Discover two major work trends that are reshaping the workplace: the shift away from managers and the growing importance of bonus-based pay. Learn why human capital is an investment, not an expense.
Two Game-Changing Work Trends:
👉 Explore two major work trends transforming corporate America: the decline of traditional managers and the rise of bonus-based pay. Find out what this means for your career.
We referenced:
Amazon's Plan to Cut 14,000 Managers
The Big Shift from Salaries to Bonus Based Pay
Human Capital: Why Investing in People is the Key to Growth:
👉 The data is officially in - Human Capital is actually an investment (I know, all of us in talent are like, no duh. But, we love the data!!). The SEC's human capital reporting rules and why diverse teams are crushing it financially (35% better). Plus, Microsoft's secret sauce for employee retention.
We referenced:Â
- From Expense To Investment: Human Capital - A Driver Of Business Value
- McKinsey & Company: Delivering Through Diversity
- Gallup: Employee Engagement
- Deloitte Global Human Capital Trends
- Morris & Garritano Ex.Â
future of work, no managers, bonus pay, human capital, employee investment
Disclaimer: This podcast is for informational purposes only and should not be considered professional advice. We are not responsible for any losses, damages, or liabilities that may arise from the use of this podcast. The views expressed in this podcast may not be those of the host or the management.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
You wouldn't expect to get returns from your
technology investments if you'recutting corners on the
maintenance right.
And so the same goes for yourhuman capital.
If you aren't investing in yourworkforce through development,
well-being programs, diversityinitiatives, you're not going to
get the best results from youremployees, and so you're not
going to get the best businessresults what's going on, mel?
Speaker 2 (00:35):
not much going on with you not much, not much, I'm
clear into fall.
I can't believe it's october,isn't this funny?
It's like the time of yearwhere you start thinking about
the next year, even though westill have what three months
left.
Speaker 1 (00:47):
We're still at the tail end of fair season here.
My best friend and I aregearing up to head to a local
garlic festival that we love.
Speaker 2 (00:57):
What kind of garlic?
You know how many varietals ofgarlic there are A million, yeah
.
Speaker 1 (01:03):
Yeah, and not sold in the grocery store.
So this place has everything.
Their vendors were amazing.
Last year they had garlic icecream, which I was very
skeptical about, but it waspleasant.
They also had the best freakingpickles garlic pickles, pickles
all day I love pickles, yeah,and then they had a ton of stuff
(01:24):
though, like sauces and-.
Speaker 2 (01:26):
Really, yeah, yeah, that's it.
That's the way to do it.
Speaker 1 (01:28):
It's a really good vendor.
I'll have to pick some stuff upfor you.
Yeah, yeah please, I would bePlease.
Speaker 2 (01:33):
Speaking of pickles, I think people need to bring
back the pickle tray atrestaurants.
Speaker 1 (01:39):
What's the pickle tray?
I never experienced a pickletray.
Speaker 2 (01:41):
What Like when you go to a restaurant and they have a
pickle tray.
This used to be a big thingback like in the 50s and 60s,
and crap like that.
Yeah, you had a pickle tray.
It was Midwestern Like a pickletray.
Speaker 1 (01:51):
I don't know what a pickle tray is.
I know at Thanksgiving my Nanawe used to always do a tray of
pickles as like an appetizerthing to pick at, Like dill,
gherkin.
Yeah, just the little ones forpeople amongst a number of
things is like tiny apps, butI've never been in a restaurant
that does a pickle tray.
Speaker 2 (02:09):
Yes, so you can get a pickle tray and it'll have, yes
, like varietals of dills, maybesome pickled carrots or
something like that, maybe someolives, but, yes, pickle trays.
I don't understand why morepeople don't do this.
I freaking love pickles.
Speaker 1 (02:23):
I would love it.
It sounds like a good girldinner.
It is.
Speaker 2 (02:27):
It is Actually so when you come, we'll just do a
whole pickle thing.
Speaker 1 (02:30):
We'll just do a pickle tray, yeah.
Speaker 2 (02:32):
I'm down.
We're back with new week, newheadlines.
Mel, what are you talking abouttoday?
