Josh Bersin (00:00):

I was a frontline worker most of my childhood. I had a paper route. I worked in a distribution center when I was a sort of a young man, and then I got involved in McDonald's when I was in high school. I never made it into management ranks, but at the time it was just all the jobs at McDonald's. I mean, I learned a lot about management and work and business and customers and how to clean a toilet and how to wash a window, and many, many important skills in life.

Joshua Secrest (00:30):

Welcome to our next session of the conversation. I'm here with Personal Idol of Mind, Josh Bersin, obviously industry analyst extraordinaire, who's fresh off the stage at Unleash and just mind blowing keynote and always thinking about the future. And we're always so excited to hear from you. And we're going to be talking today about the frontline worker and frontline hiring trends. And no better person to be able to geek out a little bit about this with you. You and I have been talking for four years at least on the importance of frontline, frontline hiring. You've heard me get really excited about it and I'm now equally excited because you all have done a lot of research on frontline, not only hiring, but the frontline experience and its impact to business and revenue. Can you tell us a little bit about the report and maybe why now?

Josh Bersin (01:31):

Well, we're really starting this research campaign for probably a period of years, and I know we'll be doing a lot of work with you guys.

(01:39):

I'll tell you one of the things that went through my mind was in the last 12 months, the white collar workforce has been flat to declining in size. I don't know if that's AI or the economy. I mean, there's a whole bunch of contributing factors to that. But if you talk to the US Department of Labor, and we've just talked to the secretary and the assistant secretary about it, the manufacturing workforce, the healthcare workforce, the retail workforce, the transportation workforce, the repair and service, all of those jobs are in very short supply. Those are in the US at least. Those are the jobs that are constraining the growth of this economy and this world that we live in. And of course the immigration policy has lots to do with this. So we felt in all of the CHRO conversations we've been having over many, many years, we're not talking about this enough for some reason. And we want to make sure that the executives that we have access to really know what they can and should do and how much attention they should play. Because in a lot of organizations, the management issues of the frontline workforce are really mostly managed by the managers of the retail operations or the manufacturing plants or whatever it may, or the hospitals or whatever. So this is the beginning.

(03:02):

I would say. The first finding is that, and I don't know if everybody knows this, 70% of the jobs in the United States are frontline and around the world it's almost 80%. So this is a much bigger population of people than the rarefied sales marketing, software engineering types we keep worrying about all the time. The second thing is the frontline workforce is the face of the company to the customer. So every single person has a massive amount of impact on the customer brand, on the customer's potential interest in doing more business and coming back on the revenue of the company. Whereas most of us working in corporate, maybe we're somehow influential on the revenue, but not that influential on the quality of the product and the service frontline workers know what's broken and what's working. They know what's wrong with the company because they see it every day

Joshua Secrest (04:01):

To be our eyes and

Josh Bersin (04:01):

Ears. We don't listen to them that much. We don't have time. We don't always have the tools. A lot of research shows that frontline workers are very disconnected from the company's strategy. They don't know what it is, they're not hearing about it. They're not included in a lot of the company communications. So they're a little bit disconnected from the culture in a lot of organizations. And even though they may be a high turnover group of people, and maybe they're a little bit lower pay because they might be younger, they need a tremendous amount of development and skills and operational training, and they have careers and they become consumers of the company that they're working for.

(04:41):

So if they have a poor experience in the frontline job in a company, they may not ever do business with that company again. So there's all sorts of really big dynamics of frontline. And then of course, if you're a nurse, this is a life or death situation if you're in manufacturing, similarly important. So we want to really make sure that people in HR understand the complexities and the opportunities and the benefits of investing in this part of the workforce. And I think the feds, they don't believe, and I don't know if this is true, they don't believe that the American employers are paying enough attention to this market. So it's everything from the education pipeline of how people get into these jobs to how they're taking care of during the time that they're working and so forth. So we're just going to spend a lot of time working on all these things.

Joshua Secrest (05:33):

It's great. And as you talk about the 70% frontline workforce within that, I mean some of the biggest is healthcare is right up there at the top, hospitality. So hotels and restaurants, transportation, logistics, manufacturing, warehousing, the list goes on and on. And we will try to go through our conversation and maybe pull out different industries because you and I talked a little bit about even just the difference of part-time workforce turnover versus maybe a full-time turnover and some of the dynamics there or some of the dynamics of a part-time workforce that requires certification or licenses like a nurse where it's a much smaller group of people that can maybe take on a role

Speaker 3 (06:18):

Versus Or a Haircutter. Or a haircutter, which is absolutely, which is really, I mean, it blew my mind when we talked about that they need to be certified too.

Joshua Secrest (06:26):

You can't just have anyone come to walk off the street to come in and cut hair. And it's one of the most competitive industries out there. We had pretty big news on the paradox front over the last several weeks with Workday acquiring us.

Josh Bersin (06:44):

I

Joshua Secrest (06:45):

Was curious of your take on that.

