Page 1

WINTER 2017

PEOPLE • ORGANIZATION • INNOVATION

TECH VS. YOU:

TECHNOLOGY AND THE TALENT ECONOMY

The Experience Engine

The New Big Thing

Brain Trust


its debut just 13 days before the Cubs won the World Series that year.

S

omething remarkable happened this past November: The Chicago Cubs, my favorite baseball team, won the World Series for the first time in 108 years. It was an unbelievable experience. To this day, I almost can’t believe it actually happened. The Chicago Cubs, the lovable losers, the team that always had something terrible go against it any time it looked as if it was about to break its seemingly cursed existence, actually won the World Series. Looking back on the celebration in the weeks and months that followed, I can’t help but take in the history. The last time the Cubs won the World Series, in 1908, the world was a very different place. Among other things, you couldn’t buy sliced bread, clothes did not yet include zippers and there were only 46 states. In fact, 1908 was so long ago that cars had not yet made it to mass production. The Ford Model T made

4

In reviewing the history and the longevity of the Cubs’ painful championship drought, it is hard to ignore how technology has changed the world in the past 100 years. The fact that the Cubs’ last championship came before the broad implementation of the assembly line is fitting given the theme of our Winter 2017 issue of Talent Economy. In 1908, the Industrial Revolution was on the cusp of experiencing its perhaps most important invention: the assembly line. By streamlining the amount of time it took to assemble a motor vehicle in 1913, the economy was forever changed in ways that are still felt to this day. Who knows if the American consumer culture we’re familiar with would have ever come to be if it hadn’t been for the explosion of cars, highways, shopping malls, drive-through restaurants and other ingrained staples. Just as the assembly line changed cultural norms in the decades that followed, today’s technology is having a similarly profound influence on society. Mobile internet connectivity has changed the way people communicate, consume and

T a l e n t E c o n o m y • W i n t e r 2017

As our editors write in this issue, today’s technology boom has farreaching implications for business. Not only have these emergent technologies transformed consumer culture and the products and services business leaders aim to develop, but they have changed the market for skilled talent. Thanks to advances in technology, people with statistical modeling and machine learning skills are in equal demand to help farmers forecast crop yields as they are to assist Wall Street banks determine patterns in high frequency trading. And while technology has pushed people to learn skills in new and emerging fields, in other ways it has forced many to rekindle those that require a deep human connection. Someone with the ability to forge such connections through communication and collaboration skills, for instance, is going to find their employability at a premium in a world that now largely discounts face-to-face interaction. Technology has changed the world greatly in the past 100 years. In this issue, we address the implications of these changes for business leaders, and we outline how the continuing shifts should influence how they think about talent. Frank Kalman, Managing Editor fkalman@talenteconomy.io

ILLUSTRATION BY ANNA JO BECK

Editor’s Note

share information. The emergent Internet of Things now helps us heat our homes and track our physical activity.


Learning That Drives Results CrossKnowledge is an engaging, forward-looking digital learning solution, driving business outcomes and the ability to transform individuals and entire organizations. We provide a customized, fully integrated learning solution and implement it at unmatched velocity. CrossKnowledge’s learning solution is complete, bringing together our cutting-edge technology and world-class content into a blended environment. Only CrossKnowledge has the experience, agility, and foresight to help you build an innovative and more eective learning solution. CrossKnowledge, a Wiley brand, serves over 10 million users in 130 countries.


CONTRIBUTORS KEVIN FINKE is the owner and chief storyteller at Experience Willow, a consulting firm based in Atlanta. Known for his contagious energy and passion, Kevin helps business leaders harness shared experiences to drive meaningful change.

KENNETH NOWAK is a licensed psychologist, and president and chief research officer at Ofactor and Envisia Learning Inc. He also serves as an associate editor for Consulting Psychology Journal: Practice & Research.

PAUL J. ZAK is professor of economics, psychology and management at Claremont Graduate University in California, and author of “Trust Factor: The Science of Creating HighPerformance Companies.”

MICHELLE V. RAFTER writes about employment, workplace issues, transportation and how tech is transforming them all. She’s a contributing editor at Workforce and a regular contributor to national business publications. She lives in Portland, Oregon.

Volume 2, Issue 1

PRESIDENT John R. Taggart VICE PRESIDENT, CFO, COO Kevin Simpson VICE PRESIDENT, GROUP PUBLISHER Clifford Capone VICE PRESIDENT, EDITOR IN CHIEF Mike Prokopeak EDITORIAL DIRECTOR Rick Bell EDITORIAL ART DIRECTOR Anna Jo Beck GROUP EDITOR/ASSOCIATE EDITORIAL DIRECTOR Kellye Whitney MANAGING EDITOR Frank Kalman ASSOCIATE EDITORS Lauren Dixon, Bravetta Hassell, Andie Burjek COPY EDITOR Christopher Magnus EDITORIAL INTERNS Alice Keefe, Nidhi Madhavan CONTRIBUTING ILLUSTRATORS Anna Jo Beck, Mike Centeno, Lisk Feng, Johanna Goodman, Josh LaFayette CONTRIBUTING WRITERS Kevin Finke, Elena Imaretska, Kenneth Nowack, Michelle V. Rafter, John Sweeney, Paul J. Zak VICE PRESIDENT, RESEARCH & ADVISORY SERVICES Sarah Kimmel RESEARCH MANAGER Tim Harnett RESEARCH ANALYST Grey Litaker RESEARCH ASSISTANT Kristen Britt RESEARCH GRAPHIC DESIGNER Theresa Stoodley MEDIA & PRODUCTION MANAGER Ashley Flora PRODUCTION COORDINATOR Nina Howard VICE PRESIDENT, EVENTS Trey Smith EVENT CONTENT MANAGER Ashley Collins EVENTS MARKETING MANAGER Anthony Zepeda WEBCAST COORDINATOR Alec O’Dell EVENTS GRAPHIC DESIGNER Tonya Harris BUSINESS MANAGER Vince Czarnowski REGIONAL SALES MANAGERS Derek Graham, Daniella Weinberg ACCOUNT EXECUTIVE Brian Lorenz DIRECTOR, BUSINESS DEVELOPMENT & EVENTS Kevin Fields AUDIENCE DEVELOPMENT DIRECTOR Cindy Cardinal DIGITAL MANAGER Lauren Lynch DIGITAL COORDINATOR Mannat Mahtani LIST MANAGER Mike Rovello BUSINESS ADMINISTRATION MANAGER Melanie Lee LEAD GENERATION ADMINISTRATOR Nick Safir Talent Economy is published January/February/March, April/May/June, July/August/ September, October/November/December by MediaTec Publishing Inc., 111 E. Wacker Dr., Suite 1200, Chicago IL 60601. Periodicals postage paid at Chicago, IL and additional mailing offices. POSTMASTER: Send address changes to Talent Management, P.O. Box 8712 Lowell, MA 01853. Subscriptions are free to qualified professionals within the US and Canada. Digital free subscriptions are available worldwide. Nonqualified paid subscriptions are available at the subscription price of $125 for 6 issues. All countries outside the US and Canada must be prepaid in US funds with an additional $33 postage surcharge. Single price copy is $29.95.

ADVERTISING: For advertising information, write to sales@ talenteconomy.io.

EDITORIAL:

tinyurl.com/jzstnou

To submit an article for publication, email editor@talenteconomy.io, Letters to the editor may also be sent to editor@ talenteconomy.io.

@TalentEcon

PERMISSIONS AND ARTICLE REPRINTS:

TalentEconomy.io

Talent Economy

ONLINE

facebook.com/talentecon tinyurl.com/hrsklz8

6

T a l e n t E c o n o m y • W i n t e r 2017

Winter 2017

No part of Talent Economy can be reproduced without written permission. All permissions to republish or distribute content from Talent Economy can be obtained through PARS International.

For single article reprints in quantities of 250 and above and e-prints for Web posting, please contact PARS International at MediaTecReprints@parsintl.com.

SUBSCRIPTION SERVICES:

All orders, inquiries and address changes should be addressed to

Computer Fulfillment

Talent Economy PO Box 8712 Lowell, MA 01853

or call customer service at 800422-2681 or 978-671-0446 or email hcmalerts@e-circ.net.


A new era in business where talent, ideas and innovation are what drive sustained growth.

A new management reality that requires a modern, flexible and constantly evolving approach.

A publication and community of forward-thinking C-suite leaders who understand how pivotal talent is to success.

Sign up now to be part of the movement at talenteconomy.io


Contents

22 28

34 18 COVER STORY

34

ANALYSIS

12

The larger force at work concerning the decline of the working class: technology.

13

Online education is a growing tool in talent development. How should it be used?

13

What does the influx of refugee workers mean for the U.S. market for talent?

15

is a leading currency in today’s 28 Trust talent economy. Here’s the science

Trump’s provocative style is a far cry from the enlightened era of Management 101.

16

branding has come a 42 Employer long way from its early days as a

Gig work will play a role, but full-time employment is likely to prevail.

17

How to get the most from innovative talent once they’re on board.

Similar to the Industrial Revolution of the 20th century, today’s technology boom will upend industries and norms for generations. Its influence on the talent economy warrants intense executive attention, scrutiny and planning. FEATURES race for top talent begins with 22 The leaders’ ability to create unique employee experiences.

behind how leaders can cultivate it.

marketing offshoot.

8

42

15

T a l e n t E c o n o m y • W i n t e r 2017

EDITOR’S NOTE

4

Technology’s current boom is disrupting the market for skilled talent.

DASHBOARD

10

Data and insight on the talent economy from Talent Tracker.

INSIDER

18

Author Kevin Kelly on the future of technology and innovation.

BOTTOM LINE most interesting 50 The and revealing quotes

from the Winter issue.


Dashboard: STEM EMPLOYMENT DATA ON THE TALENT ECONOMY FROM TALENT TRACKER RESEARCHERS

Annual Growth: Number of Workers in STEM Occupations Compared to All Occupations 2.4%

2.1%

STEM

5.5%

1.7%

0.0%

2011

2.0%

1.9%

All

3.0%

2.5%

2.4%

3.4%

People working in STEM occupations account for

2012

2013

2014

2015

of the overall full-time workforce.

Mean Hourly Wage by Occupation

2015

2010

$37.13

Computer and mathematical

$41.43

$36.32

Architecture and engineering

$39.89

$31.92

Life, physical and social science

$34.24

All occupations

$21.35

STEM Demographic Distribution by Gender, 2015

15% 85

75%

Computer and mathematical

53% Life, physical and social science

10

11% 6% 8%

Life, physical and social science

25% 47%

STEM Demographic Distribution by Race, 2015

74%

%

Architecture and engineering

$23.23

T a l e n t E c o n o m y • W i n t e r 2017

72%

15% 6% 7%

Architecture and engineering

65%

20%

9% 7%

Computer and mathematical Talent Tracker is a proprietary tool developed by Human Capital Media that integrates U.S. Census Bureau, Bureau of Labor Statistics and National Science Foundation data.


“KNOWLEDGE OF THE FACT DIFFERS FROM KNOWLEDGE OF THE REASON FOR THE FACT.” —Aristotle

Curated thought leadership, tailored to your business. At the Human Capital Media Research and Advisory Group, we work with your team to develop and deliver custom research content — tailored to your brand or co-branded with one of our partner magazines. Our deliverables are backed by qualitative and quantitative data analysis, positioning you as a thought leader. To learn more about how HCM research can help your business, visit humancapitalmedia.com/reserch

#ResearchHCM


Digital Nomads Technology is once again the catalyst for a migration of jobs, skills, priorities and plans in the workforce. by Frank Kalman

I

n 2016, globalization and international trade were marked as the primary culprits in a world economy experiencing dynamic shifts. In the United States, Donald Trump’s surprise election as the country’s 45th president was in many ways a referendum against globalization. So, too, was Britain’s vote to leave the European Union. Many of Trump’s most ardent supporters are working-class Americans whose jobs have been moved overseas. Similar sentiment supported the pro-leave vote in Britain. And Trump’s tough talk against trade deals such as the North American Free Trade Agreement, enacted in the 1990s, and the seemingly doomed Trans-Pacific Partnership galvanized millions of Americans whose job fortunes languished amid the post-crisis recovery. Trump is now promising to dispose of any deal that moves jobs overseas. He’s even said he would take a hard stance on technology companies like Apple Inc. to move their production back home. But is globalization really the sole perpetrator of working-class decline? As our cover story shows, something else is at work. While many are quick to blame trade and globalization for the loss in the manufacturing sector, there

12

is another, more dominant, force to be reckoned with: technology.

country to the other, further speeding the pace of business.

