Episode Transcript
Speaker 1 00:00:09 Welcome to 2022, too many jobs, not enough people. What I'd like to talk about for the next couple of minutes is what's going on in the labor market and parti what it means to you as a business or HR person or a hiring manager, as well as, as a potential job candidate. Well, this is perhaps the biggest economic boom. I can remember in my career. The us GDP grew at close to 7% last year, which is a really spectacular number are now 17 million jobs posted in the United States alone. There's only 150 560 million people working. So that's roughly one out of nine jobs are open. So it's as if you walk down the hall in an office and every nine seats there would be an empty one. Wages are going up at up a unprecedented levels. Some research just came out this week that shows that the average family income has gone up at a higher rate than we've seen in decades.
Speaker 1 00:01:11 Maybe a century. So wages are going up, which is of course, a problem for employers. People are quitting at an incredible rate, four to four and a half million people per month, month in the us, roughly a third of the us workforce will leave their job and do something else this year. And they did last year. And employers are beginning to realize that not only do they have to really be good at recruiting and take care of the employees they have and develop them and move them around and give them better careers. They need to raise wages, but they probably need to reorganize their companies around this highly constrained labor market. And my personal opinion, as an analyst who reads a lot of economic data, is this is gonna be going on all year. The fed the us federal reserve is going to raise interest rates multiple times this year, this is long overdue.
Speaker 1 00:02:05 I'm sort of frustrated that it took them so long to raise interest rates. It seems to me, it should have been done two years ago, and that will deflate the stock market, which has been over inflated and overvalued for several years. And there's tech companies trading it 20 to 30 times revenue, which is a absolutely nuts. You can always buy those stocks if you think they're gonna go higher. But in terms of economic valuations, they've been crazy for a while. But even with the interest rate increases, all that does is it moves money to new players in the economy and companies like banks and insurance companies and oil C and asset companies grow. So the healthcare market hasn't slowed down the retail industry. Hasn't slowed down entertainment. Hasn't slowed down. People are getting on planes. Again, we're going on vacation. It's gonna be a really, really hot year in 2022.
Speaker 1 00:03:03 Now you might say, or think that when the economy is hot, things are good, but actually it's hard. I've been through a number of these economic cycles. And sometimes the most stressful time in a company is when things are, are growing, because it is hard to hire people. It is hard to stay ahead of competition. Real estate prices have gone up leases and rents are going up and companies are now realizing they have to work very hard to maintain their market position in an economy that's growing this fast, where the labor force is highly can strain just today in the wall street journal, there was an article I don't know where they got the data that a hundred software engineers left the Microsoft holo lens project to go work for Facebook. And they mostly went for money. And I know for a fact, based on somebody, I know that applied for a job at Facebook that Facebook basically says to candidates will pay you whatever you want.
Speaker 1 00:03:58 Just tell us what you want and we'll get you a salary around those lines. So it's getting kind of crazy. We're gonna be doing a lot of work this year. We're introducing our big new research on talent acquisition in the next month or so. That's very, very interesting. You'll see what really drives candidates towards your company and what really differentiates great recruiting org organizations. We're actually also going to be introducing a massive long in process research project on organization design, as well as a course on organization design, because when you can't hire people fast enough, you kind of think about maybe we shouldn't be running the company in this fashion. Maybe we should be reorganizing. Maybe we should have smaller our teams. Maybe we should have a flatter hierarchy, and we're gonna show you how to deal with all those issues. And now to understand that the second thing of course that's happening in addition to this, as I wrote about in the article that I published this weekend is what I call industry convergence.
Speaker 1 00:04:56 So let me take a few minutes on that. We're working on a really interesting research initiative. We call the global workforce intelligence project and we'll be formally introducing that and putting out some of the research in the white papers in the next 30 to 60 days. But basically what we've discovered working with data from eightfold eightfold is the largest talent intelligence database in the market. And we chose them as our research partner, that digital transformation has taken on a new phase in the early two thousands. When the internet was new and companies started to put things online, we thought digital transformation of business meant building a website, building a mobile app, selling products and services online and, and designing easy to use consumer experiences for customers and electronically, and then delivering services as much as we could through the internet and many millions and hundreds of millions of dollars have been spent moving current existing legacy.
Speaker 1 00:05:58 It systems over to the cloud building cloud engineering teams, buying cloud services from Amazon, AWS, Google, or Microsoft, and understanding cybersecurity, understanding data, getting involved in analytics and now using AI, virtually every company has done this. Virtually every company is doing this and it's no longer state of the art to build a website and sell products and services over our mobile app. It's really mandatory. And the reason it's mandatory is not just because it's kind of cool. It isn't cheap by the way, outsourcing your it to a web provider is actually problem probably more expensive than doing it yourself. But the real reason is that consumers demand it. We have all learned through our phones, through our connected devices, through our computers that we, the old Microsoft saying, where do you want to go today? That was one of the funny things they came up with in the early days of the internet is actually true.
