a bunch of people are goofing off, but that the remote work culture at JPMorgan Chase has a lot of backbiting and gossiping going on. I don't know if that's true or not, but if it is, that's his problem. That's not their problem. I mean, and he's trying to address it as a very, very senior executive.
[00:08:40] So we as HR leaders have to get into this sort of operational mess and help make sure that this doesn't happen, that leaders are aware of these issues, that we can flatten the organ, that we can simplify the management structure, that we can build more cross functional teams and enable these new AI tools to come in and automate these multifunctional processes.
[00:09:07] Now, you know, I don't know what Elon Musk and Donald Trump and all those guys are going to do in Washington. I think they're using the shock and awe model at the moment of let's just shock the system and try to jolt it into some level of more accountability. So we'll all be a part of that process as it rolls out over the next couple of years. But in a, you have control over this, you don't have to hire so many people, you don't have to hire so many managers. When you realize that you have a bunch of people in jobs that are no longer needed, you can make a decision whether you want to redeploy or reskill them. You don't have to lay them off if you don't want to. The damaging effect of a layoff is very high on the morale, on the alignment, on the sense of security, on the skills. You lose valuable skills and you know, sometimes it may be necessary. But I would prefer to see cnbc interviews with CEOs where they say, I take responsibility for what happened. I allowed us to overhire, I allowed us to become more bureaucratic, I allowed us to create too many levels of management and I'm going to clean it up as a CEO. Now, I'm not saying CEOs have to be experts in org design, but we're all gonna have to get expert in org design because we're all going through org redesign around AI. I don't care if you think org design is some geeky book that you read. Maybe in business, this is what we're doing in companies today. And if you look at the four stage AI evolution model we created, which is turning out to be very, very useful. And we're going to do more on it. You're all going to be thinking very hard about not just assistance and automation of current jobs, but about creating hybrid jobs where multifunctional teams can work more effectively together. When I look at all the companies that I've worked in and all the business research I've done and I think about how companies are set up, we have a lot of ancient artifacts to get rid of. This whole idea of a job family within a functional area has to be simplified. These job families, these business unit groups, these geographic groups, if they're not wholly contained value creating teams, they're not adding value, they're getting in the way. And that means that we have to build a more cross functional business process of thinking about our companies operate. AI is going to enable us to do that. And I'm going to spend a lot of time working on this. Now that leads me to, and I know there's much more to come on this and you know, you guys got to get your hands on Galileo. This is all in there. You can ask Galileo all these questions. It understands all these topics and that is Chros. Now we talked a lot about the Chro Insights program the last couple of weeks and I've had, you know, a lot of Chros to talk to in the last few weeks and this is continuing. So I want to give you kind of the latest here. By the way, this is an ongoing research program. If you are a chro, take the benchmarking survey or if you're a senior HR leader, take the benchmarking survey, take a look at the report which is the first stage of this. Kathy and I are doing a webinar in a couple of weeks. You can come to the webinar and learn more. But let me just tell you the big story here. I think if you think about the history of this functional role we're in of HR and I'm, you know, I was born in 1956, so I haven't been around that long, but I've been around pretty long. It was the personnel department. It did report to the cfo. It was a, an operational team or person who dealt with hiring, payments, regulatory compliance, recruiting, development, training, onboarding and then all the employee relations issues of harassment, performance management, scoring, ratings, force rankings and so forth. And then in the 1960s and 1970s, HR was tasked with corporate universities, leadership development, succession management and much more focus on the leadership team. And I think the HR function kind of moved out of the finance function somewhere in the 1950s and 60s, Jack Welch pioneered the importance of HR when he was doing a lot of mergers and acquisitions. And the focus became more as a business partner and less as a back office operations function. And this has been going on for, you know, four or five decades. And so this idea of human resources, by the way, the word resources is a terrible word. We're kind of stuck with it because humans are actually appreciating assets. They're more than resources. You know, they're not like a pencil that you kind of wear out. They're much, much different than that. But anyway, we're stuck with that word. And so the things that HR people do have changed a lot. Significantly, Very, very significantly. None of the original stuff went away, but a lot of it did get automated. So HR technology deals with payroll and taxes and can manage hiring much, much more quickly, can do onboarding, all sorts of things like that, IT, procurement and so forth. But we now deal with complex recruiting issues, employee well being, very, very complex benefits programs that companies have been asked to provide, very complex