How Do Pacesetter Companies Outperform Their Peers? They Are "Architected for Change."

May 06, 2023 00:22:15
How Do Pacesetter Companies Outperform Their Peers?  They Are "Architected for Change."
The Josh Bersin Company
How Do Pacesetter Companies Outperform Their Peers? They Are "Architected for Change."

May 06 2023 | 00:22:15

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Show Notes

Introducing the Pacesetters: industry leading companies who outperform their peers through skills, transformation speed, and execution. After more than a year of research in the Global Workforce Intelligence Project, this week we unveil the Pacesetter research, and this podcast gives you the overview. These companies are "architected for change," and they include leaders like DBS (Digital Bank of Singapore), Providence Health, BNY Mellon, ING Bank, and many others. I hope you enjoy this podcast, please join our membership for much more. Additional Resources Transform or Perish: Seven Winning Strategies Of The Pacesetters (Inc. Magazine) The Global Workforce Intelligence Project (Pacesetter Report) GWI Overview and Methodology Understanding Talent Intelligence: The Primer 
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Episode Transcript

Speaker 1 00:00:07 Hey everyone. Today I'm gonna talk about a very exciting announcement that's the culmination of more than a year of work in the Global Workforce Intelligence Project, which we call the PACE setters. And what this research is, is after studying, uh, hundreds of companies and literally billions of job profiles in healthcare, consumer banking, consumer package goods, those three industries so far, we identified the characteristics of the highest performing companies in all three of these industries. And there are seven very common practices amongst these companies. I'm gonna tell you a little bit what about what they are in a minute. And the reason they're important is that what you find about these seven practices is that these are transformational practices. There are things that allow these companies to change and transform in a continuous way. In a sense, there are transformation muscle. And right now, more than 60% of CEOs are saying that transformation is more important than execution because we're in a very tumultuous business period with new technology, economic changes, globalization, inflation, and many other factors. Speaker 1 00:01:24 So anyway, that's what this is about. Now let me take a step back. How did we do this research? And then I'll tell you the results. What we've been doing, as many of you know, for more than a year, primarily working with Eightfold, although we're now also bringing in data from light cast, is we've been looking at more than a billion employee profiles by industry, by company, and using the eightfold dataset, we can go back and look at that data in a time series. And we look at three fundamental things. We look at the skills in all of these jobs inferred by eightfold and, and its ai. We look at the job titles, which infers the type of job and the job class or the job family that it's in. And we look at the career pathways in these companies where people have gone and what jobs have moved to what other jobs. Speaker 1 00:02:17 And we do this analysis so that you as an industry HR person or business person can look at what's going on in your industry at a high level and see where your company is relative to others. We can look at things like what percentage of jobs are on it, what percent of jobs are in manufacturing or supply chain or marketing or sales. We can look at the emerging job titles in it versus the titles that are going away. We can can look at the skills that are trending up, the skills that are trending down, really, really important, valuable information. And for those of you that are corporate members, you can get access to these studies and we can dig into them with you, and you can literally benchmark yourself against these data sets to see where you're fit. And what you find when you look at it is that you can pretty quickly tell which companies are ahead of the curve and which companies are behind the curve by the deployment and the distribution of their workforce. Speaker 1 00:03:12 For example, in banking, the laggards tend to have a very high percentage of their workforce. In the retail banking operations, front office and mid-office, the leaders have a much higher percentage of their workforce in IT and technical operations because they've basically automated more things. They're delivering better self-service and better digital applications to their customers. So it's really, really important research for all of us. And the reason we're doing it by industry is it's different by industry. For example, in healthcare, the issue is not so much technology. We thought it was, but it's really not. It's really the HR operating model and how you hire and retain and re-skill and redesign the role of clinical professionals like nurses, which is a slightly different issue. So anyway, we, we've been doing this now for more than a year and, and we are very, very indebted to eightfold for their help with this. Speaker 1 00:04:03 And in addition to understanding and discovering all sorts of things about these industries, and of course, um, having workshops with many of you on these topics, we looked at the highest performing companies in each industry. So we looked at the top 10% in consumer banking, the top 10% in healthcare, and the top 10% in CPG through financial and other metrics. And