Episode Transcript
[00:00:07] Speaker A: Hello, everyone. This week I'm still broadcasting from the UK, and I've spent a very busy week meeting with many, many companies about many, many things. But I want to talk about two things that came up over and over and over again. One is a constant discussion about where.
[00:00:27] Speaker B: The workforce is going and what's the.
[00:00:30] Speaker A: Future, which I think is worth discussing every now and then, not all the time. And the second is a lot of conversation about how we measure performance and productivity as we add more and more AI and technology to the workforce. And next week, I'll talk more about.
[00:00:50] Speaker B: What'S going on in the technology market.
[00:00:52] Speaker A: Because actually, workday announced some interesting things that I want to tell you guys about. Okay, so, you know, it's funny how just like the old frog in the boiling water story, things change slowly and then they change quickly. And I was with a large bank.
[00:01:10] Speaker B: One of the most successful large global.
[00:01:11] Speaker A: Banks I've, I've ever worked with. And we had a two hour meeting, and then everybody in the meeting, all the senior HR people, wanted to talk about the future of the workforce and the future of work, and they asked me to give them my comments. And here's kind of what I said.
Most of what we're experiencing today is the decomposition of the industrial model of work. In the industrial model of work, which was the model of work when I entered the workforce in the seventies, was a job, a job title, a job description.
You entered that job, you did what.
[00:01:50] Speaker B: That job asked you to do.
[00:01:52] Speaker A: You worked in very structured locations and times. You showed up at 830, you left at 530 or six. You brought your briefcase, you wore your.
[00:02:03] Speaker B: Suit and tie or whatever the outfit.
[00:02:06] Speaker A: Was that the company wore. You had a manager or a boss or a supervisor.
[00:02:13] Speaker B: You got a performance appraisal once per year.
[00:02:17] Speaker A: You got a one to five rating.
10% of us got a 120 percent of us got a two, and a whole bunch of people got a three.
[00:02:26] Speaker B: Or four, and a couple of poor.
[00:02:27] Speaker A: People got a five. Or you could invert it, depending on how you measured it. And you kind of accepted that. And you waited your turn to get promoted patiently, because you needed to wait until you were deemed to be ready.
[00:02:42] Speaker B: To move up the hierarchy. And when you moved up the hierarchy, it took many years.
[00:02:47] Speaker A: The Peter principle was applied that eventually you would top out, that would be.
[00:02:53] Speaker B: The highest you would go in the.
[00:02:54] Speaker A: Company, and you would hang around there and then retire. And that industrial work experience went from.
[00:03:02] Speaker B: Your twenties until your sixties. So it was about a 35 40.
[00:03:06] Speaker A: Year career, and you tended to stay in the same company and the same industry for most of your career. Certainly that was true in my case, my father's case, most people I knew.
[00:03:17] Speaker B: At the time and those companies took care of you because those companies were.
[00:03:21] Speaker A: Around, you know, IBM, at and T, General Motors, Standard Oil, Chevron, Exxon, whatever, whoever you work, large company, they were fairly stable companies. They were growing, you know, at some reasonable rate. And so if you latched yourself onto that career path, you probably wouldn't change companies more than once or twice during your career. And you had a structured life where.
[00:03:46] Speaker B: You'D come home at five or six.
[00:03:47] Speaker A: In the evening, you made enough money to buy a house and put your kids through college, and, you know, you didn't work at home on the evenings unless you were a senior executive. And if you didn't want to work.
[00:03:56] Speaker B: At home, you'd bring it home in your briefcase, because there's no other way.
[00:03:59] Speaker A: To bring it home and drag it around with you and then bring it back in the office the next day.
I mean, now the world is so different from that. It's just ridiculously different.
And so if you just plot a line from that model to today, you.
[00:04:18] Speaker B: Can see where it's going.
[00:04:20] Speaker A: We now have people working from their twenties until their eighties coming in and out of jobs very frequently. I think in the United States, the average worker changes jobs every two and a half years, maybe even more frequently. In some cases.
A high, significant number of people change.
[00:04:41] Speaker B: Industries and companies, not just companies, but change industries, because we can take our skills with us.
[00:04:47] Speaker A: Skills are now transportable, they're not locked into the company because we have much more highly skilled domains of work. Jobs are much more multifunctional and more specialized because we have so many new technologies and tools that we didn't have in the 1970s and before that. If you're a software engineer working at.
[00:05:10] Speaker B: Company a versus a software engineer working.
[00:05:12] Speaker A: At Company B, they could be completely different jobs doing completely different things with completely different tools.
