Episode 22 Transcript
The Changing Labor Market & Impact of Shifting Talent Pools w/ Brent and Banoo
Brent Trimble: Welcome again to the Professional Services Pursuit, a podcast featuring expert advice and insights on the professional services, industry and travel. And today, I'm joined by my co-host Banoo Behboodi for a new segment that we're excited to introduce. It's also exciting, I think, because we both get to converse. Banoo’s a great colleague, very erudite, and hopefully we’ll have a really fun conversation today. One of the topics we're going to explore is really just this notion of the changing labor market and the different dimensions of the service industry as it pertains to talent. There's a tremendous amount of research and a lot of sources in our industry, some of which we sponsor, but a great paper, a quarterly by McKinsey, was published back in July, and we think a lot of it's really relevant to what we're seeing and hearing in the market. The report is titled, ‘The Great Attrition is Making Acquiring Harder. Are You Searching The Right Talent for this?’ And Banoo we talked a little bit about this and thought some of the recurring themes within we've been experiencing and hearing about with our clients, so give us kind of your take on the article and some of the highlights that you emerged.
Banoo Behboodi: Let me start by saying I'm extremely psyched for this session because you're right, we don't typically get to converse together, so it's going to be fun, but it was a fascinating read in the way they analyze. I mean, everyone is talking about the attrition that's going on, the challenges with recruiting that a lot of companies are facing. But what I loved about the article was the way in which it's structured it's data and research in categories of individuals. Tthey basically categorized the groups of people or the bucket of people that you can go after as traditionalists, do it yourselfers, idealists, caregivers, and I love that categorization because it made sense then when you went deeper down on what really motivates individuals, right? Because ultimately the whole process starts with recruiting the right people and if you recruit the right people for your culture, for your values, for the company values, and keep them engaged with a purpose, then you should be able to control the attrition. You should be able to keep people excited and going and to understand who is excited by what's in these demographics of do it yourselves versus idealists versus caregivers. I found that a very interesting way of analyzing the data and presenting things back.
Brent Trimble: And again the title for our listeners because we encourage you to check it out it's, ‘The great attrition is making hiring harder. Are you searching for the right talent pools?’ And it's interesting, I think we're recording this here in early August. And while there's this sort of just cacophony, I guess, of recession, supply chain upheaval there's this dichotomy or paradox that while there certainly are signals of economic growth slowing to your point, what we're hearing and seeing in talking to our clients certainly is that the great resignation in the share of folks who are looking for more meaningful work and then conversely, firms attracting them, retaining them is still at this 24 month high. It's almost right back to where we were at the beginning of the pandemic. That could change, obviously, right? There could be a dramatic downshift in hiring, but workers and folks know all types of industries, this is really interesting in the article, I think it was one of the headlines, really, 40% of workers globally say that they might leave their jobs in the near future. Dramatic and staring into the teeth of a recession coming through a really tumultuous time in the pandemic, it really seems to me that I mean, the nature of work has forever changed.
Banoo Behboodi: I think what has happened is people are not afraid of stepping out of the traditional path that they started with and therefore they're exploring. And the trick becomes how you look for talent, potentially not in areas that you traditionally would have looked for them, but how do you look at and excite people that are traditionally not targeted for positions, for example, in service delivery that you would have normally done. So it's interesting in that you can't follow the same conventional ways of recruiting if you're targeting these people that are actually looking for alternatives. They want flexibility in life, they want to be able to care for, you know, depending on if their caregivers or which category they're in, their priorities. You've got to be able to tailor to their priorities to be able to attract and keep them.
Brent Trimble: Certainly early in my career, you know, I had the benefit of some great mentors, and even then I think back to times of just cataclysmic business slowdown. The dot com bubble housing crisis, but there was a really great mentor who told me even in times of churn and tumult, good people are ultimately always hard to find. And to your point, I think folks are just not afraid to take a different then normal sort of linear path. And there's nothing like someone really being empowered in their own career to really just take charge and say, I want something different, I need something that fits me better, whether it's a more integrated style of work into my life, what I'm worth that has more meeting. And one of the things I thought was really interesting in the McKinsey article, and of course it's McKinsey who brought us so many great frameworks over the years, like the GE Matrix and the Seven S, they categorize nuances within the great resignation trend. One is reshuffling, where they're noting that folks are just quitting their jobs but going to completely different industries. So migrating to a completely different new path. Maybe they're going to temporary work, they're going to maybe more of a consultant type arrangement, job sharing, starting their own business. And probably all categories are be reassessing the demands of life, caring for loved ones, reevaluating and maybe looking at all this time that traditionally they would have spent either commuting or business travel of far flung places now saying, let's fill this with something else. And I found that really fascinating.