Speaker 1 (02:45):
Listen, I had the hardest time picking something
because there's so much to talkabout right now, but a recent
article came out in Forbes,called From Expense to
Investment Human Capital aDriver of Business Value
Interesting, interesting.
I didn't realize that was aquestion to be said, so I
thought we'd talk about it.
What are you talking about?
Speaker 2 (03:02):
Okay, I want to talk about two trends I think
everybody needs to be aware of.
One is something calledde-layering or flattening, ie
organizations getting rid ofmanager levels, and the second
is incentive pay, so a big shiftfrom salaries to bonus-based
pay.
I want to talk about those twotrends because they're growing
(03:24):
in popularity and have somepretty massive impacts on the
workplace.
Oh, let's do it.
Two trends that I'm seeing thatI think will really impact
people in their jobs currentlyand, potentially, if they're
looking for jobs too, becauseI've been seeing it for a while.
The first trend I want to talkabout is flattening or
(03:44):
de-layering of organizations,and then the other one I want to
talk about is the idea ofshifting from salaries to
bonus-based pay, meaning more ofyour compensation will be bonus
instead of salary, so you'llstill get a salary, but more of
that percentage of the pie willbe bonus.
So those are the two trends Iwant to talk about.
Let's do it All right.
(04:05):
Article came out this week.
Amazon is reportedly planningto cut 14,000 managerial
positions by early 2025.
A couple of weeks ago, annieJassy dropped this note to all
employees.
Hit the news because the bigstory coming out of that was
Amazon's returning to officefive days a week.
Everybody had a shit fit.
Remember this?
Okay, but there was anotherparagraph in that email that was
(04:29):
talking about cost efficiencyand streamlining operations, and
in that, 14,000 managerialpositions would be cut.
Did you see this?
I did see that, yeah, yeah,we're seeing it in quite a few
places.
When you eliminate manageriallayers, it's often referred to
as de-layering or flattening ofan organizational structure.
This is something that has beengoing on.
(04:50):
Ge did this under CEO JackWelch.
It's not a bad thing to do,especially when you want to make
sure that you're improvingcommunication, you're increasing
agility, you're really makingsure that employees feel
empowered, ie the doer to theapprover is as streamlined as
the processes you can get.
Not a bad thing to do.
Speaker 1 (05:10):
Not a bad thing to do ?
I don't think so at all, yeah.
Speaker 2 (05:12):
And you see this quite a bit and you're seeing it
more and more in things likehigh-tech organizations or
fast-moving industries, becauseAmazon's doing it.
But just in 2023, meta did it,microsoft did it, ibm did it, so
it's happening in these bigmega organizations.
Okay, I want to talk about whatmight be the impacts of this in
terms of a pro and in terms of aListen.
(05:39):
Delaying or flattening anorganization can really be
really great, and you might wantto do that If you are in an
organization where it takesforever to get shit done.
Have you ever been on a teamright where you're like, oh my
God, I have to have the meetingbefore the steering committee?
Speaker 1 (05:53):
Yes, and you've now talked to 30 people and a
decision still isn't made.
And yeah, it's like moving acruise ship.
Yeah.
Speaker 2 (06:01):
That's so freaking frustrating.
Speaker 1 (06:03):
You're a hamster wheel.
Yes A hamster running in placeYep.
Speaker 2 (06:06):
Thousand percent.
So when you're in theseorganizations and you typically
see this in really bigorganizations, where you're
having like decision makingbottlenecks, employees are like
I can't get anything done.
Speaker 1 (06:24):
A lot of bureaucracy, where you have really big
industry changes happening whereyou need to move more quickly.
Flattening is a good thing todo yeah, flattening and or
looking at your decision-makingprocesses and how that works and
how that needs to change.
Speaker 2 (06:35):
Yes, if flattening is not the only move, you can make
that point Right.
That's not the only lever.
All right, yeah, here's myconcern and what I would love
everyone to look out for.
There's one thing to flattenyour organization, there's a lot
of pros you can get on thatspeed, employees feeling more
empowered, agility, great stuffIn practice.
In practice, I want everyone tothink about.
(06:57):
We know that, for example, themost direct reports you should
have seven, for a manager tohave have seven in order for
them to have really good careercounseling, coaching,
conversations, feedback, cleargoals seven, seven to one.
