Podcast
Podcast
- 26 Jan 2022
- Managing the Future of Work
Josh Bersin on why CHROs are at the center of the action
Joe Fuller: If you had predicted a decade ago that human resources would be at the center of the action in 2021, you likely would’ve met with some raised eyebrows. But HR is clearly in the spotlight as organizations confront change and friction on multiple fronts. The Coronavirus pandemic has accelerated many of the dynamics that are transforming work. Those include the way work gets done, automation and remote work, and the context in which it takes place amid rising social tensions and economic inequality. As we close out 2021, workers are quitting in record numbers, and across the board, jobs are notoriously hard to fill. Are HR leaders equipped to deal with this situation? What tools and training do they require to meet the moment? And how should the C-suite approach human capital management over the long term?
Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Harvard Business School professor and visiting scholar at the American Enterprise Institute, Joe Fuller. My guest today is HR expert, Josh Bersin. After starting out in high tech, Josh shifted to HR and e-learning. His firm provides consulting, research, and training for human resource leaders worldwide. We’ll discuss the state of HR in the context of the pandemic and the so-called Great Resignation. We’ll also talk about the importance of internal talent markets and skills building more generally. Welcome to the podcast, Josh.
Josh Bersin: Thank you, Joe. I’m pleased to be here.
Fuller: Josh, as long as I’ve been studying the workforce, the future of work, which is now more than a decade, you have been a prominent figure in this field, a really highly regarded commentator and consultant. But presumably you weren’t running some student club in high school where you learned about this. How do you find yourself as someone with such a deep and distinguished history in working with HR professionals and studying these issues?
Bersin: Well, in my case, it was a complete accident. I spent about 20 years in sales and marketing and product management in software companies and stumbled into the online learning industry in 1998 when the internet was new, which just seems so long ago, and went to work for a little company that ran out of money. We sold it to a bigger company. I was the head of marketing at the bigger company. The bigger company fell on hard times during the 2000 “dot-bomb” recession. I got laid off, and there were no jobs. And I thought, I always wanted to be a writer; maybe I could become an analyst. Twenty-two years later, that’s what I’ve been doing ever since. I started with training and online learning and then expanded into all these other areas. And it just turned out to be a really good fit for my background and my particular skills and interests. People think I know a lot about HR because I’ve been in HR, but I’ve actually never been an HR person. I’ve just studied it and consulted with so many companies and just learned an enormous amount about it over all this time.
Fuller: Well, you’re the original lifelong learner, I guess …
Bersin: Yeah.
Fuller: … doing a career shift and one that worked out so well for you. Well, in that period—it sounds, it’s a better part of 20 years now—when you think about leaders in HR and the dominant issues in HR, how would you characterize them as having evolved?
Bersin: When I first got into this, there was the whole issue of the famous article, why do we need HR? Maybe managers can just do their own [personnel]. And then there was the HR as the service delivery person, HR as the support person. Now we have HR as the strategic consultant. HR as the adviser. HR as the designer of employee experience. HR as the owner of the culture. It’s been escalating year after year after year. And I think the reason it has escalated and has become such a critical profession is technology has automated away a lot of the routine work that we used to call “labor.” And so all of these sort of soft-skill issues or soft issues about HR are really, really critical topics. It’s really evolved. And in my early days as an analyst, I used to do various programs on analytics, training analytics, and nobody would show up. There’d be like 20 geeky people there. Now everybody needs to know this stuff. It’s really evolved.
Fuller: Josh, has that led to increase of the prominence of HR in strategic discussions or increase in investment in the function that you’ve discerned?
Bersin: I think so. I know CHROs are very important people in companies now. They make a lot of money. They’re now C-level officers in most companies. They sit on the board. There are more recruiter jobs open than there are software engineers right now, but it’s number one in the domain of high-value jobs. Salaries of HR professionals have gone up. People have gone into the HR profession from consulting roles, from tech roles. The HR tech market is incredibly big. All the venture capital firms have HR tech partners who are investing in the technology. Microsoft’s in it, Google’s in it, Facebook’s in it. There are obviously big companies like Workday and Oracle and SAP. It’s a significant domain of business. I don’t think business schools still give it enough time, frankly. It’s just becoming a very, very professionalized, strategic, creative part of business, not just an administrative back-office group.
