What HR Leaders And Teams Need To Know About Inflation, Recession, The Economy, And The Workforce

July 14, 2022 00:21:01
What HR Leaders And Teams Need To Know About Inflation, Recession, The Economy, And The Workforce
The Josh Bersin Company
What HR Leaders And Teams Need To Know About Inflation, Recession, The Economy, And The Workforce
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Show Notes

It has been a crazy year so far, as inflation and recession worries abound. In this podcast I will try to demystify what's going on and give you what I believe is your mandate as an HR leader or HR professional in the mess of information coming your way. Additional Information It Doesn't Look Like A Recession To Me Be Careful With The Layoffs How Do You Build an Irresistible Company? Here’s how Starbucks, Walmart, Microsoft, Lego Group, L’Oreal, Chevron, and Cedars Sinai thrive. How Work Design And Job Design Are Holding Companies Back Unleashing Human Potential: The Real Secret To Business Success
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Episode Transcript

Speaker 1 00:00:11 I've got a whole bunch of things I want to get off my desk. I want to talk about. And it has to do with the, the economy, interest rates, inflation political stuff, all sorts of things. And what does this all mean to you as an HR person? And I'm gonna try to make this relevant to you as an HR person, not as just a regular Joe. Okay. First of all, the economy, there have been a hundred articles about the impending recession, including mark Zuckerberg, stating that this is gonna be a financial meltdown. And I just don't see it. I think this is the press getting completely outta hand. Yes. The economy is slowing. Yes. We're raising interest rates. We've needed to raise interest rates for years the world. And especially the United States had near zero interest rates for 14 year. And as a result of the near zero interest rate, they ended up with a hyperinflated stock market, a hyperinflated market in crypto and other sort of strange new things houses. Speaker 1 00:01:14 Really everybody who had any assets at all saw their assets go up. And everybody who didn't have any assets saw their wealth stay flat. So it was really bad for the economy to have a 14 year cycle with almost no interest rates at all. And I kind of LA the politicians for that, not the fed cuz they pressured the fed, although they're not supposed to, to keep interest rates low. So they would look good. And every politician would have a term where the economy grew. As you know, from your history of economic cycles and your own career, you can't grow forever. And eventually we needed to slow it down. And we have this pandemic that's been going on for two and a half almost. You know, it'll be three years before, too long. And the supply chains are constrained. We don't have enough people to work. Speaker 1 00:02:01 We can't bring people back into the same plants and distribution centers that we have in the past. And so we had high and of course the only answer to that is to raise interest rates. So the fed is doing exactly the right thing. They are jacking up interest rates at a predict relatively rapid rate to cool off the economy, slow things down, reduce the pressure on prices and take cash and money out of the system. Of course the stock market's gonna go down. It was way overblown anyway, and mortgages are gonna go up. It's gonna get harder to buy a car. All sorts of durable goods are gonna get a little bit more expensive, but we have to go through this cycle. And those of you who you may have believed that the economy was gonna grow forever, you know, welcome to the real world, uh, for people my age, you've seen this happen, you know, as maybe six or seven time in your career and it's just a natural part of the economy. Speaker 1 00:02:56 So it's a very, very natural thing that's happening. Now. The reason I don't believe we're going into some sort of a massive recession is not because the Ukraine war isn't a really existent event. It is. I mean, if the Russians drop a bomb, nuclear bomb on Ukraine, anything could happen. We can end up with a pretty bad situation. The Euro has dropped and value compared to the dollar. So there's a lot of dislocation going on. But if you look at at demand and you look at the economic activity of consumers, it's very, very high Delta airline CEO just made a comment today that there's absolutely no recession in the airline industry. There's absolutely no recession in the hospitality industry. Retail is on fire. Almost every company we talk to is trying to hire people and relatively healthy financially. So there's a lot of money in the system. Speaker 1 00:03:48 There was money put into the system during the economic up cycle, there was money put into the system by the federal government and the governments all over Europe for the pandemic and, and that money is still there. So unfortunately it's very unequally just because of the economic policies that we've done in the us. But that all said, I don't think we're gonna have a big recession. I think we could have a slowdown. I think we could have what is often called a soft