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Work For Humans
Architects of Transformation: Unlocking the Real Value of People | Michael Smith
01:12:48
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Foreign.
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Good leadership is about building something that prospers beyond your presence. And if you want to have an outsized impact, the way you're going to do that is by ensuring that individuals feel enabled, that you have a people centric mindset about making sure that you're creating an environment where they feel engaged and by doing so. In my 20 years at Randstad, by being intentional about creating that sort of environment, individuals have been willing to go above and beyond the usual call of duties, which has created a winning atmosphere. A core component of that was also making sure that the work that we did wasn't just about lining the pockets of shareholders, but that it had a broader impact on all stakeholders, whether that be hiring managers, our clients, our our candidates, the people that we employed. We often had outsized returns for all of those stakeholders.
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Welcome to the Work for Humans podcast. This is Dart Lindsley. Randstad is the largest HR services company in the world. That puts Mike Smith, CEO of Randstad Enterprise, in an unusually privileged vantage from which to see and understand the pressures that chief human resources officers and CEOs are experiencing today. They're dealing with the unpredictable economy, the emergence of AI, and demands for transformation, all while running the business every single day. It also puts him in a position to do a lot of good, and that's what he does. In our conversation, Mike and I talk about the business of hr, why HR leaders create the most impact when they act as architects of transformation as opposed to playing defense, what happens when HR is seen only as a cost, and how CEOs and CFOs can unlock the real value of the people in their organizations. By thinking differently about hr, we explore the future of human resources, how AI is reshaping hiring and what's going on with the economy and why doing well and doing good go together. All right, if you enjoy the show, follow or subscribe wherever you listen to podcasts. And now here's my conversation with Mike Smith. Michael Smith, welcome to Work for Humans.
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Thank you, Dodd. It's a pleasure to be here.
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You're the CEO of Randstad?
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Yeah, I'm the CEO of what's called Randstad Enterprise, which is a line of business of Randstad. Our CEO is a gentleman by the name of Sander van Nordent and he has the pleasure of leading all of Randstad. But I have the pleasure of leading a couple of components of Randstad. Along with our distinguished leadership team, I manage our top 54 customers globally. I have the newly added responsibility of running our center of Excellence in thinking about how we design cutting edge solutions and strategies for our most critical customers. And then I also have the pleasure of leading our enterprise talent acquisition organization which specializes in doing msp, rpo, career transition coaching and advisory services. But it's been a long and fun ride with Ramstad during my time. May feel blessed to look after what I look after today.
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Your role in Randstad and your career in Randstad has put you in a position to have an overview of the business and in particular the business of HR that I really want to explore. There are very few people who are positioned to see as much of it and over as much time as you have. So before we get to that, first let's talk about Randstad. What is the breadth of Randstad? And I say breadth because I'm looking after the range of services and the geographical range.
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Randstad is an incredibly diverse organization in terms of the services that they offer, but also the size and complexity of clients that they offer to and the geographical locations that we deliver services to customers today. So Generally speaking, we as Runstadt, we're a 24 billion euro plus company that's been around for over 65 years. We employ over 38,000 FTE and in totality serve in excess of 250,000 customers today. So it's a very large group of customers that we service and on average we send anywhere between 600 to 700,000 contingent workers to work every day. And across the services that we provide today, it can be anything from coaching individuals to helping with internal mobility to staffing manufacturing lines to offering advisory services on what great talent acquisition looks like, to breaking down roles and tasks to understand thoughtful delineation between what AI can do and what we can do. We have IT related services, we have contingent professional related services. We do BPO outsourcing in hr. So it is truly a plethora, a myriad of services that we offer. And that depth and breadth of services, both from an industry client and geography perspective, has allowed us to remain as the number one organization in HR services for quite a long time now. But we need to be productively paranoid about making sure that we're constantly staying at the bleeding edge of what our customers need from us as a partner for talent.
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I seem to remember, and I don't know if this is still true, that you were a venture funder of a handful of early tech startups.
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Absolutely, we still do that today. We were one of the first strategics, if you will, to understand the disruptive potential of HR and talent technology. So as a result of that we, we Started what was called the Randstad Innovation Fund. We did that around about 2016. And what we would do is we'd have our own corporate venture capitalist fund where we would invest in what we considered to be disruptive HR startups. And we did that from a range of organizations, incredibly small to medium to large size startups. But the attractiveness for them was obviously we have an incredibly large client base and an incredibly large salesforce. So the ability to get access to that through the Ranstad ecosystem was something of incredible attractiveness to those organizations. And then subsequently, what we got out of that was the ability to understand what was happening at the grassroots of the HR technology market and how we could think about proactively changing the roles of our people within our organization based on what was likely coming down the pipeline, and then also have a influential role on the roadmap of those organizations to be tailored more towards what our clients were needing. So it was a bit of a win win situation. We still run that today. It's a little bit under the radar, if you will, but we've been engaging in multiple conversations still with multiple providers today on strategic partnerships and investments.
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It's another place where, again, your vantage is really extraordinary. So briefly, a little bit about your background which I've read up on. You've been 20 years, maybe 20 years plus at Randstad. Started off as a university recruiter in Western Australia. You have a very strange resume, I will tell you, because almost every year on your resume you are promoted to a larger role. And it took you from Western Australia, Perth.
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I'm assuming it was actually Western Sydney.
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Oh, it was Western Sydney.
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Well, colleagues in Australia will be fighting to make sure that you claim that I'm from Western Sydney. So.
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Okay, okay, Western Sydney. I misheard that before. Singapore, Europe, uk, Houston, working in the us so you've been all over the world. And when I think of you in general, I think of somebody who is doing well by doing good. That that's something that you really focus on. You introduced me and this show to a number of our guests to date, which is Michael Hess at the Blind Institute of Technology, Charlotte Dales, who leads inclusively. Sam Strunfer, who is on your team and is a very forward thinker. Kate Griggs, made by Dyslexia. So is doing well by doing good. Have you always done that? Is it an explicit credo or is it just your nature? Where does that come from?