regulations. The new DEI thing coming out from Washington is just one example of many, many things. Data security issues, the issues of employee sentiment retention, data analytics, managing this complex infrastructure of tools we have in HR and then still thinking about leadership strategy, organization design, productivity and of course the role of AI. And I would venture to say, and this is based on our research, I'm not just pontificating here that a job that was very attractive to a non business person who may have grown up with a background in training or education or political science or psychology, is now a business job. And so see, and I'm talking about the Chro now, not every job in hr. And so the chro of the future, the chro capability model that we're working on, we haven't finished it yet, we're working on it, is not just about running hr. Running HR is actually sort of a small part of the job of the chro. It is an important part, it's a pivotal part, no question about that. Running HR and all of its intricacies and evolving it and evolving and turning it into a systemic function is a big, big deal. But there's another big job of the chro and that is to help the CEO and the rest of the company build the operating model of the future. We have three clients we're working on right now where the CEO and the chro came to us and said, we don't, you know, we'd like you guys to help us transform HR and let's Figure out how to do systemic hr. But we have another problem, and that is that the organization itself is set up in a way that's unproductive in various metrics. And we need your advice and counsel on how to simplify things, build more cross functional teams and enable AI to facilitate better growth and productivity in the company. And they're asking us for help. They because our group of people here happens to know a lot about the people issues and the management and culture and developmental issues that happen in the HR function. Well, that is to me, an example of why the Chro job has changed. If you've been in HR and running various parts of HR and experiencing the intricacies of HR and tools for a decade, say or maybe two decades, you don't just know a lot about hr, you know a lot about what a high performing team, organization and company looks like. And you should be able to sit back and work with the management team and give them perspective on things that might prevent them getting into the problems of Southwest Airlines, Nike, Boeing, intel or others that have fallen behind. And that's a different job. And I think many of the chros I talk to that are really smart and very business oriented are actually becoming COOs. Now the COO title is often a financial operations title. You know, Most of the COOs that I've met over the years are actually sort of numbers people and they're the ones that are looking at all the financial metrics and finding holes in the system to try to plug them. But there are others, the Chro of Telstra, the Chro of Standard Charter, the Chro of Spotify and others that I've met where the Chro is working in partnership with the leadership team to help the operations of the company improve. Now this is an aspirational direction for those of you who are HR leaders. A lot of you have never thought about this, you've never done this. We're going to give you some examples of this and try to help you think it through. And not all companies are ready for this. But I think in this world of rabid transformation driven by AI and other issues, and simplification of job architectures, changing in the nature of work, and building more cross functional productivity within our organizations, you have got to be a central part of this. You can't just wait for someone else to make these decisions and say, okay, well now that you've decided, let me help you do the HR stuff around it. I don't think that's the job of the Chro of the future. Now Based on the research we've done so far, there are at least 30 to 40,000 chros out there. A lot. And some of them are in small and growing companies, and some of them are big and fantastic companies, and some of them are old companies, and some of them are new companies, and they're chros in nonprofits, and they're chros in the military and different organizational types. So not everybody is going to be given this opportunity. But I think for those of you that aspire to be in more leadership roles, this is where it's going. Okay, so we have just some unbelievable things coming out over the next few months to help you with this. I will finish this article on don't blame the workers. I think in some sense it's a philosophical conversation to have as much as it is a real operational conversation to have. And when you do look around a company and you do see bureaucracy and you do see too many people and you see slow decision making, as a leader, you need to think about it as your problem is that you have to find a way to inject simplicity and rigor into the company so that everybody else can add more value. They're not deliberately being bureaucratic. They're simply stuck in a system that somehow created itself for lack of care. And so that's really my message there. I'm going to be at the HR Tech conference in Amsterdam the week after next. I'm going to be in a lot of these other events around the world. Get hold of me if you'd like to discuss any of these issues personally, reach out to us and get your hands on Galileo. There's so much more stuff coming in Galileo. I can't even begin to tell you the things that are coming over the next couple of months and for each of you, I look forward to talking to you over the year and spending more time together on these really interesting, important issues in the world of business, the world of work, and the world of hr. Thank you.
