Episode 5 - Retain, retrain and transform

Transcript

Laura Hinton: Welcome to the latest episode of our Forces at Work podcast. I'm Laura Hinton, Head of Tax, Legal and People at PwC, UK. And I'm delighted that you're tuning in. We're living through an era of extraordinary change, with so many forces at work. Technologies, such as AI, are becoming more powerful and intuitive. The geopolitical environment is complex and fast-moving, and the world and our clients are more interconnected than ever before. It's a really exciting time to be in or entering the workforce. But what does this look like for the workforce in reality? And how can organisations start planning their journey and navigate through this rapid pace of change? So, I'm delighted to be joined today by Alistair Woods, a Partner in our Workforce business, to discuss these important questions. There, in terms of the framing, lots of change, you know, the pace of that change is accelerating. Lots of clients acknowledge that there's change, but what does that look like, how does it feel, what are we seeing on the ground? It'd be great if you could just bring that to life.

Alastair Woods: Yes. Part of the answer is actually what we're about to see. Because we're living through it, it's often quite hard to think about how things are changing so fast. But for you or me as consumers, parents, how we book our holidays, how we engage in anything, it is increasingly digitalised, but that has a knock-on effect on the workforce. I suppose in an organisational context, it's come down to gradual evolution of roles. How jobs are changing, incrementally, I suppose. I think that will ramp up over the next few years. I think operations are being streamlined and made more productive by technology. There are also the other forces at work, like the pressure to be net zero, and the employee experience dimensions. There are so many multifaceted pressure points that mean organisations are trying to navigate a path through all of that. Can I just give you one example to bring it to life. As you know, I'm close to reward, and the comp round for any organisation is typically quite a manual exercise in, 'We've got this budget approved by finance, how do we manage that through individuals, against their pay bands, into payroll.' That, for example, will be transformed over the next few years, where you set up through data, and you've got your rules around where we want to pay, individual performance, market positioning, pressure points and skills, and AI will make decisions for you.

Laura Hinton: That's a good thing?

Alastair Woods: It's a great thing, that's a great thing. Then you can get that in the human lens, 'Oh, do we do this, what's the right answer here etc?' But I can see how that, the manual, quite process-heavy exercise which has lots of risks and actually extracts a lot of time from management, will go. So, that is, as you say, quite exciting. I think we're on the cusp of that.

Laura Hinton: Yes. And it's interesting, I was having this conversation with a client just this morning around, how we've thought a lot about technology. Particularly, generative AI and what does that mean. But I think a lot of the conversations have focused on what can their technology do, what are the use cases, how do we use the tech? But actually, I think the interesting question is, what will the people do when a lot of their current tasks have been automated or are delivered by AI? And I think some of those forces that you mentioned earlier, they're all interconnected, aren't they? Whether it's ESG, technology, hybrid working, where people work, upskilling and all of those elements have got a technology component. But one is connected to another, so you can't think about tackling one without tackling the entire system. And I think that's both an exciting opportunity but it can be overwhelming.

Alastair Woods: It's exactly right. Because we don't have a crystal ball, right? You don't quite know what the job's going to look like. What I suppose I go back to is, through the first industrial revolution or when Excel came in in the '80s, right? Jobs didn't go, it just created new questions and new demands. I suppose that's our lives. We're constantly looking for new problems to solve. What I think it will do, is aspects of every role we have will become easier and more frictionless. That's the hope, anyway, I don't think that's happening in reality. I think actually some things are becoming slower, but they will speed up. But the job for HR, is to figure out what that could look like, almost scenario test, what actually will happen to certain groups. And it won't just be the process-led jobs, it will actually be professional jobs, like our own. It's going to be looking across the piece, and then figuring out 'How do we get there?'

Laura Hinton: And how are people feeling about this change? We've done a lot of research through our Hopes and Fears survey, our CEO survey. There are, I think, relatively consistent but different views out there in terms of whether this change is good, whether it's challenging. What are your clients telling you?

