Episode Transcript
Speaker 1 00:00:07 Hey everybody. I have a lot of things I want to talk about this week, but let me start with just something very simple. Many of you have told me how much you like this podcast, which really warmed my heart. More than 2 million people have listened to it in the last year or so that I've been doing it. So I'm gonna keep doing it. And while it isn't always about one topic, what I promise I will do virtually every week is show you what's going on in the world of HR and work and the workforce, and show you what I've learned this week because I have this very interesting and unique situation of seeing many, many things at the same time. Okay, so enough on that, number one, I wanna talk about pay transparency versus pay equity. And let me give you a preview that we have two very comprehensive research studies coming out on both that will be out in February and March.
Speaker 1 00:00:56 We will write articles and put together some infographics for those of you that are not corporate members, but if you are a corporate member, you'll get the whole thing. But here's the story. State after state is passing pay transparency laws, forcing employers to cite pay levels on job descriptions. And the theory is that if you put a pay level or pay range on the job description, the person applying for the job will have more bargaining power and will understand what their wage should be. Because there's research that shows that women, for example, are less interested in negotiating a high wage than men. And there's other, you know, issues that if you've been under em, employ, employed, or underpaid in the past, you will never catch up. Makes perfect sense. However, if you really look at the research that drives pay equity, this is not the right solution.
Speaker 1 00:01:47 And here's what the research shows. First of all, pay equity, as you'll read all about in the research, has to do with paying people fairly for the level, the job, the contribution, and many, many aspects. It's a very complicated equation. And in most companies that are well run, as you'll see from our research, there are a lot of disparities in pay because of performance and because of other factors, skills being one of them. So we don't want to equalize pay. That is not the idea. Now you, you would think that pay transparency would give more bargaining power to the candidate, but several really interesting academic studies that have done multi-year analysis of this in different states have shown that that is not true. Because what happens is if the employer believes they have to disclose pay levels for every job, they have a reason not to give you a race.
Speaker 1 00:02:39 Imagine you go to your boss, and I've done this, this happened to me at ibm, and you say, you know, I'm kind of frustrated with my salary. I think I'm do a raise. And your boss goes, Hey, I'd love to give you a raise, but I can't because if I give you a raise, I've gotta give all these other people a raise and I can't do that. It wouldn't really be good for the company. And actually, the data shows that companies that have a lot of pay transparency have lower average pay for the same jobs. So just be careful with all of these laws that are trying to move in that direction. They have adverse effects and stay tuned for more on the research. Okay, that's topic number one. Topic number two, the labor market. It's actually fascinating what's going on in the economy. I think we're watching a slow motion car crash.
Speaker 1 00:03:28 In other words, the GDP grew by 2.9% in Q4 after about 3.2% the prior quarter. So it grew a lot. I mean, that's actually quite a bit, but it's slowed. We're still hiring people, but it's slowed. Economic activity is slowing, housing starts are slowing, credit card debt is rising. So even though we don't have this crashing effect going on, things are slowing down. And so what that tells me as somebody who's been around for almost 67 years, that we're probably going to have a slowing year. And in the predictions, I talked a lot about this and the implications of this. Now the employment situation is completely different. The demographic drought, as it was defined by MZ is getting worse. The number of people working is somewhat depressed. Baby boomers are retiring and the unemployment rate remains low. In fact, according to some research that just came out in the Wall Street Journal on Friday, it's 3.5% in the US for example, as of December.
Speaker 1 00:04:28 But some of the states like Utah, it's below 3%. It's in the twos, including North Dakota, South Dakota, Texas, Florida. So if you think you're gonna be out there hiring all sorts of great people to staff your stores, Chipotle just said they're, they're going to have to hire, I don't remember the number 10 or 15,000 new people. Well, I found out that Chipotle has 196% turnover rate. You are going to have to fix the retention problem, which gets back to this thing we talked about a couple of months ago called the four R's recruit, retain, re-skill redesign. This whole idea of systemic HR that we're gonna talk about all year and we're gonna publish some research on it around our conference, has to be your strategy to deal with this labor market. And even if we do slip into some sort of a slow moving recession, I don't think there's gonna be that many people out there looking for work.
