Episode Transcript
Speaker 1 00:00:07 Hi everyone. This is my last week broadcasting from the uk. Next week I'll be back home and I've been in London the last week and met with close to 60 or 70 companies actually talking about many, many things. But I think what I'd like to highlight is the struggles that companies are having in recruiting talent acquisition and what that implies and some of the big changes that are going to take place. And then I will talk a little bit about findings we're having on AI a little further. And this is gonna keep going and I wanna also alert you that we are going to have a special invitation event at the HR Technology Conference in Vegas in the fall. So stay tuned for that. It's in October and invitations will be going out in the next couple of weeks. We're gonna announce some pretty significant new research and it has to do with the post-industrial organization that I talked about at our conference.
Speaker 1 00:01:00 Okay, so talent acquisition. Most of you know if you work in other areas of hr, that this is a very specialized domain and in many companies it's highly strategic and considered to be one of the most important things that the HR department focuses on. In many other companies, it's not, it's considered to be a tactical operational process that is often outsourced to consultants or head hunters or recruiters. And so we met with mostly financial services companies, some other big banks and other institutions. And the challenges that we discussed were the biggest one being if we're going to use much more intelligent technology to select, identify, source, locate people, and we're going to have information about their skills in a much more unbiased way, which is absolutely happening with all these wonderful AI tools. And we're gonna try to streamline the process. What does the recruiter do?
Speaker 1 00:02:05 Is the recruiter job less important? Is the recruiter job more important? And my answer to that from the research we just finished and the discussions is the recruiter job is becoming much, much more important. And the reason for that is, even if you do believe that AI is gonna make things easier, all that does is give you new sources of information and more hopefully refined sources of people to talk to. You still need to make sure they're the right people and you need to obviously assess them and bring them forward in the right way and convince 'em to join your company. And that's always difficult, especially in the financial services industry because that industry is actually kind of a difficult industry to join and actually has had a lot of struggles. Now in terms of the job market in general, if you looked at the Bureau of Labor Statistics report that came out on Friday, and it's US data, but it's interesting, I think nine or 10 states in the United States now have the lowest unemployment rate they have ever had in the history of the B L s.
Speaker 1 00:03:13 So jobs are being created in most countries, certainly in the US I know in the uk, 'cause we talked about it a lot in the length of time to hire is extended. We actually published a report with a M F called the Talent Acquisition Factbook, that has some amazing statistics by industry. You can find it online. And time to hire is getting longer and longer and longer. So the recruiter or recruiting function, but recruiter in particular, has an ever increasingly difficult job. Now, the problem that I uncovered, and I know this is true because I've talked to many of you before, is that a lot of companies don't understand the strategic nature of the recruiter job. Some companies take it very seriously and they have very senior people doing this, but it's more common for this to be a lower level job that is more of a transactional role, oftentimes outsourced and also oftentimes downsize during a slowdown.
Speaker 1 00:04:12 In fact, you've probably seen all the data, how many recruiters were laid off in the tech industry when there was a slow down there. In a sense that's insane because, and we're gonna write some papers on this. Recruiting and tele acquisition is the most important thing that a company does. I mean, really think about it. Seriously, if you don't hire the right people and the right fit into the right roles, you're not gonna succeed. I mean, there's just no way to fix that. And every time you have a bad hire, two or three times as many people that are impacted by that to say nothing of the challenge of figuring out what to do with that person, it doesn't work out. So it's a very, very important function. And it involves clearly under understanding the role, the job, the culture of the organization, the skills, and then approaching and finding the right people, approaching them in a way that they will join your company, creating a value proposition that would make them wanna join.
Speaker 1 00:05:06 And then of course, onboarding them into the company in a way that they, that they can join. And most of the companies we talked to said in the first year of hire, a very significant number of new people leave because the onboarding process is so difficult. And these are big companies, but in some sense, talent acquisition owns all of that stuff to say nothing of the problem of finding the purple squirrel, you know, the AI engineer or the regional VP of sales or whatever the job is. That's so important that nobody will ever accept any candidates unless they're the perfect candidate. So if we don't take care of these recruiters and train them and give them opportunities to be more strategic talent advisors, they can't do this stuff. And maybe they do warrant being laid off or not supported unless we get the right rule there.
