Episode Transcript
[00:00:00] Hello, everyone. Today I want to talk about Jamie Dimon's town hall meeting recently, just came out this week, where he was lamenting the fact that the company's become bureaucratic and inefficient.
[00:00:16] People should be reducing headcount by 10%, and employees are not coming into the office, and so they're not getting enough work done, and they're not paying attention to their responsibilities.
[00:00:29] And, you know, my reaction is, actually, I'm very, very sympathetic with his feelings. Because if you think about a company as big and complex as JPMorgan Chase, there are inefficiencies everywhere. And no question there are organizations and teams that have sprung up and that have been staffed, led by various managers, without a lot of approvals from people above. And the company gets bigger and bigger and sprawls, and each manager hires more staff, and pretty soon you've got committees between committees and committees to support other committees, and no decisions get made. And this is basically what's going on in the federal government, too. And as a CEO, it's extremely frustrating to see people wasting time not coming into the office, the headcount going up, the revenue per employee going down, and not feeling like they know who's in charge.
[00:01:27] So let me sort of honor that. And this is exactly what we just published in the Rise of the Super Worker is this exact transformation. And we had two other meetings exactly like this this week. One was a software company, one with an energy company.
[00:01:46] So let me spend a couple of minutes talking about this issue and what you should be doing and how. Think about it. So, first of all, organizational sprawl happens because managers use this ancient model called hire to grow. There's a belief system from the past which we have to let go of that the way to grow the company is to hire more people. Now, Salesforce has done this. They're going through layoffs. Workday's done this, they're going through layoffs. Meta's done this, they're going through layoffs. But the natural behavior that we have to get over is a manager or a director or a VP or an SVP saying, if you want me to grow my, you know, output, I need more people. And what that does is it reduces the productivity of the team because new people are less productive than existing people. There's a time lag to bring them in. It costs money. Obviously, it's expensive. There isn't enough training and onboarding. Of course, it takes time. It takes six months or a year for people to become highly productive. And the company gets Slower and slower and slower. And if you really delegate responsibility like this, you end up with a lot of lack of structure in the organization and duplicative job roles and duplicative jobs. You know, one of my favorite clients is the head of HR at Standard Charter bank and she's the chro and the coo. And then one of the ways she prevents this the is they've built an operating model so the whole bank can be visualized on one piece of paper. So you don't get to just create a new job and create a new group and create a new offering inside the company unless it's part of this single page operating model. So that's number one is we have to stop this behavior of I need more people, I need more people, I need more people. And one simple way to do that is to say to the hiring manager, yes, I want you to double your output or yes, I want you to give me 30% more output. But no, you can't have any more people. So figure out how to do it with fewer people and force people to think differently.
[00:03:53] Number two, if you look at the four stage model we have for AI in the super worker research, we are sitting on productivity tools right now that can save 10, 15, 20, 25% of your company. And you don't have to wait for some fancy agent to be developed, some whiz bang software company that doesn't exist yet. You can do this today. Number one is improving the support and performance of people in their current jobs. Forget about new jobs. You can do that with an AI assistant. You can do that with training. By the way, a lot of productivity gaps are a lack of training on how to do their job or how to use existing tools. That's level one. Level two, if you have AI assistants like Galileo, you can start automating work. You can give people their own personal assistant. The assistant can do content generation or customer support or code generation or other forms of analysis 10 times faster. That's 20 to 30% improvement. Number three is you do cross functional integration. Now in our systemic HR research, which has been adopted by many companies, now what we basically show companies is how to stitch together the silos of COEs inside of HR so that the HR function doesn't have these silos of operations that don't work together. Well, the same thing's true in sales and marketing. The same thing's true in finance and procurement and collections and ar. The same thing's true in product engineering and product management and product support. If each of these groups has Their own little siloed team and their own little staff group and their own little analytics group and their own technology. Of course, you're going to proliferate all sorts of inefficiencies. Companies weren't designed to be job family silos. I mean, they did end up that way from the industrial model, but that's actually not the most efficient way to run the company. We just finished an off site for our company and we basically used as a role model one of the most successful restaurants in the world. And the reason they're successful is that the back of the house, the people that do the cooking of the food and maybe the cleaning of the restaurant or the bussing of the tables, are integrated with the front of the house are the people who wait on customers and take care of customers and greet them and bring them in the door. That is what we have to do in our companies. Overall, the back of the house, the middle of the house, the front of the house needs to work together. Now, one of the sort of more easy to understand examples of this, which I talk a lot about in the Super Worker presentation, is sales and marketing. If you think about what a marketing person does