Special Report: The New Laws of Talent Attraction

Culture is now more important than comp when it comes to engaging great people. A CEO guide to a future that's already here.

 

Five years ago, Joe Walsh struggled with the number of people leaving the employ of small business software provider Thryv Holdings, where he has served as CEO since 2014. Many employees grumbled about the 45-minute commute to the public company’s Dallas, Texas, headquarters, their eyes open for better job opportunities elsewhere. “I remember saying to our CFO that if I had a nickel for every employee exit, I’d have a heck of a lot of nickels,” said Walsh.

Then, in early 2020, the pandemic struck and Thryv’s 3,000 employees were sent home to work. Their grinding commute ended, as it did for millions of other workers across the world. In May of that year, Walsh made a momentous decision. “I pulled the trigger on a work-from-anywhere model, and it created this profound sense of personal joy across the workforce,” he said.

The employee exits stopped, despite a war for talent that recruiters maintain is the worst they’ve ever seen. While Walsh cited other factors in his ability to hold onto crucial skillsets and add to this talent base, including a digital transformation making work more efficient, upskilling and reskilling opportunities, and worthwhile contributions helping small businesses survive the pandemic’s impact, people who were happy in their work and life made the biggest difference.

“The money we’re saving in reducing our real estate footprint by letting employees work where they want is being directed to create more fun and compelling social interactions when they do physically get together,” he said.

Walsh runs a business that does not require people to report to a physical workspace every workday. But even CEOs of companies that rely on on-premises work have found that enriching employees’ lives is the optimal strategy to win the war for talent.

“We don’t have a work-from-home option, but we haven’t lost a single employee since the pandemic began or even in the last decade—and we’re having no trouble hiring as we continue to grow,” said Rita Case, CEO of Rick Case Automotive Group, the largest retail automotive dealership in the country owned and operated by a woman, with 14 dealerships in Florida and Georgia and nearly $1 billion in annual revenues.

This is an extraordinary accomplishment as it turns out. The 60-year-old company competes for talent in an industry desperately struggling to recruit enough employees. Seventy-two percent of franchised auto dealers in a June 2021 staffing study say that finding and hiring employees is a challenge. What’s Case’s secret sauce?

“We’ve always treated our employees as a big extended family,” she said. “Our pay and benefits are competitive, but where we stand out is our culture—a positive work environment, beautiful lunchrooms and rest rooms, monthly recognition and award programs, a defined career path and a company newsletter reporting on everyone’s life activities and work accomplishments.”

She equated the automotive group to companies a century ago, when Ford, Boeing, DuPont and many other large corporations sponsored local softball teams, bowling leagues and picnics, and their chief executives knew not only the names of employees but also the names of their spouses, children and grandkids. After nearly two years of a life-sucking global health crisis, topsy-turvy economy, polarized politics and a knee-jerk transition to remote work, the focus on people’s health, wellbeing and happiness—by way of recruiting and holding on to needed skillsets—is not misplaced.

“People are tired and grieving,” said Bryan Hancock, a partner at McKinsey & Company leading its global talent practice. “Nearly two-thirds of U.S.-based employees have told us that Covid-19 has caused them to reexamine their individual purpose—what they’re doing in life and work and what they want to be doing in the future.”

These self-reflections are among the biggest factors causing the current war for talent, which the media has distressingly dubbed The Great Resignation, The Great Attrition and The Big Quit. According to the U.S. Bureau of Labor Statistics, 4.2 million people vacated their jobs in August, nearly 3 percent of the workforce, while almost 20 million people switched their jobs between April and August. The Big Quit continues, with 40 percent of employees in a recent McKinsey survey saying they’re likely to leave their job in the next three to six months, 64 percent of them without another job in hand.

“Most CEOs think the main driver of attrition is compensation; it isn’t,” said Hancock. “The top three reasons employees tell us they are quitting are because they don’t feel valued by their organization, they don’t feel valued by their manager, and they don’t feel a sense of belonging at work.”

At a time of increasingly scarce yet desperately needed skillsets for CEOs to achieve their vision and strategy, companies need to reemphasize what the business is all about in human terms and how this connects with the longings of employees to, as Hancock puts it, “have more purposeful work and enjoy more meaningful lives.”

The New Work-Life Connection

While the emphasis on human-to-human connections may come off a bit Ted Lasso-y for hardboiled business executives, McKinsey is far from alone among the big consultancies in expressing the value of egoless kindness as a people motivator. As the subtitle of a recent special report on the employer-employee relationship by Deloitte declared, “If we’re not family, what are we?”

“A worker’s sense of purpose is the dominant force driving the relationship with the employer today,” said Art Mazor, a Deloitte principal and global human capital practice leader. “Employees want to feel the time they put into work has a positive impact—on other people, communities and the world at large. And after spending nearly two years working remotely on a highly productive basis for the most part, they want continuing job flexibility to provide these contributions in the future.”

