Episode Transcript
Speaker 1 00:00:18 Hey everyone. This week I want to talk about the labor market because it's going through a massive change. I want to give you a sense of what's going on. It's gonna have a tremendously important impact on what we do in hr. First of all, the word labor doesn't really do it justice. It's really a talent market. And the reason I say that is perhaps the biggest theme we've seen for the last decade accelerated during the last year and a half, is that most of the jobs in the economy are service jobs, 85 to 95%. And automation, despite all of the fire bells that were going off about jobs going away, has created jobs. The old Oxford University study that said that 47% of jobs were at risk turned out to be baloney because there are more jobs being created now than we've ever seen. In fact, according to mz, 26% more jobs are open now than there were one year ago.
Speaker 1 00:01:13 That's a massive increase in the unemployment rate is plummeting. I would not be surprised if we saw the unemployment rate go well below 4% because there's so much demand for humans. The second thing is that the jobs that are being created now are very different. If you look at the data on the jobs open today versus one or two years ago, areas like transportation, logistics, healthcare, personal care are exploding, including truck drivers by the way, as well as the digital jobs building and maintaining and monitoring all the software in the world. Although the software engineering profession is a massive profession, it's only about eight to 10% of the jobs in the world. So 90% of us, as I say, are users of software. Maybe eight to 10% of us are developers and analyzers of software. Uh, the third thing that's interesting about the job market is that people are moving a lot.
Speaker 1 00:02:11 There was a study done by IBM just this year that said that one in four people during the pandemic changed professions, not jobs, professions, and almost 40% changed jobs, roles or managers. So there's a lot of mobility. Now that doesn't mean physical mobility, but job mobility. And the reason there's more job mobility is we don't need physical mobility anymore. An interesting piece of research from LinkedIn found that if they looked through all of the job postings that were created in the last six to nine months, the number one location of the job was the headquarters. The number two location in popularity was remote. Remote is now a location. It's not a characteristic of a job. It is a physical formal designation. So that means that people can change companies, they can change roles, they can change professions, they can work part-time like never before. And of course, as many of you may have read, contingent work and gig work is also exploding.
Speaker 1 00:03:12 One of the studies done by Deloitte several years ago found that more than two thirds of millennials now have side hustle. So they're doing multiple jobs on the side. There's a very good chance that if you're out there recruiting people, you're gonna find opportunities that young people want to take where they're working part-time for you while they're working for somebody else. And I think that's maybe one of the biggest characteristics of the job market going forward, that a decade from now, it may seem kind of interesting and historic, that you only worked for one company and will all be working for multiple companies in a more contract experience. Now, what does all this mean for us as business people, as HR people, as recruiters? Well, number one, this idea that you're gonna post a job and there's gonna be hundreds of people applying, probably isn't gonna work anymore.
Speaker 1 00:04:03 You're not gonna get enough applicants. You may not get the right applicants, and you might get applicants that don't look like the person you're looking for. So many jobs today are hybrid or multi-skill required that we don't need people who have experience in that job to necessarily apply and be good fit. And an interesting conversation with the head of recruiting for one of the largest pharmaceutical companies, and this is a pharmac company that has consumer pharmaceuticals, agricultural pharmaceuticals, and industrial. And she said, you know, what we really need in the company is people that know different domains of life science. The jobs are changing and we're not even sure what the jobs are gonna be. So I've gotta go out there and search for life science people who have experience or proven domain in different disciplines, and then when they come into the company, we'll find the right job for them or the right role.
Speaker 1 00:04:56 And this change in job from job to role in this change in mentality from job to work means that the job description, the little box that we put around a job where we wrote, you know, must have this must experience, must have this degree, must have these skills or certifications, is becoming a smaller and smaller percentage of the workforce. This week, I had an interesting conversation with the head of HR for Ashley Furniture, which is actually a very large company, more than 20,000 employees, manufacturer and furniture all over the world. They have their own fleet of trucks, they have retail locations. And she said, you know, there has been a lot of automation in our manufacturing plants. For example, in the old days, if you wanted to work in our mattress plant, you had to be strong enough to be able to flip a mattress.
Speaker 1 00:05:44 And I laughed because that's one of the few things that I hate doing. She said, but now we have mattress flipping machines. So we can hire a, a female employee who's 75 pounds who come in and run that machine, but we need people that know how to use that kind of equipment and have the right work skills and understand technology. And she said, and we don't always find people like that coming outta community college. So we have a whole different way of sourcing them and developing them to take those jobs. And I think that's really the big theme is as more and more routine jobs go away, and the routine jobs are one, are the ones that are, that are the low paying jobs, the higher job requirements we have for people, and the more complex the ability is to search and assess people for the roles.
