The following is a conversation between Josh Bersin, the Founder and Principal of Bersin by Deloitte, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: The way work gets done is becoming increasingly important for both companies and nonprofit organizations. In fact, in many organizations, the role of HR is becoming less about compliance and more about productivity and employee engagement. One of the leading authorities in the world around these workplace issues– and the very future of work itself– is Josh Bersin, the Founder and Principal of Bersin by Deloitte, and he’s with us now. Good evening Josh, and welcome to The Business of Giving.
Josh: Thank you Denver. I’m very excited to be here to talk about all these wonderful topics.
As the economy goes up and down, and social issues change, and economic and political issues change, they affect the workplace tremendously.
Denver: Let’s start with: Why don’t you tell us about Bersin by Deloitte and what your firm does.
Josh: We are a research company, and we study and interview and meet with hundreds and hundreds of HR professionals and business leaders around the world and try to pick up on best practices, trends, new ideas in technologies. We’re also an analyst firm. We also study the technology markets around talent and work and HR. Then we develop research reports and studies and opinions, and I give speeches on all this, and we try to stay ahead of what’s going on in the world of work. It changes every year. As the economy goes up and down, and social issues change, and economic and political issues change, they affect the workplace tremendously. So, we’ve been in the business about 18 years, and it seems like it’s never going to slow down.
Denver: It’s just getting faster all the time. Very exciting space to be in.
Let me ask you about this, Josh, and that’s the war for talent that is going on. Nonprofit organizations enjoy the monopoly of sorts in attracting people who are purpose-driven and really want to have an impact and make a meaningful difference. But that is no longer the case with companies embedding social good into their core operations and into their very business models. This has caught a lot of nonprofits flat-footed. What advantages do you think nonprofits still hold? And what advice would you give them as to how to be competitive in this war for talent?
Josh: It’s an interesting problem, and particularly now with the unemployment rate so low and the job market so hot. People could leave a nonprofit and go to a regular company, and probably get a raise pretty easily. I think the biggest thing that nonprofits offer that most profit-making corporations still don’t offer is a true mission and purpose and set of programs around social good.
We just published an enormous research report last week called The Rise of the Social Enterprise, which really makes the point… the case… that profit-making companies have to take a social perspective. Even given that, only about a third or less of the companies we surveyed really felt that they had a social mission or social purpose. Most companies are in business to make money. For people that feel that they are at a stage in their life, a stage in their career, a stage in their personal growth, where they really want to give back to society? I think nonprofits are very very attractive, but in the case of the job market? I think nonprofit organizations have to probably compete more than ever for benefits and salary and engagement and provide value to people so they will spend time there. We’re going to talk about this a bit later; it doesn’t matter what kind of organization you are, profit-making or not, if you can’t build what we call an irresistible work experience, people won’t work there regardless of your mission. There’s still plenty of work to do.
First is making sure that the jobs and the work itself is meaningful to people and that we have the right people in the right jobs.
Denver: Speaking about engagement, there has been a lot of money and time and energy expended by organizations over the past decade to increase employee engagement. Whether you’re looking at Gallup or you’re looking at Glassdoor, the numbers have hardly moved. They’re stuck in the 30%… maybe a little bit higher… for those people who say that they’re truly engaged at work. Why has this been the case, and what do you think has to happen in order to move the needle on employee engagement?
Josh: It’s funny, I agree. I’ve looked at the data a lot. Since the 2008 recession, we haven’t improved engagement at all. Things were pretty bad in the 2008 recession. Companies are still struggling with that. The reason is most organizations…it depends on the leadership. The top leaders have to reach a conclusion, either early or later in their careers, that they are in the people business. Certainly nonprofits know that, but a lot of products and service companies don’t. Without taking care of your people, you can’t take care of your customers, your clients, your constituents, your shareholders, whoever it is that you think about. That means building an organization that creates… we really have five principles for that.
First is making sure that the jobs and the work itself is meaningful to people and that we have the right people in the right jobs. The second is having good management and leaders that listen and take care of people and coach people. The third is the work environment that is productive and not overbearing and difficult. These days with all the emails and messages and activities we have, most people are pretty overwhelmed at work. The fourth is giving people opportunities to develop and grow. Everyone at all stages of their career– from the very beginning until the very end– are always trying to find ways to do better and learn, and the organization has to support that. The fifth is to give people a sense of purpose and mission and trust from very senior leadership. What I have seen in all the years that I have been in business and doing HR is that companies go through cycles where leaders get this, or they don’t get it.