Fuller: Are there specific areas you see getting those supplements of investment or types of talent that are new to the HR function that you see?
Bersin: It’s a very complex profession. But the really hot areas are recruiting and all the aspects of attracting and assessing and recruiting people, which is very data driven as well as very human driven. Learning development and careers and skills are a massive area of growth in HR—everything from understanding skills taxonomies to developing complex blended learning programs. Pretty soon we’re going to be using the metaverse and virtual reality. That’s a huge area of HR. Analytics and data and making sense of employee sentiment data, employee engagement data, retention data. There’s a lot of investment right now in mental health in the HR domain and figuring out how to give people coaching. What I like about HR, you can be an economist, you can be a data scientist, you can be a tech person, you can be a teacher, you can be a salesperson, or you can be a consultant or you can be a designer.
Fuller: When you think of HR leaders that you think are progressive, having real impact on their company strategies, are there particular attributes that come to mind that distinguish them as executives, as thinkers, as people that are, through their actions and behaviors, really commanding that seat at the table and good relationships with the CEO, with the board, other important constituents?
Bersin: Well, there’s a couple things I think are critical for really highly effective CHROs. The first is respect for the complexity and the depth of the profession. And there’s a lot of history and legacy and technology involved in HR. Number two is, I think what great HR functions do is they create talent and people strategies that are unique and special for their company. They don’t just copy what somebody else did. Your hybrid work strategy isn’t the same as somebody else’s hybrid work strategy. Your leadership development strategy isn’t the same as somebody else’s. And the third is, really, operating a very complex group in the company that is global and very interconnected to the business. HR people support leaders, they support managers, they support individuals, they support contractors, they support the CEO, they support the CFO. I mean, they’re really accountable for a lot of different groups. And so the CHRO has to be a really good ombudsman, and they need to speak truth to power. Sometimes things aren’t going well, and it is a culture issue. It is a people issue. It is an employment brand issue. And if you do get a lawsuit or harassment claim or some sort of a massive legal issue, you have to take that head on. It’s a very challenging job.
Fuller: Well, you’re tugging at my heartstrings. As some of our listeners know, my father was a long-term CHRO of General Motors back in the day.
Bersin: Wow! Yeah.
Fuller: It’s certainly, the job has changed since his time, and company has as well. I think he would be quite surprised to see some of the twists and turns that have affected GM and Motor City, broadly. One thing that we have both mentioned in various writings is that Covid accelerated a number of trends that were latent in the labor market and in the challenges companies were having with talent prior to Covid; it has really fast-forwarded some developments, and so interested in getting your sense of that. One thing, of course, we’re speaking in a holiday season of 2021, and the press is full of discussion of the Great Resignation.
Bersin: Yeah.
Fuller: And how are you interpreting that? And when you look at the data of almost 16 million open positions, when only 8 million are unemployed, how are you interpreting that?
Bersin: One thing that happened during the pandemic, a couple very big lessons. Companies are now very comfortable with implementing digital strategies quickly and in an iterative way. I think before the pandemic, it was a lot of strategizing and hiring consulting firms and waiting a long time. Second thing that people have learned during the pandemic is that, if you’re not an empathetic and caring company, you’re going to pay the price. You’re going to have performance problems. You’re going to have turnover problems. You might have business-continuity problems of people just not coming to work. And then in terms of the Great Resignation, it’s true. I mean, 4 [million] to 5 million people are quitting their jobs every month in the United States. That’s roughly a third of the workforce is voluntarily leaving their jobs. They’re not retiring. They’re just burned out. They’re tired. They’re stressed out. They have lots of other issues in their lives. And they’re looking at their employer and they’re saying, I don’t like this job, I don’t like this work, I don’t like my boss, I’m not making enough money, so I’m taking a break, or I’m going to find something else. And because the economy’s doing so well, they’re finding something else. We have more money getting plowed into the economy, creating more jobs. And it’s forcing companies to become really good at taking care of people, listening to people, designing work experiences that are productive and positive for the humans, not just the machines. And I think it’s going to shake out some companies that are not doing this well and force them to take their human capital strategies a lot more seriously.