Independent research from the Brookings Institution, a Washington, D.C.-based think tank, shows that the predominant force behind the recent loss of manufacturing jobs has been technology, not globalization. As Mireya Solis, a Brookings foreign policy senior fellow, wrote in a recent policy brief, international trade has actually had a positive influence on U.S. job growth. What’s more, had the Trans-Pacific Partnership deal passed (at publication, all signs pointed to no), Solis noted that annual increases in real income for Americans were estimated to range from $57 billion to $131 billion by 2032. Meanwhile, Solis wrote that technological innovations such as robotics and 3-D printing, among others, have accounted for about 85 percent of the manufacturing job loss since 1980 by rendering most low-skilled factory jobs unnecessary.

Similarly, as our cover story shows, today’s emergent technologies — mobile connectivity, automation, artificial intelligence and robotics, to name a few — have already brought deep economic reverberations, with more on the horizon.

Manufacturing isn’t the only industry that’s been dramatically reshaped at the helm of technology. Today’s technology boom is reminiscent of the Industrial Revolution, when the invention of steam power and the assembly line transformed the fabric of the global economy while also disrupting industries and norms. With the cost of producing the Ford Model T sliced dramatically at the hands of the assembly line, American culture evolved in lockstep with the proliferation of the automobile, creating whole new businesses and industries in the process. Steam power shrunk the time to move goods from one side of the

T a l e n t E c o n o m y • W i n t e r 2017

The spread of the mobile internet now provides knowledge workers constant connectivity, allowing them to complete work through virtual communication anytime, anywhere. Automation software can sift through complex data sets with minimal human intervention, thus alleviating workers from torturous busywork in favor of more strategic tasks. And artificial intelligence and robotics appear poised to replace even more routine, computational human tasks, threatening the loss of jobs even more. Each of these developments influences the talent market. Emerging technologies will affect every industry. They will also influence the skills required to operate in the modern economy. This will change how executives make decisions — and alter the course of their leadership skill development to boot. There’s no doubt that globalization and trade has had a seismic impact on the world economy. But the more pressing issue facing executives, as it pertains to their ability to attract, retain and develop talent, is how technology is continuing to transform the role humans play in global business and society. Ignoring it isn’t an option.


3 Ways Leaders Can Embrace Online Education by Lauren Dixon

With the explosion of online education, leaders have a new tool to develop their organization’s talent. Still, there are some distinctions leaders should consider when using online platforms. 1. Even Though It’s Online, Facilitate Student Collaboration One of the biggest draws of online education — the ability to learn anytime, anywhere — can also be its biggest drawback. The perceived distance between peers means online courses need to get creative to promote collaboration. To accomplish social collaboration online, Larry Bouthillier, an instructor of computer science at Harvard Extension School and director of online education at New England Institute of Technology, instructs his students to do weekly practice exercises, followed by peer review assessments and feedback of their work. This helps his students get to know each other in an online environment, which in turn helps them learn the course material.

2. Use Video, But Be Authentic Another way to reach students is through online video. More than 80 percent of smartphone users stream video, according to The NPD Group Inc., a market research firm, making the medium an effective way to engage users online. Bouthillier said his courses feature canned videos as well as informal ones, which he said promotes student engagement. His informal videos last between seven and 14 minutes, and he keeps his tone conversational, avoiding a lecturing style. “More importantly, I do fresh video every week, in which I talk about interactions with students the prior week. It shows I’m listening and reacting and that I care about what students are doing,” Bouthillier said. 3. Use Online Components With In-Person Education In some cases, online education is a great tool for in-person learning. Gautam Kaul, a special counsel on academic innovation to the provost at University of Michigan and a professor of finance and business administration who also teaches on Coursera, said his students learn course material online outside of class time, which is then used to reinforce concepts through peer discussion and application. Kaul said this helps students learn more in the same amount of time.

How Will the Global Refugee Crisis Affect the U.S. Talent Market? by Lauren Dixon The global refugee crisis is a real problem. According to Al Jazeera, the number of forcibly displaced people has increased 300 percent in the past decade. By early December 2016, more than 351,000 refugees and migrants reached Europe by sea; about 4,715 died.

Staggering stats like these are likely why the White House announced in early October 2016 a plan to increase refugees accepted to the United States by nearly 30 percent. The process of leaving war-torn areas has left many families without any significant savings, requiring them to work. What does this influx of workers mean for the U.S. market for talent? “Overall, I would have to say that [refugees’] ecoW i n t e r 2017 • T a l e n t E c o n o m y

13


nomic impact is modest because they’re a fairly small group of people,” said Randy Capps, director of research for U.S. programs at the Migration Policy Institute, a Washington, D.C.-based think tank studying the movement of people. Just fewer than 70,000 refugees were admitted to the U.S. in 2015, according to the U.S. Department of State, making up just .02 percent of the total U.S. population.

States, they are authorized to work here legally,” Bracy said.

Refugees come from a variety of countries; their English proficiency, literacy and education levels vary. In 2013, refugees represented more than 60 nationalities and spoke 162 languages, according to The Integration Outcomes of U.S. Refugees: Successes and Challenges, an MPI study that Capps coauthored in June 2015. “It’s very hard to stereotype all refugees because there’s a lot of differences among the different groups,” Capps said.

Although refugees do need public assistance at greater rates than natural-born citizens, their reliance on government-funded programs decreases over time. Looking at food stamps alone, 42 percent of refugees here for five or fewer years received the assistance. This declined to 16 percent among those living here for 20 years or more, according to data from 2009-11, as cited in the same MPI study. This assistance, however, still registers at higher rates than the U.S.born population.

Most refugees are of working age. School-age refugees 18 and younger made up 34 percent of the population in 2013. Although education standards differ around the world, refugees are just as likely as the U.S.-born population to have the equivalent of a bachelor’s degree, the MPI study found.

The process of leaving war-torn areas has left many without any savings, requiring them to work.

There is one commonality. “In most cases, they have lost everything prior to coming to the U.S.,” said Stacie Blake, director of government and community relations at U.S. Committee for Refugees and Immigrants, or USCRI, an international nongovernmental organization focused on people in forced or voluntary migration, based in Arlington, Virginia. “This is a last chance. There is no option of failing.” The Need to Succeed The long trek to the U.S. and the need to succeed leads refugees to have certain qualities that make them desirable employees. “They’re flexible, they’re willing to come, they show up on time, they stay after if they need to, that they’re really devoted to the employer, and that they’re incredibly hardworking,” said Megan Bracy, associate director for community integration at USCRI. “Those, of course, are attributes that any employer would value.” The vast majority of refugees can — and do — work. As Bracy and Blake explained, refugees go through an extensive background and security check prior to traveling to the U.S. This process alone takes more than a year. “The moment a refugee walks off of the airplane into the United 14

T a l e n t E c o n o m y • W i n t e r 2017

Impact of Refugees Refugees could have the biggest impact in small towns. Recent illegal immigration raids at poultry plants in Texas, West Virginia, Arkansas, Tennessee, and many other states, for instance, left jobs open for refugees to fill. Capps said many of these plants are in small towns, where employers have a hard time filling roles. “These small towns where you have just one or two major employers; those local economies really rely heavily on those employers. So finding a good labor supply is really important for them,” Capps said. Large cities such as Chicago and Minneapolis also have refugee populations, but the impact isn’t as great. “Those economies are so big that refugees don’t play as large a role,” Capps said. However, according to a Chmura Economics & Analytics study, Economic Impact of Refugees in the Cleveland Area, the refugee population in Cleveland has contributed positively to the economy. Refugee-owned businesses created 175 jobs and $12 million in spending in the Cleveland area in 2012, along with $1.8 million in tax revenue for the state of Ohio. Additionally, about 68 percent of refugees are employed after two years in the area.


However, unemployment rates of some refugee populations are higher than those born in the U.S. In Minneapolis, the unemployment rate of Somali refugees in its Cedar-Riverside neighborhood is 17 percent, compared to only 4 percent in the overall Twin Cities area, according to “America’s Real Refugee Problem,” an October 2016 article from The Atlantic. Fears of radicalization and global terrorism have dominated the news cycle; President Donald Trump once promised during his election campaign to ban Muslims from entering the U.S. However, banning certain groups could impact travel, further hurting our talent market and economy, according to an article appearing in Newsweek, “Counting the Cost of Banning Muslims From Visiting the U.S.” Cited in the article are the Department of Commerce’s findings that there were 77.5 million international visitors, supporting 1.1 million American jobs, in 2015. “A Muslim ban, or any targeted or broad-based ban on foreign visitors from countries with significant Muslim

populations, would also have consequences well beyond the direct effect on travelers. It would hurt the economies of communities dependent on tourism,” according to the article. Employers Embracing Refugees Some companies have relied on refugees to grow their business. USCRI’s Blake said she and Bracy often speak with employers who attribute their success to their refugee-inclusive workforce. “When, on top of that, you expand the capacity of your business with additional language capacity, additional cultural understanding and additional new ways of thinking about products and markets, I think you’re really positioning yourself for success,” Blake said. Above all, refugees come from a variety of backgrounds and experiences, making this group ripe with diversity of thought, which has been found to foster new ideas and innovation. “There’s a big impact in what’s produced, certainly, and the innovation that comes with people who think differently, think outside the box,” Bracy said.

Want Government to Function Like a Business? Act Like One by Rick Bell A new boss naturally creates a blend of excitement and trepidation. Workers are curious, supervisors are nervous and everyone involved is filled with hope for glorious success while simultaneously suppressing fear of a long, agonizing road to failure. We’re still getting to know our nation’s new boss following Donald Trump’s election victory as the president of the United States in November 2016. But unlike most new workplace leaders where we scour the internet and email friends of friends seeking any shred of insider information, we know a lot about this CEO’s

past. If he were set to take over your organization, you’d be well within your rights to shake your head and question the board’s collective sanity for making this hire. On the plus side, there’s a great chance business could boom. He built a multibillion-dollar business, and that obviously curries favor with the board and shareholders. Like him or loathe him, he nevertheless is one of those rare personalities with an innate ability to command a room — an essential trait for negotiating. It’s also hard to argue against his ability to hammer out a deal — or at least surround himself with people possessing such talents — providing a lucrative windfall for himself and his organization. With the good, though, comes the bad. Beating down small businesses with a barrage of lawyers W i n t e r 2017 • T a l e n t E c o n o m y

15


and lawsuits; skirting tax laws; using bankruptcy as a business best practice; shaming employees in front of the media; making intimidation and mistreatment his leadership calling card. Sure, some executives are all about the bottom-line results. We’ll deal with the lawsuits when they’re filed. But that’s no way to run a business and doesn’t belong in government, either. Trump’s provocative style plays largely on the fears and skepticism of a voting citizenry that feels disenfranchised and powerless. That’s presidential politics in 2016. But it’s a far cry from the enlightened era of Management 101 as we enter the latter half of the 2010s. It’s employee-centric, all about collaboration, celebration and rewarding workers’ achievements. To put it in millennial comic-book parlance, it’s Teen Titans over Titans of Industry, Avengers instead of Aggressors. During the past decade or so — really, since the Great Recession tailed off — there’s been a growing movement among business leaders to build better workplaces. Multiple studies show there are financial perks when diversity, recognition and honesty are built into an organization’s DNA. If people truly believe that government should be run like a business, then here are your cornerstones.

Companies are recognized for their efforts to create noble, respectful workplaces. There’s even an organization bearing the name Great Place to Work that certifies businesses as having high-road cultures. Government, too, should be a great place to work. And one that works for all its people. Where does that start? At the top. Many leaders recognize that building and sustaining a fair, collegial workplace entices and retains the best talent. But if the CEO isn’t buying in, then it’s not happening. As leaders, we have the responsibility to set an example. Employees follow our lead. The toxicity of a boss who’s an arrogant know-it-all jerk filters through the organization. Dress down some underling next time the boss passes by. That’ll impress them. I don’t expect the White House to make Fortune’s list of the 100 Best Companies to Work For; but I can have the expectation of a boss who is firm, honest and treats his people fairly. I should expect the same from our country’s new leader. Surprise me, President Trump. Show your new population that you can run this nation like a business and successfully and simultaneously unite us. Your new employees are watching. And anxiously waiting.