So my question is when youflatten an organization and all
(07:22):
of a sudden, 18 people roll upinto a VP, 56 people roll up
into a VP what happens?
Speaker 1 (07:35):
That all falls away to at least one, one person who
they can go to to help them makea decision, who they can
brainstorm with, who's going togive them guidance on things.
You have one VP with 50 pluspeople, even 18 plus people.
There's not enough time in theday for them to possibly do
their job and do it really welland support that amount of
(07:58):
people.
Speaker 2 (07:59):
No, there's not At all.
Speaker 1 (08:01):
It just isn't.
So now you're hurting both,because neither of them are
getting what they need tosucceed.
Speaker 2 (08:08):
To your very good point.
When you see organizationsde-layering or flattening, they
are giving up aspects of havinga very strong mentorship culture
.
That's what you're giving up.
Okay, if you want to have avery strong mentorship culture,
this is not necessarily for you.
But if you run a very complexoperation, if you're in a
(08:28):
regulatory environment, this isnot for you.
If you're in high growth, thisis not for you.
Obviously there's some pros.
There's some pretty major cons,just something to be aware of
because it's growing in speed.
Speaker 1 (08:40):
Yeah, it's growing in speed and I think it's good to
ask questions if that'shappening.
So what does that mean?
Who do you go to?
How are decisions going to bemade?
Those are all conversationsthat need to be had.
I'm all for efficiency, butthere's a huge cost to some of
this.
Speaker 2 (08:56):
Yeah, and my number one thing if your organization's
thinking about flattening sevento one ratio, If you're more
than seven to one, yourmentorship, your coaching is out
the door.
Speaker 1 (09:05):
Just know, yeah, just know, that's going to hurt.
Also, when you think ofsuccession planning, what does
growth look like?
What does your careertrajectory look like?
How is that shifting?
If there's now only a VP roleavailable, is it someone's
either got to leave or die forsomeone to get into?
Like, what's the track forgrowth?
Speaker 2 (09:26):
Yeah, or pay, or pay Right.
Speaker 1 (09:30):
How does your pay look?
What does that look like?
Are there caps Things toconsider?
Speaker 2 (09:36):
That's yes, absolutely so there's a lot of
questions.
I have Lots of questions.
Yeah, listen, flattening ordelayering that's trend number
one.
You and I were joking around.
Catch us in two years when theyrealize that they probably
overcorrected and need to layerthat back in, but this is
something that's happening, sojust be on the lookout for it in
(09:56):
your organization.
Trend number two Wall StreetJournal came out with this
article the big shift fromsalaries to bonus-based pay.
When surveyed, 28% oforganizations are thinking about
making a bigger percentage ofsomeone's pay be what they call
variable, ie bonus.
So, for example, if youtraditionally have 90% of your
(10:17):
pay be salaried ie fixed pay,and 10% bonus, now organizations
are saying, oh, you know what,we want to have 70% of that be
salaried and 30% of it bebonused.
Yeah, we're seeing a lot morepay percentages be incentive or
bonus pay.
Thoughts and feelings.
Thoughts and feelings.
Speaker 1 (10:37):
I don't think there's anything necessarily wrong with
incentivized pay feelings.
I don't think there's anythingnecessarily wrong with
incentivized pay If there ismassive amounts of transparency
to show someone how they getthat pay, what plays into it,
how are you tracking it?
How are you measuring it?
Do they have access to thatmeasurement, not just at year
end but throughout the year?
(10:58):
How is that discussed with them?
How do they know they're ontrack?
And it's not a mystery whereyou feel like you're going into
a casino and throwing a quarterin a slot machine and maybe I'm
getting something, maybe I'mgetting nothing, Because I think
most people's experience whenit comes to burial pay and pay
transparency pay transparency inthe workplace is opaque.
(11:18):
It is When's the last time itwas made really clear to you and
you got a certain bonus foryour variable pay?
Speaker 2 (11:30):
How has that?
Speaker 1 (11:30):
ever been discussed with you.
You know what I've gotten inthe past.
Let us know if you want aconversation to discuss this.