landing. And in the middle of that, guess what else is happening? We don't have enough workers. Another 375,000 jobs were met, were created in June. The number of jobs open the United States is still extraordinarily high. The unemployment rate is well below 4%, which is extremely low historic. And most of you, as I know, are having a hard time finding the right people with the right skill and keeping them in your company because the workforce is tired. Speaker 1 00:04:43 People are burned out. People are waiting for a break from the pandemic. They wanna have a little bit of a life again. And they've been working very, very hard. You know, productivity levels have been high. Most frontline workers are overworked. They tell us that in every single survey we do. And so employers have to deal with the fact that it's going to be hard to recruit people. We're going to have to take good care of people. We're going to have to pay them more because of the inflation, but that doesn't mean things are bad. That's just the way the business cycle works. Now, the second side of the equation is what's going on in the culture, in the business culture, in the economic culture and in the political culture. And we had our conference in late may and it was called irresistible. And we had a really glorious event talking about the opportunity to create really great companies for employees and why in my mind, the only strategy that will succeed in this economy is to take care of your employees. Speaker 1 00:05:43 There really is no strategy left. Other than that, because virtually every company is in the services business and is dependent upon the human ingenuity of your workforce. But while we all may or may not understand that as business people, there's some weird stuff going on the July 4th shootings, the Evolv, these shootings, the inability of the United States to deal with gun violence, the Supreme court DOD ruling against Roe versus Wade discussions out to January 6th that have gone on and been fascinating to watch 58, 50 9% of Americans think the us democratic system needs to be reengineered. It's probably higher than that, but that's how many came out in the latest survey. Only 24% of Americans trust the Supreme court. We still have global warming income. Inequality is worse than ever. The healthcare outcomes in the United States are lagging the rest of the world, despite the fact that we spend more money on healthcare than virtually any other country in the world. Speaker 1 00:06:44 So there's a sense, at least in the us. And I know this is true in Europe of malaise and pessimism about the world in general. And I don't think it's that hard to understand after we've been locked up or getting sick for two and a half years, that people would be a little bit unhappy about life and they're looking for something to feel good about. And you know, the political system goes through cycles too, and we're in sort of a down cycle there. I kind of have faith in the us system and it will right itself. But right now people are not that happy with their political environment. They may not feel that they're getting the support they need from the government in the way they, they would like to have it. And even Howard Schultz, the CEO of Starbucks made a very interesting comment in a session he did with the New York times a couple of weeks ago where he said, now look, you know, I'm not here to fix the problems of income, inequality, gun violence, mental health drug addiction in the United States. Speaker 1 00:07:42 But those problems are coming into our stores. We're dealing with those problems every day. So we have to take care of people and we have to do things to keep our employees safe and to keep our customers safe. And that's really the philosophy I would explain to you is that as an employer, you actually are responsible for a society. The people that come to work for your company have voted with their careers, with their lives, with their time, with their energy, to be a part of your organization. So just like the political system is trying to take care of the open society, the United States or the country, you have to take care of your society. And if you look at all of the stakeholders in the world that people pay attention to the media, the politics, the political system, employers and others, employers are the most trusted of all. Speaker 1 00:08:34 And I've talked about this many, many times, but in a period of time, like we're in now, where there is a lot of uncertainty about the economy and inflation. And I talked to before about inflation inflation. Isn't just bad because things go up in price. It's bad because everything feels like it's not stable. You know, the world feels unstable. Can I buy a house? Can I buy a car? Can I send my kids to school? Can I go to the grocery store? I mean, it just feels uncertain all the time when prices keep going up. So we as employers, I believe have a responsibility to take care of the people that are taking care of us. And that means a running your company well, so that you do make a profit and you do take care of people and you respect people in the process. Speaker 1 00:09:22 Number