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First of all, I want to say thank you for the observation. It's one that I definitely take to Heart, I think during my career that I've had with Randstad for over two decades now, I work with a number of leaders who took on the philosophy to say that good leadership is about building something that prospers beyond your presence. And if you want to have an outsized impact, not only on your team, in your line of business, in the country that you're operating, the way you're going to do that is by ensuring that individuals feel enabled, that you have a people centric mindset about making sure that you're creating an environment where they feel engaged. And by doing so, in my 20 years at Randstad, by being intentional about creating that sort of environment, individuals have been willing to put in increased discretionary effort. They've been willing to go above and beyond the usual call of duties, which has created a winning atmosphere. When I've made sure that in creating that winning atmosphere, a core component of that was also making sure that the work that we did wasn't just about lining the pockets of shareholders, but that it had a broader impact on all stakeholders, whether that be hiring managers, our clients, our candidates, the people that we employed. We often had outsized returns for all of those stakeholders. I don't want to for one second say that that's really easy to do. It wasn't. And there was plenty of times that we strived and plenty of times that we stumbled as a result of that. But I've personally benefited from taking a trying to do well while doing good approach. And it's worked for me so far. And therefore I've also got significant benefits from being conscious of trying to be inclusive in that thought process. I'm on this podcast today because I've referred people to you who have been incredibly helpful to us and we've been helpful to them. So this mindset of coming with, I think, a generosity in helping other individuals and getting that paid back in spades, that's been a wonderful experience for me so far. And I think unintentionally it's become ingrained in a little bit about how I think about work all day and every day.
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I want to start talking about the business of hr. I don't even necessarily know how to phrase the question, because the business of HR has as its center humans, and it's also a business. And these things can sometimes pull in different directions. And so when HR leaders, the leaders that you support are at their best, what do they want? I'm going to follow up with when we are at our least, what do we want? But the first thing Is when we are at our best, what do we want?
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Yeah, look, it's an incredibly difficult question to answer. I think in my own experience that I have the pleasure to work with an incredibly large array of HR professionals from some of the world's largest organizations. And when I think about them being at their best, I think about them enabling things for the organization. I think about them being architects of transformation. I think about them designing workplaces that enable agility, purpose, equity, but most of all performance. And what I think is really critical, when I correlate those factors with individuals in HR that are at their best, they have an incredibly unique understanding of the business and how the business creates value. And they're able to therefore translate how the business works from an operational perspective day to day and the very tangential role that HR plays in enabling that value creation. And they're able to decipher what is the core components of HR's role that is related to enabling the business versus components of HR that are just for HR.
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And when you say that they have a deep understanding of how the business creates value for whom?
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I think that's a multifaceted answer because I think it's HR's job to create future sustainability in value creation. And if you then double click on what that actually means, it is value delivered to clients, customers, I think it's ensuring that the future pipelines of skills within the organization and the thought process about how you leverage disruptive new and innovative technologies to get work done in a data driven way is critical. And then I think it's about creating a culture where those two things can act in harmony in a sustainable way. So people are turning up every day with a connection to the purpose of the organization. They understand the role that they play in the overall value creation of the organization and the customers and clients are delighted with the service that they get from that organization. And therefore you have this great mutually beneficial ecosystem where employees, the organization and its customers are winning.
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You said it a little bit. When HR leaders, when we are at our least, when we're not at our best, one of the things you implied is that it's when HR mistakes its own interests for the interests of the company. Is there more?
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I think when I think about HR leaders being at their least, they're very reactive and they're more compliance driven and the focus is often on delivering cost savings. I would say when I think about the organizations that we partner with, where the HR leaders aren't as enabled as I think they would like to be, they're Often what I would call living in a little bit of fear. Fear of budget cuts, fear of being the first team to be scrutinized because they haven't delivered on the cost savings that were expected for the HR department. Fear of failures and fear of the persistent under appreciation that it takes to do their job in the current world. And I think what often happens from a circumstantial perspective is that creates that fear is that HR and talent are viewed as a cost center rather than a growth enabler. And that creates this perpetual cycle where they restrict their ambition and effectively they're not able to have what I would call a proactive mindset about enabling the business and creating the right culture and thinking about how they're future proofing access to the skills that they need to disproportionately grow the company. It's a short term reactive style that I would say often starts with a slippage in kind of growth that can then spiral out of control. And I want to take a moment just to acknowledge that I think in the current environment it is an incredibly difficult situation for HR and talent leaders to navigate given the lack of visibility that organizations have about what is going to happen in three to six, nine months time. So you really need to be an incredibly, I think, emotionally intelligent, thought provoking, data driven and bold HR leader to be able to ensure that you could move yourself out of the reactive environment and move much more towards a proactive environment. And that starts with convincing the leadership team that you work with every day that that is a core component to success in the future of the company.
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To express a lot of sympathy for the challenges of HR leaders. I've seen it over and over again where we start the year with a budget that is aspirational and then something happens. We've been on our heels for a decade at least longer than that probably when you think of, well shoot, I wasn't even including 2008. You've got 2008, you've got Covid, you've got changing public policy around things like tariffs. You've got back to office, return to office AI now AI, which it's not the same as Covid. It should help, but it's still new. It's really new. And so, so much of it. To use a basketball analogy, it's like how do you drive to the basket when you're being hacked on every side, you know, and fouled and you're still trying to keep your eye on that basket and hit it? It's a challenge.