If organizations are makingthis move, they're going to have
to get really good abouttransparency for how this is
measured, very specific goalsfor how that's more productive
right.
Speaker 2 (11:46):
Also pay for performance takes a lot of the
onus of pay off of the employerand puts it more on the employee
(12:07):
.
It's also why you'vetraditionally seen pay for
performance mostly in salesorganizations, because sales
organizations they'requantitative right.
Speaker 1 (12:16):
How many calls did you do?
Oh yeah, that's very easy tomeasure.
Speaker 2 (12:17):
It's very easy to measure.
You're pulling it down thesales funnel and why I think
it's so important.
What you're saying around thattransparency and that clarity is
we're talking now about pay forperformance in HR and marketing
and engineering every singleaspect of the organization where
you don't have those clearquant, and so the ability of a
leader and an employee to be100% clear on what does success
(12:40):
look like for me to get thisbonus huge.
The other concern I have withthis is that it is about what
the employee does.
So even if you're 100% clear onthat success, even if you 100%
met that goal, most ofbonus-based pay is based not
only on your performance, but onyour organization's performance
(13:01):
and on your company'sperformance as well.
So you might kill it, but ifyour company didn't, you don't
get a bonus.
Speaker 1 (13:11):
Right, or if there are variables that are
ultimately out of your control.
So, for example, you mentionedHR being in this right.
How is that going to bemeasured?
By employee engagement?
Guess what?
Hr isn't responsible for all ofemployee engagement.
They help with part of that,but a lot of that has to do with
things out of their control,like how are leaders showing up
(13:31):
to help keep people engaged?
How are other parts of theorganization set up to help
people be engaged?
So it's got to be supertransparent how this is being
measured.
Yeah, and some guarantees,right.
There has to be some guarantee,because otherwise people are
just going to feel like theirlivelihood is a gamble.
Speaker 2 (13:49):
Yeah, it's a gamble.
You and I both know, because wework with teams on this all the
time.
We work with orgs.
One of the biggest complaintspeople have is they literally
don't know what success lookslike in their role Constantly.
The fundamentals of coming backto having really clear goals is
a major problem.
Having very crisp feedback,regular feedback, is a major
(14:12):
problem.
And so now we're saying yourpay is congruent on you meeting
some sort of goal that we're noteven clear about, Oy vey.
So here's my recommendation foremployees If your organization
is moving towards that, or ifyou're interviewing with an
organization where there's abonus structure, be very clear
it's your very good point, melwhat that looks like, what you
(14:33):
need to do, how goals are set,how people have met that in the
past.
Be really clear about it.
Don't just be like oh cool,it's fine, it's fine.
Be clear about it.
Speaker 1 (14:42):
Yeah, tough questions and review your contracts.
Speaker 2 (14:46):
A thousand percent and honestly negotiate the shit
out of your salary on your fixedpay, because that's the only
thing that's guaranteed.
Speaker 1 (15:03):
The headline here again was from expense to
investment.
Human capital, driver ofbusiness value.
The author is Dr Charis SolangeCharis, let me ask you a
question, francesca when youthink of human capital, do you
consider it an expense or aninvestment?
Speaker 2 (15:18):
It depends on what hat I'm wearing, but ultimately
I would say it would be aninvestment.
But if you're talking abouthuman capital, as in like
payroll, some people might thinkit would be expense, but I
think of it as an investment.
Speaker 1 (15:30):
But I think of it as an investment.
Yeah, it's an interestingconversation to have, right,
because when we met with MikeOhada and his book, it's like
how do you bring back humanityin the workplace?
So, thinking historically, Ithink human capital it's been
seen as a cost center, whichisn't very humane, necessarily
if you don't think of yourpeople as a base for your
business value, which they are.
(15:51):
So what you need to know, humancapital, which is employees and
talent for folks who are likewhat is that?
It's now widely seen as astrategic investment rather than
just an expense to manage, andthe shift has been largely
driven by regulatory changes,like the SEC's 2020 decision
requiring companies to disclosemore human capital data in their
(16:15):
financial reports, and thesechanges are forcing companies to
be more transparent about theirworkforce management.