Josh Bersin (06:48):

Well, I think it's great. I know you guys are excited about it, and you've been partners with Workday for a long time. Workday is an interesting company, and I've worked with Workday since they were founded. And for many years, Workday deliberately did not want to get into these kinds of businesses, mostly because the pricing model of Workday is relatively high, and these kinds of businesses tend to spend less money on HR technology. So they weren't good fits for Workday. But now that Workday has become such a big company in so many industries, this is an opportunity for you as a business within Workday and for Workday to really thrive in this frontline worker segment. And of course, you guys pioneered the effective use of AI kind of before everybody else even kind of knew it was coming. It wasn't called ai, it was kind of called NLP at the

Speaker 3 (07:42):

Time.

Josh Bersin (07:44):

And so Workday gets all your expertise in that. So I actually think Workday doesn't realize the value of what they got. They probably should have paid more for you guys, but I don't know what the number was.

Joshua Secrest (07:55):

Well, it's exciting to see a very clear investment and the frontline worker and organization, and I mean Workday is such a market leader on retail and healthcare and some of these large industries that we've been able to talk about. And so now to be able to bring our synergies to be able to really help that frontline manager through the Workday system feels

Josh Bersin (08:22):

Like, well, in some sense, and I think because of the focus that you guys had on Frontline, by the way, the other thing that I think is really cool about what you guys do at Paradox, which I've never seen in other, I mean SuccessFactors did this many years ago, is that you don't just sell software. You work with the customer to build the business case for re-engineering the talent acquisition process using things like time to market and revenue and so forth, which very few HR technology companies do almost none.

Joshua Secrest (08:54):

And

Josh Bersin (08:55):

That means you're really close to the business issues behind Frontline and the revenue dynamics. And I think Workday is going to learn a lot from you guys. I think they got really quite a crown jewel from you.

Joshua Secrest (09:08):

Thank you. One of our approaches on that process design is maybe the exact opposite of the first question you think we'd start with, which we want to be and pride ourselves currently to be the best at automation within the hiring process. But our first question is, where are you getting the most value out of your people within a hiring process? And I think it's really great to be able to hear frontline organizations talk about that because they would say, well, I really want my manager to interview, but everything else, I'm okay with you automating. And it's like, oh, that's actually a really important first piece to be able to start with. And so I think it's a great compliment as we get to go and chat with some of Workday's clients as well as continue to service those who aren't on Workday because it's really going to continue to be this consultative advisory on people are still

Josh Bersin (09:57):

Very important. I really hope Workday lets you continue to do that because you guys have some gigantic clients with huge volumes that have major revenue dependencies on the hiring process. And I think each company probably has a slightly different set of issues and cultural standards for how they want to do this. And your ability to uniquely tailor your solution for each company is very, very important. And those of you Workday folks that are listening to this, I hope you're taking advantage of what Paradox has built here.

Joshua Secrest (10:33):

Thank you. And I know a key part of our strategy is to be able to support on the frontline side for Workday current customers and continue to support over 80% of our customers are on other platforms or utilize our A TS. And so a great way for us to continue to service hopefully the whole frontline industry. Want to get into our next segment, which is all about speed. And so for this, we're going to talk about quick doesn't just mean quick serve restaurants within Frontline. We've done some research and I know we've kind of gotten a talk, but for you, what's the importance of hiring quickly in the frontline space? Why has that been become so

Josh Bersin (11:22):

Important? Well, I mean there's a whole bunch of reasons why speed is important. First of all, if you have to do it faster, you're going to do it better. Faster doesn't mean sloppier faster means more precision. So there's more precision in the process. So you do it faster. Candidates for these kinds of jobs don't wait weeks. They find another job the next day, so you lose them and then you're going through another cycle again, obviously time revenue is huge. If you can staff correctly, seasonal issues come and go very quickly. You can't afford to lose the season a hot buying season. And I think it forces the TA function to reinvent the way it works because the traditional approach that a lot of us white collar types have been through is very slow. Get a bunch of candidates, screen a bunch of people, schedule a bunch of interviews, do a bunch of interviews, talk about the interviews, go back and look at who you talked to again, meanwhile the candidates twiddling their thumbs, thumbs wondering what's going to happen. That just doesn't work in this industry. And from a candidate perspective, speed is such a value to them because they got to get along, got on with their life too.

(12:42):

They can't wait forever and they're going to find something else. And it's also a brand value that if you can get back to a candidate quickly and either make them an offer or not, that's actually a great experience for them. They're going to think more highly of that company the next time they want to do business with them. Because the worst thing that can happen is somebody gets dropped as a candidate and then they decide they're never going to do business with that company again. They were treated so poorly. So there's a bunch of drivers for speed that are counterintuitive to the old white collar. Let's slow it down and kind of take this thing down to the nth degree of detail, which happens on other kinds of hiring. I

Joshua Secrest (13:22):

Think really well said because so at Abercrombie, I was really focused on

Speaker 3 (13:26):

Corporate. You tell me because you know about this from

Joshua Secrest (13:28):

Stand. I'm excited to get your take over it. I was always thinking corporate. And then at McDonald's I got to think about corporate. And I got to think about, so maybe a couple pieces of data that we can go through. One would be when a frontline employee for most industries, especially part-time applies to your job, they apply to 20 other jobs at the exact same time.