Speaker 1 00:06:54 People go online and they look for everything. And if they can it all at Amazon, they'll get it at Amazon, including the groceries, including the supplies for their homes, everything. And so virtually every industry has adapted to this in some fashion and has internet enabled or digitized its products and services in some fashion. Now, one of the things that's happened in the last decade of this digital information, it's not just AI and intelligence systems, but something else. We have realized that in almost every company, there is a recurring revenue subscription relationship that we can have with our customers. We can sell videos and movies online. We can sell data, we can sell maps, we can and sell advertising. People wanna buy things. That way people are very customed to monthly fees and annual fees and subscription fees. And I'm not saying this is gonna go on forever, but it certainly is now.
Speaker 1 00:07:52 So most companies complimented the products and services. They were selling with subs services. Now, when you get into the subscription business, it changes your workforce. You have to be a service provider. You have to be available 24 7. You have to have great data on who your customers are. You have to understand their buying patterns so that you can recommend the right products and services to them. So what's happened is virtually every company, except maybe companies that are in the logistics and trucking business have become more and more like professional services companies. They have become more service centered. They have developed new roles in data analytics and service and customer relationships. The, a number of routine jobs has been reduced to a trickle. According to a lot of the research that's been out there, 90% of the jobs in the us are now human center jobs, jobs, where the person is designing, selling, serving, listening, empathizing, creating on behalf of a customer.
Speaker 1 00:09:00 They're not just doing rote work. There's some of that left, but very little. And, and so every company is sort of going through a version of this. And at the same time, this is going on. We have the, a electrification of vehicles changing the oil and gas industry, as well as the automobile industry and all of the parts and equipment that go into the automobile industry. We have global warming, changing the need for energy, to solar and alternative fuels and low carbon. We have addict science changing the way drugs are developed and the nature of drug companies and what they provide. And we have informatics improving healthcare informatics, improving insurance, and highly intelligent systems that are working quite well. You know, AI was kind of a vague idea, 5, 6, 7, and eight years ago. Everybody was kind of having a hard time defining it. Now we know that it is something that works quite well and something that's very powerful and what this has done in the throes of this job market, where there are all these new jobs is it's created what I call industry convergence banks, which used to be brick and mortar company with lots of branches are becoming digitized slowly.
Speaker 1 00:10:19 They can't do it quickly. It takes 'em a long time. They have a lot of legacy applications and systems and infrastructure are finding themselves in direct competition with Thintech companies, crypto companies, credit card companies, you know, one of the fastest and most highly valued companies in the world now is it's now called block. It used to be called square Stripe visa, MasterCard, these companies, which basically don't have any branches at all are worth as much as most of the bigger banks. And I, I haven't totaled them up, but they're probably worth more than most of the bigger banks in automobiles. Obviously the electric vehicles are replacing gas vehicles. Electric vehicles are not only different propulsion systems, but they have internet services and they have to be designed by software engineers, not just hardware engineers. We have healthcare companies that are very infrastructure dependent that have nurses and doctors and regulatory requirements and customer service agents and billing systems and insurance management systems.
Speaker 1 00:11:22 Now being disrupted by Walmart and CVS and other consumer providers, Amazon at some point that are providing pharmacy as well as testing and diagnostics and other services, energy companies like Chevron and sun are being disrupted by new energy companies, building alternative forms of energy, including solar and wind. They will probably buy a lot of those companies. Anyway, the convergence of industries is accelerating at a very, very rapid rate. You know, I spent almost seven years at Deloitte during the early days of the digital transformation era and what we mostly did while I was there is teach companies and help them learn how to do digital. In other words, build digital products and capabilities and be digital act in a digital way and interact with their customers in a much more real time way, and then organize themselves around that, which is not easy as you know.
Speaker 1 00:12:24 Well, that was kind of yesterday. That is a mandatory transformation that virtually every company now has to do. The next transformation is who's the industry right next to you. The adjacent one, that's starting to step on your toes, give you a good example of telecommunications. I worked in telecommunications. My wife worked in telecommunications for a long time. Telecommunications companies used to be technology and infrastructure companies. They were some of the most sophist catered it companies in the world. They invented signaling system seven, all the phone network, virtually most of the internet. A lot of that technology came out of at and T and bell labs and they laid wires in the ground and they had very high quality monitoring centers and the billing systems and pricing systems and marketing systems to sell and deploy that infrastructure. Of course, about a decade or more ago, the cable industry came along and the internet industry came along and a lot of that bandwidth got disrupted.