two, B being fair. One of the fundamentals of trust is feeling that the system is fair, whatever fair means, and in a corporate setting or an employer setting, that means that pay equity is distributed. Fairly promotions and growth are fair. Recruiting is done fairly, and that there's a really hyper inclusive work experience. And we're gonna do more work on inclusivity and diversity a little bit later this year. I really wanna do some work on it, but inclusiveness and fairness means if you're disabled, if you're transgender, if you're male, if you're female, if you're young, if you're old, if you're black, if you're white, if you're Hispanic, if you're Asian, whatever difference you have from everybody else, do you feel that your company is treating you fairly? And I think that issue which tends to get lost in the shuffle when all these other things are happening is a really important one to think about today. Speaker 1 00:10:21 And by the way, one of the dimensions of inclusivity is COVID. And let me make a little point on C a lot of, you know, I had a pretty bad COVID case in the early couple weeks of June. And, you know, I probably had one of the tougher cases and I came out of it feeling pretty bad about my health and my energy. And it took me a good six or seven weeks. I'm just now feeling mostly back to normal. And during that period of time, most of my friends said, oh, I had, and it was no big deal. I just went back to work or I had, and it was nothing. And I heard that dozens and dozens of times. And I kept thinking to myself, first of all, it's depressing to hear that, but is that the reality? And I think another part of inclusivity in creating a feeling of belonging in your company is respecting the fact that some people actually don't feel very good. Speaker 1 00:11:14 They are tired, they are sick, or they've been sick and they haven't recovered yet. And you have to accommodate their needs too, because they'll come back and they'll double their energies into your organization when they can. So those are all in the area of trust and fairness. The third, the sea in the topic of culture is listening to employees. Now there have been endless studies and reports written on employee engagement. You've seen all the research we've done on employee listening and various forms of employee listening over the years. I would simply say that nobody is smart enough to know what's really going on in the hearts and minds of all of your people. In the old days, we used to do what HP called management by walking around, and you could walk around the office and you could chat with people. And, you know, they would sort of talk about what was going on. Speaker 1 00:12:05 And you got a sense of, of, of what was going on in different parts of the organization. It's virtually impossible to do that now. And so we have to stay vigilant. That issues are coming up in the workforce that maybe we didn't realize were as big as they are. One of them, of course, is mental health. And, you know, Howard Schultz mentioned this and many of our clients mentioned this, that the mental health issue, which we used to brush under the rug and not even talk about openly is really an issue at work. And it's nothing about being physically ill. It it's the mental stress of going through all of the changes we've been through the last couple years, and it hasn't been easy. So I can't tell you what the date of mental health is in any particular company or your organization, but you should know that you should figure that out. Speaker 1 00:12:55 You should really be vigilant and you should do everything, your power to understand that obviously there's many, many tools and ways to do that, that I think you'll find useful. The third thing I wanna talk a little bit about is our global workforce intelligence research. A lot of you know, that late last year and early this year, we introduced the GWI. The GWI was a project we started because of the tremendously consistent story we were hearing about business transformation skills, new jobs, new roles, new careers needed in virtually every company. And what we discovered in the research, which we do with the help of eightfold and the database from eightfold is we've looked now at healthcare and financial services in great detail. And we'll be seeing the details of this. In September. We will probably launch the research at the HR tech conference in Vegas. Speaker 1 00:13:47 And what we've found is that virtually every company we talk to is really struggling to adapt to an industry that they're becoming, that they weren't in the past and that the job titles, the job roles, the skills, the capabilities, the pay models, the sources of talent are different as you get into these new businesses. So if you're GM and you're getting into electric cars, if you are, uh, Google and you're getting into health, if you're a telecommunications company and you're getting into media, if you're a gas, oil and gas company, and you're getting into hydrogen, if you're a healthcare company, and you're basically trying to get into the issues of dealing with COVID and expanded need for healthcare services, all of these