Josh Bersin (13:48):

That does not surprise me, but I never really thought about it.

Joshua Secrest (13:51):

And that number's increasing because while we use AI at different companies, the candidate now has started to use ai. So another way to flip that would be when a candidate applies to your job, you're competing against 19 to 20 other jobs at the exact same

Josh Bersin (14:04):

Time. And there's a shortage of these people anyway,

Joshua Secrest (14:07):

Especially depending on what type of industry. If you are looking for a skilled worker that's even more precious to be able to go after an unskilled worker, potentially they might be applying to a lot more jobs. So that's interesting. The other piece of data, and this comes from, we've got now billions of interactions largely on the frontline and paradox, 52% apply at night or on the weekends. And this ties to our previous point of who's doing the recruiting. We don't have a recruiter in a restaurant, we don't have a recruiter. It's the manager and the manager sleeps. So now we're in this, we need to make sure that our stores are staffed

(14:42):

Fast and we've got people applying, we've got all this competition and then they're applying at night when we can't get to them. And so it's been a really lovely of where automation has been so sticky because essentially it's like having a recruiter working 24 7 in every single store. And so one of the pieces that I've just been really proud of within the market shift and maybe personally proud because McDonald's was the first to have a conversational a TS that leaned into all this automation, but seven years ago, the average time to hire in frontline was 21 days. We just pulled our data. And the most recent is just over three days on average. So we've got some that are going way faster. And just to be able to see that, and to your point,

Josh Bersin (15:31):

I think you have some where they get hired the same day, they apply.

Joshua Secrest (15:33):

We do. And that's also a fascinating model in this average. And you've got some in the warehouse distribution centers, less maybe frontline customer facing, and those are finding that they can do same day hiring and it's really fantastic.

Josh Bersin (15:50):

Well, I think it's also mean to some degree, this is a perfect example of where AI can change the dynamics of the entire system because without ai, the idea of hiring that fast means you would've had to have a hundred recruiters, a hundred interviewers staying up all night talking to, which is ridiculous. So you can basically re-engineer this process with AI in a way that was impossible before. That's like an order of magnitude faster.

Joshua Secrest (16:21):

And I like how you're thinking about it is I think some of our most innovative clients, seven 11 comes to mind re-engineered. It wasn't take our same process and add a little bit of automation or a little bit of AI to it. So they had 400 field centralized field recruiters in Most of those are contractors. And the reason they had that was because Understaffing was an issue and they didn't want to burden their managers. And so by being able to figure out ways to be able to automate that, they were able to reallocate that 400 headcount and be able to put that responsibility back on the managers and still return 40,000 hours back to their system per week. So they received 2 million hours of manager hours back to seven elevens within the year. And so it's exciting. That's business impact. It's not only cost savings, but it's actually revenue driving business impact that I think is quite neat. It's great hearing about manager pipelines as well. It seems like most frontline industries are seeing that managers, their best managers are coming from within versus coming in training from outside. And what's also, not only is the pay package gone much wider and bigger, which is amazing, it's tied to revenue that's being driven,

(17:41):

But you're starting to see very clear and transparent paths for training to get someone from a crew member position to a manager position. So I was sitting with a CEO of a regional restaurant group and they said, our goal is to really get someone there within three years, but once they hit the manager level, it's a significant six figure role because of the volume. Well, a

Josh Bersin (18:05):

Funny story on that. I don't know if you guys have done any business with Wegmans,

(18:10):

But Wegmans really spent and there are just a really highly regarded supermarket. I guess they're more than a supermarket, but I think that's the category they're in. What they told me is that the way they develop managers is they take a team of people that are running a really well run store, including the sort of lower level department heads, and they move them. And when they open a new store, those people get to go to a new store and train all the people in that new store and how to run that store. And that process teaches a lot of the institutional knowledge that they have and helps them understand why they've been successful. And so then they move those, many of those people get to run that new store. They get promoted when they run that new store. I mean, these are sort of innovative ideas on how to develop leadership

Joshua Secrest (19:02):

In

Josh Bersin (19:03):

Organizations that really have a big impact on frontline.

Joshua Secrest (19:06):

Yeah, I love it. Josh, this has been a fantastic conversation. Thank you for taking the time and just from all of us who've spent time in the frontline industries and thinking about it, it means so much to have your eyes on and your brain on it. I think the research that's going to come out from you and the team is going to be really cutting edge and propel us forward because I think all of us are desperate for better business cases and bringing in other case studies to our C-Suite, and I know you'll lead the charge. So just thank you.

Josh Bersin (19:38):

Thank you, Josh. I appreciate all your help.

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