Alastair Woods: So, we've got the CEO survey and we've got the Hopes and Fears survey. There's clearly a lot of money being invested in technology, in skills, in upskilling, and just transforming the organisation to survive, to be viable, to be successful, you need to adapt. So, that's happening. On the other side, I think I'd characterise it that there is uncertainty about the future, about my role. I think there's a net positive sentiment around AI, but just marginally and it varies by generation. The watch out, for us, in the HR community is, actually people are not convinced that the organisations are ready to give them the skills. So, they recognise, 'Okay, this is going to grow,' right? The judgement, the critical analysis, take enough data points we just talked about in the comp round. 'Will my organisation give me the time and the training and the opportunity to demonstrate and apply that, so I can evolve as an individual?' That's to watch out.

Laura Hinton: And interestingly, I was at a university recently talking to a group of students about to come into the workforce. With them thinking about where do they want to work, which employer, which sector. And actually, a lot of that thinking was around 'Where will I get the investment in my skills, my upskilling?' And being given the space to evolve as the technology evolves. It wasn't about the particular role, it wasn't about the salary, it was about the focus on development and upskilling and support to go with that journey. Is that consistent?

Alastair Woods: As in, that's a concern from individuals?

Laura Hinton: That's how they would ultimately decide where they wanted to work.

Alastair Woods: And I thinkyou already know this from your client experience, but it's because you don't know quite what it looks like, the job, how do you then invest in training? But I think any organisation should be thinking through, 'Right, let's take a persona in a given role and what might happen? What are our ‘no regret’ moves around that?' The thing that I've noticed in all the programmes of change we do, that tech adoption piece, that culture activation, is probably the most important bit. But it's not necessarily the one that we over-index on. And I think that's the other piece of this, that actually we don't quite know what the answer is. But let's help-, draw on our employee base and different pathways to work through it together, and I think that's the exciting terrain for HR.

Laura Hinton: Yes, I agree. And you mention the word 'culture' there, and I think that's exactly the point. It's almost that culture and the right mindset, the right environment to enable employees, but you know, leaders in businesses to embrace what's coming. To be willing to admit they don't know the answers, and to a large extent, we don't even know the questions yet. But actually, that's quite a shift in terms of traditional leadership, 'I am in a senior role in an organisation, so therefore I know the answer.' Arguably, the hierarchy has shifted on its head because the more tech-savvy individuals tend to be at the less tenured end of the spectrum. So, that mindset around experimentation, of, 'Let's just try something.' Understand that it might not work, so therefore being prepared to embrace, small incremental failures because actually, if we're not failing and trying something new that doesn't work, we're probably not pushing the boundaries fast enough. Does any of that come through the research?

Alastair Woods: It does. I think one of the things that really stuck out for me is that employees were saying, a large percentage of employees, I think 30%, were saying their organisation won't necessarily be viable in ten years time if it continues down the current path. Not dissimilar to CEOs, actually, so there's a watch out there. So, that means they know something, employees must know-, so, we need to draw upon that. I think that the thing that I'm seeing with a lot of clients is creating this mindset of test and learn, and fail and move on quickly. There's a short-term angle around productivity. We don't want lots of people trying different things and not getting on with the day job, there is a short-term angle. I think you can manage that through the reporting lines etc. But yes, create that opportunity for individuals to find workarounds, work through. AI should be a solution, could give us good solutions. We might accidentally put too much infrastructure around it, so we don't optimise it. That's the risk.

Laura Hinton: Yes. That definitely makes sense. And it's back to the environmental point around creating an environment where individuals feel that they can challenge, they can debate, they can discuss it. It's more of a free-flowing embracing of ideas and innovation. I remember seeing some of the feedback in the Hopes and Fears survey, that actually, only about a third of employees felt that they were encouraged to innovate. And that they were encouraged to-,

Alastair Woods: Small-scale failure, it's all those different elements and the impact they're bringing about. I think that will change because it has to. But exactly right, that was their concern that, 'I still feel quite restrained in my role.' And we need to loosen the guardrails a bit, I suspect.