in a bank or, you know, an insurance company or a software company or wherever it may be, they put together marketing campaigns, they buy advertising, they generate emails, they build websites, they do podcasts, they do content generation, they generate all sorts of materials in the interest of generating interest and demand for the sales organization. And they use tools like CRM tools to put all that information out there. And then the salespeople are supposed to get a flood of leads and they're supposed to follow up with these leads. Now, every company I've ever worked for, there's a debate between the two groups. The sales group says, well, how come you're giving me such crummy leads? And the marketing group says, how come we are not following up on the leads we just gave you? And it goes back and forth and back and forth. Well, let's face it, theoretically we want those two groups to work together. We want the marketing group to get feedback from the salespeople on which leads have worked out well and which ones were a waste of time so they can market to the target customers that are most likely to buy whatever it is we're trying to sell. And we won't know that until we've looked at what the sales activity actually was. And then we take that data and we improve the marketing funnel and we focus more on those segments or geographies or job titles. Or levels or company sizes or whatever it may be to get more and more high quality, high quality, high quality leads. And the salespeople can do more and more productive work on the sales side. We want the salespeople to know, based on the activity and the data coming back from the marketing systems, precisely who to call back, what to say to them, what their problems are and why they responded to the sales or incoming marketing program. So they already know the pain point they're trying to address. Those are just obvious, obvious connections that do not exist in most companies because we built siloed job functions. And you could go through as a business person, as a consultant or just as a good business person. And you could see these kinds of things going on all the time between product management and customer support and engineering. And the problem is not that people are trying to operate in the silos, but we built these job titles and these job functions so that it was if they worked by themselves. And you have this behavior where somebody says, well, we're the product group and that's the marketing group's problem, or that's not my problem. I do marketing. You need to talk to the sales group. And we think about these different groups as if they're sort of independent little entities in our company. But we're all actually trying to do the same thing. And so a lot of what is coming out in these productivity based layoffs or other words that people use is not that we kind of have a bunch of people goofing around not coming into the office. By the way, I believe everybody at work does their personal best to be as productive as they possibly can be. But if you give them a siloed job with siloed tools and siloed data, they're going to become productive at something that isn't actually in the productive interest of the whole company. So it isn't an individual person's problem. It's thinking about how the organization works together. Now, some business leaders are good at figuring this out. They, they, and I think Elon Musk, by the way, is, is good at this. I think they just see the big picture. They go to the ground level and they say, you know, the way we've set this up is dysfunctional by design. Let's start from scratch and design it in a more integrated way. But the vast majority of managers are not good at that. They've never thought that way. Maybe they're afraid to think this way because they might be, you know, penalized for making comments that jeopardize or threaten one of their peers. I mean, it's very threatening to a manager to say that, you know, your group doesn't need to exist because we could take your group and fold into this other group. So that manager is not going to come up with that idea. So, you know, thinking about it from, you know, sort of our perspective in hr, we need to get involved in these org design, AI implementation projects. And this is going to happen a lot. It's going to happen a lot because the companies that think from the ground up about how these business processes can be stitched together are going to be more productive companies. They're going to have smaller teams delivering more output at a higher rate of growth. Now, the big question in the sort of the Jamie Dimon, you know, Jamie Dimon conversation that you can listen to or other sort of CEO level things is if the company decides to do this through a layoff, will the company become more productive? And I would suggest that the answer to that is no, because Meta has done a layoff now three times in the last two or three years. Salesforce went through it multiple times because they're not redesigning the jobs fast enough. And all they're doing is trying to sort of tamp out the fire by perhaps laying off a group of people and not rethinking the way they're organized. Because in most companies, and I firmly believe this, and from all the research and the consulting we've done, the group that you think isn't needed is just as passionate and interested in helping as the group that you really think is needed. So if you're laying off people in one group because you want to hire people in the other group, there's a good chance that the bulk of the people you want to lay off actually could be redeployed to this new group, maybe retrained to some degree. But training somebody internally, by the way, is much faster than training somebody from the outside in most cases.
[00:12:38] And you wouldn't have this layoff shock effect on making the company more productive. Now, there is a philosophy, the Elon Musk philosophy, that you sometimes have to shock the organization. And that's the philosophy that he has certainly talked about at Twitter and I think at the federal government, where the bureaucracy has gotten so thick that no amount of re engineering will work until we lay off or eliminate a high percentage of people to go back to ground level.