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Yeah, look, it is we have the privilege of running a lot of executive dinners for the HR community. So Frank Conju, who leads that for us, I think he's done over 26 CHRO dinners in the US alone this year. I had the pleasure of attending a couple. I attended one in Atlanta more recently where we had a significant number of chros from incredibly large companies. And what I took away from that actually was there are a number of chro leaders there that I felt were really looking to be very aspirational, to reclaim their voice, I think. And there was certainly strength in the connection of that community. And I felt like as a result of going through what they've been through more recently, firstly, Covid the back to work challenges, the fact that they're now in a situation where most organizations are going through some type of long term transformation in an environment that is incredibly volatile, unpredictable and very ambiguous and will continue to become more complex at the same time that they're trying to navigate an AI implementation on the future of work. It's easy to say, wow, this is really challenging and I'm not sure I'm going to be able to get through it. I didn't get that sense. I got despite the fact that there's tough budgetary complaints, most of them work for publicly listed companies where there's a quarterly clock ticking in the ear. These were brilliant, ambitious people who worked out with like sharp vision and deep empathy for saying, yes, we can and we'll make it happen. And I found that incredibly refreshing and renewed. And there was one statement that I think stood out from that particular evening and that was, if CHROs, HR talent, et cetera, it applies for all of them, understand the soul of the company and the organization, then they continue to perform well, irrespective of circumstances outside their control.
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If you could change the minds of CEOs in one way, what would it be? And the question is based on the idea of if you could improve the context for HR chros, what would that be?
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If you think about where organizations are Today, I think CEOs need to be more open, I think, to seeing their chro as an incredibly important part of enabling and executing their short, medium and long term strategy. And if I reflect over the last couple years of five to 10 years, I think chros have done a good job at getting a seat at the table. What's come with that seat at the table I think is more complex questions for chros to ask. I'll give you an example. I was with a chro more recently who said, look Mark, no one asked me about whether the payroll is working at the moment or is it going to be on time. They want to know what are we doing to bridge the gap between two Middle Eastern BRG groups that we have? What should be the CEO's message on that in the latest town hall? And how are we going to be thoughtful about continuing to ensure that the engagement of these individuals remains intact with the rest of the group? And I think that's an incredibly great example of the difference in complexity that CIHOs have had to face over the last 10 years. When I spend time with chros, I still think that there's an opportunity to not underestimate how key people still are to creating value within organizations and to ensure that we're not in a space where CEOs lose sight of that. Most of the world's most valuable companies today are still where they are based on people and the work that people have done to create that value. And by making sure that CEOs are lockstep with their chros in thinking about the short, mid term and long term strategy and the environment and culture they create for their people. If I could wave a magic wand that would make that happen. That would be the one magic wand that I would wave.
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I'm going to ask the same question about CFOs. The reason I bring up CFOs in particular is that you spoke about the CEO being concerned about the short, medium and long term. Sometimes it feels, and I don't know if it's always the case, that the CFO is in a position where they have to think about the quarterly revenue, they have to think about the annual revenue and it can make us short termist. I'm actually working on creating a show where I interview CFOs and say what is going on in your world? But if you could change the mind of CFOs in one way to improve the context for HR, what would it be?
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Look, I still think that we're in an environment where CFOs unfortunately view HR and talent as a cost center. And that's a big generalization, but that's been my experience thus far. And therefore the focus on HR and talent becomes less on quality and more on cost and efficiency. And as a result of that, if I could change one thing in the minds of CFOs, it would be to switch the lens to be thinking more of talent and HR departments as enabling functions for growth, critical enabling functions for growth, and to focus more on the medium to long term value creation that can come from unlocking investment in those departments versus the focus and in some instances the incessant focus on doing more with less.
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Yeah, I've seen one sort of failure mode with how budget is allocated in large corporations. And one of the failure modes is we'll give you money HR if you'll show us how you're going to give it back from your own budget through savings as opposed to how you're going to give it back by profitability for the whole company. In other words, HR only has so much budget, it can't give back that much of its budget and make a difference. It's more traceable when it comes from your own budget. But the truth is you're affecting the whole company's effectiveness 100%.
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You need to measure the impact of that investment on overall company performance, which.
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Traceability for that is challenging. And so it may never be something that you can develop certainty about. But recognizing that that's a legitimate investment is something I think we miss sometimes.
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I think that's a good point. I would challenge the notion that there's not a way to get to what I would call a relatively good data set of correlating how investments in HR and talent help grow the overall organization. I think there's enough systems of record and BI and MI information today that most organizations have to be able to make some sort of meaningful connection between ROI on activities. Whether you look at new starter fail rates, hiring manager, NPS scores on individuals from a quality perspective, which I still think are to over index and you need a little bit more of a more modern way of managing quality of fire, I think you should still look at speed of fire. I think that's important, but I don't think it trumps quality. I think if you look at the overall areas within your organization from feedback on engagement, that can be low hanging fruit, that by fixing you further increase engagement and therefore further increase willingness to adopt change initiatives and lean into them that can further lead to productivity improvements. There's multifaceted ways to take snippets of data within the organization and correlate them back to investments that we've made in HR and talent that are improving the overall performance of a company. The question is what does your dashboard say today? What do you discuss with the board, with your supervisory board, with stakeholders? Is it about are we reducing our cost year on year or is it about how we hiring higher performing individuals that are being rated at a higher quality and therefore are driving future growth correlation for the company? One perfect example them is Are the skills that we're hiring for the company more aligned with the future skills that we think we need for the company? And for example, how, when and where are we getting work done? What's the percentage of our contingent workforce at the moment? How much of that is done through statement of work where we're offboarding people? Is that being done in a way that's aligned with our values and purpose and therefore we're still getting good referrals through the door? I can keep going. There's multiple data points that I think allow you to connect back to. Here's a way in which we're driving value creation for the company and this is the data that supports that.
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Yeah, I think that's persuasive. Different topic. What's going on in the economy and the reason I bring it up is that it seems very mysterious, which is to say that for the first time in my experience, software engineers are on the street and companies that are being extraordinarily profitable are also laying off. I guess what I'm experiencing from my little corner of Silicon Valley is that it feels disconnected from events in ways that I don't understand.