The ‘Gig Economy’ Isn’t the ‘Future of Work’ by Frank Kalman The gig economy has changed how people perceive work, but is it the future of the talent economy? Here’s why it isn’t: First, current gig economy participation is still a small fraction of the U.S. labor force. As of June 2016, 0.9 percent of adults actively earned income from working on online platforms, according to a November 2016 report from JPMorgan Chase & Co. That includes 0.5 percent from labor platforms, like Uber, and 0.4 percent from 16

T a l e n t E c o n o m y • W i n t e r 2017

capital platforms, like eBay or Etsy. Second, growth in gig economy participation peaked in 2014 and has slowed since then, according to the JPMorgan report. Not only is the current gig economy still a tiny fraction of the overall labor market, but its growth is slowing. Third, assuming the gig economy is the future of work based on proliferation of a few platforms runs counter to the kinds of workplace cultures that leaders are working hard to cultivate. Take a look at how corporate culture has evolved; the themes don’t align with the idea that untethered gig work is the future.


The gains could be counterbalanced by the fact that they’re sourcing a recurring pipeline of workers.

Sure, freelancing continues to have its advantages and is a growing percentage of the labor force. But the notion emerging around what constitutes a strong workforce is a united culture of full-time employees. Imagine the lack of unified motivation a company’s workforce might have if most of its employees weren’t tied to the success of the company, or if much of their time was spent considering gig work for other companies, maybe even competitors.

Finally, companies like the idea of employing an em-

ployer-dependent workforce. Companies gain a lot when workers depend on them for their financial well-being. As a result, they’re able to retain workers and control them in ways they wouldn’t be able to otherwise. Moreover, the idea that companies would always have to be working to source and recruit their next batch of workers to complete parts of projects or initiatives would be cumbersome. The gains companies may receive by employing more gig workers could be counterbalanced by the fact that they’re forced to spend more time sourcing a recurring pipeline of workers.

5 Ways to Build Highly Innovative Teams by John Sweeney and Elena Imaretska Cultivating innovation is hard. For many firms, the first step is hiring people with innovative qualities. But once they’re on board, how do leaders and managers ensure they are managing this kind of innovative talent to get the most out of them? Think as an innovator: It’s no secret that a leader’s behaviors are important to what’s perceived as acceptable regardless of the stated values or strategic direction of an organization. When leaders manage highly innovative people, they have to stretch and show their innovation colors. Innovation is about listening, empathy, opportunity, risk-taking, influence and persuasion. Model desired behaviors: Leaders should identify the behaviors they want out of their team and model them. If leaders want their teams to think big, they should monitor the reaction they give when someone shares a wild idea. Don’t immediately jump into evaluation mode. Defer judgment, thank the person for their idea and recognize its potential.

Be transparent: If leaders want to harness the innovation energy and passion of their teams, they need to make sure they’re clear in how they’re using their ideas. Involve them early and often, hear their ideas about how they want to be involved in the process as well as their actual input into it. Make mistakes OK: Innovation is inherently unpredictable; mistakes are part of the learning process. When leaders manage highly innovative people they have to create safe spaces and segments of the process for them to experiment, make mistakes, learn and iterate. Fear of failure is the biggest enemy of innovation. Pay attention: Leaders have to pay attention to the team dynamics and ensure team members feel safe. Notice if people are dominating the conversation or withdrawing from it. Create channels for everyone to participate to ensure equity in contributions. Be authentic with the team and set the tone for everyone to bring their authenticity to work as well. Innovation comes from the cross-pollination of ideas. The richer the points of view the team can draw upon, the higher probability they have to come across a breakthrough. W i n t e r 2017 • T a l e n t E c o n o m y

17


Kelly eventually stumbled onto a — somewhat — conventional path, at least by his standards, writing and editing in the 1980s for various magazines on travel and other ahead-of-their-time niche subjects. Then, in 1992, Kelly and a small group launched what would become his most recognizable and successful project, Wired magazine. He served as executive editor of the now-esteemed technology publication from 1992 to 1999, a time during which the magazine won numerous awards, including the National Magazine Award for General Excellence in both 1994 and 1997.

INSIDER • • • • • • • • • •

Wired’s Kevin Kelly by Frank Kalman

Kevin Kelly is not your typical business prognosticator, but he has a knack for seeing things others don’t and embracing the unconventional. Take his career upbringing. When it

FROM THEN 18

was time for Kelly to go to college, he went to Asia instead, traveling in the 1970s as a photographer in the region’s hinterlands. When he returned to the U.S. in 1979, Kelly didn’t follow a traditional path with

1971: Dropped out of University of Rhode Island after one year.

T a l e n t E c o n o m y • W i n t e r 2017

1972-1979: Independent photographer throughout Asia: Japan, Burma, Pakistan, among others.

Kelly is now the senior maverick at Wired, though he no longer serves as its editor. His post-Wired career has mostly included writing books, including “New Rules for the New Economy,” a tome on decentralized emergent systems, and “Out of Control,” a novel about robots and organisms, among others. Kelly’s most recent book, “The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future,” is arguably his most fascinating for a business audience. Drawing on his technological background developed through his time with Wired, “The Inevitable” aims to provide a road map for the future, arguing that most, if not all,

1981: Launched Walking Journal, first American magazine dedicated to recreational walking.

PHOTO COURTESY OF JAMIE TANAKA

an entry-level office job but hopped on his bicycle and traveled 5,000 miles across the country.


of the biggest inventions in the next generation haven’t been invented yet. For business leaders reading his book, this means that the next billion-dollar opportunity remains undiscovered. But unlike past generations, Kelly argues in the book that the next wave of technological innovation can come from anyone.

Talent Economy spoke more with Kelly on the subject. Edited excerpts follow.

•••••••••• TALENT ECONOMY:

Your book discusses 12 technological forces that will shape our future. What are they? KEVIN KELLY:

These are general trends, tilts, leanings that will keep increasing over the next 20 or 30 years. And those 12 — I give them a past participle form — they’re motions, they’re ongoing activities. So they’re not static, they’re not nouns, but those are things like becoming, which we’re remaking everything, upgrading everything; there’s this sense that everything is in f lux, in motion. There’s cognifying, which is making things smarter. We’ve moved from nouns to making things liquid, processes and services instead of products. We’ve moved away from fixed text to a world where everything is kind of moving images. Again, these trends are all kind of selfreinforcing or intertwined, so the f lowing and the screening work together.

1986: Created The Essential Whole Earth Catalog , a distillation of the best tools and books for self-education.

Accessing — we’ve shifted from owning things to the benefits of not owning things but having access to them. If you have access to anything in the world on demand, that’s better than owning it, whether it’s a movie or a ride. Sharing — this idea of collaborating and increasingly deepening cooperation, sharing at speeds, at scales, and in dimensions that we have never done before and are doing more of. Filtering is this idea that the choices that we are making

reality, where our bodies are our interface and we’re interacting inside the technology. Tracking — becoming almost ubiquitous. We track ourselves, other people track us, government tracks us, so that’s become pervasive. Questioning — the shift from answers becoming valuable in the past and now answers will be cheap, ubiquitous. Ask a machine a question and you’ll get an answer. But questioning, the uncertainty

I PREDICT THAT THE FORMULA FOR THE NEXT 10,000 STARTUPS IS THAT YOU TAKE SOMETHING AND YOU ADD AI TO IT.

are exceeding our attention to the point where everything is being mediated to have filters that tell us what we want, and we are going to be making more tools to manage and sell our attention. Remixing — which is the foundation of the new economy, combining things. Interacting — which is movement toward more and more ways that we interact with our tools, and the kind of ultimate way, which is the motions of our whole bodies and body language is being captured. The best example of that is virtual

1992-1999: Founding executive editor of Wired magazine. First issue is launched January 1993.

of not knowing, becomes more and more valuable. And finally, all of this is just the beginning; we’re just at the start. The greatest inventions of the next 25 years haven’t been invented yet. TE :

Which trend do you foresee having the biggest impact in the near term? KELLY:

I think by far the most immense, disruptive, consequential of all these will be cognifying; will be making things smarter. Adding artificial intelligence to everything

2000-2014: Wrote various books, blogs and novels. 2016: Published “The Inevitable.”

TO NOW

W i n t e r 2017 • T a l e n t E c o n o m y

19


I think this is going to have effects on our education, entertainment, commercialization and militarization — everything is going to be affected by the fact that we have the ability to insert mindfulness into our clothes, our shoes, our homes, the back offices of every corporation. So I predict that the formula for the next 10,000 startups is that you take something and you add AI to it. We’re going to repeat that

20

by one million times, and it’s going to be really huge. TE :

How do you predict this will impact the market for skills and jobs? KELLY:

We’re going to see incredible explosion of new jobs, new things to do, new things that we want done that we didn’t even know we want done until AI came along. Of course, there will be a huge disruption, because the most common occupation in America right now is truck drivers — there’s something like three million truck drivers — and a lot of them are going to not be driving trucks, because we’ll have auto-driven cars and trucks and vehicles. And so they will have to find other things to do, and there will be so many of them. The most obvious one will be that these self-driving trucks and cars

T a l e n t E c o n o m y • W i n t e r 2017

are going to be complicated machines that will need fixing and repairing and oversight and care, and that alone is a whole occupation that doesn’t exist right now, but there will be many, many others invented by the fact that we have these mechanical servants working for us that will enable us to invent new things that we want done. This AI will be the geneses and the birth of more new occupations than we can imagine right now. TE :

Are there any industries most at risk of disappearing as a result of these forces? KELLY:

I don’t think at the level of an industry. I think every industry will be transformed. Again, most jobs are bundles of tasks, and some of those tasks can be automated but not all of them. So most of what this kind of automation is doing is transforming the job. We’re going to be working with these things. AI does not think like a human; they’ve been programmed to think differently. The reason we want them driving our cars is because we’ve engineered them to be not like the human mind. They’ll be complementary in many ways. The best chess player in the world today — even though AI beats human in chess — the best chess player is not AI either, it’s them working together. And so in many cases our jobs will be transformed by working with these robots or AI or

PHOTOS COURTESY OF CHRISTOPHER MICHEL

in our world is going to exceed the consequences of the Industrial Revolution, which was artificial power, artificial energy, beyond what we could do ourselves with our own muscles, or animal muscles. And we used that artificial power, cheap power, to build skyscrapers and railways and factories turning out endless rows of refrigerators. This was all because we harnessed artificial power, which we distributed on a grid and anybody could buy as much power as they wanted. And now we’re into the same thing with artificial intelligence, where we’ll distribute it on a grid. Anybody can buy as much artificial intelligence as they want, it will cognify all the things we electrified the last generation, so we will now be able to not just have 250 horses in our car but 250 minds.


agents, and I think the same could be said about industries. Some industries will be more transformed than others. But they’re not going to go away; they’re going to get a new life. TE :

What lessons should a business leader reading your book take away from it? KELLY:

There are several things. I truly believe that the next 20 to 30 years will be the most innovative and the most opportunistic that we as a species have ever experienced. There is no better time in history to start something, to make something than right now, that the opportunities that are before us are so vast and the barriers to participate are so low that if you’re in business or want to be in business this is a great time. The reality, though, is the success rate for any particular experiment is very low — and may be even getting lower in terms of the number of people

trying it — so one of the things that we’re learning, and maybe one of the things that a person in business should be expecting, is this is like science, where your long-term success is going to be built on many failures. And so, science proceeds by failure one after

another, where you try something, it doesn’t work, you try again, so on and so forth.

is going to come.

That’s the nature of what you do, and I think businesses should be expecting more of that, where most of your success will be built on a string

KELLY:

TE :

Do you have anything else to add?

I do want to reiterate of what a great time this is, this opportunity. If we were to get in a time machine and travel to 2040,

I TRULY BELIEVE THAT THE NEXT 20 TO 30 YEARS WILL BE THE MOST INNOVATIVE AND THE MOST OPPORTUNISTIC THAT WE AS A SPECIES HAVE EVER EXPERIENCED.

of failures. But hopefully you’re failing forward; you’re learning something each time. So it should put to rest the idea of the inherent state of a startup is that it works. The inherent state of a startup is that it doesn’t work. The inherent state of any new product is that it’s not going to work. And so I think this regime, this place that we’re going to is very fluid, and this idea that the first version of something is definitely not going to be the final version, that you’ve versioned your way to success, iterate fast, that things that are made look more like a verb, the process is more important than the product. It’s a great opportunity, but it’s a different way that success

25 years from now, that the greatest product of that time that everybody would be using and that would be changing lives then, that product has not been invented yet. It does not exist today. And even though I’m a big fan of AI and virtual reality and those kinds of things, I think in the next 25 years that the next big thing does not exist, it’s in a form that we haven’t seen yet, just like the web didn’t exist 30 years ago. And that means that all this goodness is all before us. The kid in Jakarta, Indonesia, has as much chance of inventing that today than Google does or Amazon. In fact, the more likely that they will rather than Google or Amazon, both of which are pinned in by their success. It’s more difficult to be innovative once you’ve been successful. So I reemphasize that this is a tremendous time to try and start something that hasn’t been done before. Frank Kalman is Talent Economy’s Managing Editor. To comment, email editor@talenteconomy.io.