Banoo Behboodi: Yeah, I agree. I agree. But then if you look at what is driving that change, it's interesting because ultimately they're doing what they're doing because they're looking for either more flexibility or more meaningful work that means more to them and their work life balance, or it could be compensation, but it was for me, it was fascinating that one of the number one elements that that seems to be more motivating to any of those groups that I mentioned based this study is workplace flexibility. And we seem to have stepped into a completely revolutionized way of looking at what workplace flexibility means. And I believe that if we can be creative in offering and giving options to these different teams that are looking for opportunities, we may be able to attract the talents from groups that we traditionally wouldn't have thought about.
Brent Trimble: That's completely true, and I liked how McKinsey really wove these trends and extracted these trends around things like meeting and direction, newness, fulfillment into what's normally a very staid kind of data set of employment and resignation, and then people not being fearful of resume gaps or taking more of a lateral type of move to learn a new type of industry and so forth I thought it was fascinating. And before we get into more of the article, did we have the benefit to, you know, you and I work with dozens of service companies, whether it's I.T. management consulting or creative marketing services or strategy firms who have to field dozens and in some cases thousands of people to transact client work. I have some anecdotes of folks here telling me, what have you been hearing from our clients and prospects?
Banoo Behboodi: It's interesting, right? A lot of clients that are coming to Kantata this point is because making it easy for their teams to do what they have to do, such as automation. Providing more automation is part of increasing or improving that quality of work for the client. So one of the number one objectives or outcomes that we hear many of our clients speak to is sort of, yes, enhance productivity, but colleague delight in automation. I find that more and more companies are looking for what does that mean? What does that experience look like? They get they're directly getting feedback from their teams to understand what is broken, what's not working, what tools can help, where can they make things more efficient? And then based on that, filling those gaps and that's where a lot of clients are coming to us and we're helping them in the professional services industry at least.
Brent Trimble: Yeah, it's almost as if having the tools to transact work and something we talk about with some of our clients and, I know you do as well, around this notion that good operations and automation often helps build the conditions for success, b trying to mitigate things like frustration and too many manual processes is one piece of a pretty extensive puzzle to guide things like retention. What I found, and maybe that's a good kind of segue into you talked about the personas that McKinsey calls out. The way to target the employee value proposition, is that this old adage, and you may have heard it, that people don't necessarily leave positions, they leave what they consider bad management. You know, the workplace shift over the past few years, the move has been with the millennial workforce and now the subsequent generations coming on line that that relationship of constant feedback and enablement, the old sort of boss managerial to employee relationship has really shifted. I mean, I knew when I started off working years ago this my boss came and talked to me many times over. It was usually because I was in trouble, right? And that's really changed, but it's that notion of the perception of bad management really forcing a change and this is still constant, but they begin to tease out a bunch of others other personas and reasons to target retention.
Banoo Behboodi: Yeah, actually it's interesting that you bring this up because we have a podcast that's coming up, it hasn't aired yet with Carrie Young, and we talk about the whole concept of career development and advancements, which is, by the way, in the study. That's one of the big motivators of any of these groups. It may be in different places in terms of priority, but it is one of the top motivators is career development and advancement and what companies are doing for them from that perspective. But the point is not everyone is positioned to be a manager. It takes a certain skill set and talent to do that. And so advancement, there should be paths for individuals that are comfortable being individual contributors to also make career advancements. And I think that is very important to make sure that you don’t position people in managerial positions that are not prepared or ready for it, which then in turn has serious impact to experience the colleague experience for those who are reporting to that manager. And then, you know, we have it all the time Brent, at Kantata, right? Our H.R. team does a great job of offering different types of training for managers, making sure that they're prepared for all announcements and change management and how they're communicating those but, it was fascinating in this study, not surprising, but fascinating that a big part of reason provided for why individuals are leaving and looking for other options was they had bad managers.