Speaker 1 00:05:18 By the way, one more interesting piece of information on that topic. Kathy and Nahal and Stella and I have been digging around on hybrid work and looking into some research we're doing on productivity and internal mobility. And we found a bunch of research on gig work. And what we discovered through some surveys that have been done by McKinsey and others that roughly 35, almost 40% of Americans, now this is the United States data, but it could be higher in other countries, are now doing gig work. They are doing contract work, they're doing side hustles, they're creators, they're making money on YouTube or Instagram, they're driving Uber cars, whatever. And their analysis also shows that those people who have multiple sources of income are happier, more optimistic, and more excited about the future than those of us that are wage slaves. <laugh>. I'm not saying our companies like that, but many of us are working for one company.
Speaker 1 00:06:14 And now a couple of thoughts about that. First of all, we as employers need to get a better handle on this contract work issue, which is another topic which I wrote about in this research we call the pixelated workforce. But the second thing is internal mobility and gig work inside of the company can create that same level of happiness and satisfaction as it creates outside of the company. If I get a chance to do something really fun, a project, maybe I get a bonus for doing it inside of the company, I don't need to go find gig work on the outside. And so all of this interesting activity that's going on with talent marketplaces and internal mobility really should lead to contract gig and project work inside of the company across business unit boundaries and across functional boundaries. So there's some things for you to think about as the year ahead continues.
Speaker 1 00:07:03 Number three, some research that came outta Microsoft on Thursday. Now Microsoft is doing a lot of things right now. You know, they've invested in G P T three and chat G P T. It appears that most of that investment is giving the company computing power, but they could end up putting it into Microsoft products. I'm gonna talk about chat GBT in a minute, but this research is a little bit different. What they did is they surveyed several thousand, or maybe it was more than two or 3000 people, and asked them a bunch of questions about their tools and their productivity and their work environment. And the results are actually kind of surprising. 72% of the people surveyed think they have too many tools for collaboration at work. And I've talked about this a lot. I mean, I think it's nuts how many things we have to interact with their work.
Speaker 1 00:07:51 They're kind of trying to sell you to buy Microsoft teams, but they don't really explicitly say that this is a real research. So simplify your tech stack, simplify your work experience. We all know this. Number two 59% believe that the tools they're using at work do not allow them to do their jobs better. Now that's pretty significant. Things like Zoom and Teams and WebEx and many of the video conferencing tools that we have in many ways are kind of first generation systems. If I think about what I do all day, I'm constantly switching back between Microsoft Outlook, word, PowerPoint messaging, on and on and on. Is there a new generation of integrated tools to do this? I think there's an opportunity for that, and I think this opens the door to many vendors to figure that out. The third thing they noticed is that 77% of the people that use all these tools, and these are probably mostly white collar workers they interviewed, would like a no code implementation of the tool so that they can build something else.
Speaker 1 00:08:55 In our case, for example, we use all Microsoft. So we have Stream, which we can record all of our videos. We have SharePoint, we have teams. All that stuff works really well. But it isn't easy to create a SharePoint site. It isn't easy to set up an external user experience. These things should be easy for managers, and I think Microsoft's research points out that there's still a big opportunity out here for productivity tools to be even easier to use. By the way, one of the superstars of this last stock market route is ServiceNow. And one of the reasons I think ServiceNow is doing so well is because they have a lot of no-code or low-code solution for building the employee experience. So that theme will continue. Okay, let me talk about chat G P T next. I've had lots and lots and lots of conversations about this with reporters, with researchers, with users, with people experimenting with it.
Speaker 1 00:09:50 And basically what's kind of happening in my opinion, is the blushes off the rose here. This thing is really good. It's simple analysis of words and phrases and creating simple answers and listicles as Buzzfeed is now invested in, it's also extremely good at going through a large corpus of training information or documentation and summarizing it and creating quizzes and creating questions and creating virtual teaching assistants. Those are massively big markets. I know you to me, is working on this. CORIs is working on this, other companies are working on this. I, I think all of you that are in the training space should be looking at this, but the but the technology is still very immature. And let me point out, I've updated the article that I wrote last week with some new links, but one of the links is some stuff that Kiran Snyder, the CEO of text io did, where they actually took job classification questions, job descriptions and interview questions and put them into the system.