W i n t e r 2017 • T a l e n t E c o n o m y

21


22

T a l e n t E c o n o m y • W i n t e r 2017


THE

BY KEVIN FINKE ILLUSTRATIONS BY LISK FENG

The race for top talent begins with leaders’ ability to create unique employee experiences.

T

he phrases “employee experience” and “employer brand” have become popular among human resources professionals as they aim to bolster their organization’s ability to attract top talent.

But for C-suite leaders intent on mobilizing their firms’ talent attraction strategies, it’s become ever more important that they, too, begin to embrace these terms in a new light. Creating a clearly defined and formal employee experience has become a strategic foundation for businesses wanting to flourish in today’s global marketplace. No longer can companies act as if they only compete in a consumer-driven economy with traditional products and service brands.

Companies must also find ways to stand out in a thriving talent economy with world-class employer reputations capable of attracting and retaining the most talented workers with the promise and delivery of an enjoyable employee experience. The experiences employees have at work matter. Multitudes of studies and research from Gallup, Willis Towers Watson and others have shown how a rewarding employee experience can influence employee

W i n t e r 2017 • T a l e n t E c o n o m y

23


engagement, external customer experiences and bottom-line results. Businesses that invest time and resources on building outstanding employee cultures and work experiences see the impact of their efforts in that their people stay more engaged over time and speak more favorably of them as employers. They’re able to consistently attract and retain top talent, and they see positive business results in the form of increased levels of safety, quality and productivity, as well as higher operating margins and earnings per share. The simple fact is that employees spend more time each day in relationship with their employer than with any other business or brand in their lives. Regardless of what they do or where they work in the world, people are having countless experiences every day with employer brands. That constitutes more interactions and opportunities to engage than we could ever imagine with our traditional consumer brands, but leaders’ job as employer brand owners is no different. They must focus on addressing and deepening the relationships they have

with employees. If leaders want to receive employees’ best work throughout the employee lifecycle, the experiences people have while they work need to be positive, meaningful and worthy of engaging.

The big questions in this discussion center less on why leaders need to prioritize employee experiences and grow employer brand equities, and more on how. How do leaders build an employee experience so exciting that people come to work from day one engaged and ready to give their all? How do leaders sustain that experience and help their cultures thrive over time, so their brands, businesses and customers thrive too? How do leaders create a meaningful experience that leaves people feeling happy and positive, especially when it’s time for them to leave? In the key takeaways and recommendations from its 2016 Global Workforce Study, Willis Towers Watson provided its answer to the how question: Businesses looking to increase engagement should begin offering their workforces more valuable “consumer-like experiences.” Today, retention risk is higher than it’s ever been. Top talent now moves more fluidly from one employer to the next. Nearly half of the employers surveyed in the Willis Towers Watson study indicated that their recruitment activities are having to increase year over year, and more than one-third of the same employers report that churn and turnover is on the rise. What would happen if a company’s customers were churning at such increasing rates? Leaders would likely be focused on finding out what needed to be improved and doing something about it. Leaders therefore need to consider holding employee experiences to the same standards. It’s never been more imperative that leaders reverse this momentum by beginning to consciously design and create experiences that workers want to have. In fact, in the same study, Willis Towers Watson uncovered that employees wanted to be treated more like consumers; 70 percent of workers who responded believe companies should understand their employee needs to the same extent that employees are expected to understand the needs of external customers. Yet only 45 percent believed they worked for employers who viewed them as consumers. That’s a big gap that needs to be closed. One way companies are beginning to act more like employer brand owners is by placing an increased importance on inf luencing and listening to the stories being told about how their employees experience their work. Opinions of how businesses and leaders treat their people and how their people feel treated have never been

24

T a l e n t E c o n o m y • W i n t e r 2017


more openly shared and discussed inside and outside organizations. Stories that reveal whether leaders are meeting their employees’ needs are being magnified globally through social media and everyday conversations between peers. It’s important to pay attention to how leaders deliver and respond to these stories. Today, employer brands, like more traditional consumer brands, are being cocreated with employees, who from an employment brand perspective are their primary consumers. The experience that they create together not only influences the stories that are being told, but also how well companies compete in the global talent economy. Leaders should never be able to separate employee experience from employer brand. In fact, they should begin thinking of the employee experience as the employer brand experience — because they’re intrinsically linked. If leaders want to grow their employer brands and be competitively positioned in the talent economy, they must be ready to invest in the redesign, improvement and transformation of their global employee experiences. These experiences must also be designed and created in ways that meet, if not exceed, the needs of workers. To accomplish that, many employers are being inspired by design thinking, a process commonly used in the consumer world to help define problems and implement new solutions and experiences.

5. Use observations and feedback to refine experiences. Industry leaders know the importance of using design thinking processes to innovate their consumer product and service brands to stay ahead of macro business trends and competitors. It’s no different with employer brands. Companies with high levels of employee engagement know the importance of actively designing and innovating experiences to reflect the ever-evolving workplace and meet the needs of their workers.

I can relate to the positive influence design thinking can have on creating a solid employer brand experience through my own work with NCR Corp., a technology company where I help lead an effort to transform the company’s global employer brand. I believe it serves as a case study for other executives looking to create and build on their company’s employer brand.

Employees spend more time each day in relationship with their employer brands than with any other business or brand in their lives.

Typical design thinking follows five simple steps: 1. Empathize with the end user and understand their experience through observation, interaction and immersion. 2. Process and synthesize findings into a perspective that will be addressed by a future design solution. 3. Explore a wide range of potential solutions and ideas. 4. Transform ideas into real solutions and prototypes, so people can engage and experience them firsthand.

Most recently, as the company moved from a manufacturing-centric to more soft ware-driven business, there has been an internal initiative to transform its global culture and employee experience. At the heart of this initiative is design thinking in action, and it centers around taking the company’s customer brand promise — NCR makes everyday life easier — and turning it inward toward its own employees. Leaders across the organization are collaborating to change why and how work is done inside NCR. In essence, they’re asking, “How do we create an experience that makes everyday life easier for our incredible team?” The driving force in this culture and employee experience transformation is the idea of the consumer-worker. In simplest terms, NCR sees workers as the primary consumers of the NCR employer brand, and each day they actively consume an NCR experience. These modern consumer-workers have high expectations of employers, especially leaders, and they want customizable work experiences that are personally relevant and meaningful. When their expectations aren’t being met, they don’t hesitate to begin shopping and moving on to new employer brands that they feel better suit their own needs and dreams. W i n t e r 2017 • T a l e n t E c o n o m y

25


To help power incredible experiences for consumer-workers at any company, Andrea Ledford, the company’s chief human resources officer, outlined five actions — from what NCR calls its five-star model — that leaders can follow to create their own employee experience strategy and experiences using design thinking.

Discover

As the design thinking process begins with empathy, so does NCR’s five-star model. This first principle is grounded in listening and information gathering of all kinds, from the expectations of the business and its leaders, to the needs and desires of employees, to external benchmarking from the tech industry and other sectors. Main discovery methods include focus groups and surveys with leaders and employee groups from across the organization. The key is to listen with intent, to communicate what was heard and to take meaningful actions. “Our discovery process on a new leadership development experience started with business leaders that crossed levels, functions and regions,” Ledford said. “We wanted to understand what they liked and didn’t like about how leadership training is typically delivered. We also wanted to involve them from the start in the content development itself, especially our senior leaders who are being given

tomer experience industry, moments of impact are the make-it-or-break-it moments employers have to get right. The key is finding creative ways to use these critical situations to delight employees, address their most pressing needs and give them a positive feeling and memory — another common customer experience practice called emotional stamping. Using insights that were discovered to define key moments of impact, emotion stamps and opportunities to delight is a critical element of the five-star model. It helps companies ground every global experience in what really matters for the business and employees. It also helps deliver more return for the business by focusing time and resources on the moments and experiences that are the most important to transform and get right.

Develop

The next practice in the five-star model is to identify and develop employee personas for the company and key talent groups considered the most critical to execute on the guiding strategy of the business. This persona exercise is an important practice for any company or brand to take to heart. It helps leaders design more meaningful and consistent experiences by creating very clear, easily understood pictures of end users — in this case, employees. When done right, personas have names, and their stories feel like those of living, breathing people.

Companies are acting more like employer brand owners by influencing and listening to stories about how employees experience their work. the chance to influence the learning experience being designed for their teams and lower-level leaders.” When leaders make a genuine effort to listen to their people on a regular basis and take the time to discover what they’re really feeling and need, they can lay a solid foundation for a global employee experience that not only exceeds worker needs but is also beneficial for their business and employer brand as a whole.

Define

Grounded with a thorough discovery process, the next destination in the five-star model is to define employee moments of impact. A term picked up from the cus26

T a l e n t E c o n o m y • W i n t e r 2017

“We call every employee at our company an iNCRedible team member,” explained Ledford. “We felt it was important to use this enterprise talent persona to bring our shared values, behaviors and needs to life. These shared parts of our talent story were discovered and defined through our conversations with business leaders and employees. We now help the business recruit, onboard, develop and recognize our team with this persona in mind — every experience in our employee’s lifecycle is influenced by our iNCRedible persona. But we don’t stop there.” Deeper, more customized personas for priority talent groups can also be developed to help guide the design of


more relevant, personalized experiences throughout their life cycles. “Because NCR is transforming into a more software-centric company, we’ve prioritized certain groups like sales, service technicians and software engineers to help drive our business strategy forward,” Ledford said. “These more functional personas influence the design of

NCR experiences from its Summer Intern Expedition to its new Talent Scout employee referral program. Brands differentiate to stand out. Committing to an employer brand story and bringing it to life through talent programs and experiences helps create a unique message and space for companies in the global talent economy.

Deploy

Borrowing from design thinking, the deploy phase of the five-star model is where prototype and pilot experiences begin to be introduced to employees and discovery continues. It’s important to understand what’s working and what’s not when a new experience is deployed. The only way to do that is by observing and listening. “We’re clear from the beginning on how we’re going to measure success for the experiences we design,” Ledford said. “We deploy listening tools to collect feedback, measure progress and direct improvements. This part of the five-star process helps us stay true to our NCR promise to make everyday life easier for our iNCRedible team.”

everything from new training programs for our iNCRedible sales and services employees to better recruiting and candidate experiences for our software engineers.”

Differentiate

Every brand stands out on the merits of its story and how that story connects with the hearts and minds of its primary consumers. Companies must develop strong employer brands with clear identities and value propositions that resonate deeply with their consumer-workers and set them apart from competitors. “At NCR, one of the most important elements of our employee value proposition is the transformation of our business. In focus groups, we uncovered the sense of adventure our people feel who are on our reinvention journey with us,” Ledford said. “It helps us attract a certain type of worker, one who thrives on diversity, growth and change.” Adventure theming can now be found throughout many

Many companies wait until an employee experience is fully baked and perfect before introducing it to workers. They spend vast amounts of money, time and resources doing heavy lifting, only to implement solutions that are not exactly ready. Design thinking processes like the five-star model remind leaders of the importance of listening, designing with certain personas in mind and deploying experiences in agile ways. These ways of working allow employer brands to quickly begin addressing consumer-worker needs and problems, and also help employees feel a sense of influence and ownership in the development of the experiences themselves.

Leaders must learn to stand out in the talent economy by building world-class employer brands capable of attracting and retaining the most talented workers with the promise and delivery of an enjoyable employee experience. Design thinking can become the pathway to that memorable employer brand and work experience we all want to be known for. Kevin Finke is the owner and chief storyteller at Experience Willow LLC, an experience consulting firm based in Atlanta. To comment, email editor@talenteconomy.io.

W i n t e r 2017 • T a l e n t E c o n o m y

27


BY KENNETH NOWACK AND PAUL J. ZAK ILLUSTRATIONS BY JOHANNA GOODMAN

Trust is a leading currency in today’s talent economy. Here’s the science behind how leaders can cultivate it in their organizations.

N

umerous management books, articles and conferences have focused on the topic of trust. Trust is claimed to be some near-magical economic elixir explaining everything from productivity gains to enhanced happiness at work. But in reality trust is complicated and challenging to measure at an individual, team and organiza-

28

tional level. Fortunately, discoveries in neuroscience have provided new, rigorous, peer-reviewed and actionable insights into what trust is, how it can be measured and, most important, how organizations can build and enhance trust to improve their performance.

What is Trust?