Speaker 1 00:05:54 In fact, one of the companies own very large global financial services company, but does business in more than 50 countries told me that their talent acquisition function has more than 1400 people in it. And that that there are more than 400 job titles because the talent acquisition function is distributed into these different geographic business units, each of whom decide to do it their own way. And of course the problem with that is you get inconsistent hiring. You can't leverage tools, you can't leverage research and science and IP you've done in general. So they're going through a massive transformation. They're upgrading all their technology, they're gonna change their job roles. And as I was talking to her about it, I told her we're working on a specific talent acquisition certification program for strategic talent acquisition partners. You have to train these people so they can take on higher level roles and responsibilities.
Speaker 1 00:06:44 And by the way, I wonder, just to throw it out there, how many of you rotate people into and out of those jobs? One sign of a job that you're not taking seriously is you don't rotate people into and out of it. Well, talent acquisition executives or leaders learn a lot about people and the business and uh, they should be rotated into and out of other jobs as well. And those of you that aren't not in recruiting should spend some time in recruiting. It's very hard. It's much more complex than you probably realize. So given the fact that we've got this great economy, we we're gonna bypass the recession this cycle, the unemployment rate is very low, a cost of living is going up. So pay is an issue. We can't just hire people by giving them more pay. And in fact, the pay in the United States based on Friday's report went up about 4.2%, but inflation in the US is still above that.
Speaker 1 00:07:36 And inflation here in the UK is over 7%. So you've gotta take this seriously to say nothing of the fact that in most of the critical roles that are hard to hire, there are internal candidates that want these jobs. So talent acquisition has to be bolted at the hip with the learning and development group and the career development group so that you have a really strong program for internal mobility, talent, marketplace, whatever you wanna call it, to source and recruit internal candidates as well as external. Now the whole problem of internal candidates and internal mobility is much more complex because there's cultural issues, there's rewards issues, there's the issue that the manager that is, that this person reports to may not let them go, et cetera. So lots of things there we can talk about. And we've actually done workshops with companies on that problem.
Speaker 1 00:08:29 So my point is that this is a really important part of HR and it, it doesn't always get the attention it deserves. We talked about it with some people at the meeting. One of the largest airlines in the United States laid off the entire talent acquisition department during the pandemic. Now I know they needed to save money, but that's insane. All of that ip, all of that knowledge, all of that process disappears and they have to outsource it. And they did it for financial reasons and now they don't have enough pilots and they don't have enough flight attendants and they're have lost this muscle that they had built over the years for attracting those people. So we gotta take this more seriously. We have to look at it in a more systemic way and we have to get ready for ai. Now lemme talk about ai.
Speaker 1 00:09:17 So we had another incredibly interesting session on ai. Many, many more advancements and discussions and topics came up. One topic of course is the human interface problem, which is that whatever AI tool you buy, eightfold, beamery, whatever, the interface to the recruiter in the case of recruiting isn't perfect. There's new candidates being surfaced, but they have to decide if they're the right ones and if the AI is working correctly. So the user of AI actually has to be better trained then somebody who wasn't using ai, because now you have to know if the system is telling you something that seems correct or not. You have, you need some judgment around it. And so in some sense, not only does AI require a lot of skills and technology to do the implementation, but you need the people that are using it to be pretty intelligent because these things are definitely not perfect.
Speaker 1 00:10:10 Now, one of the other interesting discussions that happened in the AI session on Friday was one of our very favorite customers was talking about their journey through AI in the employee experience area. And what he reminded me is something that I wanna remind all of you, you should not use any of these tools because they're cool tools. Use them to solve a problem, fall in love with the problem. So before you go out there and buy a chat bot or a sourcing tool or whatever it is, make sure there's an agreement on the problem because the implementation of these things is gonna take time. It's not gonna be perfect. There are gonna be a million decisions you're gonna have to make. And if you can't keep thinking about the problem that you're trying to solve, you're gonna go sideways. And so he was describing at his company, which is a financial services company that they built essentially a pretty interesting, not super complicated employee experience model.