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Yeah, I can certainly understand why you would ask the question, Doc. Let me share a little bit about what I'm seeing. Generally speaking, I need to be careful about how much data I share as it obviously relates to us as an organization, but from a general landscape perspective. Let me tell you what I was saying. Firstly, both from an external data perspective and an internal data perspective, we are seeing trends that we've never seen before. So that's the first thing, and I'll give you an example of one of those trends. Usually our recruitment process, outsourcing industry, or the business in general acts in direct counterweight to a career transition organization. So, for example, and you can go back and study this as publicly available information. The growth of the RPO industry recruitment process, outsourcing and the growth of the career transition organizations usually act as counterweights to each other. When people aren't hiring each other, they're moving people out. When people are moving people out there hiring people, we are seeing a interesting convergence between those trend lines. So we're seeing organizations for the first time ever say, we believe that we are going to continue to make surgical like adjustments to our workforce. We'll do that in a way that's just respectful. And we need the participant experience and career transition to be really well done. There's a much greater focus on the ability to internally reskill set individuals and move them to other opportunities within the organization. And at the same time they're saying we're going to double down our internal talent team's focus on ensuring that we win the war in the most disproportionately value creating roles in our company, and therefore roles that typically sit outside that. We are going to be in a situation by which we think about augmenting or outsourcing that component. They're typically the roles that are still important, they're still enablers, but they wouldn't be classed as the most value creating roles within the company. And as a result of that, we would don't want to be distracted by the spiky hiring demand that we typically see in those profiles. And we're seeing organizations say we don't want to invest fixed cost in those areas where we constantly get distracted by ballooning in and out our talent acquisition augmentation teams. And at the same time, we're going to continue to make surgical adjustments to create investments for budgets in areas that we think are core to the strategy of the company. We haven't seen that before. That's a data point that is super interesting for us. So we're watching that very closely, both externally and internally. And then the last piece I would say is you do see a much greater willingness from organizations to think differently about how, when and where they get work done. Recognizing the shift in candidate preferences across the multi generations that you have in the workforce at the moment. And therefore a lot of our enterprise customer conversations are, we need you as a partner for talent for us to help us use your proprietary data sets to say, should we do this work as a contingent? If so, what is the data that says that if we're going to do a contingent, which country can we do it in? If you're going to do it for us, how will you enable that through yourselves? Or a supply chain that makes that a seamless and compliant process for a hiring manager so that we're not thinking about doing it in the traditional sense and we're taking advantage of potentially skill sets in other countries, nearshore, offshore, where we have more access to those sort of talent than what we had previously and we're not fighting for competitors in a small fishing pond, for example. All of those things rearing their head in conversations with customers at the moment. And they're all data points that we haven't seen have that same level of attention that we've seen over the last decade.
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Yeah. And I'm going to say, because not everybody who listens to the show is in hr. So I want to say what you said in slightly different words, which is people are hiring and firing at the same time. And so what you see that is you see that as demand for your services and how those things move in an inversely correlated way. And they're not inverse, which I have seen before. Cisco Systems did a lot of that in the last decade and it was because it was radically transforming its route to markets and its product lines. And so it needed a very different workforce to do it. And taking a corner like that had that kind of effect, which was hiring and letting people go at the same time.
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B
I absolutely agree with that. You've got organizations that have made those strategic pivots. What I would say is previously they were probably allies and now we're more generally broad based.
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But interestingly, you had to see it in the data to know it was happening. At least that's implied. So what it means is that it may not have been deliberate. Right. It's something that's happening in the economy, but it may not be fully conscious or strategic.
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B
I think I would say that it's probably conscious within C suite of certain organizations. What? In my conversations with our enterprise client base, I think there was a little bit of a lack of appreciation for the fact that lots of other organizations were also doing that. And then through sharing those data and those stories, there's a. Oh, interesting. We're not the only ones doing this as a way of enabling or accelerating our future strategy of where we think the business is going to go.
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A
Anything else you really want to talk about before we go into the Talent report?
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B
You've probably heard my point of view on this before, but we talked a little bit before about the opportunity for HR and talent to reposition themselves as growth enablers within the company. And that's happening at a challenging time and I don't want to underplay that. At the same time, that focus on doing more with less and cost efficiency can often create systems and processes within talent acquisition that unintentionally disclude people from being able to be part of the company in the future. And I've talked about this for a long time publicly, although I don't spend a huge amount of time publicly in the limelight. But one of the things I talk about is this idea of having a choose your own adventure recruitment process. So you would say, here's the job. It's a container of tasks, skills, responsibilities and outcomes we need to deliver for the organization. We care about your ability to do that, how you demonstrate to us that you have the ability to do that, we actually don't care. We are not going to run a black and white process that says you have to do this pre screener. You have to do this battery of assessments. You have to do a first interview in which these will be the exact behavioral competency questions that we ask. What I'd love to get to is a world in which we say, here are all the ways that we've built a tool set that you can choose to demonstrate to us how you have those skills, the capability to undertake this role in a great way. And as a result of that, let's now run the process that way. And I think what you get to is a situation in which significant amounts of individuals who are unintentionally disadvantaged by having an efficiency and cost reductive thought process and executing talent acquisition would show up in a wonderful way for organizations and you'd have a significant amount of untapped talent that you previously didn't think existed.
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A
And to a large extent you're talking about that we set up systems that exclude the neurodistinct. Is that what you're talking about? That we're essentially inadvertently excluding people from our organizations who would be enormously valuable and we do it because we set up accidental filters?
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B
Yeah, look, neurodivergent individuals are a great example of that. But like, I think it's even more simplistic of that. For example, bespoke to a customer, a client more recently who has a presentation stage as part of their selection process. Yet the individual who's going to be successful in this role does three presentations a year. So if you hate presentations, you're probably not going to shine through that process. But actually, is the process designed to actually be a sample of real work delivered in the role that you will undertake every day, or is that just something that was inserted into the process to act as a filter to get people who they think need that skill to do that?