The first comprehensive mathematical derivation of trust came from a 2001 biologically based model introduced by one of us, Paul J. Zak, and Steve Knack. It showed that trust reduces the transaction costs associated with investment decisions by increasing confidence in what the other party would do. In a sample of 41 countries, trust was among the strongest predictors economists had ever found to predict investment

T a l e n t E c o n o m y • W i n t e r 2017

and per capita income growth. Trust is an economic lubricant, reducing the frictions that often occur during economic activity. This same mathematical relationship can also be applied to describe interpersonal interactions within organizations. Trust is Chemical Is it possible that when we interact with others and perceive that they are capable, caring, ethical and predictably consistent in their behavior that some type of “switch” in the brain turns on to signify we should trust them? A turning point in the study of trust was the discovery of the role of the neurochemical called oxytocin. For more than 15 years, we have explored the neurobiology of trust, initially using a cooperative dilemma


W i n t e r 2017 • T a l e n t E c o n o m y

29


known as the trust game. In the trust game, participants are placed into anonymous dyads and randomly assigned to the roles of decision-maker 1 (DM1) and decision-maker 2 (DM2). Both DMs are allocated money as compensation for their time and pain from the experimenters — $10 for showing up and agreeing to have their blood drawn, and up to $40 based on their performance. Important for a study of trust, there is no deception in this experiment and DMs cannot contact each other before, during or after decisions are made. All interactions take place via computer while participants sit at desks with privacy dividers. After identical instructions, DM1 is prompted via software to send any integer amount (including zero) of their money to the DM2 in their dyad. Participants know that whatever is sent comes out of DM1’s account and is tripled in DM2’s account. The software then informs DM2 of how much money they were sent by DM1 and then prompts DM2 to send some amount back to DM1 (including zero). Transfers from DM2 to DM1 are not multiplied and constitute a dollar-for-dollar allocation out of DM2’s account and into DM1’s account.

Trust is an economic lubricant, reducing the frictions that often occur during economic activity. nerships or agreeing to work together on a project. Oxytocin signals that a person is safe to be around by reducing the natural wariness we have around strangers. Functional magnetic resonance imaging (fMRI) experiments have shown that infusing oxytocin in people results in a marked reduction in fear-associated brain activity.

This research approach allows for the quantification of Subsequent research has shown that oxytocin influences both trust (DM1 to DM2 transfer) and trustworthiness trust by increasing our emotional connection to others; (DM2 to DM1 return transfer). Zak’s idea was to obtain that is, our empathy. When our empathy is enhanced we blood samples before decisions to assess oxytocin. Zak’s are motivated to help others, even complete strangers. Adteam of researchers found that the receipt of money de- ministering extraneous oxytocin does not always enhance noting trust, but not money in general, causes the brain trust. In fact, when individuals who possess some personto synthesize oxytocin. Furthermore, the amount of oxy- ality disorders (e.g., social anxiety, trait aggressiveness and tocin produced predicts trustworthiness — the return of borderline personality) are given extraneous oxytocin, they money to the DM1 who had initiated trust. This shows show increased in-group bias and greater distrust in their that the intention behind someone’s actions is important. relationships with others. This research team also demonstrated the causal effect of oxytocin on trust by safely infusing synthetic oxytocin High Stress Inhibits Oxytocin into people’s brains (through A number of neurochemicals their noses). Those given synpromote or inhibit the brain’s FIGURE 1 thetic oxytocin, compared to oxytocin release. This means participants who received a plathat not every positive social Organizational Practices Leadership Practices cebo, trusted strangers with 17 encounter will be reciprocated percent more money and were as such. A primary inhibitor Oxytocin Release twice as likely to show maxiis a stress hormone called epimal trust by sending all their nephrine. During high stress, money to another person. epinephrine spikes heart rate and blood pressure, inhibiting Outside of our conscious our ability to connect to and Engagement Performance awareness, our brains seek the feel empathy for others. Interright balance between being estingly, though, it turns out wary of strangers and interactthat moderate stress increases ing with them. Cooperating oxytocin release. When we’re Retention Innovation with others puts us at risk of facing a challenge, we often exploitation, but it also allows turn to others to help us surus to derive value from such mount it. Well-being interactions. This value could be friendships, romantic partOther neuroactive chemicals, Source: Paul J. Zak.

Trust Culture

30

T a l e n t E c o n o m y • W i n t e r 2017


including the primary female hormone estrogen, increase a person’s sensitivity to oxytocin. Indeed, in every oxytocin study by Zak’s lab, on average, women released more oxytocin than men. This helps explain why women tend to connect more easily with others than do men and may actually have a leadership advantage. Nature has played a further trick on the sexes when it comes to oxytocin. A potent oxytocin inhibitor is testosterone, a substance that is five to 10 times higher in men than in women. In experiments in Zak’s lab in which synthetic testosterone was administered to men, compared to men on placebo, testosterone-enhanced males were less generous toward others but also demanded more from others. Testosterone makes all of us self-focused and selfish.

Consistency: I believe you will act in a predictable and reliable manner (i.e., behaves in a dependable manner that minimizes surprises).

Building a High Trust Culture

The neuromanagement challenge is to design a work environment in which oxytocin can be released many times during the day. Understanding the brain circuit that oxytocin activates has allowed us to derive a set of actionable ways to design organizational cultures that bolster and sus-

4 Cs of Interpersonal Trust Harvard Business School professor Amy Cuddy has been studying first impressions alongside fellow psychologists Susan Fiske and Peter Glick for more than 15 years, and has discovered some important patterns in these interactions. Two key dimensions are cited by Cuddy and colleagues that define the extent to which a person respects and will trust another: competence and warmth/trustworthiness. Of the two, trustworthiness appears to be the most important factor in how we actually size up and relate to others. Additional research from Roger Mayer, a professor at North Carolina State University, along with Professor David Schoorman from Purdue University shows that attributions of trust extend beyond just competence and warmth. They have found two other factors that each of us use when we meet and interact with others — the integrity/honesty of the individual and his or her expected reliability in behavior. These four attributes of trust are also necessary for teams to work effectively. In our own research and work, we refer to these four attributes, which are independent of each other, as the “4 Cs of Interpersonal Trust.” Capability: I believe you have the appropriate knowledge and skills (i.e., possess competence, knowledge and ability that make me trust you). Caring: I believe you are on my side (i.e., display empathy, warmth and caring about my wants and needs). Candor: I believe you will act with honesty and integrity (i.e., will follow through on your promises and not deceive me).

tain interpersonal trust. The causal flow is derived from an organization’s culture and leadership practices that produce opportunities for oxytocin release that builds trust between colleagues (Figure 1). The neuroscience experiments we have done identified eight classes of organizational and leadership practices that promote the release of oxytocin, increasing trust and sustaining high performance. The eight factors have been organized into a convenient acronym OXYTOCIN. Each factor contributes to building a high trust culture and increases productivity, engagement and retention of high-performing talent and will be briefly described below. 1. Ovation: Ovation recognizes accomplishments through praise. Social recognition in mammals causes the brain to release oxytocin, which then induces the brain’s reinforcement learning chemical, dopamine, to be released. Dopamine is part of the brain’s learning circuit, reinforcing behaviors so they are repeated in W i n t e r 2017 • T a l e n t E c o n o m y

31


the future. Public and unexpected recognition together are the ovation double whammy, causing both dopamine and oxytocin release. Both leaders and organizations that “catch employees doing things right” will create a culture where oxytocin is released enhancing rapport, cooperation and teamwork. Survey research from Bersin by Deloitte shows that “high-recognition companies” have 31 percent lower voluntary turnover than companies with poor recognition cultures. 2. eXpectation: eXpectation designs time-limited challenges for colleagues as a group. Group challenges stimulate the release of oxytocin and build trust among team members. Challenge stressors also improve engagement and job satisfaction. Leaders must be careful that challenge stress does not devolve into destructive chronic stress by setting clear objectives and end points. As we have seen in our own research, stressors that are uncontrollable and threatening tend to inhibit the release of oxytocin so it is important to set challenging but realistic goals. 3. Yield: Yield enables participative decision-making and celebrates mistakes as learning opportunities. Extensive research by Robert Karasek and his Job

32

responses found that 1-in-4 employees do not have the tools to be successful in their jobs. High transfer organizations let colleagues manage their work hours, vacation days, location of work and collaborations with others, treating them like adults rather than micromanaging them. 5. Openness: Openness shares information broadly with colleagues throughout the organization. In interpersonal interactions, self-disclosure and candor facilitates the release of oxytocin enhancing rapport and a reduction of the chronic stress associate with uncertainty. Openness drives performance by clarifying goals and giving colleagues the information necessary to make decisions like owners. Openness provides the most information to the most people so that they can perform at their best. 6. Caring: Caring intentionally builds relationships with colleagues. As social creatures, human beings naturally form relationships with others that serve as the foundation for trust. Those who do not empathize with others, dismiss their ideas and treat them with disrespect cause physical and emotional pain. Our own research confirms that employees who work in caring environments are more productive, innovative and less stressed.

Demands-Control-Support model support the importance of endowing colleagues with flexibility and control in deciding how work is done. Maximizing yield for employees minimizes threat stressors that inhibit the release of oxytocin.

7. Invest: Invest enables whole person growth. Investing in colleagues’ professional development is a key driver of job satisfaction. Talented employees who feel trapped often leave their companies to find new challenges elsewhere. Invest also recognizes that colleagues want to develop their personal and emotional lives. Invest embraces people at work as whole human beings, not as pieces of human capital. Organizations with an orientation to develop employees are 92 percent more likely to be innovative, 52 percent more productive and 17 percent more profitable than those with low learning cultures, according to Bersin research.

4. Transfer: Transfer allows people to choose which tasks to do that create value for the organization. This means providing the resources needed to be successful. Results from the 2014 TINYpulse Employee Engagement and Organizational Culture Report from more than 500 companies and 200,000 anonymous

8. Natural: Natural leaders are honest and vulnerable. Being natural demands that leaders not only talk about trust but are themselves trustworthy. Rather than dictate to others, natural leaders ask for help, solicit opinions and, when a decision is made, embrace outcomes whether the result is positive or negative. Asking for

T a l e n t E c o n o m y • W i n t e r 2017


help from volunteer-colleagues is the first step to being a natural leader. Natural leaders make those around them successful, taking a “servant-leadership” orientation and are more trusted by their colleagues than are hierarchical leaders.

Return on a Trust Culture

We have analyzed the advantages of building a culture of trust in a variety of ways. We ran two experiments that measured the change in oxytocin in blood, obtained survey measures of organizational trust and collected objective measures FIGURE 2 of productivity and innovation Low vs. High Trust from employees Outcome Quartile Percentage working in two Difference different compaEngagement +76% nies (N=148). We used these data to Joy at Work +60% develop a survey Job +56% we call Ofactor Satisfaction that measures organizational trust Productivity +50% and the OXYTOJob Retention +50% CIN factors that create it. Life Satisfaction

+29%

Sick Days

-13%

We then confirmed the predictive value of the Burnout -40% Ofactor survey in several ways, including using a nationally representative sample of 1,095 working adults in the U.S. We report the results of the latter study in Figure 2, comparing business-relevant outcome measures for the highest quartile compared to the lowest quartile of organizational trust. These results show that building a culture of trust directly improves employee engagement and profits. Correlations between trust and job burnout (Maslach Burnout Inventory) and engagement (Utrecht Work Engagement Scale) were meaningful and significant, providing evidence that higher trust cultures are psychologically healthier than lower trust cultures. Unsurprisingly, those who work in high-trust cultures report substantially more job satisfaction and plan to remain with their present employer longer than colleagues in low trust organizations. We also discovered that those in high trust organizations take substantially fewer sick days and report greater satisfaction with their lives overall.

What Can Organizations Do to Create a High Trust Culture?

We have described why trust is critical to succeed in the talent economy. By taking a neuroscientific approach to measuring and intervening in culture, leaders can create a culture that instantiates interpersonal trust and inspires performance at the individual, team and organizational levels. Here are 10 things leaders can do to build a culture of trust: 1. View employees as “volunteers.” Volunteers need to be engaged by the organization’s mission or they will move on. 2. Include a measure of joy at work as an important snapshot of your culture. Which division/location is most joyful? Which is the least? 3. Run an experiment by changing one of the OXYTOCIN factors and measuring the effect on joy, innovation, customer satisfaction or productivity. Repeat with another factor. 4. Create an “Ovation” committee and have them create a weekly peer awards program. 5. Disseminate financial statements (profit, loss, debt, etc.) widely with colleagues and be sure they can understand them; consider making salaries transparent within the organization. 6. Pay new hires to leave the company if they don’t feel they fit the culture after 30 days. 7. Conduct a “stay interview” annually for all colleagues focusing on professional growth and personal development. 8. Develop and implement a weekly “feedforward” performance goal setting and review check-in system. 9. Celebrate colleagues at every level who have contributed to the achievement of team and organizational goals. 10. Invest in programs that develop professional, personal and emotional goals including education subsidies, volunteering and appropriate work-life integration.