Speaker 1 00:11:06 And they looked at the 40 or 50 micro journeys or moments that matter that people go through. And each one of them is actually really complex. He came up with ways to instrument many of them. He's very good with technology, they have, they use pecon and they use Qualtrics and some other things to get him feedback on the net promoter score of all these different things that employees go through. And he said, so we're gonna look at the ones that are most suitable for AI and we're gonna pick 'em off one at a time. We're not just gonna buy a tool and assume it solves dozens and dozens of problems like peanut butter. So let me give you that as an adv as some advice. When you do look at all this technology that's in the market, you think about the problem is the problem that really worth it to go bring this in.
Speaker 1 00:11:49 Now, the bigger tools, the AI-based recruiting tools, the AI-based sourcing tools, the AI-based career tools are very clear what problem they solve. But if that problem isn't bothering you and you don't have an agreement among the management team, the leadership team, that that is a priority for this year, and you buy one of those tools because you think it's important to your long-term strategy, you may not find people are willing to use it or go through the effort of learning how to use it. So AI is not a solution looking for a problem. It has to be a solution to a problem, which means you need to decide what problem you're gonna try to solve with it and don't let the vendor pretend or convince you that because it's so great, it's going to slice bread and do everything that you ever wanted. Of course they're gonna say that and the demo's gonna be great, but every company's different and every company has different issues.
Speaker 1 00:12:41 You know, one of the other things that came up in the big reset was one of the large manufacturers was making some comments about nudges and, and all these recommendation engines that are coming out from different tools and they, they actually use Microsoft Veeva. And she told me that she told the team that the managers at this company said, stop, turn it off. I don't want so much of that, it's interrupting my day. So Humu and, and Veeva and Veeva Insights and other tools that give you nudges and suggestions and stuff, they're actually great, but you don't assume that employees want all that or have time for it. So I think we need to take a very pragmatic attitude about all of these new tools related to AI and make sure they are suitable for solving a problem. We can define and not interrupting people or causing lower productivity because people are futzing around to play with them.
Speaker 1 00:13:34 It's early days for a lot of this stuff. So some of these things are miraculous inventions that haven't been refined yet. So I don't think it, it's unusual to see this kind of thing going on at this cycle. But anyway, that's kind of a little bit about talent acquisition and what's going on there. Another couple of things that came up in a lot of these meetings. One was that your implementation of a new talent acquisition stack, by the way, as you, you guys probably all know this, that talent acquisition technology stack, it, it's at least as complex as the learning and development one. There are, there are dozens and dozens of systems. And although you would like to have one platform that does all of it, you're not gonna find that. And these different systems, everything from campus hire systems, scheduling systems, sourcing tools, assessment tools, pre-hire assessment, those vendors are constantly being acquired and changing.
Speaker 1 00:14:30 If I think back 20 years ago, none of the vendors are still here. If I think back 10 years ago, 80% of them are gone. And you know, if I think back five years ago, I bet most of them have changed what they're doing. So you have to really have an architectural view of these tools. And but we're really dealing with in, in talent acquisition is two problems. The candidate experience. How do we make it easy, easy, easy for the right person to apply and get their information to you? And then the interview and hiring and onboarding experience on our side, which is extremely complex. So it warrants an employee experience view that is not the same as a process view, an employee experience view is what does the user experience during these various steps? Not what does the process look like on a whiteboard, that means testing it and asking users how well things worked and measuring why people dropped out of the process along the way.
Speaker 1 00:15:35 And that is not always a domain of expertise that's sitting around in the talent acquisition department. But I'll tell you the companies that invest in this and and know this from many years of doing this, it really pays off. The one one that occurs to me that talked to fairly recently is American Express. American Express, everybody knows is a really great company, just had a great quarter. They have very high-end talent processes and HR processes. A lot of the people I know at other companies have come from amex where they learned a lot of things. And I talked to the head of talent acquisition there, and I was actually involved in one of their transformations. It was a while ago when they transformed the whole process. And it was all about the experience, primarily because they're trying to hire people who give their customers a great experience and they want the people who come into American Express to see an experience that attracts the kind of people that will create a great experience for their customers.