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A
I've certainly seen hiring processes that were quite uniform across companies where if you didn't have the gift of gab in general, you would be excluded. And there are lots of ways to engage in a company that don't require that. Essentially, it's the stage. It's the same thing you're saying about the stage, except that the whole interview process is the stage in some companies. Hey everyone, I want to let you know about some upcoming speaking events. If you happen to be in the Great lakes area on September 30th. I'm keynoting the HR track at the UWEBC 27th Annual Emerging Best Practices in Technology Conference in Madison, Wisconsin. The conference pulls in some fabulous speakers to discuss topics across all of business, not just HR. Also, in Oakland, California, September 17th and 18th, two of our past guests at Work for Humans will be speaking at the Responsive Conference. Brie Grof will be talking about her sparkling new book Today Was Fun. And Simone Stolzoff will be talking about his next book. So check it all out. At responsive.org, use promo code elevenfold, that's eleven fold to get a substantial discount. All right, hope to see you there.
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B
Yeah, yeah, exactly. I just think there's an opportunity to say if what really matters is just the ability to do the job, let's not be myopic in our way of understanding people's ability to demonstrate that they can do the job. Why are we so fixed on knowing that this is the exact way to hire the right person for that job? If you look at any of the studies empirically undertaken on the success of how recruitment processes are good at predicting quality of hire, we know even when you stack five together, you typically only get to a 2/3 to maybe 50% prediction. The system isn't working as well as we would like it to in that sense. And I would encourage organizations to be bold and have a little bit of think about what we can do there to make sure that where creating an opportunity for talent that is untapped in certain locations, industries to actually demonstrate that they may have the capability to do that job.
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Now there's two reasons motivations that I can see for why you might anchor on that particular point. One is we're wasting a business opportunity. The other one is it's wrong. We're excluding people who shouldn't be excluded. Is it one or both or a third?
- [40:03]
B
Yeah. And look, I mean you see it in our talent trends report that organizations are still saying that they're struggling to find the talent they need. And whilst geographically there are some surpluses of talent in certain parts of the world for certain skill sets, it's not easy always to get seamless access to that. And by being in a situation where you can unlock a little bit of that talent, I think that that's a great thing. One of the things that concerns me, like the trend that we see is obviously, particularly in the emerging careers and early talent space, the volume of future hiring that we're seeing be an early indicator for that space at the moment. So generally speaking, across the market you've seen a lot of Reports come out and say that anywhere between 15 to 20% of the emerging career talent or graduate talent that's coming from colleges and universities will likely be unemployed in 2025, 2026. Why is that? Because enterprise organizations are saying, well, look, we're going to leverage a more AI. We're in a situation where we think that leveraging more AI should get us into a situation where these individuals can produce more outcome than what they were previously. We're also in a situation where the economic environment is a little bit uncertain at the moment. We don't want to repeat the mistakes that we made of COVID So making sure we're not over hiring, we want to be conscious of that. And therefore you see this really careful ambition around how much early career talent they bring into their organization, which is leading to a surplus of great young talent being available in certain markets. How are we going to solve for that over the next two, three years if that doesn't change?
- [41:47]
A
I suspect that companies are overestimating the amount of efficiency they're going to get from AI in the short term. Am I right? Do you think I might be right in that?
- [41:57]
B
Generally speaking, the level of ROI that you're seeing from initial AI initiatives I think is not as high as most organizations would hope or expect. And that is because it is typically not eliminating whole jobs, it is making certain parts of the job much more efficient to be have done by humans. The question then becomes is with the excess time that is created, how do you capture that and how do you refunnel that to activities that are important and aligned with the purpose and value creation strategy of the company moving forward? And how are people motivated and inspired to do that and lean into that change journey with you as an organization? And I think that's a really challenging aspect. So for example, we're using AI within the screening and scheduling process for a number of our customers at the moment. There's always any human in the loop. We have it locked down from an AI order and governance perspective. So we're really comfortable with the level of experience that we're bringing to candidates that are going through that process. For example, I was looking to report this morning we did 55,000 conversations. More recently, the candidate scores 4.98. In terms of interacting with our own, we estimate that individuals will probably have anywhere between a 15 and 20% increase in overall productivity on certain accounts as a result of utilizing that. That allows them to make arguably maybe one to two more placements for their customers than they made previously. So it's allowing us to have a little bit more of a buffer to grow without necessarily adding fte. But we now need to be thoughtful about, well, how much longer is it going to last for? How long do we get to the point where, hey, I can actually start to do way more of the recruitment funnel and then the question becomes how do we then transition our people into different tasks? We've already started to explore that a little bit and I'm an optimist on this. I strongly believe that we can be in a position where we can move people towards even more value creating and enjoyable jobs. And I'll give you a small example. We with a certain life sciences organization got to a stage where we pretty much automated through a gentic AI, most of the front of the recruiter funnel. So passive outsourcing, screening of candidates, the scheduling of those individuals, and what we decided to do then is say, hey, our recruiters have a huge amount of time. Imagine if we didn't need hiring managers to do first or second interviews anymore. Imagine if we could skill up our recruiters to actually completely undertake the role of the hiring manager in the first and second interview and there was enough trust between the hiring manager and the recruiter that they became a true extension of that hiring manager's decision making process and they could understand the job, the boss, the company, the culture, the context of the operating environment. They could even ask technical questions and they could be have an overlay of AI that helped them to know what's a good technical question, what's a good answer, what should they ask next, et cetera. So we ran that pilot and what you saw was effectively we gave almost between 70 and 100 hours back to hiring managers to focus on their core work. The time to offer for those candidates acceptance went through the roof. Why? Because we weren't worried about trying to schedule candidates for interviews with hiring managers who always had something more important on. And I think that's just one microcosm of an example of where individuals in the HR and talent field in the future can actually, through the thoughtful use of agentic AI, play an even disproportionately value creating role on helping organizations work better in the future. And we need to find more pockets of those sort of things.