Speaker 1 00:13:27 And so all those companies said, oh, well, maybe we better be in the content business. And you know, in the early days when I was young, it was illegal for, to he phone companies to be in the content business, but it became legal. And so they started snatching up media companies, Verizon bought Yahoo and all sorts of assets from there. Comcast bought NBC at T bought time Warner. They're all now sitting around, looking at each other, saying, Hmm, Netflix, they're competing with us. Apple. They're competing with us. HBO is a brand, but is it keeping up with apple or Netflix? I mean, that's just one industry. Plus they, by the way, still have to deal with 5g and all the applications and consulting and real time business processing in five. So their industry 20 years ago does not look like it does now. I'm not sure anybody can tell you exactly what the telecommunications industry will look like.
Speaker 1 00:14:17 In another 10 years, it might be that Facebook or meta is the telecommunications provider for half the world. I don't know. I mean, they're putting in so much infrastructure, but in industry, after industry, the talent issues are not just reskilling upskilling, creating digital fluency, creating better leader as those are obviously still critical issues. And they always will be, but they're also learning how to operate in a business model and an industry that isn't one you're that familiar with, you know, about it, but you have to sort of hire your way into it. And what we're gonna do in the global workforce intelligence project is we're gonna show you these changes. We've been spending the last couple of months, looking at the data on the job titles that are declining and the job titles that are growing and the skills that are declining in the skills that are growing.
Speaker 1 00:15:09 And when you, it, enough of that data, you start to see some really significant patterns industry by industry. And so what we wanna do in the coming year is we're gonna show you that data. We're gonna give you a chance to map that data against your company and say, how are we doing relative to our competitors and our industry on the converging industries ahead. Now, one more interesting thing I wanna just pontificate on, on this topic of 2022, I've been around for a while. I'm in my mid sixties. I remember when GE IBM us steel were really, really, these were the iconic companies to work for. They were conglomerates, they were, they were multi industry conglomerates. They had great management teams. They were financially engineered to generate a profit regardless of the economy, which is kind of an interesting thing they did. And they were good places to work because you had a really rich career there.
Speaker 1 00:16:05 And there were a lot of things going on. They all got kind of disrupted by specialized industry solutions in every market and basically been broken up. So there are very few conglomerates, at least in the United States left in India. There's a lot in immature economies like India. There's tons of 'em, but here the economy is so dynamic that most conglomerates became very specialized or broke themselves up. We're now moving to a new world of different kinds of con. You could argue that Google is the GE of the future. Google does search obviously, but they do maps. They do cloud, they do consumer Google workspace. They have health products, they have YouTube, they do entertainment. They do infrastructure. We're building a new set of industries based on these industry changes. And the reason that I bring this up is for those of you in HR, and most of you are your job is not just to sort of hire people and take care of the HR department and make sure everybody's happy and make sure the pay is fair.
Speaker 1 00:17:09 And that compliance is taken care of. Your job is also to think about the future. And you're gonna have an opportunity in 2022, to work with the strategic planning department in your company with the head of workforce analysis or intelligence, if there is somebody or there should be somebody like that and really plan your organization for the future. And I think this is maybe one of the most exciting times and opportunities in HR are capability development, learning, career management, internal talent, marketplaces. Those are all critical pieces to this, but their means to an end, the end is keeping your company competitive and relevant in a market. That's changing this fast. If there's anything the pandemic did it accelerated everybody's transformation of their consumer lives and their business lives at light speed. So this thing that we used to call digital transformation, that sounded like something that would take five or 10 years is now happening in one or two years and rates.
Speaker 1 00:18:09 And you know, when you read about things like the metaverse or crypto or NFTs, and if you're paying attention to all that stuff, these are ideas that come to maturity much, much faster than they ever had in the past. So our job and your job in the HR function is to keep up on this stuff, look at the industry, changes and get ready for them and sign your organization to perform in this new world, not the world you were in before. And I think in 2022, as the economy grows significantly, and we have this constrained labor market, you're gonna have a lot of freedom to do that. You're gonna be required and asked to do that. So we're really excited about the things we're doing to help you. Let me stop there. We're gonna be introducing lot of research in the next quarter, our new talent acquisition research, the org design research, the workforce intelligence series and all of the research and data behind that. We also have some really cool things coming in our membership program that you'll be hearing about. And I'm always interested in hearing your feedback. So thank you for listening and have a fantastic year head, reach out to us. If you have any questions. Thank you.