Brent Trimble: Yeah, it's in the study, top reasons for quitting previous job, a full year of data, lack of career development and advancement, 41%. Inadequate compensation, of course important, 36%, and not total compensation, of course, not just being someone's cash right? Benefits, support, those types of things, uncaring and uninspiring leaders, 34%. And then it begins to trail into things that we would think is more commonplace, lack of meaningful work, unsustainable work expectations, unreliable and unsupportive people at work, lack of workplace flexibility. So if an enterprising individual who's in charge of their own career development looks at this, it's usually not just one of these, right? But it could be two or three of these conditions really drive them to change.
Banoo Behboodi: Yeah, precisely. The other thing that I found was fascinating is Kantata did a recent survey that hasn't really been published, hasn't come out yet, but will be called, ‘Changing Dynamics of the Modern Workforce.’ And what they identified is 90% of full time employees, and that's that participated in that survey, indicated that without a proper professional growth path that they don't really see having any loyalty to a company that doesn't offer a professional growth path. So again, being able to be engaged have proper growth paths, whether that's investing, we talked about compensation being number one reason or number two reason for people leaving. And compensation is comprised of not just salary but all the other perks, including professional development. What is the investment that is being made in professional development within the company and other things like health care, everything that makes up a full compensation package. I think those are all very enticing type statistics just to know where and how you structure your benefit plans to make sure that not only you attract the right people, but you retain them.
Brent Trimble: To the point around folks still voting with their feet and lots of mobility. Again, you know, recording this the first week of August, I guess second week of August, the labor statistics and the reading on the economy very much came out last week and noted that we had really returned to just about full employment and there's a lot of talk now about, of course, what’s the Federal Reserve going to do it's really struggling to sort of cool off the economy without causing a type of really deep recession. There's all this conflicting data, certainly slow down macroeconomic data, interest rates rising, less borrowing, housing markets beginning to cool. Inflation's still stubbornly high, yet we're nearly at full employment and we're also potentially in recession. And I know there's a lot of sort of political banter around the actual definition of the recession and so on and so forth, but we have the benefit of talking with lots of clients and talking to service industries. And service industries inevitably are very headcount heavy because they're product is their people in most cases, have you heard from clients any hints of slow down or still struggling to attract or maybe the inverse because a little bit of the top is taken off the market, there is better talent that normally might have not been available to go.
Banoo Behboodi: Yeah, I've got to tell you that at this point, there is still a lot of energy that we see with our clients in the market. So I think maybe in some months we'll get the sense of potential slowdown, but my experience has been most of the clients were speaking to are scaling are in growth mode still and that's one of the reasons that they are looking for automation is because they want to be able to be positioned to scale and provide better experience, as we talked about before. But generally my experience, I don't know what I know, you're also dealing with a lot of clients, but generally I'm not seeing what I'm hearing out in the market yet in that, you know, a lot of the clients that we deal with there is still a lot of energy and excitement about the growth they're planning for us. What about you? What's your experience been like?
Brent Trimble: Well, it's the same in, you know, for our listeners, of course, we work together, we collaborate frequently, but we cover different sectors of our business. So it's a little bit of a focus group of two here, but I think there's strong anecdotes. I'm seeing the same kind of sentiment. There's maybe the hints of some caution in service industries because of course, whenever there's a hiccup in spending that does trickle to certain service groups, service industries really quickly, and that sometimes results in headcount reduction or slowdown in hiring, sometimes a mix of both. A large client, for instance, in a marketing services firm, might cut a media spend dramatically and that trickles down to the fee. And then with the media services or strategy firm, instead forecast. But so far, looking at quarterlies and some of the earnings of the Accentures in the Deloids, on the marketing services side, the WPPs, very, very strong. Now, those are several month look backs, but still hearing the same struggles to fill seats, frankly.
Banoo Behboodi: It all comes back to talking about, again, career development and advancement. Everyone was in hypergrowth hiring or looking to hire. There may be positions put on hold now, but at the end there may be a slow down period that everyone has to work through. And some of the conversation we've had with clients and prospects is how they focus on cross training during this period, right? How do you use this slow down to make sure your talent can step in and be able to accommodate unexpected events or be able to step into someone else's shoe in covering different skill sets. So there is a lot of opportunity to use that same base of colleagues and employees, and use the slowdown period to actually build up the team so that they're ready to go when the economy picks up because it will pick up.