Kenneth Nowack is a psychologist and president and cofounder of Envisia Learning and Ofactor Inc., a management consulting firm. Paul J. Zak is founding director of the Center for Neuroeconomics Studies and Professor of Economics, Psychology and Management at Claremont Graduate University and also the chief research officer and co-founder at Ofactor. To comment, email editor@talenteconomy.io.


Tech Vs. You: Technology and The Talent Economy

34

T a l e n t E c o n o m y • W i n t e r 2017


BY ANDIE BURJEK, LAUREN DIXON, BRAVETTA HASSELL, FRANK KALMAN ILLUSTRATIONS BY ANNA JO BECK

Like the Industrial Revolution at the turn of the 20th century, today’s technology boom will upend industries and norms for generations. Its influence on the talent economy warrants intense executive attention.

E

ven before early humans crafted the first wheel, technology has been at the forefront of life. For centuries, civilization has propped itself up on the heels of innovation, whether it was that first wheel, the horse-drawn carriage, the automobile or aeronautics. And along with technological progress have come seismic shifts in the world economy, starting with the nature and role of human work. Today, technology is at it again, and, unsurprisingly, the effect of the current wave of innovation is transforming the nature of work as we know it. The rise of mobile connectivity and networked technology, automation, artificial intelligence, big data, among others, have both created and eliminated jobs and augmented others. It has spawned new ventures and lowered the barriers of entry to entrepreneurship — but it has also shuttered those windows that are no longer useful or efficient. Talent Economy editors explore how the latest wave of innovations is poised to transform every industry, the market for skilled talent and the future of business and society.

W i n t e r 2017 • T a l e n t E c o n o m y

35


Automation Every Industry is a Tech Industry.

O

n Oct. 7, 1913, workers at Henry Ford’s automobile plant in Highland Park, Michigan, rigged its first rudimentary assembly line. Using a crude, rope-based system, 140 workers stretched across the 150-foot line installed parts on the base frame of a motor vehicle as it dragged across the floor. The new process revolutionized motor vehicle production, dropping the assembly time for a single vehicle from 12 hours to about 90 minutes. The innovation also propelled the Industrial Revolution to new heights by improving the economics of manufacturing, norms around employee-employer relations and American consumer culture. In 2016, days after Ford Motor Co. celebrated the 103-year anniversary of the first moving assembly line, 50,000 bottles of Budweiser traveled across Colorado in a self-driving, autonomous truck named “Otto.” Owned by the popular ride-sharing firm Uber Technologies Inc., Otto represents a similar technological innovation poised to disrupt industries and cultural norms for generations. Just as the impact of the assembly line was felt far beyond motor vehicle manufacturing, today’s modern technology boom has far-reaching implications for every industry. While autonomous vehicles may soon be the norm in the automotive sector — Ford announced plans in August 2016 to have an entirely autonomous ride-sharing fleet by 2021 — the technologies behind the innovation are driving seismic shifts across industries. Advances in mobile communication and artificial intelligence have made self-driving vehicles possible, but these are just some of the burgeoning technologies that are also upending the wider economy. As a result, executives are shifting course not only in the kinds of products and services their companies aim to produce, but they also are cautiously eyeing how such innovations will influence the market for skilled talent.

36

T a l e n t E c o n o m y • W i n t e r 2017

Consider how today’s modern tech boom has influenced agriculture, one of the world’s oldest economic sectors. While firms like Uber, Tesla, Google and Toyota, among others, are just now ramping up progress on self-driving vehicles, farmers have used autonomous tractors for nearly two decades, according to Chris Rhodes, director of business development, crop cycle at AGCO Corp., a manufacturer of agriculture equipment based in Duluth, Georgia. “Farmers are leading-edge folks,” Rhodes said. Nascent agriculture technology focuses on using the data collected by tractors and other tools to help optimize crop yields and other performance metrics. And starting next year, AGCO plans to experiment with hologram-like images and other augmented reality tools to help workers in the manufacturing process, The Wall Street Journal reported in December 2016, further increasing the company’s reliance on emerging technologies. This means firms like AGCO are increasingly recruiting talent equipped with the same skills as those seeking jobs with traditional technology companies. Cargill Inc. is another century-old agriculture company increasingly reliant on similar technology. When asked what roles will be most critical for the company in the next five years, Mary Kynkor, Cargill’s vice president of talent and organizational effectiveness, said data scientist and cloud computing specialists are near the top of the list. “Technology is playing across all areas of our company,” Kynkor said. Much of what’s driving today’s technology boom is the enhanced ability to sort through and manipulate complex data sets — a task needed by every industry thanks to the explosion of data provided by mobile and networked technology. Because of this, artificial intelligence is a technology many predict as the basis for the next technological revolution due to its ability to make judgments off complex data sets. AI, along with its relative, machine learning, will play a heavy hand in the development of things like self-driving automobiles. But the technology is finding powerful use in many other fields, from email marketing to digital publishing, human capital analytics and workforce planning. The sales industry in particular is one profession that has experienced a transformation using AI. The job of any salesperson is to build connections with other people so as to help each side find value in a transaction. Therefore, it makes


sense that most sales relationships are typically built on people’s ability to communicate with one another, whether it is through telephone, fax machine, email or instant messaging. Today, however, salespeople are coming into an age where software programmed with AI can help streamline communication clutter.

Today’s modern technology boom has far-reaching implications for every industry.

Take, for instance, Conversica, a marketing firm that provides users an automated sales assistant. Carl Landers, the Foster City, California-based firm’s chief marketing officer, said Conversica’s software uses AI to email potential clients, read their responses to gauge interest and gather leads. This leaves actual human salespeople with more time to build relationships with customers, which ultimately leads to more sales based on automated work the software has performed for them.

Just because AI does the legwork for a sales staff doesn’t mean the job is easier. Landers said the job often becomes harder because the automated software technology provides people with more sales leads to act on. Most of Conversica’s clients end up having to add to their human sales staff to handle the increased workload, with sales professionals forced to sharpen their skills in some of the more complex areas of the job. For other companies, advancements in automation technology have allowed them to forgo a sales staff altogether. Such is the case with Atlassian, which sells project management and chat applications without a single salesperson. Thanks to low-cost marketing provided by the company’s website, Atlassian instead relies on internet word-of-mouth to sell its product. Not having to pay a sales force allows Atlassian to invest elsewhere, such as research and development, the company’s president, Jay Simons, told Bloomberg in May 2016. Thus is the looming threat posed by today’s modern technology boom: the loss of human jobs, or at least a drastic transformation of how people work. Although AI appears unlikely to wipe out the sales industry altogether, there are other sectors that are likely to be more directly influenced by continued advancements in emerging technologies. Cybersecurity is one such sector that’s emerged with increasing significance thanks to today’s technology boom. Nearly every company now uses complex computer systems to store information like customer credit card numbers, internal employee profiles and proprietary strategic plans. “There’s almost no business left in the country that doesn’t have to start worrying to some extent at least about

cybersecurity,” said Daniel Tauritz, associate professor of computer science at Missouri S&T in Rolla. As a result, more companies have built sophisticated teams of specialists to protect against data theft and other vulnerabilities created at the hands of technology

Another is retail. First, e-commerce upended the way in which people shopped, taking a largely in-store, in-person experience and moving it online. Now, robots and automation are disrupting the in-store experience yet again, this time coming at the expense of in-store workers. Amazon Inc., which led the initial e-commerce wave, is at the forefront again with its plan to create an instore grocery shopping experience with a checkout process devoid of human intervention. Hardware retailer Lowe’s Cos. Inc. is another example. Customers at a Lowe’s store can now stumble upon the LoweBot, which helps them answer questions and find certain products. Some industries are expected to grow immensely as a result of advancements in these technologies. Pharmaceutical companies now use computer models to better test human reactions to medications, decreasing time to get drugs to market. The textile industry uses computers to mock up and create custom cloth for designers. It also uses body-scanning technology to determine customers’ exact fit. An AI-enabled dress by Marchesa and IBM Watson also hit the red carpet at the 2016 Met Gala. Finally, just as manufacturing was the beneficiary of the technology boom at the turn of the Industrial Revolution, the sector again is among the core industries likely to change at the hands of modern-day innovations. Pace Industries Inc., a full-service die-casting manufacturer in Fayetteville, Arkansas, makes molds to produce parts for a variety of industries. When Pace first opened for business in 1970, the firm’s manufacturing process included a traditional assembly process with most of the company’s workers using trial and error, according to Kenneth Sandlin, vice president of health and safety at Pace Industries. Now, engineers use software to develop more precise computer prototypes, which are then molded using 3-D printers. Nearly every machine at the company’s 21 locations now has a computer on it, Sandlin said, which helps identify gas porosity during filling of the cast and other quality metrics, leading to a more consistent, higher-quality product. Using this variety of technology requires more technical W i n t e r 2017 • T a l e n t E c o n o m y

37


knowledge from Pace’s employees. “The days of going to any job and not at least having some form of contact with technology, I think are definitely passed,” Sandlin said. Employees now need to program robots and work with software. To find these workers, Pace works with colleges to educate students on these technology skills. Moreover, Sandlin said the firm often has high school students visit its plants to see how technology is used and to explore potential career opportunities. The company also sponsors a robotics team that interns during the summer to learn more about robotics and 3-D printing. Pace also uses digitized visual effects to layout its facilities. By standardizing the layouts and manufacturing processes and storing and tracking this information digitally, Pace is able to improve its efficiency as well as increase workplace safety. Pace was able to save $1.2 million in workers’ compensation costs between 2012 and 2015 as a result of improved workplace safety conditions. Sandlin said that money now goes toward educating current employees as well as toward partnerships with technical schools to develop a pipeline of incoming workers. “We’re able to take that money and reinvest it into our people, reinvest it into newer technology to keep our advantage over competitors that maybe aren’t grasping technology as quickly as we are,” Sandlin said.

Agility How Tech Has Reshaped the Skills Market.

T

he economy’s dramatic reshaping at the hands of modern technological innovation has vast implications for the market for skilled talent.

In particular, with changes afoot in almost every industry, the skills that companies will need now and into the future are likely to require equal emphasis on hard, technical skills and soft, management and leadership expertise. The manufacturing industry is again among the primary sectors experiencing transformation. For starters, the industry is having difficulty replacing a generation of talent with skills in traditional trade fields, according to Pat Dean, director of recruiting at industrial services company Advanced Technology Services Inc., based in Peoria, Illinois. For example, Dean said interest in tool and die-making — machinists who make jigs, fixtures, dies, molds and other tools used in the manufacturing process — is waning, making 38

T a l e n t E c o n o m y • W i n t e r 2017

it increasingly difficult for companies to find people to do the job, especially among younger generations of workers. Part of the problem, Dean said, is that the education system hasn’t encouraged students to pursue vocational careers. Instead it is pushing more young people to attend traditional colleges and universities — institutions that typically don’t emphasize education in trade or manufacturing skills. “Conventional wisdom as always been that these manufacturing facilities are dark, dirty, nasty places,” Dean said. This lack of a pipeline into traditional vocational fields comes amid a wave of innovation in manufacturing technology that has shifted the kinds of skills needed to work in the field. “From our perspective as a service provider to large manufacturing companies, we’re seeing a shift. The factory floor is becoming so much more tech heavy,” Dean said. As the industry does become more technology-heavy, Dean said one thing it is not doing well is marketing what the jobs are like today. Nowadays, manufacturers are not just looking for talent with skills in vocational or trade roles; they’re also in need of people with electrical and computer programming skills. Just like the shift in the agriculture industry, manufacturing needs to attract the kind of talent normally seen in traditional technology roles. Although traditional manufacturing jobs are still needed, the industry is experiencing a skills gap in technical jobs, like troubleshooting on the factory floor or the computers that run those machines. Another profession undergoing a skills transformation thanks to technology is the sales industry. Given the growth of startups in the technology sector, particularly pertaining to software, sales has become among the fastest-growing roles, according to Harrison Horan, founder and CEO of re:work, a Chicago-based firm that trains people without college degrees to sell software.