This flexibility isn’t limited to traditional knowledge workers although it’s a lot easier for these employees to work on a flexible time and location basis. But even workers in retail, hospitals, manufacturing and distribution need to be offered greater choice in when, where and how they work, the consultants said.

“The days when employers took for granted that workers would show up and be available all the time, hiding who they are and what they needed in terms of their personal health, happiness and wellbeing, well, those days are shifting and are likely over,” said Mazor. “The pandemic made everyone deeply realize how sensitive and delicate human life is.”

All human life, as the environmental and social issues of the past year and one-half have palpably demonstrated. A company’s position on issues like diversity, equity, inclusion and belonging (DEIB) and environmental, social and governance (ESG) can be dealbreakers employment-wise. “Workers have a ‘voice’ now more than they’ve ever had before,” said Mazor.

CEOs who fail to listen to these voices, particularly those of younger Millennial and Gen Z workers with the mission-critical software engineering, machine learning, data science and DevOps skills they desperately seek, do so at their peril. “Every policy must be put under a microscope to ensure it includes a promise of better equity; otherwise, the company risks a backlash among current employees and job candidates at a time when our surveys suggest that seven in ten employers are struggling to find workers with the right mix of technical skills and human capabilities they need,” said Mazor.

These human capabilities include people with interpersonal skills like leadership, empathy and adaptability, as well as advanced cognitive skills like critical thinking, project management and decision-making, said Hancock. “Our research suggests that the share of employers looking for interpersonal and empathy skills has nearly doubled in the past year,” he added.

Different functions like marketing, operations, IT and finance are all hunting for this combination of technical and human relationship skillsets. In a recent survey by BlackLine of more than 1,150 C-level executives and finance professionals in midsized and larger organizations, most respondents said they “lacked confidence” in attracting analytical, consultative, planning and due diligence skillsets.

The New CEO Playbook

These various talent issues are top of mind for CEOs like Al Crawford at Bankers Healthcare Group (BHG), a national non-bank lending company with 1,200 employees and $2.4 billion in assets. Having committed to a work-from-anywhere model for BHG’s 1,200 employees composed of physical offices, at home or a hybrid combination of the two, Crawford conceded he misses “collisions in the workplace, those unexpected opportunities that arise from chance encounters,” he said.

To ensure these missed social interactions don’t erode motivation, Crawford has instituted mandatory off-site quarterly meetings funded by the company. Employees can even choose the meeting location within reason, making it serve as a retreat of sorts, he said. “It ensures our teams are staying creative, innovative and establishing authentic relationships with each other,” Crawford said.

Aside from the flexible work policy, BHG also offers free health insurance, on-site gyms, monthly cash awards and a 401k match to recruit needed skillsets and retain current talent. The company hosts monthly workshops that cover personal finance, investing, mindfulness, healthy eating and more. “Employees can qualify for advanced training and personal coaching; their voices are heard and valued here,” Crawford said.

Helping Thryv Holdings win the talent war is its transition in 2017 into a subscription-based software platform for small businesses with two to 50 employees (previously, it was known primarily as the publisher of the Yellow Pages). Using mobile tools, the platform helps small business owners generate estimates and invoices, automate marketing through email and text, and process payments, among other features. “Our mission to help small business entrepreneurs at a time of existential challenges resonates with job candidates,” said Walsh.

The company’s charitable foundation, which provides employee time and company financial resources to support small businesses, is another inducement to hire on. But Walsh said his decision to make Thryv a work-from-anywhere company has made the biggest difference, augmenting people’s joy in life and work, while liberating the company to recruit and hire much-needed software and tech skills outside its home state of Texas. “We’re a ‘hire-from-anywhere’ organization, too, just in time to help maintain our 30 percent quarterly growth rate,” he said.

At BlackLine, a developer of cloud-based services designed to automate financial close, accounts receivable and intercompany accounting processes, CEO Marc Huffman has found it valuable to get personally involved in talent recruitment.

“The supply of labor is moving like water, going towards the easiest places,” Huffman said. “What I mean is that if your talent hiring processes are burdensome—absorbing too much time to write a job description, post a search, interview candidates, and so on—other companies will outmaneuver you. To make sure this is not the case here, I’ve prioritized investments in our sourcing, recruitment and onboarding tools and processes.”

Other talent strategies include a commitment to providing remote work options across parts of the organization, with investments in upgraded workspaces for specific instances when people need to collaborate physically.

“Our world will be much more respectful of employee choices on where they want to work,” said Huffman. “When there is a reason for them to come in, we will provide collaboration spaces they will want to go to.” At present, Huffman is reviewing a series of design renderings on this future space.