For example, under the newrules, companies must report on
workforce composition, includingthe number of full-time,
part-time and seasonal workers,as well as provide more detailed
data on diversity, and this iscrucial because, according to
(16:37):
McKinsey's, diverseorganizations are 35% more
likely to outperform their peersfinancially, for example.
Speaker 2 (16:45):
I think it's so funny .
It's like all this argumentaround DEI and all the pushback
on DEI and this is a businessissue.
It's a slam dunk win forbusinesses.
Yet we're making it this dumbshit.
Speaker 1 (16:57):
Political stuff Like yes, more diverse teams are more
profitable, period, point blank, correct Not hard Because
people come from differentbackgrounds, experiences, have
diverse point of views, whichhelp with innovation.
So many things.
Yeah, don't have blind spots,it's unreal.
Speaker 2 (17:12):
It's the dumbest thing.
Speaker 1 (17:15):
According to the article, businesses that use
human capital analytics toinform their decision making see
an average ROI of $19.75 forevery dollar invested in their
workforce, compared to thosethat don't invest in such
systems, and this means thatorganizations are seeing
tangible returns on investing intheir people, whether it's
(17:37):
through leadership development,well-being programs or training
and development.
So something to consider ifyou're listening to this how
does your organization approachworkforce investment?
Are there any examples whereyou've seen clear returns on
that investment, like increasedproductivity, improved culture?
So spending more time measuringthose impacts?
(18:00):
Why does this matter?
The shift matters becausehistorically and you and I have
seen this on our own experiencescompanies have seen labor as a
cost, something to control andminimize.
However, more and more data isshowing that human capital is an
asset that directly contributesto financial performance.
We talk about this a lot onthis podcast, that your people
(18:23):
are the base of everyorganization.
For instance, gallup shows thatcompanies with highly engaged
employees and we talk about thisoften they outperform those,
and I love this analogy.
But they talked about how youwouldn't expect to get returns
from your technology investmentsif you're cutting corners on
the maintenance right, and sothe same goes for your human
(18:44):
capital.
If you aren't investing in yourworkforce through development,
well-being programs, diversityinitiatives, you're not going to
get the best results from youremployees and so you're not
going to get the best businessresults.
Why do you think organizationsare so slow to recognize the
actual value of their humancapital as a strategic asset and
not a cost?
Speaker 2 (19:04):
I think one of the long game right.
A lot of times organizationsare looking for results every
quarter as opposed to every yearor year over year.
And when you think about thereturn you're going to get on
human capital investment, thinkabout someone onboarding right.
Someone's not going to be 100%ready to go and able to really
(19:25):
hit the ground running on dayone, like historically we look
at like 90-day marker,three-month marker, six-month
marker, one-year marker.
The higher up you go, thatextends.
I don't think most executivesare really like feeling very
confident in their role untilabout a year in.
Quite honestly, two years iseven better.
So it's a long game.
It's one.
The other thing is mostorganizations don't do the
(19:50):
plumbing right or theinfrastructure right to set
their people up, the plumbingright or the infrastructure
right to set their people up,and so all of the problems fall
down to oh, this person must notbe operating well, as opposed
to thinking about are we settingup an environment that would
put someone up for success?
Speaker 1 (20:04):
Right, yeah, yeah it's a good shift that's
happening, I think.
So I want to talk about what itmeans for organizations,
leaders, employees, I think, fororganizations, companies that
shift their.
They've increased retentionbecause of it.
They've also improvedinnovation because of it.
They focus on providingtraining and career development
(20:36):
opportunities for employees,which fosters long-term loyalty
and boosts creativity.
And you and I both come frompretty heavy L&D backgrounds
ourselves.
We know that training is supervaluable for that.
For leaders, they play really acritical role in this shift,
(20:57):
this mindset shift and way ofthinking about people, and they
are the ones that need to ensurethat human capital investments
are the ones that are alignedwith overall business goals.
There was a Korn Ferry studythat found that organizations
with effective leadershipdevelopment programs, for
example, saw a 25% higher profitmargin than those that don't.
So leaders who prioritizeemployees' growth, invest in
(21:22):
leadership development andcreate cultures of engagement
are going to see those betterfinancial results.
And then for employees, today'sworkforce just expects more
from their employers.