- [45:53]
A
That's a great story. That was a great story. Nobody's ever wanted to do scheduling. Nobody's ever wanted to do the front of the funnel. That is drudgery. And the idea of alleviating some of that and turning it into, first of all a higher touch model in Many cases, well, higher touch for the recruiters, which is that the recruiters are now in a position where they're talking to human beings at a deeper level and expressing their own higher skills. So that's very compelling because every time I've heard anybody say the first part of that story, I haven't heard the second part. The second part is somebody else who is not uniquely qualified to do those interviews, but is absolutely uniquely qualified to do their core business. The manager is now able to allocate more time to things that in my interviews with hiring managers, managers in general, they have classified as administrivia. So what that means is the recruiters still have a role. They are value adding to the whole company in a really powerful way. That's great.
- [47:06]
B
I'll give you one more example though. Whether you're included in the podcast or not, we say we have another organization that we work with in Europe where we manage a significant portion of their non permanent employee workforce. And in that we have, let's call it a front door for hiring managers to think about how, when and where they get work done in a data driven way. Now we've automated a significant amount of again the screening, sourcing, shortlisting and the hit list of candidates who could do that particular role for an organization. What this organization decided to do was move to a not an FTE thought process of getting work done, but a cost of getting work done budget. So outside of confidential proprietary projects that we're working on that are commercially confidential and sensitive, you have the opportunity as an individual to use your work budget in the most efficient way possible, still delivering to the outcomes that our clients and customers expect. So then our role as a talent advisor within that organization transition to becoming a much more of a data driven optimization thought process to say, okay, where are we on this project? Are we tracking? Is there revenue leakage? Are there cost implications? What skills are we missing to deliver this in the way that we want? What are the different ways that we can create a team of individuals to be able to get that done in the most efficient time? Cost quality triangle and how do we enable that for the organization as super seamless way as a partner for talent could be a statement of work for this component of it. It could be two freelancers, it could be contingent workers in another country and then we're going to have three permanent workers come in for this component of it. But we're enabling all of the different ways in which you can get work done with ready made talent communities of these individuals in A data driven way that's leading to more efficiency in how you get work done. And like there is an incredible opportunity for organizations to start leveraging that sort of model and being intentional about having a partner that can help bring that data driven service. I know significant amount of organizations aspire to do that. There's a great role for we within the industry that we operate today to take a big step forward in enabling that for companies and there'll be huge amounts of work for us to do to get that right for companies for the next five or 10 years. So I'm an optimist and they're just some of the couple of reasons why.
- [49:43]
A
I'm an optimist too, by the way. It's not because I know anything, it's.
- [49:48]
B
A better way to live.
- [49:50]
A
The story you told of moving the work out of the front of the funnel, it actually does come with one knock on effect, which we had one person on the show named Matt Bean who talked about how all automation, all technology, has a tendency to take novices out of the process where they can learn. So how many of us learned recruiting in the front of the funnel? And in order for us to have the sophisticated conversation that we need to have to actually do some of the interviews that a hiring manager might do, you have to wonder whether or not that front of the funnel is a place where that's learned. I started off even before I was a recruiter, as a staffing researcher. Nobody remembers. You might remember staffing research. I'm sure I did, which is before LinkedIn. You would do cold calling into companies and you would extract people's complete life history and resume over the phone. Talk about a boot camp. It was incredible. So I think that it can still be learned, but we might have to be more deliberate about how it's learned.
- [51:00]
B
I think that's an incredibly accurate comment and one I definitely subscribe to. The tangential example that I have is I'm an absolutely avid user of AI and it's become a reflex for me whether I'm writing reports, needing to review emails, reviewing documents, etc. And I've probably underestimated how much I've been using it. I'm on the plane coming back from a certain location, I need to write a board report and we don't have access to wi fi, so I'm writing that board report by myself. A year and a half ago, I would have knocked that out in 30 minutes. I would have been seamless and I really struggled for the first time in a long time. To write that report because I'd been over relying on AI to do so much of the heavy lifting for me previously. And I think it was a checkpoint for me to say, every now and then, write your own board report. Don't lose sight of those skills that gave you the foundational building blocks to actually use AI well today, because in the future, you still might need to use those skills in a different setting or context. And I think Matt's example of how will we be intentional about replicating the building blocks that recruiters had in the front of the funnel to be successful in that next component of it?
- [52:19]
A
When my father was in his 80s, I worked with him on a paper and I tried to teach him how to use Excel over the phone. Over. And every time I tried to do that, I thought, oh, my God, Dad's got to go into a home. And then he would start talking about statistics, and I'd say, oh, my God, I've got to go into a home. And the reason is that he grew up doing statistics on a slide rule. I remember when he got his first handheld calculator in 1972, it cost $500. You locked it to your desk because somebody might take it. And so it's not the first time this has happened, which is it's not the first time that some technology has come along and made it so that we understand something less and we seem to survive. So I love that story. So I want to talk about the talent report. I don't want to talk about the front end of the talent report. I want to talk about the end of it. And so let me just say what the front end is. The front end talks about 10 big trends and opportunities. And I'll just give a sample of a few because I think we're going to go on to something else, which is, who does HR need to be in the future? A lot of the big trends have to do with doing things that we've done before. In fact, I looked at your report from 10 years ago, and the truth is, there's not a huge difference in the list, But AI is on every single one of them. It's how are we going to use AI to do things that we've always wanted to do? There were some fundamental differences. I think that there is a lot more focus on agility.
- [53:48]
B
Absolutely.
- [53:50]
A
In the most recent report, of course, there's more focus on AI, less on big data. There's still some data, though, because we need good data for AI, more of a sense of design. I think in the Most recent one, instead of engineering sort of approaches to things. So there were changes in particularly from.
- [54:14]
B
A design thought process, embedding agility into the core of the model.