companies, and by the way, retailers are getting into healthcare are getting into adjacent industries. And what that means is that the people in your company and the job titles and the job architectures and the talent systems that you built over the years have to adapt very, very fast. Speaker 1 00:14:49 And that doesn't mean you can just hire more people. It's funny now that we've done all this research and we're seeing it, it's, it's almost as if talent acquisition is the oldest and most simplistic way to grow your company in the old days. And certainly in many of the companies I worked for the fastest way, your grow to your company was to hire more people. Because the more heads you had, the more stuff got done, the more sales people there were, the more marketing you got done, et cetera, all that stuff scaled up. Well, when you're in the middle of a transformation, it doesn't work that way more heads don't solve the problem. If you have a high turnover rate, if you're missing the skills you need, if you don't know what skills you need, just hiring, won't solve it. And what you're gonna see in the GWI is a whole new systemic model for talent that will allow you to use data and information and talent intelligence to grow in a more organic and systemic way. Speaker 1 00:15:45 And I won't give you the secrets. Now we're gonna talk a lot more about this later in the summer. And the reason I bring that up is that that is also part of dealing with this economy. I cannot predict for your company where you're gonna see growth and where you're not, what parts of the world or what parts of your industry are gonna be growing and not. But you know that you have that information and you need to get smart about that information because we are in a very asymmetric economy. There are parts of the economy where there are layoffs. They tend to be the high tech, highly valued companies, but there are parts of the economy where there are just not enough people. Healthcare. I talked about transportation and others. So you as an HR professional, really need to get smart about where these inconsistencies and disparities are so that you can put together the right systemic talent strategy to grow the organization in those areas and shrink it in the areas where it is not growing. Speaker 1 00:16:41 That isn't just recruiting. And it isn't just traditional talent management. In fact, the research we're gonna be publishing in September will show you exactly what this means and how to do it. So that's another thing to think about over the summer is, are you getting the right information? Are you thinking about your organization consistently? And, and that that's an initiative that we call talent intelligence that I think is really big. So bottom line, the world is not coming apart. Yes. We're going through a lot of changes. You know, I love the book who moved my cheese. I happen to be kind of a conservative person and I don't like it when things change all the time, but we've gotta accept that we're going through an economic readjustment in the global economy, we're dealing with the war and the new alliances that will be created because of that war, by the way, many of which are very positive. Speaker 1 00:17:34 If you look at what happened at NATO, it's happening at NATO, it's it's to me, in some sense, good, the workforce is under a lot of stress. Your employees are under a lot of stress, but the economy's healthy. And if you're able to adapt, you are going to come out of this just fine. And I think we're gonna have a soft landing and short some sort of a nuclear war, which I think is fairly unlikely. We're gonna have a pretty good year next year when we shake this all off. And just remember that as an HR person, communicating that you understand the stresses that your employees are going through, and that you're willing to adapt and deal with issues like the abortion law and benefits and healthcare and mental health and flexibility. You will be better served by doing that than being tough on your people. Speaker 1 00:18:20 Right now, you can be tough on your people if you want, but I don't think it'll work. I think most workers have given their hearts and souls to your company over the last couple years. And they just want a little bit of flexibility as we try to shake off this pandemic anyways, kind of a lot of stuff in one podcast, but I hope you found this useful join our corporate membership program. We're gonna really start promoting and heavily. We have hundreds of research studies and lots of information that you're not seeing on our website that we save for members watch out for the big learning and development study that's coming out in August. It's one of the largest studies of corporate training we've ever done, and I've done this five or six times. And then in September and October, the GWI research is mandatory reading for those of you in HR. You're gonna learn a lot from that, and it'll really open your eyes to a new way to think about the workforce and the systemic approaches to managing people. Thank you and have a great summer. Talk to you again soon.

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