Episode Transcript
Speaker 1 00:00:07 Hi everyone today. I want to talk about the power skills economy. And I wanna start with a fairly profound question. If we have a recession, will unemployment increase, will it get easier to hire people? Well, I have a thesis that the answer is probably no. We are in a new high employment, low unemployment environment for some time to come. And the reason is not that we're not gonna have economic cycles or ups and downs and people won't go through layoffs. The reason it is that the nature of the economy and the workforce has changed. And this goes back to the beginnings of digital transformation in the early two thousands. So let me tell you this story, because it impacts a lot of your strategies in HR and leadership. First, let's start with demographics. Believe it or not. According to the world bank, the number of workers in all of the developed economies, except the United States is going to peak in the next two or three years and then decline.
Speaker 1 00:01:08 And the reason for that is actually very simple, even though people are living longer and working more years, the fertility rate and the rate of marriage and the delay of marriage is reducing the number of young people. In fact, a fertility rate is below 2.1, which is a replacement rate in almost every major country. And it's significantly low in countries like Japan, Germany, the Nordics, and even the UK and the United States, by the way, which means that the population itself that works will either be flat to declining, but people are also working remotely and in gig work. So we've created this fractal workforce where there's fewer people and most of us have the opportunity to make money in multiple ways, not everybody, but quite a few. And therefore the demand for employees is not going to be met by supply. Now, that sounds kind of simple.
Speaker 1 00:02:05 And you would assume that automation would fix this. And so, as I discussed in the article I published today, the theory CERCA 2016 from Oxford economics was that 47% of jobs were going to be automated. That is completely wrong. And I don't know if the guys who wrote all that stuff are thinking about this the same way I am, but automation has not eliminated jobs. It creates jobs. I've made this point in speeches for many years. I used to work in the 1970s in a company that had no computers, no email, no voicemail. If we needed to type a letter, we wrote it out by hand and we went to the steno pool. I'm not kidding. And there were about 10 or 15 women in there with typewriters or word processors, and we would stick it in the inbox. They would take it into their queue.
Speaker 1 00:02:57 Somebody would type it up and I would get back a typed version on a piece of paper, huge amount of work, huge amount of labor to just do something as simple as typing a letter. Well, obviously we've gone multiple orders of magnitude beyond that. Not only do we have word processors and computers, but we can talk to the computers <laugh> and they write this stuff. We don't even have to type anymore pretty soon, I suppose. We'll just think. And then the words will come out. So you'd assume that all of those people that were stenographers typists, they used to be called or front office. Administrators would be gone out of work. No, not at all. They've all got better jobs. They became customer service agents. Maybe they went into sales, maybe they became recruiters. Maybe they became designers. Maybe they became editors or proofreaders. So what automation does in every single case I've ever seen is it eliminates boring routine, repeatable work from the job and gives the person the opportunity to do something better.
Speaker 1 00:03:53 And you as a business person or as a designer or as an HR person, must continuously look at this automation or design issue. As we described in the GWI project and where we talk about the four RS recruit, retain reskill, redesign, redesign has more impact on your workforce than the other three in most cases. And you don't have to be a strategic job designer to do this. All you need to do is go out there and buy Salesforce or some hot tool. And as people start to use it, you suddenly realize they're spending their time on different things. Good example of how jobs are created by automation is Salesforce. I've been in sales and marketing a long time. Prior to Salesforce, there were clunky, old Salesforce, automation tools. They were terrible, and you had to type customer names into fields. And it was a complete waste of time.
Speaker 1 00:04:46 I suppose it was valuable because you had all your customer information in one place, but it didn't really add that much value along comes tools like Salesforce and HubSpot. And all of a sudden people realized it wasn't really a problem of storing customer names. It was a problem of sharing leads, combining customer information with lead information and opportunity information and letting salespeople spend their time more strategically and share information with each other, rather than dig into their Rolodex, to try to figure out who to call every day and make call after call after call. And so the implementation of Salesforce, which I've been involved in, in several companies, and most of you probably have changed the role of the salesperson to be a much more high performing high, productive, collaborative job. Did it do away with the number of sales people needed? No, there's 550,000 sales jobs open right now, sales is a very, very human center job.