Laura Hinton: Yes. And even, some of the solutions to that are relatively traditional concepts in terms of feedback is important, being open-minded to giving feedback, to receiving feedback. Again, pretty low responses in terms of Hopes and Fears. Only about a third of employees feeling that they were encouraged to give feedback.

Alastair Woods: That’s right, yes, I love this performance management stuff. And I feel that there are chinks of light in that. That people are much more open to radical candour, candid feedback, being constructive, because we've got to do this together. And I'm seeing more models coming out in performance management, that release that and actually enable that. Where it takes us to the binary nature and, 'Here's your year and you didn't meet your objectives.' Being much more open to ‘you're part of the solution’. ‘I'd like to be part of the solution, here's how we do this.'

Laura Hinton: And that's true with clients as well, isn't it? That co-development, co-collaboration, developing propositions, ideas, together. Because as consultants, as advisors, we can bring data, evidence, methodologies to the table. But actually working with our clients to define some of the solutions and some of the questions, is an entirely new way of thinking and working, even through that lens.

Alastair Woods: 100%. I think the fun as a consultant is to co-create because we don't have a model off the shelf. 'Here's what your organisation should look like in five years time.' What we can do is use the external insights etc, that's what we can bring, but then work with the client to model that through. And I'm really enjoying stuff around what you see in your clients, around our shape of the organisation. Our pyramid or whatever it looks like, is going to change. Where's that going to happen, where's that going to bite, at what level? Probably going to be all of them, actually, in terms of change. But what does that mean for our recruitment plans? What does that mean for our training, what does that mean for our talent gap? Because we've still got a skills shortage issue in the UK which isn't soon going away. So, I think if I was in HR now, I'd be really thinking through, 'Actually, well let's just think about what could our organisation look like. Is it like that, is it a diamond?' And how do we start to navigate a path to that, through that?

Laura Hinton: There's a lot in there, isn't there, and there's a lot for business leaders to think about, for HR, people leaders to think about. Whether that's the upskilling agenda, whether it's the recruitment and attraction of talent. Whether it's strategic workforce planning, shape and cost-based, is all part of that. So, what's the practical advice? How do organisations start this? I think we're starting from a really healthy point. From my perspective, everyone wants to engage in this conversation. So, it's interesting when there's a big development in technology, often there's a hesitance or a, 'Keep it at arm's length, I'm not ready to engage in that yet.' I am sensing the opposite with AI, in particular of, 'Come and help, there's a thirst for knowledge and understanding’. So, how do we help organisations navigate that in a practical way? What would your top three tips be, tell us, things to do first?

Alastair Woods: Top three things, goodness, okay, well, I think first of all, I'd probably say have an overarching narrative around where you're going, which sort of opens the door that we don't know exactly, but we're going to figure it out. So, we need to create a culture. So, there's something about that to enable leaders to feel part of it and know they don't have to know everything. I do think data and baselining your data is probably a thing that I'm passionate about, but I think that is important. And then I think, keep an eye on that culture activation. Who are your activators to then make whatever change happens? Because then programmes and work streams will spin off it, wherever they go, right? Whether it's your location strategy, your performance management, your pay and skills plans. But I think, having those three in place, narrative, baseline data, to model, and then creating that cultural flow through.

Laura Hinton: Yes, I completely agree with that. I think the one I would add would be that culture of trying, experimenting, that growth mindset concept of, be prepared to try and fail and experiment. Because not everything is going to work first time. And that is part of that cultural playbook. But we all have to work together, knowing that we're finding our way together. There isn't necessarily a right and wrong way of getting to an outcome. There are different versions.

Alastair Woods: Exactly, it's going to keep us all busy.

Laura Hinton: It definitely is. That's probably all we've got time for in this conversation but thank you for your insight and sharing some of your thinking around this really important topic, and for joining us on this Forces at Work conversation. And thank you to all of you for listening and tuning in today. We have got so many experts in our people business, so please do reach out to us if you would like to hear more.

Speakers

• Laura Hinton, Head of Tax, Legal and Workforce
  
• Alastair Woods, Workforce Partner