Speaker 1 00:10:51 And very craftily tried to de trick the system to see if it was gender biased and racially biased. And it was, it tends to assume that nurses are women and it writes things about nurses as if they're women. It tends to assume that African American people have less confidence than Caucasian people. Now it's not doing that because it's psychologically biased. It's just scanning all sorts of information on the internet and picking up these signals. So there's lots of interesting work to do here with chat. G P T I remain, by the way, very, very optimistic about this technology. I don't think open AI will be the only player. As I talked about before, I think there will be many, many corporate applications to this. We've got a whole list of them I talked about in the last podcast, but it is still a little bit raw and I think people are going to be a little less enamored with it once they start using it until it has a year or two to refine itself.
Speaker 1 00:11:50 And there will be r and d and a lot of r and d going into this. And we'll stay tuned to see what comes next from Google and some of the other big players. Okay, lemme talk a little bit about hiring. I had a very interesting dinner this week with 10 senior HR people from mostly west coast companies, but a couple of east coast companies, Yelp, Salesforce, Expedia, BlackRock, few others. And we were mostly talking about hiring. It was hosted by a company named Handshake, which is the leader in communication, recruiting and support for young employees or early career employees graduated from college. And so we had a lot of conversations about how to best hire diverse slate of candidates for early careers. And by the way, one of the people that was in the room was the ex C H R O of Tesla.
Speaker 1 00:12:39 So we had a very interesting conversation about that. But the, the basic conclusion we all came to more or less all 10 of us, was that there's this strange conflict between the degree and the pedigree of the college and the skills or perceived skills of the candidate. And I told them that in my experience doing many, many studies and talking to hundreds of companies about this is that generally speaking, almost every company reaches the conclusion that the college degree is a very weak signal of how successful somebody will be at work. Much stronger signals are prior work experience, the person's culture fit, the level of passion and interest in the job and the person's learning agility. And one of the things that was very funny, I told them the story of Liberty Mutual many years ago I did a case study on Liberty Mutuals auto insurance business where they were trying to figure out how hire the best sales people.
Speaker 1 00:13:33 And the typical approach they were using was going to great schools, looking for people with straight A's that had all sorts of great academic experiences, bringing them into the Liberty Mutual Company, which is a great company, and teaching them how to deal with auto insurance sales. Turned out that didn't work very well, and they did an analysis of those people that did succeed in the auto insurance sales operation. And it turned out there were two things that had nothing to do with college degrees. Number one, they loved cars and they thought the car business was kind of cool. So they were just passionate about that. And number two, they had sold cars. <laugh>. And I told this story and one of the people in the dinner who used to work at Salesforce told me they had the same experience. They used to hire people with college pedigrees at Salesforce in the early days and they found out it wasn't predicting success, but car salesmen were the best salespeople for salesforce.com.
Speaker 1 00:14:29 So just take that as an idea to thread through your recruiting process as you think about how difficult it is to hire. In our particular case, we're hiring a fair number of people given how small we are. We do a very extensive analysis of cultural fit of people, and we really look at what they know how to do and what they have done. And we don't look at really that much about where they worked or where they went to school. And it's worked out very, very well for us. We've, we've had virtually no turnover at all. Next thing I wanna talk about a little bit is layoffs. One of the things that happened this week is that a couple of podcasts and interviews with reporters on what's going on with layoffs. And one of the questions that came up many, many times it seemed like was, how do you take care of the people that are the survivors of a layoff?
Speaker 1 00:15:16 Obviously doing a layoff is difficult, but what about everybody else? And I recalled a situation I was in twice in my career where a bunch of people were laid off around me once at IBM in the 1980s when Lou Gerner came in. And once in the 1990s when I was at Cybase and a new management team came in. And in both cases I was one of the survivors. And I remember at the IBM situation, I used to work at 4 25 Market Street, which is a big building downtown San Francisco. I was on, I think the 14th floor or something, and there were maybe 300 people on that floor, open desks talking and doing work and everything. After the layoff, I was the only one on the floor. The only one left. I don't know how that happened, but I went into work and there was no one there.