Speaker 1 00:05:43 There's lots of creative thinking, communication, listening, objection, handling, et cetera, involved in sales, but it did become more productive because of CRM. By the way, there's a few other jobs that have been created. How about the person who sets up the Salesforce system? How about this person who designs the Salesforce system? How about the person who does the back office integration of the Salesforce system? How about the person that does digital marketing that does digital marketing analytics, et cetera, et cetera, those jobs did not exist in the 1980s. There were no jobs like that. So what happened is this one domain of automation just in sales, sales and marketing has created this whole flurry of new high value jobs in exchange for more productive activities by the population that they're targeted to use. And this is going on in every single part of business. If you run a call center and you buy call center automation technology to better route calls, or you give customers a chat bot, that's intelligent, you don't get rid of the call center.
Speaker 1 00:06:42 The call center, people are monitoring the chat bot. They're teaching it, they're training it, they're improving it. They're getting better at their jobs. They're understanding what questions people are asking so they can answer them faster. They're putting together more self-service, but the human part of the job never goes away. And the reason for that is we are value creating people. Our businesses are always finding ways to add value. If we automate a routine thing, we're gonna add value on top of that. At least if you're a good business person, you are, you're not just gonna automate it and leave it. And, and that's true. Even in social media, if you look at Google or Facebook, meta, or mostly social systems, they have hundreds of thousands of employees behind the scenes, looking at the data, looking at the information, finding bad photos, curating, deciding what should be on what shouldn't be on.
Speaker 1 00:07:29 Those are things machines can't do yet. Yes. Maybe they eventually will. And then there'll be something else for humans to do. We just finished doing this in healthcare. We're gonna be doing this in just by industry. And what this means is that the automation and the AI and the technology that's entered their workforce has actually created a benefit for most of us. It's made our jobs better. If we, as business people and HR people take advantage of it. Well, and you know, that means the unemployment rate may remain low for a long time to come. Now, the flip side of all this is sometimes it doesn't go well. And let me give you a good example, Starbucks, as most of you know, is facing unions. The Glassdoor ratings and retention rate at Starbucks has gone down. Now that's not because Starbucks is integr company. They take their employee relations very seriously.
Speaker 1 00:08:18 They pay fair wages. They pioneered the idea of education and healthcare for hourly workers. They give people career development, they focus on diversity and inclusion. We do all the right things, but it's still become harder and harder and harder to work in a Starbucks store. Why is that? Because during the pandemic, they added all sorts of new things. Drive up windows, mobile, ordering delivery services, more flavors of food, more flavors of drink, cold, hot, warm, whatever. Well, if you look at the studies, rather, the articles have been written on Starbucks over the last couple of weeks, Howard schul. So I give a lot of credit, decided it was time to reengineer all this. And one of the things they did is they looked at what was going on inside the stores. And they found out according to wall street journal article, that there are 170,000 options for food at Starbucks.
Speaker 1 00:09:08 I mean on dozens, surprise me. When you think about all the different types of food and drinks and add-ons, you can do think about that for the five or six or seven people working in there. <laugh>, I mean, there's maybe five or 10 baristas in there and there's people streaming in the door and sending things over the internet and driving up to the window and everybody's in a big hurry and they're wearing their mask. And they're worried about getting sick. I mean, that's a lot of stress to put on your workforce. And so the acute problem that they identified was that the workers were upset and that's the reason they had these union problems in the context of becoming irresistible, which is our whole strategy about this. Starbucks has taken a step back and they've looked at the technology and they've looked at the automation and they've said, we need to design this differently.
Speaker 1 00:09:54 We, we need to get different kinds of blenders. Maybe we don't need so many products. Maybe we should give people fewer options. Maybe we should bundle things together, et cetera. That's the ever increasing value that's created by automation. And this is going to go on in every job in the economy. Now, several things happen as a result of this shift. The first is we keep creating jobs. So the unemployment rate doesn't go up. So it's still hard to hire. And I think this is gonna be true for a while. I can't guarantee it, but I have a funny feeling that even if the economy slows down, we're not gonna see this massive unemployment rate. The second is the type of skills needed change. As I just wrote about in the article I put out this weekend, there is this concept of what we call power skills.