- [54:19]
A
Yes, exactly, exactly. Which, given our context, makes total sense. The word human was used a lot more in this year's version than 10 years ago. I suspect it's to counterbalance the word AI, which is that whenever we say AI, I notice that we all have to say human right after so that we aren't scared of it. But what I thought was actually quite different was the suggested new roles for HR in 2030. So looking out five years, I'm just going to read them and then we'll dive into a couple. HR will be architects of adaptive organizations, Agility Guardians of Ethical AI and culture. Very interesting to see those two together. Curators of the human AI workforce, data visionaries, drivers of lifelong learning, human centric workplace designers, business strategists and sustainability champions. I'm going to pick on Guardians of Ethical AI and Culture first. And the reason is recently I was at a conference and there was a panel of leaders speaking about leadership in the AI era. I asked them a question which I did not mean to be a zinger, but it was, which was how do you need to build out moral discernment as a leader to know when you're using AI, AI the right way. And what do you see as the challenges that AI might bring to a moral leader? And we couldn't answer it, at least as framed. And so what do you see as the special challenges of this combination of three words, ethics, AI and culture in the same sentence?
- [56:05]
B
We discussed this a lot within our advisory business that you mentioned earlier. And the reality is we believe that AI in the future, and it can already to a degree, do some things arguably better than what humans can and make some relatively strong and robust predictions about certain outcomes that could happen and how you can be proactive in getting ahead of them. And then lastly, we believe there's an opportunity for AI to really displace, if you so choose, a significant portion of certain workforces within certain industries. I think we're already seeing that in the call center space. Let me give you a tangible example of something that we've worked on previously, and that is a simple model that suggests the likelihood of an organization to experience turnover in a certain department, in a certain location as a result of external factors and internal factors that we can track through publicly listed available information. We might be, for example, responsible for hiring those skill sets for certain companies. And therefore we have the ability through AI to, say, the return on investment for our recruiting efforts by targeting said individuals in said department in said location with said offer will result in significantly higher acceptance rates, higher productivity, and therefore higher profit for us as a company. Because if we put in less effort for a good return, now the question is, is that ethically the right thing to do? Now, we think the answer to that is no, that's not the right way that we should be using AI in the current context of our values as a company. The same model can be applied internally to hiring managers who, for example, have individuals within their team who may be at a higher propensity to leave the organization. And as a result of that, what information should you make available internally to hiring managers to think about whether they are proactively given the opportunity to have a conversation with individuals who may be in key critical roles about their propensity to leave the organization? It's a small, simple example where we now have significant data and robust models that can statistically significantly predict this to a relatively high degree. And I think in that context, you need to come back to, how would I feel as an individual if I was asked to undertake work in that context? Does that align with the values that we've espoused as an organization? And this is the one that I like to reference the most. Let's imagine that people are going to find out about how we got that work done or how we undertook that relative project. For example, would you feel comfortable standing up in front of a room of 100 CHRO CEOs and CFOs, et cetera, and saying, and they got to ask you questions about that? So, like a bigger version of the red face test, would you inherently go, yeah, I had no problem with what I did there, or would you be like, yeah, we probably should have thought that one through a little bit more. And I don't think there's a silver bullet. Every single example is, is nuanced in these examples that we're talking about. But I think you as a company have a responsibility to think about a generic framework that you can apply to these instances that's consistent with your values, your purpose, how you want to be thought of as an organization from a reputational perspective. And you should run it through that in a way that allows you to go from a moral perspective, from a just a genuine human decency perspective. Is this the right thing to do? And how do we want to make that decision?
- [60:14]
A
And the very first step in every single one of those scenarios was asking the question moral Discernment starts with asking the question, is this the right thing to do? The answer's rarely easy, but at least asking it, you can start down the right path.
- [60:34]
B
I think there also needs to be who owns the decision in organizations. And I think the proactive setting up of cross department multidisciplinary governance functions who are equally empowered is a great step for enterprise organizations because individuals are incredibly motivated by different mechanisms. And if you are an individual that's maniacally focused on shareholder value and creation and what you're going to do in the short term, well then you probably might go, yeah, that's the right decision for our organization now because we're going to grow, we're going to hire more people, they're going to have a better career, we're going to be able to invest more training and development into them. Why wouldn't we do that? I think you do need a really well orchestrated governance function to make sure that that goes the way it needs to go for your company in the long term.
- [61:28]
A
I had one conversation on the show with the Clark family. It was Kim Clark, Jonathan Clark and Aaron Clark, who wrote a book called Leading through and it's about moral leadership. And Kim Clark talking about Harvard, said, no, we talk about ethics all the time at the business school, all the time. So I don't think you have to worry about business schools discussing ethics. And Jonathan, who's at a different school, said, no, we sort of cut our department and actually we should actually worry about this. And so it's a mixed bag out there whether or not were actually creating the capability. And I think that Kim Clark in particular, when he explores moral questions of management, he turns to his church, to the elders of his church. The other one on this list here is data visionaries. I would argue we are farther away from having data visionaries than we are from having business ethicists in our organizations because that's hard. A lot of my career has been in data and so it's part of the reason why I know that that's hard. Why data Visionaries first of all, I.
- [62:36]
B
Want to acknowledge that your comment around data being hard resonates. And look, I think anyone who tells you that it's not that hard doesn't have the right ambitions and aspirations around what having an incredibly well structured up to date and I would say broad range data set on any particular topic can generate in terms of insight and action and competitive advantage for you as an organization. When we think about HR needing to be data visionaries in our own experience Today there's many questions that HR can't answer. And if they want to continue to own that seat at the table and as I mentioned earlier, be in lockstep with the chro about driving more short term, middle and long term value creation through human centric decision making. They're going to need more data than they have today. That starts with designing systems that allow you to capture that data and to easily act on it. And I think it's more than just the internal data that you have within your own systems. A significant portion of that is being way more focused on finding a way to get more external data in real time to be able to make better decisions. I'll give you one example. A lot of the services that we provide customers today are based on talent intelligence services. On we're thinking of opening a global capability center. Where should we open that global capability center and why? And we're in a luxurious position as the world's largest HR services company to have access to a significant amount of data to help companies make the right decision about where you would get that done. For example, we spoke to a company more recently who said, yeah, look, we're thinking of doing in this city in Portugal. And we said, look, actually if you look at the availability of talent, the costs, the competencies in which you can get the long term sustainability of that plan, that makes sense. But actually there's one bridge between where you want to open your office and where the majority of talent sits. And you want to have an in office culture. And as a result of that, we know barely anyone from that town is going to drive across that bridge because it's bedlam for three hours every morning from 6 to 8:30pm so you either need to do staggered shifts or you need to think of a different place in which you're going to be able to do it or you're going to have to do work from home. Now, if you didn't have access to that data, you would have said, this looks great, let's go and do that. And it would have been a disaster.