Speaker 1 00:16:03 My boss was in another state and I was just flabbergasted. And I literally spent two weeks wondering if I even should come into the office. Same thing happened at Cybase. I happened to be in an office in Emeryville that was a closed office, but in a floor that had a lot of cubicles and other people in it. And the layoff happened. There was a little bit of a slip. Somebody sent an email Friday afternoon that inadvertently notified people that something was coming there, was kind of ready for it. Monday morning, all the layoff notices took place. People went home Monday midday, they had like two hours to clear out their desks. And again, I sat in my office looking around thinking, now what do I do? I gotta make new friends because there's nobody here. So the point I'm making is that maybe the most important thing for the people that are left, and this can go for all of the tech companies and anybody else, is now what is the plan?
Speaker 1 00:16:54 Yes, we understand you had to lay people off to save money. Maybe we could disagree on who you laid off and how you did it, but what is the plan now? Because immediately after this happens, everybody says, Hmm, maybe I'm next. Maybe the company's going outta business, maybe the management team doesn't know how to run this place, et cetera, et cetera, et cetera. So let me just give you that as something to think about. If you're going through a layoff, if you're planning a layoff, or if you think it might come sometime this year. And I do think there will be more. I'm not a pessimist at all, but I think we have to shake off this 15 years of zero interest rates and we have not shaken it off yet. There's still a lot of speculation in the market, and I think consumer demand is probably gonna go down before it goes back up.
Speaker 1 00:17:38 Okay, two more things and then I want to wrap up. First of all, I wanna give you some funny experiences I've had with our book. So the book, irresistible, the Seven Secrets of the World's Most Enduring employee focused organizations has been really applauded by many of you. And it is nothing that makes me happier than knowing that you're learning something from the book and finding it useful. That is really what this is all about. Nobody makes a lot of money writing a book, but it is a labor of love. And I put a lot of my heart and soul into that book, and I will read some chapters from the book in another podcast to come. But there's this funny thing that happens when you publish a book. You have to sell it on Amazon because most people buy books on Amazon. And Amazon has this weird screwy thing where they sell ads on top of your book.
Speaker 1 00:18:28 And this is really where the DOJ should be spending their time. So when I go into Amazon and I look for my book, I actually find other books. And so you actually have to buy advertisement to sell the book that you wrote on Amazon. I'm not gonna make any comments about this, but I have a feeling the DOJ has some more work to do to figure out what's going on over there. Oh, and one more thing on the book, if you have read it or you've got a copy of it from a vendor or you bought it and you like it, please rate it on Amazon. It turns out that the SEO within Amazon is very dependent on the number of ratings, and hopefully you'll give it a good rating. <laugh>, thank you. One more thing, the predictions. We published our predictions report this last week.
Speaker 1 00:19:12 I talked about it last week. It is a quite comprehensive labor of love that I do every year, and I really hope you use it for planning, not just for predicting, cuz it really doesn't predict things. It really shows you the trends. But the real message I wanted to make about it is something I wrote about in an article. It's activation 2023 is not a year to ponder the future or put together a 10 year plan. It's to activate hr. You and we and I are going to be asked to do some very pragmatic strategic things in our companies. We're going to have to get this skills thing figured out. We're going to have to fix retention. We're going to have to deal with job change and internal mobility. We're going to have to improve our focus on leadership and new models of leadership. We're gonna have to clean up the HR tech mess.
Speaker 1 00:20:03 We're going to have to rationalize the HR function and integrate it into a systemic model. And I, I call it an operating system, not an operating model. We're going to have to pay attention to the industry changes going on in our industry and how the company's trying to move into the new industry. And we're gonna have to move fast because some of the changes that are happening are very difficult. Intel had the lowest earnings and the lowest growth it's had for something like 20 years. Intel for most of my career, is one of the best run companies in tech, and they have fallen behind in that industry and that can happen to anybody. So activation, activation, activation is the word for 2023. Okay, well, I hope you enjoy the podcast. This was a little bit of a smattering of topics and I will keep doing this as often as I can, and I always welcome your feedback. Thank you.