we looked at what was different about them and we found that there were seven things they were doing probably more than that, but roughly seven things that differentiate them from their peers. So what I'm gonna do very briefly is I'm gonna mention what they are on this podcast and encourage you to download the resources we have and join the membership if you'd like more details on this. And I think this is very educational for everybody in hr. Okay? So first thing that PACE setters do is they focus on organizational design, accountability and goal systems that facilitate change and efficiency together. Speaker 1 00:05:02 In other words, they design their organizational structures and rewards to encourage and facilitate transformation and execution. So if you look at banks, for example, banking is a very complex and controversial industry at the moment. And it may seem simple, but it's not. There's the front office, which is the services that we buy and interact with a teller or somebody over the phone, mortgages, checking accounts, savings accounts, CDs, et cetera. There's the mid-office or the people that do the bureaucratic administration data analytics that create in a sense the things that we put our money, the products that we buy. There's IT who builds all the systems, which are obviously critical. And then there's finance administration and all the back office, HR and so forth. And what you find is that in the Pacesetter banks, they have significantly fewer people by count in front office and middle office and significantly more people in IT operations. Speaker 1 00:06:06 And it in fact, the difference is that they have, generally speaking, 1.3 times more people in it, which might be something like 4,000 people in a given bank and 1.6 times less people in the middle back office doing administration. So that affects essentially thousands of people in different roles. Now, why does that particular factor make a difference? Well, in banking today, banks are competing with all sorts of digital financial services companies. I mean, even Apple at this point. And so if you can't give customers a superlative digital customer experience, they're probably gonna drift off to another bank. And if they have to go into the branch and wait to talk to somebody in, the person behind the counter is new and they haven't been trained and they wait in a line, they're gonna say to themselves, you know what? Maybe I'll just put my money elsewhere. Speaker 1 00:06:59 They say nothing of the fact that it's more costly to go to market that way. And and these changes are not simply by hiring and firing people. This is a different organizational model that prioritize more people in these tech and operational roles and fewer in these front office and mid-office roles. Number two, they prioritize technology and transformation over core operations. So when you look at all of the job titles in these healthcare banking and CPG companies, and we've actually looked at them, we grouped them into four types of jobs, administrative jobs like administrators, secretaries, clerks, operations, jobs like productions, managers, maintenance people, general contractors, operators, transformation roles, innovation manager, management consultant, process manager, project manager, and tech roles, web developer, software developer, data science and so forth. And you can take sales marketing and group them all into these four categories. What you find is in the pacesetter organizations, there's a significantly, I mean very significantly more roles by headcount or percentage in technology and transformation. Speaker 1 00:08:15 And of course that means two things. It means that they have technology depth, and we'll talk about skills in a minute, but they have more people to do it, and they have people to help drive change. For example, one of the interesting findings when you look at the data is that there's 1.7 more, which is 70% more workshop facilitators in the transformation companies, the pace setters than the others. Why is that important? Because the workshop facilitators, the project managers, the management consultants, the innovation managers are the ones that are helping different business units redesign their operations to move to a more digital front facing model. And when AI comes along, the same thing's gonna happen. So these are in a sense, consulting firms inside these companies driving change, not just expecting every employee to know what to do. The third issue that comes up, and this is by the way, is true, and by the way, this is true in banking and all of these industries. Speaker 1 00:09:16 The third issue that comes up is the skills themselves. And sure enough, as you might imagine, the PACE setters not only have deeper skills, but they have different skills. They have more advanced technology skills. When we characterized the skills in IT and healthcare and other areas, what we found is that you can very clearly see that the banks, healthcare companies, and CVG companies that are ahead of the curve are skilled and hiring and training people in more advanced technologies and more advanced business methods. And we actually grouped skills into these categories. For example, in the banking industry, the pacesetter banks have 70% of their skills are stable or declining, and 30 to 40% of their skills are amongst the emerging rising skills. So they do have cobalt programmers, they do have old technology to take care of, but that's about 65 to 70%. In the traditional banks, that's more like 80 to 85%. Speaker 