Fuller: How does this all shake out over time? Because one of those latent visible trends in the workforce was changing workforce demographics. If you look at people who’ve left the workforce in this downturn relative to the Great Recession, it’s an older group that’s leaving now. It’s people decided to retire at 62 as opposed to wait for 65, maybe because their home value spiked, maybe because temporarily they feel good about their IRA. Maybe because of Covid. Does this get sorted out by work redesign? What’s the playbook to get back to some supply-demand balance?
Bersin: First of all, relative to demographics, we are living longer. The average career will be 70 or 80 years long pretty soon. Right now, there are people retiring early, because they’re fed up with the pandemic. But I think that’s a particular situation because of the current economic cycle. And so we are going to have workplaces and work arrangements that accommodate people at all different levels of their career—alumni coming back, retirees working part time, young people managing older people. I reported to somebody 30 years younger than me when I was at Deloitte. That was an interesting experience. That’s going to be very common, and people are moving between companies and within companies just at really increasingly accelerated rates. You’re going to be living through technology cycles, business cycles, company cycles, and culture. And then, the other thing that has changed is that we now live in a culture where individuality is more important than conformity. And so companies have to be much more flexible in accommodating the needs of each individual and the working conditions of them. In terms of where it’s going to go in the long run, I’m definitely an optimist. I think people are going to have richer, more-diverse careers. Companies are starting to get very smart about finding what we call “new career pathways,” where if you start life as a financial analyst and you get sick of it, you don’t have to stay in the CFO’s department for the rest of your life, you can become a cybersecurity specialist or go into IT or become a data scientist or do something else. If you’re an administrator and a nurse, you can become an informatics specialist. There’s all sorts of career evolutions that are taking place in the workforce because people are living longer, and companies are getting much, much smarter about the skills they need in different jobs. And I think what we’re finally doing away with is the old industrial model, where your job description is almost like a little box. People’s careers are going to be much more diverse. And then the other thing I would say relative to the politics, I think that the Biden administration in some ways is a little bit of ahead of its time. This pushing for unions and pushing for childcare benefits and pushing ... People are demanding that. That’s not just good economic policy. Employees are speaking with their own feet. They’re saying, “Look, if I don’t get good benefits here, or this company’s not giving me fair pay, I’m out of here, because I can work full time at home. I can change employers by changing email addresses. I don’t have to drive across the town and interview at another company to get another job.” Now that’s not as true for hourly workers and frontline workers, but they’re going to get more mobility, too. We’re definitely entering a world where the workforce has a lot more power and agency than it ever did before. And companies are getting smarter about giving people more opportunities. The companies that don’t adapt to these new talent models are going to lose out. They’re just not going to be able to get great people.
Fuller: Let’s double-click though on those frontline workers that so often became called “essential” during Covid. How do you see more choice and more satisfaction being mapped into someone who’s running a retail store or someone who’s in the food service industry, even that frontline worker in a public-service setting?
Bersin: Well, I think companies that have the large number of essential workers or frontline workers have a choice to either treat them like reusable objects or treat them like high-value human beings who can continuously be developed to do more. You have the Costcos of the world who pay above-average wages, take really good care of their people. And they have an exceptional customer experience. But companies that don’t treat their employees well that have a 70 percent turnover rate. And so what the second kind of companies have to do is they have to automate away as much of the potential human value as possible and make the company a big software company in a way. A that’s very hard for companies to do. So I think essential workers, especially in healthcare and retail and hospitality, are now viewed as very high-value contributors to companies. You look at, like, Hyatt or Marriott or these companies that have a lot of hotel workers, they take a lot of care to make sure they’re happy and that they’re getting the benefits they need. And they’re well taken care of. And they’re trained. Amazon, Walmart, Target, Disney combined spend more than a billion dollars a year on tuition reimbursement for these people, not just because they want to be nice citizens, but they want these people to know how to do their jobs better and to advance their careers. I think the level of investment in essential workers is now going up pretty significantly. And then, of course, they have different kinds of technologies. They need workforce management systems that are designed for them in remote locations or in a store that don’t require a big computer to log into. So there’s a whole bunch of new technology being developed for them, too. And more and more companies are doing that. I think there’s a pretty big recognition that the essential workers are, in fact, essential.