Speaker 1 00:10:40 We used to call them soft skills. And the idea of a soft skill was that it's soft, there's hard skills like learning how to become a software engineer or a scientist or a biologist or genetic engineer or whatever it may be or mathematician. And those are hard. They're hard to do. And then there's the soft stuff. Eh, you know, manager, salesperson communities, ah, stuff's easy, right? Anybody can do that. No, that's not true. Actually it is the soft skills that are hard. It is the soft skills that take continuous development throughout your whole life. And so I call them power skills because these are really the most important skills of all. As you can see from the article, I just wrote this weekend, the people who have greater power skills make more money than the people who have great hard skills. And everybody with technical skills will benefit from power skills.
Speaker 1 00:11:32 And by the way, there's lots of jobs that are focused entirely on soft skills. And the technical skills are not that hard to get. In fact, in my life, in my career, technical things have always come easy to me. I, I just sort of am wired that way, but learning how to manage people and lead people and deal with conflict and drive change, that has been a never ending journey for me. And I think that's true for most of us. And so as this inevitable technology based re-engineering continues in the workforce in the job market, people are going to have to get better and better at these human skills because automation is taking away a lot of the, what we used to call technical things, even writing code is being done automatically a low code system or no code is essentially saying, Hey, we don't need software engineers anymore.
Speaker 1 00:12:21 It's just drag and drop. You need to be a designer. You need to know what the customers are need. You need to be a good consultant. But if the heck with writing code, that's a waste of time. I mean, at some point writing code may become not really that valuable can't guarantee that, but I think it'll become much more automated. Now, what does this all imply? A couple of things, first of all, for people in HR and the talent part of the company, you need to look at the jobs you have. You need to look at the skills that are currently in demand among those jobs and continuously reevaluate, whether they're well organized, whether you are continuously breaking them down and offloading the skills that can be automated or done by lower wage people, creating more talent pipelines, find the adjacency of those, of those skills across jobs.
Speaker 1 00:13:14 So you can move people into those jobs from related jobs and do what Greg, till from Providence calls, decomposition of work, break, work into steps or tasks and see if one person should be doing all of that. There's this wonderful concept in the healthcare industry called working at the top of your license. And the idea of that is that if you're a nurse and you're registered as a nurse and you've spent your career becoming a nurse, there's no reason for you to be taking out the garbage, sweeping the floor, filling out forms. If somebody else can do that for you, because you're getting paid 50, $75 an hour or more, and you have some specialized skills. All of that engineering work is fairly obvious. You don't need a PhD in re-engineering to do this, but you need to get people together and talk about it.
Speaker 1 00:14:02 And what we've found in all of our org design research, and we have a whole body of research on this is that these org design projects are easy to do. If you bring together the people doing the work, along with the it people and some decent consulting skills that you probably have in HR, and you look at the technology and automation available, by the way, one of the reasons companies don't automate is they're afraid of it. And what happens when you're afraid of it is you fall behind. If you read the article that I wrote, there's an interesting study that looks at countries that have high degrees of non-routine work versus countries that have highest degrees of routine work. In other words, the routine work countries don't have a lot of automation. Those countries are economically very slow growing countries and they're falling behind. So if you're afraid of technology or you somehow don't believe that it's going to help, you're gonna suffer from that.
Speaker 1 00:14:58 It's like if we still had a steno pool in our company, and there were 10 people sitting around typing for us, obviously we wouldn't be very productive as analysts. I don't need to tell you, you know what it means for us. We use all sorts of things. We have Microsoft teams, we use Otter, we have voice recordings. We have video. I mean, we do all sorts of stuff that really automates our work tremendously. And in a relatively small company, we can produce pretty high volumes of stuff in a way that I couldn't even do 10 years ago when I was doing this prior to Deloitte, the second thing that's critical in this evolution to power skills is you need to figure out how you are going to define and build power skills in your company. Last week, I spent an almost an entire day with one of the largest tech companies in the world, talking about management and leadership.