1 00:10:20 So they have almost 10 to 15% more software engineers, IT professionals and so forth with advanced skills that might include ai, python, advanced analytics, the use of cloud services and so forth. In healthcare, exactly the same thing. We found the same thing when we analyzed the healthcare technology and operational roles that the advanced skills are much more prevalent in the pacesetter companies. Now, of course, how do they do that? They hire people with advanced skills, they create projects and talent marketplaces to facilitate the use and development of those skills. They have an internal capability academy, they might pay people more money to get them who have those skills and attract them from maybe tech companies, but they are more data and technology savvy, which leads to number four. Number four, we found that these pacesetter companies deeply value talent, prioritizing retention, re-skilling and mobility to drive growth rather than only focused on recruiting. Speaker 1 00:11:22 Now, as many of you have heard from us in our systemic HR research, it is impossible to recruit your way into growth anymore. There aren't enough people. The job market is very competitive. The unemployment rate is low, everybody's competing for the same skillsets. So you need to build those skills internally. You need to move people into new roles. You might need to create a talent marketplace, create a talent capability academy, and so forth. So when we looked at what these pacesetter companies were doing, they weren't only aware by the way, they were aware of the skills they needed. So they were using tools like talent intelligence to identify what was missing. And they were doing their own homework to figure out what these new roles are. And then they were specifically designing skill and career pathways to fill them. For example, in banking, one of the Pacesetter Banks is a company in Europe called I N G I N G designed a product manager role. Speaker 1 00:12:21 They're an agile company, they run an agile, so they have a lot of product managers, a lot of companies don't have product managers. That's another example of a advanced role. And they designed the product manager role, the specific skills that product manager role needs, and then went out into the workforce using talent intelligence to figure out who has those, potentially those skills and can be trained and developed to become a product manager. And they do that in other areas as well. And healthcare companies do that in the healthcare and clinical professional area. And consumer banks, the ones that are ahead of the curve, do the same thing in analytics, risk management in other areas. And they do this understanding that when they identify a skill that is needed, they can't just go out and hire it. First of all, you may not be able to find it the way you've defined it. Speaker 1 00:13:12 Second, when you do go out and hire somebody that might have that background, it takes them time to get to know your culture and your company, and there's a good chance they won't stay over a long period of time. So it's a pretty high risk way of doing it. So they use the four R model, recruit, retain, re-skill redesign to facilitate these new roles. That's number four. And by the way, in the healthcare industry, this is a life or death issue because as you've heard from us before, our research shows that over the next two and a half years, there will be a shortage of more than 2 million clinical professionals in healthcare. And with only 200 to 300,000 people graduating each year from nursing school, you're not gonna fill that gap unless you're developing those people, creating better jobs so that the nursing professionals can work at the top of their license and they won't have to do so much administration, redesigning the work experience, improving retention, giving people more flexible work hours. Speaker 1 00:14:11 All of those things go into this item four that make the pace sitters successful. Which gets me to finding number five, continuously redesign jobs and work to adapt for the future. One of the things most of you're aware of is that thanks to the pandemic and a lot of other things that have been going on, employees are working from home, they're working part-time. We have a lot of hybrid work situations, they have family issues. And if you really want to build a transformation ready company, you're going to have to accommodate the needs of each worker. So in the case of nursing, what we found is that some of the advanced companies like Providence for example, have gone into the nursing teams, specifically studied the activities that they do on a daily and weekly basis, and created automation projects or job redesign to eliminate the work that is not top of license and other resorts work that is not actually nursing work. Speaker 1 00:15:11 What they found, for example, is that a significant amount of time for a nurse is spent on scheduling an administration. Well, that can all be done by AI with an advanced scheduling system. So Providence in particular developed a new AI scheduling system that accommodates the very varying needs of nurses for time of day, length of shift, et cetera, and took the workload off the nursing supervisor to save them hours a week to spend more time with patients. So this design issue, which we talk about all the time, has now landed in our laps. And that is number five. And that goes for banks, that goes for CVG companies too. Think about what happens when you walk into a bank, and this has