Sometimes, when they’re growing really fast, they don’t get it, and they don’t care because they’re making a lot of money, and they just churn through people, and then later they realize during bad times, that they didn’t take care of the people well enough. So, there’s a cycle to it. People move into leadership roles, including in nonprofits oftentimes because they are good at their job, not because they understand the complexities of being a leader, and they learn how to be a good leader over time.
So, there’s this constant maturing and rethinking of how we’re treating people going on. But I would say just generally across all the businesses around the world, it seems more and more of our work is becoming social and community and people-oriented because machines are automating more and more of the traditional operational tasks that we do at work, that a focus on employee engagement is becoming more important than ever. I hope people are thinking about this, although the data doesn’t always seem to show it. These are keys. If you think about those five things that I just said, if you’re not dealing with all five of those things, you’re going to have some form of an engagement issue.
Denver: There’s some concern in the sector that there’s a pretty significant data divide between nonprofits and business, and I think part of that has been caused because IT has always been considered an administrative cost and nonprofits wanted to keep their overhead cost down and be able to attract funding. But that, thankfully, seems to be changing. But part of that technology leg is an HR technology, and that’s a field that’s flush with capital and is really changing at a very rapid clip.. What are some of the innovative technologies that have you really excited in the HR field? And what should an organization who’s lagging start to do to help close that data divide?
Josh: HR technology is incredibly complex. In some sense, it’s getting more complex because there’s more of it. We’re getting into well-being programs and social-recognition programs and different forms of performance management and so forth. But what’s getting better, and what’s getting easier and what I think really plays to the needs of the nonprofit is you can buy a Cloud-based, end-to-end talent and HR system for a very modest cost today. You could not do that a decade ago.
Obviously, you need to have a payroll system, so that you get people paid. Past that, there are dozens and dozens of small, medium business systems now that really have almost everything you need in one platform. That’s what I would encourage a nonprofit to do, is go to the companies that are selling you payroll, and ask them: who do they work with that provides an end-to-end human capital management system in the Cloud. Because if it’s in the Cloud, you don’t really need an IT department by the way. You don’t even need to work with IT. I won’t mention the vendor names, but you’re going to find quite a few; a lot of them are dedicated small, medium-sized businesses. They have very easy to use interfaces. They can handle everything from onboarding to training to performance appraisals to career-oriented platforms, learning. All of that stuff is built in that wasn’t available 10 years ago. Once you get to the point where you have 10, 15, 20 people, I think you should look at one of those and just make the investment because it absolutely pays off.
Denver: You’re around HR all the time. How is the role of HR, which I think is increasingly being called human capital or people operations, how is that changing? And how will it continue to change into the future?
Josh: If you’re a small nonprofit, you probably don’t have an HR department. You probably have a bunch of people doing it in their spare time, but you eventually reach a point where you need an HR manager or HR person. And they’re originally going to be dealing with recruiting and hiring and onboarding and creating an employee handbook and some of the basics– making sure people are getting paid. Then all of a sudden, you’re going to have to deal with salary reviews and performance management and coaching; and all of that stuff is critical but not sufficient. Those are the basics, and most HR people understand the basics and understand they have to do those things.
But today, I think the bigger direction for the HR professional is to think about productivity. What are we doing in HR to allow people to better do the work that they’re doing and make sure they’re in the right jobs? That’s not something that might come out of your list of things to do Day 1 as an HR person. But of all the other things you’re doing, if they’re not contributing to productivity, I think you have to ask yourself why you’re doing them. There are certain legal things you have to do for compliance, but every time you get into the softer issues of engagement, culture, compensation, or rewards, career management, coaching, management development, think about what is the mission of this organization. And are we making it easier and easier for people to do the things that we want to do and not getting in the way? Because there’s the tendency for HR people to build all sorts of wonderful HR programs that after a while turned out to be great for HR, but seem a little bit like overhead to their employees. That’s my warning. Just make sure you don’t go down that path by accident.
…we tend to perform best when we work in small groups, because in small groups we get to know each other. We can communicate better. We trust each other. We can have more personal relationships, and as soon as you reach that level of trust and understanding, productivity shoots up because you know you can communicate very, very quickly.
Denver: I visit a lot of nonprofit organizations, and I speak to the people about how work gets done. Cross-functional teams are always at the center of that conversation. How are teams changing the workplace; and through your observations and your research, what makes a really high-performing team?