Huffman has instituted policies to ensure BlackLine’s culture is not impacted by what are likely to be predominantly remote work experiences. “We’ve made significant investments in virtual collaborations, building a production studio at our Los Angeles headquarters and hiring related talent to produce ‘one-to-many’ content that’s broadcast to our employees and customers,” he said. “We’re broadcasting such high-quality content it feels like we’re in the TV business, which in a way we are. I just spent 10 days in LA filming spots for our upcoming user conference.”

EisnerAmper, one of the country’s 20 largest audit, accounting and business advisory firms, also is offering remote work options to attract needed skillsets as it transitions into a technology-infused outsourcing services provider. The transition is predicated on carving a sharper competitive edge as a provider of services to clients on their digital transformations. “We’re building a lot of proprietary technology around data analytics and dashboarding, requiring us to recruit people with both subject matter expertise and technological skills, which are in high demand,” said Charly Weinstein, the firm’s CEO.

The firm’s emboldened vision and mission will make a difference in its recruitment objectives, he said, noting that EisnerAmper recently received an infusion of capital from private equity firm TowerBrook Capital Partner to drive the firm’s long-term growth initiatives, which include investing considerably in talent and technology. “Having additional capital and resources to accelerate our growth is creating opportunities to make us a more attractive destination for talent,”  Weinstein said.

To offset the impact on culture by a remote work model, the CEO is increasing investments in the firm’s employee resource groups (ERGs), representing different groups of employees with shared characteristics. “One of our ERGs just hosted a combination event at a winery in New Jersey, where more than 50 people physically attended and dozens of others joined virtually,” said Weinstein. “It was such a success in terms of esprit de corps that we’re deploying the events across all the ERGs.”

Other companies like Gallup are reimagining the role of managers, one of the three top reasons why employees are quitting, according to McKinsey’s research. Jim Clifton, the global polling and consulting firm’s longtime chairman and CEO, said Gallup now measures employees’ anonymous opinions about their managers. “Employee stress is through the roof, with many people experiencing symptoms of burnout and depression,” he said.

Clifton directed a redesign of the firm’s traditional employee engagement survey to include a series of new questions about managers, such as: Does your manager care about your wellbeing? Do they treat you with respect? Are they helpful when you express a problem? Does the manager listen? The anonymous response data is an insightful guide for managers.

“We’ve changed the function of our managers from administrative supervisors to coaches,” he said. “If someone is feeling subpar, it’s the manager’s job to find someone else on the team to pitch in.”

Unlike Thryv, BHG, EisnerAmper, Gallup and BlackLine, Rick Case Automotive is an entirely on-premises enterprise, with face-to-face sales and on-site car repairs and servicing. These obligations haven’t impeded the company’s talent objectives, despite the industry’s steep talent recruitment and retention challenges.

“We’ve invested in state-of-the-art technologies like apps, iPads and WiFi; do both digital advertising and traditional TV spots; and provide employees, whom we call associates, with the ability to see their paychecks and other employment data online,” said Case. “These days, that’s table stakes in any business.”

But what has been most important to the company’s talent retention and recruitment success is its treatment of people. “Treat your employees well on an equal and consistent basis and they will do the same for your customers,” said Case, recipient of the 2022 Horatio Alger Award.

She will not tolerate “negative energy” at a dealership, she said. “If I see a piece of paper in the street outside, I pick it up and toss it in the trash. I expect that others here will do the same. It shows respect for other people, building feelings of trust, safety and wellbeing. And it’s contagious,” she explained. “We’re all in this together.”

The New Manager

Cecile Alper-Leroux has dedicated her life’s work to helping companies design the best possible experiences for people to achieve great things at work. These days, the veteran economic anthropologist is designing work experiences that extend beyond a physical workspace for the evolving work-from-anywhere model that many companies are adopting.

“HR leaders tell me they’ve got new employees onboarding to work remotely, and they’re worried about them becoming less attuned to the culture since they can’t come to the office and meet everyone,” said Alper-Leroux, group vice president of research and innovation at workforce management solutions company UKG. “I tell them ‘culture’ has nothing to do with colocation.”

Her point: Companies can provide the means for people to gather when necessary, either for specific work needs like learning about a new product launch or simply for social reasons and team-building exercises—business-speak for fun.  “I don’t want to diminish the importance of physical communications and collaborations, but there are virtual ways of accomplishing the same things,” she said. “I have people on my team I physically see maybe two to four times a year, but I virtually see them most every day, typically across several times zones.”

CEOs adhering to work models that require people to be physically seen and supervised a set number of hours each day of the workweek need to reconsider who is really being served by this structure, she said. Managers, it turns out, may be actively or inadvertently preserving these work practices.