[00:13:11] And only you know and can sense whether that makes sense. But if you're not thinking about redesigning the organization in the process of the layoff, I don't think it's going to work necessarily because you're just going to rebuild the same bureaucracy you had before because the behavior and the reward systems are going to be the same. Part of this, by the way, is delayering. And the more middle level managers you have, the more they're going to protect their turf, the more they're going to argue against the elimination of their particular group and the slower and slower this reorganization is going to take place. So a lot of this comes down to management culture, reward systems, a sense of equality. By the way, diversity and inclusion is a part of this. If you have the haves and the have nots, the decision makers versus the people who are order takers. If you have that kind of culture in your company, that is going to get in the way of making these kinds of transformations. So in some sense there is a flattening going on, democratization of decision making and a big focus on more simplistic, cross functional job titles and job responsibilities. For example, if you're an engineering manager, leader, director, VP, and you have 100 people in engineering, you could give each engineer a name, a title, and you could say you're a backend engineer, you're a front end engineer, you're an AI engineer, you're a database engineer, you're a quality engineer, you're a QA engineer, you're a front end engineer, you're a UI engineer. That's great. And what you're basically telling them is that you're a little silo and if we can't find you a job doing that type of engineering, maybe we don't need you. Well, the reality of engineering, and I know this because I am engineer, is they're pretty good at learning new stuff. And engineers who are very good at, you know, certain things can learn other things pretty quickly if they're semi adjacent to where they started. So one of the companies we talked to had this problem, big company in Europe and they said, we're going to get rid of those job titles. We got Eng. Everybody's an engineer. We have level one, level two, level three engineers. Some of you are project leaders, but you're not necessarily managers, you're project leaders. So sometimes you'll be leading a project as an engineer and maybe you get a little bit more money for that responsibility. But we're not going to graduate you into this particular job title where you get pigeonholed for a long period of time because we know there could be something that comes on next year where you get to work on something else by the way a lot of R and D departments are like this, where the scientists are specialized in certain areas, but because there's such domain expertise, they work on other projects as well. And that's what great R and D departments do. So a lot of this, you know, a lot of my reaction to, you know, the JP Morgan Chase sort of story that came out this week is I think there's probably some philosophical things likely going on at JP Morgan Chase. And then there's lots of, you know, sort of tough decisions that need to be made about how the bank is organized and the operating model. And the reason that I think this is a really big, big topic is if you listen to the Super Worker presentation I've been giving the last couple of weeks, 40% of CEOs coming from the PwC CEO survey with 4700, I believe is the number CEOs, 40% of them said, we need a new operating model. Now what do they mean by operating model? They mean simplifying, changing and improving the structure of the company so we can go to market faster, so we can make decisions faster, so we can be more, more productive, so we can save money, so we can build better products, so we can be closer to customers. That is not just telling people to come into work, telling them to work on Saturdays and Sundays and forcing them to work harder. And I think the problem with this mentality of, oh, you can work Saturdays, oh you can work Sundays, oh, you can stay late, is that you're not honoring or respecting the, the human issues at work. Now, there are times when people work extra hours because they love their jobs, because there's a really big project that's really time critical, or there's a massive customer issue, or they really love this thing that they're doing and they don't want to leave it today because they want to finish it before they lose their momentum on it. But you can't look at that as a way to sustain a business over the long term. And so when I see CEOs frustrated like this, the first thing that comes to my mind is someone, the coo, the chro, should say, let me take that issue off your plate. Let me work on the productivity and the culture and the organization of the company, and let me come back to you with a plan on how we can become 10% or 20% more productive and generate 20% more revenue or 10% less expense, not just reduce headcount. Because I think that's in some sense the beginning of a solution. But it isn't the End of a solution.
[00:18:34] So that's my perspective on this topic. I don't want to get into a huge amount of detail on some of these client stories, but I suggest you read a little bit about org design. Take the org design class in our academy and go through the super worker research that we just launched a couple of weeks ago and read about the four stages of AI and you'll see that this is a lot of what we're going to be doing inside hr, inside sales, inside marketing, inside all of these different business functions. And by the way, don't believe all this stuff about agents. We don't have these nirvana off the shelf magical agents yet they're being built and I think a lot of you are going to build these agentic solutions from core systems like Galileo, from us, from the co pilot, from some from now, assist from ServiceNow or others. And you're going to build these multifunctional agents around the new organizational models you create as opposed to waiting for some magic agent to come in and suddenly improve this productivity for your company. We are really interested in talking to you about this in your particular company. If you want to talk to us about your situation, please call us and take a look at our new research on the super worker and even more importantly look at our new research on the role of the Chro. Because to me this points to a important message, is that you as an HR leader, as a Chro, as a VP of hr, need to lean into this and take responsibility for this issue. And don't think of it as a work at home policy. Think of it as changing the focus of the company towards more integrated operations, more systemic operations, productivity based job design and skills and AI improvements in all the roles in your company.
[00:20:24] Thank you. I hope this is interesting.
[00:20:27] Very interesting period of time we're going through here and we'll continue to stay close in touch with.