“Regardless of what people think is going to be done by machines in the near future, sales is something that still requires complex communications and thinking on your feet,” Horan said. And while technology has certainly helped sales professionals, the role is ultimately driven by complex human interaction — an area in which the industry is currently experiencing a lack of skills.

Communication is a skill that has experienced especially broad transformation thanks to technology, as the prevalence of electronic platforms has decreased instances of faceto-face human interaction and long-form written correspondence. Davin said this has hurt people’s overall ability to communicate and has put a premium on talent with strong skills in these areas.

For example, especially among younger workers, salespeople are becoming too “consultative,” Horan said. They’re getting worse at managing uncomfortable conversations around significant areas like pricing and handling objections, which can hurt the business. Another skill Horan said that is in need of improvement in sales is information processing. With the surge of internet content, it’s easy to get distracted, but it’s become more necessary to process new information quickly and deeply.

Bob Schultz, general manager of Smarter Workforce at IBM, the company’s human resources software division, echoed the importance of communication skills in today’s economy. He said talent with a holistic profile made up of both strong technical backgrounds and softer skills like communication and collaboration will stand out among recruiters. This is especially important since most companies, IBM included, now use personality assessment technology in the recruitment process. “It’s not about matching the resume to the key word search,” Schultz said.

The consumer products industry is also feeling the skills transformation, not just because of advancements in technology, but because of the global scale with which such enhancements have elevated many businesses. “We need people who can think and act on a global basis, even if their job is focused and regional because, ultimately, it all connects,” said Tom Davin, CEO at 5.11 Tactical, a uniform clothier for law enforcement, military and public safety personnel.

The level to which the modern technology boom has transformed business has brought about a need for leaders to change their skill palette as well. One major skill needed in

Experts remain bullish on technology as a supplement for vast amounts of human knowledge work.

Executives of companies like this should enhance their skills by mastering the complexities of global sales. This entails skills like doing the right market research to comprehend the needs of local consumers in different global markets as well as understanding the nuances of import duties, testing and labeling requirements. These skills don’t just apply to larger firms, either; smaller firms with modest overseas operations need to adhere to them as well. While some of these skills are specific to the consumer products industry, Davin said there are many skills required to operate in a more globalized business environment that apply to all type of knowledge workers. A few of these skills are critical thinking, collaboration and communication. The globalized workplace has created an environment in which people whose skills are rooted in creative fields need to learn to be more technical and vice versa. People with more creative jobs, for instance, are also now expected to understand the analytical side to their work and be able to use certain tools to improve their performance. Conversely, people in more technical-heavy roles are expected to adopt more soft skills.

this modern environment is the ability to adapt to change. Not only has modern technology upended traditional industry norms and the skills required to operate in today’s economy, but it has also sped up the pace of change. “Things are so fast,” said Yvette Cameron, global vice president of strategy at SAP SuccessFactors, a cloud-based human capital management software firm. “It’s not enough to respond to change and then relax. You have to build the agility to handle constant change.” James Cross, director of learning product strategy at Workday Inc., an HR management software provider, echoed the point. “More than anything, we need people who know how to go with the flow, learn new skills and adapt to a changing world,” Cross said. On an organizational level, companies can foster an adaptable talent pool by focusing on building stronger learning W i n t e r 2017 • T a l e n t E c o n o m y

39


and development functions, Cross said. That starts with leaders making sure that their organizations are adequately funding learning and development, especially programs around leadership development. SAP’s Cameron cited a Leaders 2020 study the company recently conducted with Oxford Economics showing that most corporate leaders are ill-prepared to operate in today’s digital economy. The study, which surveyed thousands of executives from companies around the world, found that barely half of them think their senior leadership is proficient enough using technology. It also suggests that, as a result of this deficiency, many companies are approaching a “leadership cliff,” where they don’t have enough ready-now leaders in their talent pipelines.

As early as 2013, researchers from the McKinsey Global Institute had identified 12 disruptive technologies with the potential to reshape the future of how humans live and work. They are: mobile internet; automation of knowledge work; Internet of Things; cloud; advanced robotics; autonomous and near-autonomous vehicles; next-generation genomics; energy storage; 3-D printing; advanced materials; advanced oil and gas exploration and recovery; and renewable energy. Taken together, application of these technologies could have a potential economic impact between $14 trillion and $33 trillion a year by 2025, according to McKinsey.

Modern technological innovation has vast implications for the skilled talent market.

For companies to thrive in today’s modern economy by attracting, developing and retaining talent with the right skills, leaders need to be more hands-on in evaluating how technology is continuing to transform the talent economy. Above all, that includes spending more time understanding how each generation is developing their skills along with technology so leaders can adapt their companies’ cultures as a result.

“Leaders have historically been clandestine about what the next step is in people’s careers,” Advanced Technology Services’ Dean said. “It’ll have to be a more open environment in the future, [with leaders] talking to employees about the type of things they have to do to get to the next role in their career.”

Foresight Technology and the Future of Work.

T

echnology’s impact on long-held industry norms and the market for skilled talent is just the start of a wider conversation about the role it will play in society going forward. But for leaders to fully comprehend the ways in which their organizations will need to adjust to this new environment, it is first important to understand the extent of the change these emergent technologies might bring.

40

T a l e n t E c o n o m y • W i n t e r 2017

While all of these technologies are poised to inf luence how businesses operate, there are a few in particular that appear bound to have a more profound effect on the future of the talent economy.

First, the mobile internet has already had the most overwhelming impact on the talent economy in recent memory. Thanks to increasingly inexpensive access to mobile computing and internet connectivity, workers have not only become more productive but they are now better equipped to start new and unforeseen ventures. The rise of the gig economy is a prime example of how mobile technologies have created a new tool for entrepreneurs and new market for talent. As of June 2016, about 0.9 percent of adults in the U.S. labor force actively earned income from these platforms, according to a November 2016 report from JPMorgan Chase & Co. This not only includes platforms like Uber, in which people with cars log into an app to give people rides, but others like Airbnb, eBay and Etsy — platforms that allow users to leverage mobile connectivity to sell goods (eBay, Etsy) or earn passive income from acquired capital (Airbnb). Second is the automation of knowledge work. According to a 2013 Oxford University study, close to half of the 700 occupations its researchers examined are at risk of being overtaken by robots in the coming decades. But, as the researchers at McKinsey point out, the automation of knowledge work extends beyond the emergence of robots. It includes using AI and machine learning technology to allow software to complete certain routine tasks formerly completed by a human. And according to the McKinsey Global Institute study, the additional labor productivity of automation could soon equal the output of 110-140 million full-time workers.


For instance, technology such as Robotic Process Automation, or RPA, software helps companies move information from one system to another with limited human intervention. The legal sector uses similar technology in the discovery process, where automation software wades through piles of legal documents to help attorneys find relevant information. Finally, as evidenced by companies like Conversica, automation can be used in sales and marketing to streamline communication and other administrative busywork so sales professionals have more time to make the kind of complex human connections required in today’s business environment. The third is the advancement of robotics. Even as studies continue to point out the potentially jobs-killing role robots could bring to the talent economy, many experts remain bullish on the technology as a supplement, not a replacement, for vast amounts of human knowledge work. According to the McKinsey study, the key applications for the future of robotics technology appear concentrated to the industrial/manufacturing and service sectors. Food preparation, cleaning and maintenance, robotic surgery, human augmentation and personal home robots are among the core applications the advisory firm considers most relevant to the future of the technology. Pat Geary, chief marketing officer at Blue Prism, an automation software firm with offices in London and the U.S., said his vision on how robotics will influence the future of work is one where these technologies don’t entirely displace humans but frees them up to take on more complex problem-solving and other strategic initiatives. “You can immediately focus a whole bunch of digital workers on a completely new task,” Geary said. Still, even as robots have the potential to make human work more strategic, leaders should remain cautious in how they integrate the technology, said Mary Lacity, a professor of information systems at the University of Mis

souri-St. Louis who has studied how companies have used robots and automation technology at work. “There are companies that will come in and say, ‘I’m going to use RPA to slash my headcount,’ ” Lacity said. “They may end up with employee sabotage; they may end up with it not working.” Robotics’ inevitable rise will force many to learn new skills entirely. This will put a tremendous burden on companies’ human resources functions, write the authors of a 2016 report from research and advisory firm Accenture, The Promise of Artificial Intelligence: Redefining Management in the Workforce of the Future. Those who fail to learn new skills to complement the impending robotic boom will be included among the job churn. This is especially the case for lower-skilled workers with little access to education or the ability to learn complex skills quickly, according to Ian Barkin, a co-founder of Symphony Ventures, a business automation consulting service headquartered in the U.K. “I would imagine it would be a challenge to take someone whose primary job is one of transaction processing and turn them into a data scientist,” Barkin said. “It’s just not what those particular folks went to school for or know how to do.” The onus, therefore, falls on executives to prepare their organizations for this quickly approaching workforce transformation. The first step, according to Mike Cook, human resources services research director at HfS Research, is for leaders to be wholly accepting and adaptable to change. He also said leaders should open up communications channels within their organizations. Breaking down too many bureaucratic layers and encouraging more open communication can improve processes and worker efficiency. Cook said executives should also engage with their industry peers in conversations on how to adapt and take advantage of the changes to come with the future workforce. Finally, even as robots and automation threaten the future of human work, Cook said leaders must continue to focus on an employee-centric workforce model. Human talent remains the most powerful driver for any organization. Therefore, for leaders to fully embrace the changes likely to come with emerging technologies, it’s important for them to remain invested in developing and retaining human talent. “Talent really defines businesses right now,” Cook said, “and I think it’s absolutely archaic that we see so many C-suite executives who still see their workforce as a cost. It’s ridiculous in today’s age. That mindset is changing.” W i n t e r 2017 • T a l e n t E c o n o m y

41


BY MICHELLE V. RAFTER ILLUSTRATIONS BY JOSH LaFAYETTE

Employer branding has come a long way from its early days as a marketing offshoot. Here’s how two companies are employing sophisticated tactics to ensure their brand is front and center amid the war for talent.

T

hree years ago when Thermo Fisher Scientif ic Inc. was struggling to attract enough candidates to meet an ambitious goal of doubling its workforce by 2020, the Waltham, Massachusetts-based lab equip-

42

ment company turned to Charlotte Marshall. Marshall wasn’t some rock-star recruiter known for filling thousands of job requisitions through stellar cold calling and her skills cultivating passive candidates. She was an employer brand and social media manager at Life Technologies Corp., which Thermo Fisher acquired in the same year for $13.6 billion. Marshall joined Thermo Fisher as part of the acquisition as the company’s first employer brand specialist, tasked with helping propel its talent acquisition capability toward its 2020 hiring goal. Today’s talent acquisition strategies incorporate tireless teams of recruiters and hiring managers, expansive market-specific candidate prospecting and sourcing, reams of

T a l e n t E c o n o m y • W i n t e r 2017

demographic data and specialized workforce planning experts — all to help C-suite leaders secure the people they need to propel their companies’ futures. The newest function of the corporate talent acquisition apparatus is a discipline known as employer branding. Given a macroeconomic environment that has produced a growing skills gap and tightened the labor market for skilled talent, companies are investing heavily in brand messaging campaigns not just to sell products and services to consumers but also to sell themselves as compelling places to work. The practice has been complicated by the spread of technology and globalization. U.S. businesses are going global, and the proliferation of mobile phones and social media have


W i n t e r 2017 • T a l e n t E c o n o m y

43


made it harder for organizations to project consistent brand messages to the public both at home and abroad. As a result, more organizations are getting behind a single, unified image to represent both their products and their workplace culture — and they’re using a widening arsenal of tactics to promote it. Still, as standard strategies for creating and maintaining a corporate image for recruiting purposes evolve, many companies are only now figuring out the importance of their employer brand. According to 2014 research from human resources analyst Aptitude Research Partners, 1 in 4 companies is unsure about their employer branding, half are unhappy with the technology they’re using to support it and 62 percent expect to increase their investment in employer branding in the next year. Furthermore, employer brand is becoming more of a companywide endeavor, not something exclusively owned and operated by HR. From 2009 to 2014, HR ownership of employer brand dropped from 46 percent to 38 percent, according to Employer Brand International, an industry consultant. Today, depending on the company, employer brand activities are managed by HR, talent acquisition, marketing, communications, operations or a combination of those functions. C-suite executives are paying more attention to the function as well, and as they do, employer brand leaders are using a wider variety of

metrics to measure results to justify the costs to the corner office.