Brent Trimble: I'm glad you brought that up, it's interesting. I joined, in my current role at Kantata, just six months or so before the pandemic. So had that initiation, got all of the clients, hypergrowth and then of course, we essentially voluntarily shut down. There were many trillion dollar economy for a period of months and there was an initial shock and we didn't really know what was going to happen. And certain clients just aggressively downsized, some really paused on a lot of their planned initiatives and just said we're going to go into a, just a period of just doubling down on what we've got because we really don't know where this is going to lead. And then it wasn't long, I want to say, less than a quarter to the sentiment that you bring up around focusing on training, focusing on operations, using a bit of a slowdown as a period of time to recoup. We really saw that coming out of those first few months of the pandemic. Service firms almost to a T and it was regardless in my experience, probably dealt with more than 100 clients during that first year. We're saying we are going to grow this period has shown us the value of things like automation and really maximizing the value of who we’ve got taking care of our employees, working on retention. But I wonder if we're going to repeat this pattern again. You know, a bit of a slowdown, use the time, recoup a bit and build the conditions for success in the future.
Banoo Behboodi: Brent, I'm curious, one of the other things that was fascinating about our study, meaning the Kantata study and the survey that we did in the context of the McKinsey article as well. It was fascinating to me that in this survey 61% of senior leadership said that they spent a third or more of their time dealing with employee turnover issues. Can you imagine, like when you think about senior leadership and things that they have to be focused in ensuring the success of company operations and objectives and a third of their time being spent in dealing with employee turnover. That in itself was fascinating to me and it highlighted the opportunity with me getting creative to make sure that not only are you attracting the right people for your business, but doing what it takes to keep them motivated and engaged so that they stay with you and you can retain them. What do you think about that?
Brent Trimble: I mean, tremendous tax on time. And you think of the opportunity loss for firms that could be thinking about innovation, starting a different practice area, preparing for a potential downturn, and for our listeners, the study we commissioned was just released and it's on our blog and the title is, ‘New Research: Business leaders spend nearly half their time coping with employee turnover.’ The senior executives at professional services firms spend 40% of their time each day dealing with employee turnover and more than half, 53% have a problem hiring full time employees. So I think the older way of working and coming up in different consulting, leadership roles, growth, and of course the prevalence of in-office work and I think of, you know, another mentor I had, who said when you reach a certain size in a services firm, whether it's consulting I.T. strategy or marketing services. You build a firm 50, 75, 100 people, you're really still in that business of delivering great work, insights, innovation. The reason you're growing is incredible, clients come to you for solutions, but when you dip over that scale, she said this mentor of mine, you really in the people business. And every day you roll up to the office and there's like, you know, kind of a deli counter, right, of anything from grievances to challenges that employees need help solving requests for investments and so forth. So this puts that really in stark relief. I wonder of course again, we focus on the services industry, so people being the product, it's tremendous. There was another stat in there that I thought was really interesting, which was that something like 43% of folks who are currently FTE employ are considering leaving their jobs to become their own agent and become their own freelancer or spin up a small consultancy of their own, in an even more recent piece of research that sort of backs up the McKinsey article.
Banoo Behboodi: It's going to be fascinating to see where this movement is going to go in terms of individuals leaving full time employment, going to contracting and being their own sort of bosses, if you have it. And I think it goes hand in hand with not having optimal experience where they are as full time employees with leadership and mentors. So I think if we can offer that, then we can offer leadership training so that the managers are managing and providing the leadership coaching that's necessary. If we can provide the flexibility that someone who is self-employed can have, then we're giving reasons for individuals to think twice about leaving, because obviously there's risks inherent with being your own boss as well. And any individual who's making the decision is weighing the pros and cons. And we've got just got to make it more difficult for them to make that decision if we want to retain those individuals who are considering going on their own. That said, I mean, there is trends all the time between going for a full time in companies, hiring more contractors and then going more towards full time depending on where the economy is and what makes sense for the business. So that's been a long term up and down and change in hiring practices.