Josh: That’s really an existential issue going on in big companies right now. What I’ve learned from the research I’ve done in all the companies I’ve met is there’s some fundamental human nature here. Human beings are tribal animals. We tend to perform best… A lot of psychological research has proven that we tend to perform best when we work in small groups, because in small groups we get to know each other. We can communicate better. We trust each other. We can have more personal relationships, and as soon as you reach that level of trust and understanding, productivity shoots up because you know you can communicate very, very quickly.
The older, more traditional way of setting up a business was around a functional hierarchy where we had a sales department, we had a marketing department, we had the engineering department, service department, whatever. And you are a member of that department, and you worked your way up. Your career was within that business function, and you might get to work on that team that’s launching a new product, or a team that’s trying to sell a big deal or solve a particular problem with a particular client. But that’s a sideline. The main job was to do the thing you were supposed to do.
It’s turning out now that everybody is really doing projects all the time, and most of the time, you are on a cross-functional team, and that is where your work is getting done. If you’re in a nonprofit that’s delivering services to a community of some kind, you’re not doing it yourself. You’re doing it with other people. Other people in your organization are helping you. So, we need to reorganize all the HR stuff around the team and strengthen the tools that we have to assemble teams, manage teams, and evolve teams because teams come and go.
In the old functional hierarchy, the sales department never went away. But a project team begins and ends. And when it begins, we have to staff it, and when it ends, we have to move the people to a new team. We can’t lay them off. So, there’s some pretty fundamental changes in the way we manage people and the way we organize the company around teams. I would just say for any nonprofit, the more you can encourage people to work in small groups, the more you’re going to see higher performance. So, it is absolutely a trend. I think in most nonprofits, you’re probably finding more teaming happening than in most big business because in most big businesses, things are very functionally siloed.
Denver: I have the good fortune, Josh, to speak to a lot of CEOs on this show, and a number have admitted to me that they really need to reorganize their organizations to become more agile and less hierarchical but they simply do not know how to go about it. What they do is they just keep putting it off. Where would you suggest they start?
Josh: I think it’s a little bit harder and a little bit easier than people think. On the harder side, people think they have to reorganize their whole company and implement holacracy or something like that. That’s not true. You can take the current organization you have and tell people that I want you to spend some percentage of your time working on cross-functional projects, and we are going to decide what those projects are together, and we are going to give you the time to do that, and we’re going to staff accordingly, and we’re going to reward you around the results of those projects. Instead of the old model, which is you got your 9-to-5, 40-hour-a-week job, and on the side, I want you to join this project and do this nights and weekends …which I may or may not hold you accountable for. Maybe I won’t. Maybe that project will just disappear and we won’t even know what happened to it. I can’t tell you how many project teams I’ve been on,we worked on a bunch of stuff, created a bunch of whatever… PowerPoint …or whatever it may be, and then nobody ever did anything with it because it wasn’t real.
If you’re the head of an organization, you’re in the position to do that. You’re in a position to say, “This project is important, and I’m asking you guys to work on this, and I’m going to free you up from your current responsibilities to give you time to work on this, and we’re going to watch and help you. We’re going to hold you guys accountable for fixing whatever it is you’re doing.” That actually is a very liberating thing for people to hear, as opposed to, “Oh, by the way, I want you to be on this team in addition to everything else you’re already doing.”
Denver: It’s just like in the best organizations I’ve been around, they actually give their managers time to manage. Instead of just throwing it on top of all other work they expect them to do.
As you know, one area of great concern that many people have is what will technology, robotics, and AI do to our jobs? Will they augment them and create new and different opportunities for people? Or are we headed for a very disruptive period, one where people will become increasingly obsolete and replaced by machines? You study this issue an awful awful lot. What’s your take?
Josh: It’s completely the opposite. It’s so funny how the press got this completely wrong. The opposite is happening. The more machines we have, the more jobs we create. We’re actually creating jobs faster than ever. Look at how many jobs that are created every month. It’s a hundred to two hundred thousand dollars of jobs a month. Because what’s happening is, when you automate something, you create scale. First of all, you eliminate routine work, which is usually work that wasn’t very good for people to do. And then you create scale.