The phrase “employer brand” first appeared in the corporate lexicon in 1996 to describe how a company’s unique products, operations and work environment distinguish it from other organizations and how that reflects on its status as a desirable place to work. Even though it’s still a nascent field, employer branding has become big business. Companies can hire consultants to nurse bruised brands back to health after public relations catastrophes, or help them rebrand if a merger or acquisition renders their former image out of date. Employer brand agencies and technology providers, including a growing number of startups, can assist internal teams to manage recruitment marketing, social media and other functions employer brand departments are responsible for. The reasons for pouring resources into a company’s public image are well documented. An organization with a positive reputation for its products, social responsibility and workplace culture can establish itself as a desirable entity. A 2011 Reputation Institute study of 100 global companies found that a positive reputation gives a corporation an edge over its competitors in attracting sought-after candidates, keeping valuable employees and solidifying relationships with customers and investors. Larger enterprises are most likely to have some form of employer brand strategy. But the concept is catching on at middle market and smaller organizations as well, especially for companies in technology, finance and other industries, where competition for new hires with in-demand skills is especially fierce. Early employer brand campaigns came in the form of top-down directives that relied on recruitment advertising to project the image a company wanted to create. That changed with crowdsourcing, social media and Generation Y job seekers, also known as millennials, who have grown to be the largest contingent of the U.S. workforce

44

T a l e n t E c o n o m y • W i n t e r 2017


and who demand more transparency from their employers. Today, branding campaigns are more likely to be bottom-up affairs that start with employer brand teams polling employees and monitoring websites such as Glassdoor to gauge how an organization is perceived. Digital is also playing an increasing role in how millennials interact with corporations, challenging reputation managers to “proactively manage their corporate story to be accessible, engaging and relevant to tomorrow’s influencers,” according to a 2014 study by Nielsen, a market research firm. Based on that groundwork, corporate employer brand teams come up with an employer value proposition, or EVP, a kind of mission statement that explains a company’s purpose and values they then use to craft or improve their image, or employer brand.

Whether top-down or bottom-up, shaping an employer brand is no small feat. To show leaders how employer brand efforts are played out in practice, we profile two companies of different sizes and scopes, Thermo Fisher and General Electric Co. Before 2014, Thermo Fisher never had an EVP or employer brand — and was suffering as a result. By failing to distinguish itself from competitors in biopharma and other industries, the Fortune 500 company was hampering its inability to attract the volume of candidates needed to hit its 2020 hiring goal, according to Marshall, the Thermo Fisher employer brand leader. Coming up with a unified message wasn’t easy for a company that makes a million products, operates in 50 countries and has an equal split of white- and blue-collar workers, half of which are outside the U.S. “There’s no way a factory worker in Japan experiences the same thing as a corporate finance person in Waltham,” Marshall said. Because science is Thermo Fisher’s business and, by extension, identity, Marshall decided upon coming on board to take a scientific approach to establishing the company’s EVP. She surveyed a representative sample of employees on their perceptions of the company, including polling people with varying jobs and years of service. Marshall then interviewed 13 top C-level executives for their insights and ideas. She also conducted employee focus groups in company outposts around the globe, specifically targeting employees in jobs that matched the company’s most urgent hiring needs. Marshall used an outside research firm to help her ana

lyze the results against industry benchmarks, paying close attention to areas where employees scored the company 10 percent to 15 percent higher than average, indicating its superiority in those areas. Traits for which the company stood out, such as continuous personal development and the bond employees feel between their personal and professional life, became some of the main tenets of its eventual EVP and employer brand. Marshall next looked for employee stories that could highlight those characteristics and bring the EVP to life, particularly stories she could use to attract candidates to job openings the company was struggling to

Organizations are getting behind a single, unified image to represent both their products and their workplace culture. fill. For example, Thermo Fisher was losing European sales representative candidates to competitors. Marshall made a recruiting video featuring a sales representative who had joined Thermo Fisher from a competitor and whose 6-year-old son had Type 1 diabetes that was being helped by drugs the company produced. “To be able to say, ‘This is why I come to work every day, it’s not just building an app or working for a tech company, but working to help children like my own,’ sends a powerful message,” Marshall said. Since starting Thermo Fisher’s employer brand campaign, Marshall has compiled a library of 40 employee stories available on the company’s career site. She’s also updated the site and trained 26 people working in recruiting, HR, marketing and internal communications on what the company’s EVP and employer brand are and how to deploy them. Initially a team of one, Marshall now oversees a brand representative covering Europe, the Middle East and Africa; another in the Asia Pacific region; and two U.S.-based assistants. Employer brand initiatives such as Thermo Fisher’s aren’t cheap. A 2015 Harris survey commissioned by Glassdoor found costs vary by company size, averaging $129,000 W i n t e r 2017 • T a l e n t E c o n o m y

45


and reaching $335,900 for organizations with 3,500 or more employees.

Sarah and Owen characters talking up working at GE to show to job candidates.

Marshall wouldn’t disclose Thermo Fisher’s spending other than to say it’s been a “large investment.” “I’ve built employer brands at four other companies and this is the first that gave me the time and resources to do everything right,” Marshall said.

Zilich was also able to preview GE’s main TV commercials before they aired to some of the more than 10,000 employees who are GE brand ambassadors, a volunteer army she relies on to talk up the company online. Zilich, who now leads a four-person department, trained 5,000 of those employee brand ambassadors in 2015. She estimates about 1,000 are “heavily engaged” and regularly share posts about the company and promote job openings. To give them material worth sharing, Zilich uses recruiters, talent acquisition specialists and salespeople worldwide to write about new research, deals or customers. Her employer brand team also sends an email every Monday morning recapping GE news from the previous week. The team uses tools such as LinkedIn Elevate and Hootsuite to manage social media outreach.

Consumer brands have an edge when it comes to corporate reputation and image, because people are more likely to know their products and businesses can use that familiarity to tag on their employer brand.

Businesses such as Thermo Fisher that market to other businesses have a tougher challenge because people — including potential employees — aren’t as familiar with them, so using products to promote their employer brand is more complicated. When companies change the business they’re in, it complicates things even further. General Electric found itself in that situation when the company spun off multiple product lines, including its well-known household appliance division, to focus on building aviation, energy and other industrial equipment.

Employer brand efforts aren’t one-size-fits-all, as even companies with uniform global corporate cultures have to take into account local customs, laws and workplace norms in the countries where they operate. Being a global company adds a step of complexity to it, but the process of creating an employer brand is the same, said Jody Ordioni, chief brand officer with Brandemix, a brand marketing agency in New York City. Ordioni counsels the com-

Branding campaigns are likely to start with employer brand teams polling employees to gauge how an organization is perceived. After such a significant pivot, the $117 billion conglomerate needed to overhaul its image to attract the workforce it needed going forward. “People think we still make toasters,” said Shaunda Zilich, GE’s employer brand leader. “How do we make a software engineer want to work for GE instead of Google and Facebook? That’s the bulk of our messaging right now, the why. Why pick GE?” Coming up with an answer to that question was challenging, especially considering that when Zilich was hired in 2012 she was a one-person department with zero budget. Zilich was fortunate to ride on the coattails of a massive, marketing-led corporate rebranding campaign that was already underway. For one, it allowed her to piggyback on TV commercials GE had crafted to rebrand itself as a “digital industrial” company. In the commercials, which began airing in 2015, actors playing employees “Owen” and “Sarah” explain their new GE jobs to their families. Zilich filmed spots with the same 46

T a l e n t E c o n o m y • W i n t e r 2017

panies she works with to look through the characteristics of their employer value proposition for things that exist worldwide. “Make sure the employer brand architecture is the highest common denominator that can exist globally,” Ordioni said. To ensure GE’s efforts are optimized for the company’s global workforce, Zilich manages a 35-person employer brand council with representatives from every business unit and geographic region where the company operates. The council has monthly conference calls that are recorded so employee brand ambassadors can listen on demand. Some council members work on employer brand 25 percent of the time, others more. GE’s operations are so vast, Zilich said she can’t apply the full employer brand strategy everywhere and relies on local council members to figure out what will work in their locales. Brand ambassadors in China, for example, closely


monitor WeChat, the social network app that’s become ubiquitous in that country. She didn’t use the “Owen” recruiting videos in some countries because the character uses self-deprecating humor, which doesn’t translate well to all cultures. Because GE uses LinkedIn to attract potential job candidates worldwide, Zilich needed to increase the number of employees outside the United States on the business network. She offered one-hour, voluntary LinkedIn training to all GE employees and encouraged them to build profiles that included descriptions of why they liked their jobs. In the first 12 months of trainings, 50,000 GE employees created profiles, including many outside the U.S., where LinkedIn isn’t as popular. It brought total GE employees on the platform to 170,000, about 78 percent of the company’s workforce.

Thermo Fisher still depends on traditional measures to analyze the success of its employer brand efforts. In the first four months of its employer brand campaign, the company saw time-to-fill drop 47 percent, to 52.5 days, and cost-per-hire fall more than 60 percent, to $417. Other positive changes included a 123 percent increase in traffic to a newly redesigned careers site, 162 percent

GE also exemplifies the tug-of-war between marketing and HR over responsibility for employer brand duties. Zilich came from marketing, but at GE her function is part of talent acquisition and she reports to both that team and marketing. Having a marketing background made it easier to get marketing to respect her ideas, but even so it hasn’t been easy. “We still struggle,” she said. “I tell people, talent acquisition and marketing are friends. They’re not necessarily holding hands yet, and sometimes they have little fights, whereas before they didn’t acknowledge each other.”

As employer branding and image campaigns have become more sophisticated, so have the tools companies use to measure their success. Companies commonly gauge the return on investment of employer brand projects by noting the amount of time it took to fill job openings. They also track how much money it took to fill an open job. But talent acquisition thought leaders and corporate brand practitioners are beginning to recommend looking beyond time-to-fill and cost-per-hire to more business-focused data points to measure success — metrics likely preferred by executives in the C-suite. John Sullivan, a well-known human resources author, speaker and San Francisco State University management professor, suggests data on better-performing new hires, the increase in workforce productivity and increased retention are all worthwhile gauges. He encourages employer brand practitioners to convert business impacts to dollars. “With this conversion into dollars of revenue, you can also show that each dollar invested in employer brand has a higher business impact and ROI than other HR programs, so that your EB effort can receive better funding in the future,” he wrote in an April 2016 blog post on his website. 48

T a l e n t E c o n o m y • W i n t e r 2017

increase in click-thrus to online job applications and a drop in applications needed to generate a hire, from 280 to 126, Marshall said. After the first of GE’s “Owen” TV commercials aired, the company says it saw an 800 percent increase in applications. However, more applications don’t necessarily equate to attracting the right talent, and Zilich said she still has to prove she’s done that. “We don’t have that figured out yet,” she said. Zilich believes source of influence — the website, social platform or referral where a candidate hears about or applies for a job — is another critical measure of employer brand ROI. In October, Zilich was onboarding a customer relationship management system that will let GE track up to five sources of influence per candidate. “Until we can start measuring for that I am not sure we’ll see ROI on employer branding,” Zilich said. Michelle V. Rafter is a Portland, Oregon-based business reporter covering workplace issues and technology. To comment, email editor@talenteconomy.io.


Be first. Be fast. talenteconomy.io


PORTRAITS BY MIKE CENTENO

BOTTOM LINE QUOTES OF NOTE FROM THIS ISSUE “The days of going to any job and not at least having some form of contact with technology, I think are definitely passed.” — Kenneth Sandlin, vice president of health and safety at Pace Industries | Tech Vs. You, Page 38

“The simple fact is that employees spend more time each day in relationship with their employer than with any other business or brand in their lives.” — Kevin Finke, owner and chief storyteller, Willow LLC | The Experience Engine, Page 24 50

T a l e n t E c o n o m y • W i n t e r 201 7

“Trust is an economic lubricant, reducing the frictions that often occur during economic activity.” — Kenneth Nowak, president and co-founder, Envisia Learning | Brain Trust, Page 28

“There’s almost no business left in the country that doesn’t have to start worrying to some extent at least about cybersecurity.” — Daniel Tauritz, associate professor of computer science at Missouri S&T in Rolla | Tech Vs. You, Page 37


HIGH POTENTIAL core competencies for emerging leadership Leadership matters. Organizations spend millions of dollars identifying and developing employees with leadership potential. Despite all this effort, most high potential programs fail because employees with leadership potential often go unnoticed. And the people that do get noticed don’t always have what it takes to succeed. Hogan’s High Potential Report is the only tool that identifies the strengths and shortcomings that make or break a leader, and sets the stage for developing emerging leaders. Supercharge your high potential program with the science of personality.

hoganhipo.com

Talent Economy — Winter 2017  

Like the Industrial Revolution at the turn of the 20th century, today’s technology boom will upend industries and norms for generations. Its...