In some sense, every employee now is a unique Persona.
[00:05:25] Speaker B: This idea of a fixed, structured job.
[00:05:28] Speaker A: Has slowly gone away, and it's going to continue to go away, where you might have a job title, you might have a job level, but it has very little relationship to what you actually do. And the company is reducing the number.
[00:05:41] Speaker B: Of titles and the number of levels.
[00:05:43] Speaker A: To create more mobility and agility in the company. So you tend to do a lot of things in your job that weren't written down when you joined. And in fact, your ability to adapt and learn is a much greater measure.
[00:05:56] Speaker B: Of your ability to move up the.
[00:05:58] Speaker A: Pyramid than your willingness to do what your boss says all the time and make friends with your boss.
[00:06:03] Speaker B: So we do have much more of a meritocracy.
[00:06:06] Speaker A: In organizations.
[00:06:07] Speaker B: Your performance is measured much more regularly.
[00:06:10] Speaker A: Than once a year. I know companies still do once a year performance appraisals for management and reporting standpoints. But we've had a big focus on continuous performance feedback and other forms of accountability.
[00:06:24] Speaker B: Many people have multiple managers. They do gig work, they do part.
[00:06:28] Speaker A: Time work, they work at home. People are starting to work four days a week, and employees are highly activated. Because we're now living in a very low unemployment environment. The unemployment rate over the last 30 to 40 years has gone steadily down. I just read today that the number.
[00:06:45] Speaker B: Of workers in Japan is shrinking even faster than before.
[00:06:49] Speaker A: And it's true in all the developed economies. Some of you guys listening to this live in the UK or Germany or other developed economies where the baby boomers are retiring and there aren't as many children being born. And you're already beginning to see the size of your workforce peak. And that world development data shows that within 20 to 25 years, all the developed economies are going to have shrinking workforces, including China, if they can't figure out how to turn it around. So your company is now giving you more autonomy and more power, and employees are more activated. We use the word employee activation to really refer to the fact that employees want to do work the way they want to do it, where they want.
[00:07:32] Speaker B: To do it, when they want to.
[00:07:33] Speaker A: Do it, and they have ideas and innovations and creative approaches to the work.
[00:07:39] Speaker B: That they want to bring to work. They don't want to work in the.
[00:07:41] Speaker A: Old model where everybody in that job did it the same way, that that isn't the way they were born and raised, and that's not the kind of life they want to lead. So we've got to adapt to all of these changes and the fact that.
[00:07:54] Speaker B: There are many ways to make a living that have nothing to do with.
[00:07:58] Speaker A: Working for a company.
[00:08:00] Speaker B: You can go become an influencer, you.
[00:08:02] Speaker A: Can set up a YouTube account on and on and on. And many young people have learned that they can make money on the side, sometimes more than they make in their regular company job. So you're competing with stuff that doesn't even look like another employer to keep them busy. And so all of these changes took place slowly and then very fast. And of course, the pandemic accelerated this tremendously because the work at home model turned out to be very successful. And those of you that have companies that are trying to drag people back into the office into fixed roles, I mean, it's not going to happen. People, of course, do need to work face to face. They want to have social relationships at work. And you know, the thing about the older model, the industrial work age was, there were a lot of fun things about it. We went out to lunch together, we went out for drinks together. I mean, when I worked at IBM, a high percentage of the people married, married other people at IBM because they spent so much time together at work. That's completely different now. So we have mental health stress, you know, employees that feel like they're not.
[00:09:11] Speaker B: Having a social relationship with work, companies trying to rebuild their cultures.
[00:09:15] Speaker A: We have to adapt to all of this, but it's not going back. And this future of the workforce is the reality. And so I went through all of that with these guys, including the fact that as these transitions have taken place, the number of workers in the global economy has not gone up, but the revenues and GDP has gone up. So the revenue per worker, per employee, or you can measure as profit however you want to measure it, is skyrocketing.
So whether the economists give you credit for improved productivity, in reality, what's happening.
[00:09:53] Speaker B: Is from a GDP per employee standpoint.
[00:09:56] Speaker A: Productivity is going up at a very high rate and it's going to go up more because just as machines automated a lot of blue collar work, AI is automating a lot of white collar work. So we're all going to be using AI tools and doing ten times as much stuff a few years from now.
[00:10:14] Speaker B: Than we are today.
[00:10:15] Speaker A: And it's going to feel very, very normal. You know, a tool like Microsoft Excel, which I was around when it was launched today, is so powerful compared to the manual, either calculator that we use.