Speaker 1 00:06:32 Now, the second big topic that I want to talk about is developing talent as opposed to buying or recruiting talent. In most of my career as an analyst, I've talked to companies about this idea of the talent supply chain. The talent supply chain is this idea that you hire somebody out of college or into a beginning role in your company and they evolve and learn and develop progress into senior roles, and then eventually they reach semi-retirement and retire. And so you needed a supply chain of constantly sourcing and searching for people, keeping people in the company through retention programs, maybe rehiring people now and then, and then finding ways for them to progress and move on. Well, it's not really like that anymore. It's really a pixelated always on system where candidates are coming from inside the company, outside the company, full-time people, young people coming from school or early in their careers, older retirees coming back to work, reentering the workforce, and a very aggressive program towards building the capabilities and skills you need.
Speaker 1 00:07:44 I did a study with General Assembly two or three years ago, and we looked at the cost of hiring versus developing data scientists. And it turned out that a data scientist can be built. You can learn how to be a data scientist. It takes about 12 to 18 months to get reasonably good at it if you have a background in math and an aptitude for numbers. But if you go and hire one, you have to hire them away from someplace else. And in many cases, they're working for a very high market cap software company, which you may not be able to compete with. So you have to pay a signing bonus, you have to pay a commission to the recruiter, and a high percentage of them won't stay. Well, it turned out when we analyzed the data, it was six times more expensive to hire this person than it was to develop the person.
Speaker 1 00:08:30 Now, it might take a year or two to really develop somebody into a great data scientist, and of course they're gonna develop more over time, but that's a huge difference. And so this idea that a lot of your talent production is going to be developed internally is becoming a very, very strategic issue. And I'm tired of hearing about the war for skills and the reason that skills should be used as a way to evaluate people. This is way bigger than that. This is a business fundamental that if you are not building critical capabilities in your company and you haven't sat down and figured out what those capabilities are and developed what I call a capability academy, you're gonna have really hard time succeeding in the future in this labor market. Third thing I want to talk about is retention. Every time there's a tight labor market, there's a hundred thousand articles about retention and engagement and what we can do to keep people.
Speaker 1 00:09:26 That formula actually always exists, and it's always important. The cost of keeping somebody who's working out well is far, far, far lower than the cost of losing them and rehiring somebody else. And so we have to find ways to keep people in the company. But there's an even bigger reason to do it. And this is a conversation I had with Bank of America just last week. If you look at the consumer bank at Bank of America, the consumer branches, which are called money centers, and all of the people in call centers who take care of your money and your checking accounts and your CDs and all those kinds of things, there's about 70 to 75,000 people in that organization in six or seven years ago. They had a pretty high turnover rate. So a lot of people were hired in and sometime in the first year, they would leave.
Speaker 1 00:10:13 It's a lot to learn. There's a very difficult set of systems and tools and rules and operational procedures. You have to learn. Some of the jobs don't pay super high level wages. And uh, they had training departments all over the country working on taking care of these issues. Well, they brought all that together into something called the Academy at Bank of America, and we're gonna write a big case study on this that's just in the process of being published. John Jordan runs it. And the, what the academy does is it put together an end-to-end view of all of the issues of training, retention, recruiting, and leading in the consumer bank. You could call it a talent management function, but it isn't really a talent management function. It's really development function. And what John's team learned, and he did this in concert with the head of the consumer bank.
Speaker 1 00:10:59 So this wasn't a training department. This is an entire business initiative around growing and maintaining the skills in the consumer bank. So he works for the head of the consumer bank and for the head of corporate training. Well, one of the things they found, of course, as they started to look at the data, is that the highest performing employees have all sorts of characteristics, but the number one performance characteristic is tenure. In other words, the longer they stay, the better they know the company, the better they know the people, the better network they have, the better they know the systems, the better they understand their job, the better they understand the customers, the environment. And so tenure or retention is a huge performance driver. It isn't just something that's nice to do because it reduces the cost of hiring. It is a business fundamental. And so developing skills and creating an entire ecosystem of development and growth is fundamental to performance at the bank.
Speaker 1 00:11:54 By the way, bank of America now has a 91% EM employee satisfaction rate, and their attention rate, um, is over 92 or 93%. So they have really, really turned the bank around with this new approach. And that gets me to the fourth part of this, which is mobility. Most of you probably have been looking at these new systems called the Talent Marketplace, and these are products from companies like Eightfold, degreed, gloat, fuel 50, Workday, Oracle has one and a whole bunch of other companies that isn't really what's going on. Those are enabling tools. But the big issue in a talent market, like the one we're going into is you need to look at internal mobility as one of the most strategic things you do in the company. Now, many of you may have heard me talk about this in the past, but when I did research at Deloitte, we looked at talent mobility.