“Managers will tell you they trust their people, but they still want to see them working,” said Alper-Leroux, author of From Dissonance to Resonance: Bringing Your People and Organization Into Sync. “It’s an enduring disconnect. Manager reskilling is long overdue.”

Many managers were trained to organize, direct, supervise and control the work of others. People in this model are treated like cogs in a wheel—not exactly a compelling recruitment campaign following a demanding war for talent following a soul-crushing pandemic. More than three-quarters (76 percent) of employees in a recent survey by Mind Share Partners reported at least one symptom of a mental health condition in the past year, up from 59 percent in 2019. “CEOs are leading workforces that, to a significant extent, remain traumatized and vulnerable,” Alper-Leroux said.

The fix? Companies need to reskill managers in foundational human qualities like empathy and compassion to become “professional coaches and business guides for people,” she said. And CEOs must adopt a “genuinely life-aware understanding” of employees’ work. “Employees want more autonomy over when, how and where they work. They expect to be valued as fellow human beings by managers and leaders and appraised for the quality of their work.

“They’re not objects—’cogs moving the wheel.’ They are the wheel.”

The New Office

While the work-from-anywhere model suggests that more people will work remotely, the opportunity does not preclude going to the office or, as Brian Hancock, who leads McKinsey’s global talent practice, calls it “the new offsite.”

The reason for the change in nomenclature is the purpose of an office in an era of remote work—to do “those things that are harder to do remotely, such as connectivity, culture and apprenticeship,” Hancock said. “Consequently, we are likely to see spaces evolve to include more flexible meeting and conference rooms and perhaps fewer individual workstations.”

Art Mazor, who heads up Deloitte’s global human capital practice, has a similar perspective, visualizing an office of the future with a dedicated collaborative space, integrated meeting rooms that connect remote and in-office workers, and increased safety measures such as partitions around desks. “On a strategic level, there’s an opportunity to rethink the workplace as ‘phygital’—integrating the physical space with the digital practice, while embracing constant change.”

Office design firms are conjuring these workspaces of tomorrow. The WorkSpace Futures research group at Steelcase, for instance, is creating designs that integrate video cameras, large monitors and other technologies positioned around a shared space to ensure an equity of experience, blurring the distance between people working remotely and those at the physical space.

Other design considerations account for the unobserved, untethered and destressing experiences working from home, which is tough to replicate at an offsite designed for busy in-person collaborations. The WorkSpace Futures Group has come up with a design called Pod Tents that look like, well, one-person pod tents. Made of canvas-like material, the tent includes a small desk and chair to relax or ruminate, as well as a video camera, speakers and a Lume Cube broadcast light to jump on a quick Zoom call.

Office designer Rapt Studio takes equity of experience even further, creating a space in which virtual reality technology is used to make it seem like employees working at home are inside the room. To pull off the feat, everybody wears a VR headset; each person’s face appears the same size, with a background that looks like a boardroom (or beach). Not a cubicle in sight.

The New Migration

As more companies embrace a work-from-anywhere model, the choices made by employees about where to remotely work are being balanced against organizational needs for in-person collaborations and the innovations these encounters spark. While “anywhere” does not imply “everywhere,” it nonetheless posits extraordinary socioeconomic changes across the United States in the years ahead.

Employees who work for companies that have announced full remote-work policies, for instance, may choose to move out of more expensive cities like New York and San Francisco to areas with a different cost of living, to be closer to their family or to shift lifestyles.

“Popular destinations like Lake Tahoe, Aspen, Jackson Hole and Park City experienced exponential growth during the pandemic, as some employees chose to live and work in places normally thought of as vacation spots,” said Art Mazor, principal at Deloitte and the consulting firm’s global human capital practice leader.

Other employees are moving to states with lower taxes. “This helps explain why Texas is one of the fastest-growing states, while California is growing slower than the national average,” Mazor said.

While Deloitte’s research indicates that four out of five CEOs have increased work flexibility, Mazor said there’s still a need for in-person collaborations, connections, social interactions, creative collisions and innovations, requiring relative proximity to a physical workspace. To provide this space, many organizations are introducing an HQ-and-hub concept, designating certain cities as collaboration hubs for traditionally office-based workers. “This way, the workforce’s choices about where to live is balanced by the organization’s desire to bring people together at moments that matter,” he explained.

Bryan Hancock, a partner at McKinsey & Company who leads the management consultancy’s global talent practice, said the firm anticipates that most employees will be in commuting distance to an office “location,” even if they are not coming in the office every day. In choosing these hubs, companies have a rare opportunity to increase workforce diversity, offering jobs in places where people of color live. “At present, fewer than one in 10 Black workers live in the fastest-growing regions of the country,” said Hancock. “Cities like Atlanta, with its skilled and diverse workforce, will be attractive for companies looking to develop hubs outside their primary headquarters location.”


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