Speaker 1 00:15:44 They're building and management and leadership academy. And they've done this before, but they're doing it in new way. And what they've discovered as most companies know is that, you know, most managers in companies are new to the job they learn as they go. And there's all sorts of philosophical and human centered decisions they need to make on behalf of their teams and different companies deal with teamwork and leadership in different ways. Some companies are highly competitive, highly execution oriented, and they don't suffer fools lightly. Other companies are very developmental and growth oriented. You should really talk about what your culture is and what are the power skills that you believe are important to you and how are you going to develop them and reward them inside of your company? Because the March of technology is going to continue. There will be automation, whether you like it or not, there will be new tools, but these power skills will remain as the keys to growth and success into the future.
Speaker 1 00:16:42 The third thing that I would point out is that this whole topic of leadership management, soft skills is really kind of a big red ocean. It's very confusing. I talk to vendors in this space all the time, and I would venture, there's probably 10,000 books on leadership, probably two or 300 leadership assessment models, many, many hundreds of leadership consulting firms, many self-proclaimed bestselling authors. And by the way, lots of academic research. And so rather than try to find the one that you think is perfect. I really think the right answer is to get to know as many of them as you can and develop your leadership and soft skills strategy based on the ones that seem to fit your culture. And if I think about all the companies I've talked to over the years, most companies culture doesn't change that much. If you're a successful business and you've been around more than a couple of years, your founders, your early leaders built something that was enduring.
Speaker 1 00:17:46 And as I talk about my book, irresistible endurance is proof that you're doing something right. And in addition to looking at great models and tools and vendors, go back to your roots and figure out what made you successful and compelling in the early days. And try to build on that. We did a project at Deloitte for a large electrical lighting company. I remember this and they were a light bulb company basically, and they were losing market share. The prices were dropping. The margins were dropping because everybody was moving to digital lighting, digital lighting systems, integrated lighting systems, much more software driven solutions in buildings. And this was a very, very well run older company. And they did a series of discovery sessions, group workshops, all over the company, 20 or 30 of them at multiple levels, working together, talking about their culture. And what they concluded was that there were a lot of things about their culture that were out of date and they wanted to change 'em.
Speaker 1 00:18:42 They wanted to move faster. They wanted to be more digital. They wanted to be more innovative. They wanted to be more iterative. They wanted to be closer to customers and not have this distribution channel in the middle. So they adopted a lot of those as philosophies and strategies, but there were a lot of things that they didn't wanna lose too. There were a lot of heritage, cultural values of quality of taking care of each other of caring about the environment of engineering that they also wanted to keep. And so they created a new culture manifesto that brought the new together with the old, and from that they could define the power skills that matter in that company. I won't mention the company's name, but you can imagine who it might be. I think this is a pretty common strategy that most companies can adopt, maybe not every year, but every couple years to really do a serious look at your management leadership and collaboration culture.
Speaker 1 00:19:35 And it will change over time. As the company grows, as the company becomes more global, as the company goes into new markets or new industries, some of the things that you started with will have to be adjusted. And so that's why this particular tech company that I was talking to this week is going through a refresh of their management process because they're a very large company and they do business in hundreds of countries and the things that made them great when they were little are still there, but there's other ones added and they have to focus much more on execution and collaboration and knowledge sharing and things like that. Okay. So a lot to think about, but the re-engineering of work, the re-engineering of jobs, the creation of high value jobs is a really big topic. If you're an economist and you're listening to this podcast because you're kind of interested in HR stuff, you're not gonna necessarily agree with me, but just look at the data and look at what's going on.
Speaker 1 00:20:27 Even though the stock market has dropped and the fed is raising interest rates, jobs are being created. And I talk to a lot of companies that are creating jobs. And even if there is a recession and a downturn, I'm not sure they're gonna stop doing that because you can't shrink your way out of a downturn. The only way to survive a downturn is find new opportunities for growth. And when you find new opportunities for growth, you re-engineer work and you move people into new jobs. So this discipline, this expertise, this muscle of thinking about work and making it better all the time. And I don't mean just nicer. I mean, easier and more productive is a very fundamental new part of HR and something that I think is really exciting for the years ahead. Thank you.