[00:10:28] Speaker B: Most of you have never used a.
[00:10:29] Speaker A: Calculator, but I did. Or the slide rule that we used before that.
[00:10:33] Speaker B: I actually had to use the slide rule in college.
[00:10:35] Speaker A: They didn't want us to use calculators, at least for the first year and, or the pencil and paper that people use before that. But we don't, you know, you even feel intimidated by that. It's just natural. So as we improve the output per worker, every single worker becomes more important individually. We don't want to lose them. We need to hire the right people, we need to train them, we need to engage them, and we need to figure out how to measure and hold them accountable. We can't have an annual performance review anymore. Now I'm not going to talk a lot about performance management. I've done a lot of studies of it. But where performance management is going is we're going to be evaluating the performance of teams and groups and individuals based on data and AI. And we're going to look at it and we're going to say, why is.
[00:11:27] Speaker B: This individual generating x number of lines of code per hour or x number.
[00:11:31] Speaker A: Of revenues, new deals per hour, whatever the number may be, versus that person? And then we're going to do performance.
[00:11:37] Speaker B: Management based on the real numbers.
[00:11:39] Speaker A: We're not going to have this judgmental, oh, well, I think this person has got high potential because they're kind of here on the nine box grid versus there.
All of this is real. I mean, this isn't just somebody dreaming this up.
[00:11:53] Speaker B: This is reality today.
[00:11:55] Speaker A: Now, the reason that I had this conversation with these guys, these are very smart people, is this is a global bank that's very familiar with organizational transformation.
[00:12:04] Speaker B: And they're trying to figure out how.
[00:12:06] Speaker A: To make decisions about the call center workers who are likely to be not necessarily laid off, but likely to not be needed when they turn on all these AI tools. And I said to them, look, you know, everything that's going on in the workforce supports the concept that human beings are the most malleable part of the work environment. People can reinvent themselves very quickly. Look at what happened in the pandemic. Nobody dreamed that within six months we were going to reinvent the way we did our work, using remote and different forms of distribution because of the virus. But it worked fine and people got used to it and they just did it. I said, look, you can choose to let those call center people go, but I think you're going to have a much better Roi if you reskill them. And then we had a big debate about what drives learning agility. Because in this new world of pixelated work, I like to call it, your learning agility is everything.
You're going to get thrown into a project or an initiative or a situation.
[00:13:11] Speaker B: At work that you haven't had before.
[00:13:13] Speaker A: And you can't just say, that's not my job. I mean, that's what it used to be like in the old days is you would say, well, that's not my job. That's somebody else's job. It is your job now. And that means you need to figure out how to deal with it or learn about it. And the, you know, sort of the conversation that I had with them was from my experience, learning agility is all about the environment.
If the company takes the time to discuss changes, to gives people the opportunity to learn things, honors and values learning.
[00:13:46] Speaker B: Gives people the opportunity to do developmental.
[00:13:49] Speaker A: Assignments, rewards, and tell stories of people who've reinvented themselves. And believe it or not, most of the people in your company, and I think this is like, 99%, will do new things, learn new things, take on new responsibilities on your behalf. And yes, you're still going to have.
[00:14:07] Speaker B: To do recruiting because people are going.
[00:14:08] Speaker A: To quit, you know, or retire, but you won't have to do as much recruiting and it won't be as tough if you focused on this. So this is a reality. This is the future of work. I had a whole series of meetings with the Financial Times talking about the role of DEi, the four day workweek, the new learning experience we have at work and so forth. And this is real, this. And so if you're sitting around figuring out how to redesign your leadership development program or your performance management, your pay practices, wherever, whatever it may be, you just think about this first before you just sit down and design something. Now, the second conversation that I had over quite a bit this week with a lot of companies was companies come to me and they think I'm a guru of all sorts of things. I'm not a guru on. And they ask me things like, what do you think drives high performing companies, not HR departments. And, you know, I do have a lot of opinions about that because I've met so many companies and met so many leaders in so many companies over the years, and I pretty much have a pretty simple formula. The most enduring, sustainable, high performing companies have a clear mission. They really understand and they constantly think about it, what they're trying to do and why, and how they do it.
[00:15:33] Speaker B: In a unique and different way.
[00:15:35] Speaker A: And they don't flip flop around on what that is. They actually get better and better and better at it over time because most organizations that are big started small, and.
[00:15:47] Speaker B: They started with somebody's good idea, Walt.
[00:15:50] Speaker A: Disney's good idea, Steve Jobs good idea, Howard Schultz's good idea, Elon Musk's good idea, whatever person you credit with, the founder.