So, all of a sudden, more work can get done, and there are more needs for people to provide service or sometimes train the machine or improve the operations around the machine. But we have to be willing to reorganize the way we get our work done. If you’re an X-ray technician, and the X-ray machine gets smarter, you don’t get laid off. People aren’t going to be walking in and getting their own X-rays. You’re going to be doing other things. You’re going to be spending more time with the patient, spending more time interpreting what the machine is doing, operating it.
That goes for when you’re an accountant, whether you’re a sales person, whether you’re a marketing person, whether you’re an IT person, automation is your friend, and it gives you the opportunity to add value in new ways. The example that’s commonly used is the automatic teller machine. The automatic teller machine was invented in the ‘80s. I used to work for IBM, and everybody talked about shutting down branches. There are more bank branches now; something like three or four times as many bank branches now as there were in the 1980s because what the ATM did was expand the scale of transactional services that people can do at their banks, and now they go into the branch, and they get sales support. They get customer advice. They get consulting. They get all these other things that are better jobs than the tellers that used to sit behind the counters and just take your check and stick it in an envelope.
And the economy’s proved this. The more automation you go; amazon.com, for example, which is considered to be one of the most automated companies in the world is expected to have a million employees within the next five years. The tricky part is, sometimes the new jobs are different, sometimes they’re in different locations. Sometimes they’re in big cities where the old jobs are in small cities. So, there is dislocation. Each company or each organization has to protect people and give people enough tools to move into these new roles. But most of the jobs that are created as a result of technology are new for everybody. They’re new for people in the company, and they’re new for people outside the company. This idea that you have to lay people off to reskill for these new jobs is not true. Research just came out of the World Economic Forum in January which showed that something like 70% of the new jobs that are created by automation are reskillable within six months within your company. I don’t buy it, that all these jobs are going to go away. In some cases, they are, but in general, there’s more jobs being created.
Denver: Just one more case where the pundits got it wrong.
Let me close with this, Josh. You’ve been around and studied the workplace cultures of countless organizations. What are the common threads of those companies and organizations that have the most healthy and robust corporate cultures?
Josh: There’s a couple of things that’s come up for decades. One is leadership. Leaders have an outsized impact upon the organization. So leadership behavior, leadership communications, trust, values, transparency. It doesn’t matter whether you’re making money or you’re nonprofit, you have enormous responsibility to create a culture that brings people along in the direction you want to go, and that’s a responsibility that leaders have that they sometimes learn over time.
The second is a sense of purpose, and particularly in nonprofits, but this is true in businesses too. People these days, particularly young people, are a little bit wary; the; trust levels in general in the workforce are down. The people don’t trust the political system. They don’t trust the economic system the way they used to. Young people are concerned about their economic future. They want to trust their employer. So, you as the manager or team leader or senior leader… whatever your job may be, think about why we’re here. What are we trying to do? What is the bigger problem we’re trying to solve? How are we helping not only our customers and clients, but society? And communicate that. You’ll be amazed at the impact those kinds of conversations have.
The third, I guess what I would say, is just fairness. The theme of our research conference last week was what we call The Rise of the Individual. Every individual in every organization has the ability to deliver and perform and contribute in incredible ways. These old HR practices, the putting people into 9-box grids and rating and ranking people are really kind of obsolete. Thinking about everybody and giving everybody a chance to have a growth mindset, and giving people the opportunity to develop and learn from their mistakes, those are the principles of high-performing organizations in the future. And that is a little bit of a different way of thinking about management and leadership than there has been in the past. That sense of inclusion and fairness and thinking about people as having an ability to grow is really fundamental to success today. I think nonprofits in particular have the opportunity to really leverage all those ideas.
Denver: Absolutely. Josh Bersin, the Founder and Principal of Bersin by Deloitte. I want to thank you so much for being here this evening. Tell us about your website and some of the information that visitors might find there.
Josh: We’re part of Deloitte, so we’re part of the world’s largest consulting organization. We are a special group within Deloitte. Our website is bersin.com. You can see all sorts of great stuff there. We do a lot of webcast and communications and blogs and articles. I’m on Twitter and LinkedIn, and you can follow a lot of the stuff that I do. We would love to hear from you, whether you’re a nonprofit or small or big, whatever organization you’re with, we’re here to help you.
Denver: You turned out some great stuff, and I enjoy it all. Thanks Josh. It was a real pleasure to have you on the show.
Josh: Thank you Denver.
Denver: I’ll be back with more of The Business of Giving right after this.
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at http://www.facebook.com/BusinessOfGiving