Brent Trimble: Just saying this jokingly for our listening audience, I think Kantata as a firm really put a stake in the ground around employee development and retention in the pandemic. And then, of course, going through different business cycles resulting in our merger, we've had some attrition just like any firm over the years, but for those listening, I think we are content with Kantata at the moment being able to talk and listen and help strategize with other firms. It is a fun kind of time to be part of this dynamism and helping give solutions for helping firms maximize their resource but, a McKinsey White Paper wouldn't be complete without a snappy conclusion. So I'll just rattle a couple off, that there are three points how do firms address attrition and then ultimately attrition. They note to sharpen the traditional employee value prop and that's the folks who are FTEs want career development a path to ascension. Second build a nontraditional value prop for those folks meaning flexibility culture different form, to your point I think is really great one, different forms of career progression and make it more personal. And then third and lastly, I think this is really important too, because the notion that companies can broaden their talent sourcing approach, looking at folks with nontraditional backgrounds who might not be looking, maybe they want to reenter the workforce back, but they would engage for the right mix and dimension of work. I think these are really cool sort of salient points that leaders can identify, and I think you've got some podcast episodes coming up around things like AI to source candidates. And I read an interesting article, it might have been in the Wall Street Journal recently around how some of the gatekeeping technology really has to transform because it's missing people with nontraditional backgrounds and folks with maybe a resume gap or being left out. But I think these are really good points. You know, look beyond that traditional vertical career path person and there's probably a really good reservoir talent out there.
Banoo Behboodi: Yeah, and the episode you're referencing is episode 20 with Sean Kogan actually that we talk about a number of interesting concepts around recruiting, but the role of AI in it. So I invite our listeners to, if they're interested in the topic, to look for that. Episode 20 but this has been fun, Brent, we should do this again.
Brent Trimble: We should, we should, And I always learn something, it's always a distinct pleasure. For our listeners, in addition to the episodes we referenced and a few coming up, we have a webinar that's co-hosted with the TSIA called, ‘Staying Ahead of the Changing Dynamics of the Modern Services Workforce.’ So you can look for that on our website, that's upcoming. But as we close, I'd love to hear personally what's in your quiver of reading as we're in the last throes of summer.
Banoo Behboodi: Well, Brent, I know last time we talked was when you were introducing me as a co-host, you asked me that question and I said, well, I'm about to read the, ‘21 lessons for 21st century.’ And I have now read it and I highly recommend it, it's a fascinating read. So I don't know if you know Noah Harari, but he's a historian, so he puts the whole A.I. we talked about A.I. and everything else. He talks about the impact, what life and politics and everything else could be in the world of biotech and A.I. and it's fascinating, scary, exciting all at the same time. So it was really a good read, recommended, I was I was going to come back and say whether I enjoyed it or not, highly recommended. So what about you? Anything you want to share with the listeners?
Brent Trimble: I love to read. I read all kinds of stuff. I'm also a history buff, so I'm getting through a very dense, extremely detailed, annotated historical account of the US Army's Pacific War Odyssey in 1944. So I saw funny tiktok, I think my wife shared with me, which is that it was the guys said something like when men reach a certain age, middle age, you have a couple of choices you can really get into World War Two history smoking me in your backyard and starting a podcast. So I haven't started a podcast, but I am a I'm a frequent guest and host. But what's interesting about the book is that when you when you think of World War Two and everything that followed, 70 years of relative calm as it pertains to no world wars, you think of the Marines kind of their island hopping campaign and going to your Hirojima, Guadalcanal and so forth. But the army mobilized, massive men, manpower material on their way to the ultimate victory and Japan's surrender. So John McManus has written extensive historical accounts of that period, this one, some chapter two or three, maybe the pool, but it's really good. But I'm going to go to something lighter once I get through this.
Banoo Behboodi: I'm always so impressed by the vocabulary that you use. So I know that has to come from a lot of reading and reading of a lot of historical books and books that many people may not be interested in, but I know you are.
Brent Trimble: Yeah and in our podcast, we've got some authors coming up. We've had a few authors as guests, we have a few more coming up, and I always tell them I'm the guy who still buys in hardcover, so. We all have college tuitions to pay for them so, this has been a great episode. I think we should we should do this every half dozen or so for our listeners again, the quarterly we referenced from Mackenzie's, ‘The great attrition is making hiring harder. Are you searching the right talent pools?’ And then again, welcome you to go to the Kantata website and look at some research we just did, canvasing hundreds of business leaders in professional services, and that's going to be the subject of a webinar incoming with TSIA. Yeah, this has been great as always for our listeners. Thank you for joining, we love doing these and have the opportunity to have conversations. If you have questions or topics relevant to the services industry like us to cover, you can reach us at podcast Kantata dot com.