[00:15:59] Speaker B: And that idea was good enough to get the company to the point where it grew to some stage, and then.
[00:16:04] Speaker A: It got bigger and bigger and bigger, and a bunch of investors got involved. And then it started to gain all these financial pressures. And that core mission really never goes away. Now, the manifestation of how you deliver it, what products, what services, changes. Like in our case, our mission really is, at its core, to empower you HR people. I mean, at all levels. And we do that through research, through education, through Galileo, and a lot of other things.
[00:16:34] Speaker B: And we're constantly thinking of new ways.
[00:16:36] Speaker A: To do that because we know that this is a big problem, and we are uniquely capable of doing it extremely well. And I think most companies know that.
[00:16:45] Speaker B: And when you lose sight of that.
[00:16:47] Speaker A: Core mission and you develop a bunch of products and services to make more money, you find more competition, less differentiation, lower profits, and a reduced employment brand.
So that's number one. Number two is that great companies learn that the biggest strength they have during.
[00:17:09] Speaker B: Periods of change, and we are in a period of high change, political change.
[00:17:12] Speaker A: As well as economic change and technology change, is leadership. Your leadership is one of the greatest assets you have, because the leaders as a whole, top to bottom, are making decisions every single day about what resources to allocate to what, what to prioritize.
[00:17:32] Speaker B: Who to promote and so forth.
[00:17:34] Speaker A: And all those little decisions pile up. So when you look at the fiasco at Boeing, there were leaders who knew what was going on. There were activated employees speaking up about the quality problems of various parts of the 737. And leaders were not living by the company values, or they had changed their opinion about the company values for a variety of reasons. And sure enough, Boeing is in crisis.
[00:18:04] Speaker B: And it may be in crisis for.
[00:18:06] Speaker A: A long time to come. You know, I listened to a long.
[00:18:09] Speaker B: Podcast with Howard Schultz talking about the challenges at Starbucks.
[00:18:12] Speaker A: And yes, Starbucks is going through a similar transformation. So are a lot of other companies. And, you know, what happens with leadership is leaders copy other leaders. And there's this old maxim that I learned years ago that, a, leaders hire a people, b, leaders hire c, people. If your leadership is weak, they feel threatened, and they hire people that are less threatening. So your talent density goes down. So of all of the things we have to think about in HR, and.
[00:18:47] Speaker B: There'S many of things.
[00:18:48] Speaker A: Many, many things. 94 capabilities in our model and lots of new things. How is the company developing, aligning and socializing and managing leaders?
And that actually, capability scores the highest in our capability model for HR, relative.
[00:19:08] Speaker B: To the growth rate of the companies we study.
[00:19:10] Speaker A: We have 50, almost 51,000 hr people that have taken our capability assessment. And we've been analyzing the data, and over and over again, what you see.
[00:19:21] Speaker B: Is the companies that are very good.
[00:19:22] Speaker A: At managing and developing and continuously discussing leadership are the fastest growing companies. And it's not easy to do that. Takes time. You have to have a clear mission and purpose. You have to think about what role leaders play, how empowered they want to make their teams and many, many sort of levers to pull here, but those are the factors that create great companies.
And when I think back about my career, which has been, you know, almost 50 years now, and the companies that have survived and thrived year after year, decade after decade, century after century, they have the mission clear, and they do focus on leadership. The third thing that creates a high performing company is the relentless focus on the development and support, alignment and accountability of employees. And you've heard me say this before, but the employees to me are in.
[00:20:22] Speaker B: Some sense the most important stakeholders the.
[00:20:24] Speaker A: Company has more important than customers and investors. Now, that may sound ridiculous, but in fact, customers can easily buy somebody else's product.
Southwest Airlines found this out, by the way. I don't think Southwest Airlines realized, and I stopped flying southwest many years ago. I got sick of it. But they didn't realize that their customers were leaving and their employees were not necessarily feeding back to management. And I'm sure this is what's going to come out later about how unhappy people were flying on those planes. Now they're changing a lot of things and starting to charge for bags and they're going to have reserved seats and all sorts of stuff like that. They weren't paying attention and now they are. And the employees know what's going on with the customers. And so these high performing companies have.
[00:21:19] Speaker B: High levels of retention, high levels of.
[00:21:21] Speaker A: Engagement, strong employment brands, and they carefully hire people. They don't rush to dilute their employment brand or their talent density by hiring too fast.