happened to me many times, and you go up to a teller and you ask them a question and the person says, well, we're gonna have to have you talk to a manager. Speaker 1 00:16:03 And then you sit in a chair and you wait 10 minutes for the manager to come over. And he says, well, I'm not able to do that. Let me get you somebody else who can do it. And then that person says, well, I can't do it. Let me call the call center and figure out how to do it. Why would they do that for you, <laugh>? It's nuts. But they just haven't spent enough time thinking about the consumer banking experience and designing or redesigning the consumer delivery to optimize the capabilities of the workers because the workers are not giving you, they're not operating at the top of their license if they're just chasing around trying to find somebody else that's supposed to know how to do the thing that you need. So that's number five. Number six, implement a globally integrated systemic HR operating model. Speaker 1 00:16:44 Now, most of you've heard us talk about systemic hr and we're building out more and more details on the operating model every day. But essentially what these companies do is they understand that in order to create the transformation ready roles, the new skills, the new job titles and job classes, and create a top of license operating model for workers, it involves all of hr. It affects pay, it affects rewards, it affects engagement, it affects development. All these things have to come together. And so these companies also have more advanced HR departments. And we know this from talking to the CHROs, that they are creating cross-functional teams, and they're doing things in a much more integrated way. For example, if you look at HR departments, that teams like Kaiser Permanente, they have what are called pods, which are clusters of HR people that focus on particular hospitals or workforce segments. Speaker 1 00:17:45 So you don't have a recruiting department doing one thing, a comp department doing something else, a D E I person doing something else, an L and D person doing something else. These are systemic HR practices. And number seven is in order to create this pacesetter approach, they collaborate across the C-suite because many of the things we're talking about here affect the way we hire people, how much we pay people, regulatory compliance, new cities or states or countries where we need to locate operations to access new skills, issues that might affect the business model investments in new technology. HR can't do this alone. Operations can't do this alone. CIO can't do this alone. Legal and regulatory can't do this alone. This has to be a C-suite collaboration. And when the C-suite comes together and focuses on the transformation agenda, these problems can be addressed very systemically. Speaker 1 00:18:45 So those are the seven basic ideas, and if you take a step back as an HR person, basically what we're talking about is organization design change and change management and change readiness and culture of change skills and identifying critical skills, developing critical skills, and continuing to identify the skills of the future, creating career pathways and career mobility to fill these skills, job and architecture and work design to look at creating top of license opportunities so that people in nursing or banking, or even in cpg, the guy who's driving around delivering beverages to different stores, isn't spending all his time stocking shelves, but is spending more time with customers, changing the nature of his work. Those are all the things that matter. And we cannot do this without a systemic HR organization where people work together and without an integrated plan and strategy and relationships across the C-suite. Speaker 1 00:19:51 Now, the reason we did this research was to learn these practices. In some sense. What happens when we do these kinds of studies is we learn things we already knew <laugh>. So if I take a step back now and I look at the things we learned through all of this effort for the last year, I almost feel like saying, duh, it's all obvious, but it isn't obvious because most of you are doing HR projects one project at a time. We're creating a new onboarding program for people in the branches. We're creating an upskilling program in data science. You know, maybe we're doing a job design project in the sales organization, or maybe we're looking at the comp model in marketing because we're losing a lot of our key marketing people. Those are all great, but they all need to be put together into these seven practices to help the organization continuously grow and thrive. Speaker 1 00:20:45 Otherwise, a lot of these independent HR practices, frankly just don't move the needle enough. So that's the research we're launching this week. I know it's kind of a long complicated podcast, but I wanted to just introduce you to it. We're gonna be putting out a lot more information. It's one more reason to join our membership. Some of this information will go into the academy for those of you, their academy members, but a lot of it's gonna be available to corporate members, and we're willing to talk to any one of you in any industry to do this with. The next industry we're working on is pharmaceuticals, and then we will work on energy and some of the other ones later in the year. I hope this was interesting. I know it was a lot of information, and I look forward to talking to you later this week as we put all this out there.

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