Fuller: Well, thank goodness that is getting realized, because I think if you’d asked boards of directors in the fall of 2019, “Who are the most essential workers?” in any one of the companies you mentioned, they would’ve been talking about succession planning for the C-suite.
Bersin: Right.
Fuller: And by September 2020, they were talking about people who are opening the stores, serving customers, dispatching product to this new B2C business model that’s all the rage.
Bersin: One of the things that’s occurred to me for a long time as an analyst is, why do we treat wages as an expense, when human capital is the most appreciating asset you have in the company? Everything else depreciates. People get better at their jobs over time. I’m not saying we’re going to change the accounting profession, but if you’re a retailer and you are losing a lot of people—because you’re not paying them well enough or their working conditions are poor, their management is kind of crummy—you’re losing a lot of money. Because the people that are there the second year and the third year have much, much more productivity and customer experience. You want them to stay. It’s really in your financial best interests to pay them a little bit more, train them a little bit better, and get them to move around inside the company and stick around. And I think the CFO would understand that.
Fuller: Well, as you know, a unifying theme in some of our work at the Managing the Future of Work Project is that companies execute their HR strategies logically given the way they structure their data. And they incent various players in the system, which doesn’t mean they manage their human assets logically, because they miss out on a lot of systems effects, things like cost of turnover. Josh, you touched on technology. And, of course, one of the shibboleths out there is that among many people, technology is going to come and massively disrupt work and people won’t have anything to do. And then what? How do you think about that? How do you reassure people in that front? And also, how do you think technology is going to change the HR function, specifically?
Bersin: What happens is, the technology eliminates the routine work, much of which people didn’t really like doing, anyway. And the definition of “routine” keeps getting raised. Pretty soon, if you’re the financial auditor running all sorts of checks and balances on the financial statements, that gets automated, too. So you’d better become a little bit better of an adviser. But all of that, technology has clearly revolutionized the way we work, improved productivity. The productivity numbers in the United States went up the last couple of years or two for the first time in a while. It’s giving people the opportunity to work at home or on the road. And it is going to make work better for almost everyone. You have to be willing to learn how to use the technology. You can’t let it intimidate you. They will be adding significant value in your job. And I think that’s going to continue. For every new self-service tool that a company adds to its customer experience, there is another human job behind it created. That seems to be what happens, to raise the value proposition. As far as inside of HR, there are analytics tools that can identify potential for stress or lack of productivity. People that are spending too much time on internal meetings, sending too many emails to the wrong people, not communicating with Blacks or Hispanics or women. All this data is there. These systems are giving you alerts on how to be more inclusive and more productive. There’s incredible technology for recruiting and sourcing and finding people who you didn’t think were going to be a good fit for a job. There are systems that can go out into the internet and find people and say, “Look, here’s a whole bunch of people that actually have the skills you need. They’ve never done the job you’re hiring for, but they have 80 percent of the skills you need. So you probably should talk to them.” And that’s revolutionizing the sourcing and recruiting. There’s technology that identifies gender pay equity now. So you don’t have to wing it and do a big analysis every year. That can be done on a pretty regular basis. The learning-technology industry is unbelievably dynamic—technology that can serve up micro-learning in the flow of work, technology that can identify skills gaps, and then give you recommended courses or people to meet who would be good peers or counselors or coaches or mentors to you. Talent marketplace technology that can help you find another job inside the company. So you don’t have to quit if you want to get more opportunities to do something new. And then well-being tools, a lot of which we use at home, are available at work, too. If you’re burned out or are not getting enough sleep, the company can provide you access to experts or tips for that. It’s pretty remarkable—it’s a very, very healthy part of the technology industry. And then, by the way, the other thing, of course: Microsoft’s in it now with Microsoft Viva, Google’s in it with Google Workspace, WebEx from Cisco, Facebook wants to get in it with Workplace. Every big-tech company wants a piece of this. It’s be become very interesting and very dynamic.