Speaker 1 00:16:34 I happen to have been an American Express customer almost my entire adult working life. And I would never change business credit cards. I I just wouldn't. I just know how good they are and they take it seriously. If you have a problem and you call them, you actually get to the right person pretty doggone quickly. And they do solve the problem. And that is because they've hired the right people, they've trained them, and they've looked at these journeys and they've worked them out. So if you're gonna outsource this process or lay a bunch of people off, I think you gotta sort of scratch your head and and ask yourself why you're doing that. Okay, well I've been in Europe for about three weeks. It's been mostly vacation and what's been about a two thirds vacation, a third business. And I will say the one thing I've talked about in the last podcast is that being in the UK primarily, I've been infinitely impressed with the way the government and the city and just the culture takes care of people.
Speaker 1 00:17:32 Now, those of you who live in the United States, you know, we have a lot of issues. We have homelessness, we have guns, we have racial strife, et cetera. And I know the UK has plenty of issues too, but there's something about an older country that has adapted for longer periods of time, and I mean much longer periods of time that makes it more mature in these ways. And the reason I bring that up is only because the same thing's true in business. Young companies are obviously very reactive. They don't have the resources or the staying power to spend a lot of time on design oriented problems because things are happening so fast. But let me just say to you, I think that's a mistake. Even if you're a fast growing, medium sized company and your CEO's totally distracted by whatever it may be, the numbers and isn't giving you the attention you want, if you don't work on these design issues as if you're designing the best airplane or rocket ship or whatever it is, you're gonna have talent processes that don't work that underperform, that alienate employees or job candidates or others that actually cost more money and spend more time.
Speaker 1 00:18:44 I've been involved in the redesign of a lot of different systems, a lot of different websites, a lot of different applications. And I've learned this over and over again. Every time you take a shortcut, you pay for it later. So one of the studies we put out, we did, we did this with the support of Light Cast. We have a really great relationship now with Light Cast who is the world's leader in navigating the job market and the job and skills data around the world. We looked at the financial services industry following our big G W I study of banking. What we figured out, and they did a lot of the analysis, but was that over the last five to seven years, technology of course is a massive problem in banking because they have a lot of old systems. And so all these new mobile interfaces and chat enabled, mobile enabled things are difficult for banks and the data and the amounts of processing are huge.
Speaker 1 00:19:37 And then of course they're in regulatory compliance about everything. So they have to be very, very careful what they do. They have a really hard time hiring advanced tech people and the banks that have the most advanced tech people are the pacesetters. So we did an analysis of this and funny enough, what we found through the light cast analysis was that of all of the 75 or 80,000 people that left the technology industry to go into banking to try to help banks build more advanced systems, 95% of them left the banking or financial services industry and went back to tech firms within five to seven years. They didn't stay. Now it's not the same people, of course, it's more of a flow analysis, but what that tells you is that it's really hard to attract and retain highly skilled people in particularly new areas. Why is that?
Speaker 1 00:20:33 Because if I'm say an engineer or even a salesperson, but let's say I'm an engineer and I've got skills in some advanced tech area, I wanna go work for a company that's gonna make me even more valuable. I wanna work on projects that are advanced projects, advanced technology opportunities so I can go to my next opportunity and say, look what I built at that place. And so funny enough, we had this conversation with this team of, you know, executives and the woman sitting next to me laughed her head off and she said, you know what? We do the exact opposite of that at our company. We outsource all the exciting technology work to somebody else and we do the dull, boring old stuff. It's no wonder we can't hire any of these advanced technology people. And I said, well, I think you just put your finger on something to talk about that if you don't have innovative, creative, sometimes experimental projects going on inside the company, you won't attract these highly ambitious creative people because there's nothing for them to do. And I know banks have a lot of focus on operations and compliance and all that, but our research shows that if you don't have advanced tech people, you're gonna fall behind. So that's one more little story to throw out there on talent acquisition. Anyway, I've had a wonderful couple of weeks over here and we will be back on the big reset on Friday and I'll talk to y'all next week. Thank you.