So that came up a lot. Now, it sounds funny to repeat this stuff for you guys who've heard me talk about these things before, but I literally had almost 15 client meetings in the last week and a half, very large companies over here that in many different industries. And this came up a lot because HR departments who are flooded with technology projects and AI and DEI issues and recruiting issues and etcetera and other distractions, want to know where should we focus our attention? So that's kind of my little spiel on where work is going. And I just think it's going to be more of the same, more pixelated work, more empowered employees, more flexibility, more focus on skills, more focus on fit, more focus on culture, more focus on mission, and a heavy dose of thinking.
[00:22:32] Speaker B: About the role of leaders and taking.
[00:22:34] Speaker A: Care of the leadership agenda at all levels. By the way, you know, every employee.
[00:22:39] Speaker B: In some sense is a leader, as.
[00:22:40] Speaker A: We learned about from Marriott at our conference. And so, you know, if you want.
[00:22:44] Speaker B: To build a high performing company under times of change, even in the middle.
[00:22:47] Speaker A: Of a crisis, you have to think about these things. Okay, let me talk a little bit about AI.
The last couple of weeks have been slightly slowed down in the AI frenzy, but there's some new things that have happened. There was a really interesting announcement from workday about a partnership or alliance they're doing with Salesforce that has to do with chatbots. I will tell you more about that later. OpenAI leaked the fact that they're going to announce a search engine, which to me is going to open up a whole can of worms about where they got the data that they're searching for and whether they're paying people appropriately for that data. I think OpenAI's brand as a provider is going to be hurt by this.
[00:23:36] Speaker B: At least in the corporate market.
[00:23:38] Speaker A: There were announcements by other vendors about emerging AI products. I had a spectacular meeting with successfactors two weeks ago. To be honest, I think successfactors has probably jumped ahead of workday in some of its AI initiatives. And those of you that are still shopping around between these different vendors are probably going to find a more competitive world between SAP and workday than ever before. And we'll talk more about that next week.
[00:24:07] Speaker B: And we are beginning to get into.
[00:24:09] Speaker A: The late summer and early fall when there's going to be a lot of technology announcements.
[00:24:14] Speaker B: We have introduced a whole bunch of AI courses in our academy. There is no excuse for you to.
[00:24:20] Speaker A: Be intimidated by AI anymore. In HR. You can go through our academy, it hardly costs anything, and you can get yourself up to speed on this stuff. There's a microlearning course coming out in the next couple of weeks. It's even easier to consume. And this is transforming virtually everything we do within HR at a very interesting rate. I had a meeting in the beginning of my trip over here in Ireland.
[00:24:43] Speaker B: With a bunch of L and D.
[00:24:44] Speaker A: People, and I explained the transformations going on in L and D, which many of them kind of knew about, but didn't really think through too much yet. And there was a period during the presentation when I looked out at the audience and people looked like they were in shock.
Their eyes were sort of wide open and their mouths were open. And I thought, what's on everybody's mind? And they were all asking me, well, what is our job going to be when all of these tools start doing some of the work that we do? And what I said to them is the same thing that I think I've said before, is the first time Microsoft Excel hit the market.
[00:25:22] Speaker B: Accountants were thinking about what their job would be. And then they learned how to use it.
[00:25:27] Speaker A: And then their job got better and they did more work and added more value. And that is what's happening here. So I won't go through the technology tectonic things that have happened. This podcast, I'll save that for next week. But there's a continuous focus on AI. Every single company I talked with wanted to talk about their AI strategy. They wanted to talk about Galileo. We've had some incredible successes with Galileo. I'm not going to get into a sales pitch at this point, but I suggest you take a look at it. And you know, that is obviously still a really hot topic over here, too. I'm really excited about the political situation United States. I'm glad Kamala Harris has come onto the scene. Frankly, we can talk more about Dei and stuff like that next time we have political change in the UK. That's been really interesting to observe. And in fact, one of the people I was with this week told me that we've had more political change around the world in the last three months than maybe any time before in our careers. So even though political issues don't directly impact us in HR, they do because the, the workforce. So anyway, think about this future of workforce stuff.
[00:26:32] Speaker B: Hopefully it will help you make some.
[00:26:33] Speaker A: Decisions and it will bring you to the conclusion, by the way, that you need to implement systemic HR. And we're going to keep beating the drum on systemic HR. It came up in every meeting. There's many manifestations and implementations of systemic HR. Read up on it. You can take the course in the academy. And by the way, we're also launching a course in the academy on the scope based organization that'll be out a little bit later this summer. And we will talk to you guys all again next week. Have a great weekend, everybody.