Right, we talk about this allthe time.
Employers aren't going to beeverything to everyone, but
there has to be a two-way street, and Deloitte always comes out
with that human capital trendsreport, and they noted that 80%
of employees say, for example,being is critical to their
(21:45):
success and the organization'ssuccess.
So employees are looking fordevelopment opportunities,
diverse work environments,well-being programs that support
their professional and personallives, and companies that
prioritize those elements toretain their talent.
What are some other things thatyou think leaders can be doing
or should be doing to transitionor help with the transition
(22:07):
from viewing employees as anexpense to seeing them as an
investment?
Speaker 2 (22:11):
I think this comes down to a philosophical thing.
Quite honestly, if you're aleader, do you think your people
work for you?
Do you work for your people?
Are you trying to figure it outtogether?
That's one.
What do you think yourresponsibility is in, helping
people reach their potential ornot?
I really think it comes down tothat.
What is your philosophy onpeople?
(22:33):
And if you really believe that,for instance, my philosophy on
leadership is that my job is tomake sure that these people are
reaching their full potential,that's my job.
That means the investment isgoing to reach their full
potential.
It's not that these people workfor me, it's what's my
responsibility in that.
Speaker 1 (22:52):
And it's just a philosophy thing yeah.
Interesting stuff Globally.
There are also some globaltrends and regulatory changes.
I'd love to recognize.
So in terms of regulations,globally, there are tighter
regulations around human capitaldisclosure.
For example, europe's Europeansustainability reporting
(23:14):
standards require that companiesdisclose how their workforce
strategy contributes tolong-term success for their
employees.
Similarly, japan's corporategovernance code calls for more
transparency in workforcemanagement, and these
international trends arestarting to push US businesses
to prepare for stricterregulations under this new SEC
(23:35):
ruling, such as reporting onworkforce composition, turnover
rates and the total cost of theworkforce.
So it is signaling thatworkforce management is becoming
just as critical as financialmanagement, and a failure to
provide transparency could harma company's reputation with
investors, employees, customers,future talent, etc.
(23:57):
So becoming extremely relevanttoday.
So want to wrap it up by justsaying with for leaders, if
you're listening to this today,you're right in the middle,
right, but you have the greatestimpact.
So it's time to rethink howyour company approaches human
capital.
Here are some things that youcan do Consider implementing
(24:17):
data-driven strategies likeworkforce analytics, to see how
those investments are trulyimpacting the bottom line,
whether it's through leadership,development, being performance
programs, diversity initiatives,treat your employees like the
asset they are.
That's critical to businesssuccess.
You might ask yourself how is myorg preparing for the future
(24:37):
workforce?
How am I doing that?
How am I offering transparency?
And then I had a fun Googlealert for a small organization
that I wanted to call outbecause they had a really good
motto First, take pointers fromany external orgs doing this
really well.
In my Google Alerts this weekfour L&D trends that I was
(24:58):
following something came up thatwas super interesting.
It was an insurance agency andthey were nominated in the
Insurance Journal's 2024 BestAgency to Work For.
They took home the gold for thebest agency.
In the Insurance Journal's 2024Best Agency to Work For.
They took home the gold for thebest agency in the West.
Their motto we treat ouremployees like we treat our
clients.
Hey friends, this episode ofyour Work Friends was hosted by
(25:27):
Francesca Ranieri and myself,mel Platt.
Speaker 2 (25:31):
This episode was produced and edited by Mel Plett
and myself, Francesca Ranieri.
Speaker 1 (25:35):
Our theme music is by Pink Zebra and you can follow
us over on all of our socialmedia platforms Instagram,
TikTok, YouTube and, if you'reso inclined, join us over on
LinkedIn in our large andgrowing community.
And, if you're so inclined,join us over on LinkedIn in our
large and growing community andyou can email us at
friendatyourworkfriendscom orvisit us on yourworkfriendscom
(25:56):
Also.
Folks, please like, subscribeand leave a review if you
enjoyed this episode.
And if you really enjoyed it,please share with a work friend
or two.
Bye.
You wouldn't expect to get returns from your
technology investments if you'recutting corners on the
maintenance right.
And so the same goes for yourhuman capital.