Speaker 1 00:12:52 And what we found in our studies was that two thirds of employees believed a couple years ago that it was easier to find a job outside the company than it was to find a job inside the company, which is an absolutely ridiculous finding. But it was true. And the reason was, of course, we didn't really have a lot of formal systems for doing this. Well, what John Jordan found at Bank of America, and many, many of you are beginning to realize this now, is that internal mobility is a huge strategic weapon. When people move around inside the company, it's great for them. They get a great expanded career, and they get to broaden the T-shaped career model or the T-shaped learning model in their own profession. The cross part of the T, meaning horizontal experience, the vertical part being deep experience in one domain, the second of course, you build better leaders, because leadership is a job that requires context, it requires system thinking, it requires relationships and really understanding aspects of the company that maybe an individual team doesn't understand.
Speaker 1 00:13:56 So people who move around tend to be much better leaders, they move into senior roles. Third, it actually creates a deeper pool of talent. I told you the story about the data scientists a minute ago. Well, it turns out in the most rarefied job of all, which is cybersecurity, that is the job that is the most in demand with the fewest number of experts. Research has proved that the best experience to become an expert in cybersecurity is not software engineering. It is having been a financial auditor. So some of your best cybersecurity experts are sitting around in the finance department somewhere, probably auditing the books or maybe even working on the taxes, but you wouldn't know that if you weren't moving them around. The third reason why T mobility is so important is that it creates organizational resilience. Now, as most of you learned in the last year and a half, sometimes we gotta move people around.
Speaker 1 00:14:54 Sometimes we have reorgs, we shut things down, we open things up, we create new opportunities for new plants, new facilities. We change the way we go to market, and we have to move people into call centers. Well, if there isn't a system and set of programs for accountability, that is a massive problem. I'll tell you another example of that that I think will give you some things to think about. One of the most successful companies I've ever worked with over the years is a retailer by the name of Wegmans. If you live in the northeast, do you know who they are? Wegmans is a beautiful, elegant, wonderful place to shop for food and groceries and all sorts of related family items. And it's a family built company. And what they found is when they go into a new city or a new state, rather than hire people into the new store, they have a special assignment for senior managers and people that are high potentials and really great employees on other stores to move for three months to the new store to help open it up.
Speaker 1 00:15:55 So what they do is that they transform their culture and move their culture to a new location. They make sure that the people that are hired into that location really understand the culture, and they create this wonderful career opportunity for people that have worked really hard in high school or maybe part-time in college in one of the other stores to go to a new store and be part of the team that opens it up. And I think that is a wonderful example of talent mobility done in a very strategic way. The fourth big topic I wanna talk about in context of the labor market is diversity and inclusion. Now, we just produced a huge research study on this and a program in the JBA called Elevating Equity, which has gotten really incredibly strong reviews. But the reason it's important in this labor market is you have to be equitable and diverse in your talent acquisition.
Speaker 1 00:16:43 If you think about the fact that a high percentage of your workforce is likely to be working from home or a remote location, you could be hiring people from any nationality, any age group, any experience level, any race, of course, any gender, and it really wouldn't make a big difference. So if you're not inclusive in your culture, in your hiring practices, in your assessment practices, in your management practices, you're gonna have an even harder time hiring. In fact, one of the biggest themes in talent acquisition software has been building systems that can assess people regardless of background and race. And as much as we all like LinkedIn and the fact that we have these marvelously well put together profiles there, all of that data in LinkedIn may or may not be useful if you don't have an inclusive hiring model and an inclusive culture and leadership model to bring new people into the company.
Speaker 1 00:17:37 Now, you know, I actually have a picture of all of this and how it comes together, which I'm putting together into a research report and an article that I'll publish soon. But the bottom line is the labor market is no longer a market for labor. It is a market for talent. If you think about the human value that people add to your organization, I believe that people are the only appreciating asset. You really have raw materials, supply chain money tends to depreciate over time. People become more valuable. The more trained they are, the more aligned they are, the better they know the company, they become more committed in this world of an incredibly disrupted labor market that is rebuilding itself in a fractal way. You have to really rethink about how you hire, recruit, train, develop, move incent, and support people like never before. I think we're going to have a massive competition for talent in the years ahead. And the companies that are gonna thrive are the ones that can become talent factories producing incredibly high performing, engaged, highly skilled people, and we are here to help you learn how to do that. Thank you.