Fuller: You’ve written about the new SEC Human Capital Disclosure rule, which is quite a broad—I wouldn’t say it’s unspecific, but it really gives management quite a lot of latitude to discuss their human capital. What’s your interpretation of that? Is that going to accelerate the trend of these types of technologies? And what are you advising your clients? How you’re responding to that?
Bersin: Well, right now it’s so general that you can write almost nothing or you can develop a whole bunch of data. What I think the goodness of that is that rather than trying to specify every metric in every report that companies have to fill out, there will be a little bit of a competition among companies to disclose things that they think are important to their investors. One company’s talking about the diversity numbers. Another company’s talking about their HR department. Another company’s talking about their pay. Another company is not talking about anything. But I think at least it’s starting the disclosure of more information, because, like I said before, I think human capital investments are financial investments, and they mean a lot to investors. Good investors look at the Glassdoor ratings of their companies before they invest in them. They look at the human-capital metrics. And Glassdoor’s not exactly a totally scientific thing. So if we get companies to disclose this effectively, it’s going to help the investment community a lot.
Fuller: It could very well be that some of the firms that evaluate financial statements on behalf of institutional investors like IASS may start setting forward guidelines on this, and driving at more transparency in this space, I think, is both useful for investors, and arguably, will provide into the domain of evaluating potential places to work. You mentioned diversity, equity, and inclusion. Are you seeing the type of innovation you’re talking about in those programs, specifically? And what are you talking to companies about how to improve their performance?
Bersin: There are a lot of companies hiring heads of DEI and putting effort into it. But the needle’s moving very, very slowly. We did a big study of this, and the conclusion that I came to is, first of all, it’s not an HR problem. It’s a company strategy problem. The HR department can’t suddenly decide to hire a whole bunch of minority candidates and teach everybody about DEI and expect the culture to change. On the other hand, the companies that are really inclusive by nature have great employee retention. They respect people regardless of their age, gender, nationality, race, whatever. And they are inclusive in their entire business. They sell to inclusive communities. They do business with inclusive and diverse suppliers. If you look at companies like Target in the retail industry or Chevron in the oil and gas industry, both of whom I know very well, these are very highly inclusive companies and highly diverse companies. In the case of Target, they sell a lot of stuff to disadvantaged and small communities in parts of the country where there are a lot of Black or Asian or poor people. And that’s part of their business, and they think it’s the right thing to do. And so their whole company’s inclusive. In the case of Chevron, as in most oil companies, they’ve been doing business in Africa and Asia and all these different cultures around the world. And they discovered a long, long time ago that, if they don’t have a multicultural, diverse leadership team, they can’t do business in these countries. They can’t drill for oil. They can’t get the leases. They can’t keep the communities happy. To me, diversity and inclusion is about you deciding that your company is going to be a diverse and inclusive member of the economic system that you’re in. And as a result of that, all the things you do around it will be inclusive. I think that’s the ultimate goal. And I think the HR department gets caught in the middle with this. And the head of DEI is sometimes sponsoring a lot of these things. And sometimes they get a really good audience, and sometimes they don’t. As much as I think it’s important that HR take the lead here, it’s really a business issue for CEOs and everybody else, too.
Fuller: Well, I think that’s a truth about all progressive thinking, rooted in competitiveness, in HR—that, first and foremost, it’s a business issue. It’s not a corporate social responsibility issue. Companies that have been focused on diversity, inclusion for a while and have thought about it broadly and thought about it as a business issue, they have a virtuous cycle going. They’ve got upper- and middle-level management who are diverse. They have established relationship with the skilled providers that provide diverse talent. To the extent to which there were issues of getting their historical workforce comfortable with more diversity in the workplace, those bridges have been crossed. If you are a laggard, what do you do? Because you can’t roll out those diverse vice presidents, point to histories of success, instantaneously create successful relationships—whether it’s with historically Black college or universities or inner city school systems. How do you get started?