If you aren't investing in yourworkforce through development,
well-being programs, diversityinitiatives, you're not going to
get the best results from youremployees, and so you're not
going to get the best businessresults what's going on, mel?
Speaker 2 (00:35):
not much going on with you not much, not much, I'm
clear into fall.
I can't believe it's october,isn't this funny?
It's like the time of yearwhere you start thinking about
the next year, even though westill have what three months
left.
Speaker 1 (00:47):
We're still at the tail end of fair season here.
My best friend and I aregearing up to head to a local
garlic festival that we love.
Speaker 2 (00:57):
What kind of garlic?
You know how many varietals ofgarlic there are A million, yeah
.
Speaker 1 (01:03):
Yeah, and not sold in the grocery store.
So this place has everything.
Their vendors were amazing.
Last year they had garlic icecream, which I was very
skeptical about, but it waspleasant.
They also had the best freakingpickles garlic pickles, pickles
all day I love pickles, yeah,and then they had a ton of stuff
(01:24):
though, like sauces and-.
Speaker 2 (01:26):
Really, yeah, yeah, that's it.
That's the way to do it.
Speaker 1 (01:28):
It's a really good vendor.
I'll have to pick some stuff upfor you.
Yeah, yeah please, I would bePlease.
Speaker 2 (01:33):
Speaking of pickles, I think people need to bring
back the pickle tray atrestaurants.
Speaker 1 (01:39):
What's the pickle tray?
I never experienced a pickletray.
Speaker 2 (01:41):
What Like when you go to a restaurant and they have a
pickle tray.
This used to be a big thingback like in the 50s and 60s,
and crap like that.
Yeah, you had a pickle tray.
It was Midwestern Like a pickletray.
Speaker 1 (01:51):
I don't know what a pickle tray is.
I know at Thanksgiving my Nanawe used to always do a tray of
pickles as like an appetizerthing to pick at, Like dill,
gherkin.
Yeah, just the little ones forpeople amongst a number of
things is like tiny apps, butI've never been in a restaurant
that does a pickle tray.
Speaker 2 (02:09):
Yes, so you can get a pickle tray and it'll have, yes
, like varietals of dills, maybesome pickled carrots or
something like that, maybe someolives, but, yes, pickle trays.
I don't understand why morepeople don't do this.
I freaking love pickles.
Speaker 1 (02:23):
I would love it.
It sounds like a good girldinner.
It is.
Speaker 2 (02:27):
It is Actually so when you come, we'll just do a
whole pickle thing.
Speaker 1 (02:30):
We'll just do a pickle tray, yeah.
Speaker 2 (02:32):
I'm down.
We're back with new week, newheadlines.
Mel, what are you talking abouttoday?
Speaker 1 (02:45):
Listen, I had the hardest time picking something
because there's so much to talkabout right now, but a recent
article came out in Forbes,called From Expense to
Investment Human Capital aDriver of Business Value
Interesting, interesting.
I didn't realize that was aquestion to be said, so I
thought we'd talk about it.
What are you talking about?
Speaker 2 (03:02):
Okay, I want to talk about two trends I think
everybody needs to be aware of.
One is something calledde-layering or flattening, ie
organizations getting rid ofmanager levels, and the second
is incentive pay, so a big shiftfrom salaries to bonus-based
pay.
I want to talk about those twotrends because they're growing
(03:24):
in popularity and have somepretty massive impacts on the
workplace.
Oh, let's do it.
Two trends that I'm seeing thatI think will really impact
people in their jobs currentlyand, potentially, if they're
looking for jobs too, becauseI've been seeing it for a while.
The first trend I want to talkabout is flattening or
(03:44):
de-layering of organizations,and then the other one I want to
talk about is the idea ofshifting from salaries to
bonus-based pay, meaning more ofyour compensation will be bonus
instead of salary, so you'llstill get a salary, but more of
that percentage of the pie willbe bonus.
So those are the two trends Iwant to talk about.
Let's do it All right.
(04:05):
Article came out this week.
Amazon is reportedly planningto cut 14,000 managerial
positions by early 2025.
A couple of weeks ago, annieJassy dropped this note to all
employees.