- [65:31]
A
Right. It was the equivalent of putting that site in a different town entirely where none of the people were.
- [65:38]
B
Exactly. And like again, just another small example, the data visionaries, I would argue organizations need to be able to have that as an inherent core skill within their own organization in the future to be able to understand how, when and where they get work done.
- [65:55]
A
And I'd argue it's both knowing what data are meaningful, knowing how to communicate them, but also knowing how to move toward A tech stack that can integrate it. And it's a really fun problem, but very hard.
- [66:12]
B
If you don't have the right data set and you're ambitious about AI, I'm going to really be strong in challenging the value you're going to get from that anyway. Do you need to be thoughtful about your data hierarchy, your taxonomies, how you're leveraging data, how you keep it up to date, and then more importantly, how do you action the insight from it?
- [66:30]
A
I ask a few questions at the end of every show of everybody. One of them is what job do you, Michael, hire your job to do for you? Randstad hires you to do something for it. What do you hire it to do for you?
- [66:43]
B
What a great question. I hire the job that I have for me to do a couple of things. The first thing is I find it incredibly intellectually challenging and stimulating. That's one, two. I'm a big believer in lifelong learning and the job that I've had at Randstad for the last 20 decades has seen me work across many cultures in you mentioned it earlier. From Australia to Singapore to Hong Kong to Malaysia to Europe to the UK to now in the US the breadth and diversity of experience, cultural adaptation and learning has been phenomenal. I'd be lying if I said I don't get quite a lot of identity from work as well and like a sense of fulfillment that comes from that. And then lastly I get a huge amount of satisfaction, which sounds super cliched about developing others and seeing others do well. And I would be remiss of me not to pay homage to the fact that one of the largest reasons I am in the job I am today is I had leaders that were always incredibly generous and value with their time in creating a great environment for me, allow me to make mistakes and learn from them and I've got a fantastic team that works for me or that works with me. Sorry, I should say to be able to deliver the types of services that Ranstad is passionate about delivering. So all of those things have led me to have a really satisfied and enjoyed career so far and I feel blessed beyond what I deserve is probably the right answer.
- [68:16]
A
I'm going to tell you how some people answer that question and I want to test if it might apply to you. I have been told that you are very competitive and I counted the number of times you said win in this conversation. It was eight times you said win in one way or another. Some people say I hire my job to give me a worthy opponent and they say it because they like to compete with and they like to compete with people who are as strong as they are. I'm curious if that rings a bell for you or if it doesn't, because nobody ever says it without me asking a little deeper whether or not that's something that they like.
- [68:56]
B
Look, I love winning. I am addicted to winning. And I am a competitive person by nature. There's no doubt about that whatsoever. And I get as much satisfaction from a customer saying we choose you to partner with as I do in knowing that I beat our competitor. I think as I've had the pleasure of taking on a more senior role within the organization, I think winning is important. Winning in the right way is more important. And I would say that over my career I've transitioned from the let's win at all costs to let's win the right customers, where we're the right partner for them, where we can deliver a service that they need that is in line with creating an environment for our people who want to get up every day and do the right thing for our customers. Because the way that they think about treating people is aligned with how we think we should treat people as well.
- [69:57]
A
That's beautiful. What does your job cost you?
- [70:00]
B
Too much? I travel incessantly probably 70% of the time. I've got three young children, a 13 year old, a nine year old, a four year old. I don't get to spend anywhere near as much time with them as I'd like. I don't believe in the saying that there's quality time over quantity time. I think any time spent with your children is quality time. And one of the things I'll need to make peace with in my life at some point is the fact that I haven't got to spend anywhere near as much time with my children as I would have liked. And I hope that at some point I'm able to maybe finish a little bit earlier my career and that they're still willing to spend time back with me.
- [70:41]
A
We get that a lot. To that question. It's a common answer and I suspect there's a correlation between success and the answer. But not always well spoken.
- [70:53]
B
Look, I think it's incredibly difficult to have hindsight in the present. It wasn't like 15 years ago when I took my first expat assignment that I thought like I'd be here. You just kind of focus on doing the next job ahead of you well, and then each time a new journey or adventure kind of opens up and then you get to a stage where you're like, holy Moly, I've got five more summers left with my 13 year old that you wish that you could take some of the wisdom and experience that you have now and inject it into your former self. The question that raises is, would you be where you are today if you knew that? Yeah, that's a deep question.
- [71:34]
A
Yeah. It got me thinking. So where can people learn more about you? And where can people learn more about Randstad? That seems like it would be easy. We just need to be able to spell Randstad.
- [71:45]
B
You gotta be able to spell Ranstad. R A N D S T A D. You can find us online and Obviously I'm on LinkedIn, so if I can ever be helpful on any HR topic, talent topic, in any way, shape or form, more than happy to pay it forward. So I would encourage any listeners to reach out to me and understand how it can be helpful.
- [72:06]
A
Great. Thank you for taking the time to come on the show today.
- [72:10]
B
My pleasure Dart. Keep up the good work.
- [72:14]
A
Thanks for joining me for another episode of Work for Humans. If you enjoyed this episode, please give us a five star rating. Wherever you listen to podcasts and share the show with one person you think would get value from it, believe it or not, this really helps us grow the show and reach more people who want to build the kind of work that people really want. As always, thank you to my producer Jason Ames at 9th Path Audio for his insights into content and his high standard for quality. Final note, the opinions shared here are my own and not to be of Google or Cisco Systems. Thanks again for listening. See you next time.