Bersin: Well, I mean, I think the first question you have to ask is, what does diversity and inclusion mean to your company—to do business in and with a more diverse community of customers and more diverse and inclusive communities and cities and countries around the world? If all you’re trying to do is change the representation of your workforce, you’re probably going to have a little bit of a challenge. If you’re an African American person and an all-white law firm says, “We want more black partners, we’d like you to come work here,” you can just scratch your head and think, “I don’t know, maybe. Why do you want me? To what end?” I think the first thing you have to ask is, “Why do you want to do this? And what is the benefit to your company, not just to your social cause?” Then what all the HR and DEI leaders tell me, you need to sit down as a leadership team and talk about what this is going to do to your leadership team. Some of your leaders aren’t going to like this. It’s not going to be normal or natural for them. Maybe they didn’t grow up in a diverse community. They’re not used to being in an organization like that. Maybe they’re in the wrong place. It needs to start at the top. And then you can start setting metrics and going to the right universities and teaching people. But I think the simple part of it is there’s no excuse for managers to act in a biased way. And so even if you don’t have a big, fancy strategy about DEI, you can teach people about behavior and inclusion and belonging as a leader and listening to people and respecting people and having good conversations. And that, really, to me is about building an inclusive experience at work, regardless of whether it’s Black, white, age, race, nationality, whatever.
Fuller: Josh, one of the trends that we had written about prior to Covid and actually published a couple of papers during Covid was the growth of contingent work. A lot of people call it “gig work.” And specifically, its growth in more white-collar-type functions that we have, quite innovative business models that are delivering tech talent. What are you observing in the marketplace? Is this going to become more of a fixture in people’s HR strategies? Or is this just a mechanism for balancing a supply-demand function that’s out of whack and we’re still going to be predominantly getting skills by hiring it, retaining it, evaluating it, and promoting it?
Bersin: The way I put it is, the alternative workforce is not so alternative anymore. I mean, it really went mainstream during the pandemic. Before the pandemic, I did some research on this, and I found that 70, 80 percent of companies were jawboning, they needed a strategy, but they really didn’t have one. Alternative work was handled by the procurement department, and the HR department wanted nothing to do with it and didn’t know much about it. That has completely changed. Sixty to 70 percent of millennials have side hustles. They’re already doing alternative work, even though they’re on your payroll. So many people work at home—40 to 50 percent of workers work at home, so that they can change jobs at the drop of a hat. And because the labor market is so tight, sometimes you can’t find a full-time worker. So you have to outsource parts of the job. And there are new systems inside HR called “talent marketplaces” that allow you to shop around inside the company for piecework. They’re even becoming gig work inside of the company, which is a very dynamic way to run a company. And that makes it easier to outsource pieces of a project instead of the whole project. I think, whatever we call it—gig work or alternative work arrangements—is really a mainstream issue. And now one of the top priorities of most HR departments is optimizing it.
Fuller: Well, it’s also one of those areas where you can see the type of technological dynamism you were talking about earlier, that you’ve got companies like the Gloats, like the Catalants, like the TopTals, that are pretty refined, well-developed models now. And like some other changes we’ve been talking about in our conversation, it does require serious senior sponsorship with people who view this as a strategic issue integral to their business model. Well, Josh, this has been a great conversation. Any final thoughts?
Bersin: Well, Joe, thank you so much for the opportunity to talk to you about HR. The thing that I have learned over and over and over again is what I call the “unquenchable power of human spirit.” People adapt, people grow, people change to adapt to your company’s needs if you create the right environment for them. And so, no matter what business you’re in, if you think about the people as fundamental parts of your company to be invested in, they will usually do things even better and even more interesting than you ever imagined. I have become very inspired by the whole domain in the last couple of years. And the pandemic has brought that home in a huge way.
Fuller: Josh, thanks so much for joining us on the Managing the Future of Work podcast.
Bersin: Absolutely, Joe. Thank you.
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