Hit the news because the bigstory coming out of that was
Amazon's returning to officefive days a week.
Everybody had a shit fit.
Remember this?
Okay, but there was anotherparagraph in that email that was
(04:29):
talking about cost efficiencyand streamlining operations, and
in that, 14,000 managerialpositions would be cut.
Did you see this?
I did see that, yeah, yeah,we're seeing it in quite a few
places.
When you eliminate manageriallayers, it's often referred to
as de-layering or flattening ofan organizational structure.
This is something that has beengoing on.
(04:50):
Ge did this under CEO JackWelch.
It's not a bad thing to do,especially when you want to make
sure that you're improvingcommunication, you're increasing
agility, you're really makingsure that employees feel
empowered, ie the doer to theapprover is as streamlined as
the processes you can get.
Not a bad thing to do.
Speaker 1 (05:10):
Not a bad thing to do ?
I don't think so at all, yeah.
Speaker 2 (05:12):
And you see this quite a bit and you're seeing it
more and more in things likehigh-tech organizations or
fast-moving industries, becauseAmazon's doing it.
But just in 2023, meta did it,microsoft did it, ibm did it, so
it's happening in these bigmega organizations.
Okay, I want to talk about whatmight be the impacts of this in
terms of a pro and in terms of aListen.
(05:39):
Delaying or flattening anorganization can really be
really great, and you might wantto do that If you are in an
organization where it takesforever to get shit done.
Have you ever been on a teamright where you're like, oh my
God, I have to have the meetingbefore the steering committee?
Speaker 1 (05:53):
Yes, and you've now talked to 30 people and a
decision still isn't made.
And yeah, it's like moving acruise ship.
Yeah.
Speaker 2 (06:01):
That's so freaking frustrating.
Speaker 1 (06:03):
You're a hamster wheel.
Yes A hamster running in placeYep.
Speaker 2 (06:06):
Thousand percent.
So when you're in theseorganizations and you typically
see this in really bigorganizations, where you're
having like decision makingbottlenecks, employees are like
I can't get anything done.
Speaker 1 (06:24):
A lot of bureaucracy, where you have really big
industry changes happening whereyou need to move more quickly.
Flattening is a good thing todo yeah, flattening and or
looking at your decision-makingprocesses and how that works and
how that needs to change.
Speaker 2 (06:35):
Yes, if flattening is not the only move, you can make
that point Right.
That's not the only lever.
All right, yeah, here's myconcern and what I would love
everyone to look out for.
There's one thing to flattenyour organization, there's a lot
of pros you can get on thatspeed, employees feeling more
empowered, agility, great stuffIn practice.
In practice, I want everyone tothink about.
(06:57):
We know that, for example, themost direct reports you should
have seven, for a manager tohave have seven in order for
them to have really good careercounseling, coaching,
conversations, feedback, cleargoals seven, seven to one.
So my question is when youflatten an organization and all
(07:22):
of a sudden, 18 people roll upinto a VP, 56 people roll up
into a VP what happens?
Speaker 1 (07:35):
That all falls away to at least one, one person who
they can go to to help them makea decision, who they can
brainstorm with, who's going togive them guidance on things.
You have one VP with 50 pluspeople, even 18 plus people.
There's not enough time in theday for them to possibly do
their job and do it really welland support that amount of
(07:58):
people.
Speaker 2 (07:59):
No, there's not At all.
Speaker 1 (08:01):
It just isn't.
So now you're hurting both,because neither of them are
getting what they need tosucceed.
Speaker 2 (08:08):
To your very good point.
When you see organizationsde-layering or flattening, they
are giving up aspects of havinga very strong mentorship culture
.
That's what you're giving up.
Okay, if you want to have avery strong mentorship culture,
this is not necessarily for you.
But if you run a very complexoperation, if you're in a
(08:28):
regulatory environment, this isnot for you.
If you're in high growth, thisis not for you.
Obviously there's some pros.
There's some pretty major cons,just something to be aware of
because it's growing in speed.
Speaker 1 (08:40):
Yeah, it's growing in speed and I think it's good to
ask questions if that'shappening.
So what does that mean?
Who do you go to?
How are decisions going to bemade?
Those are all conversationsthat need to be had.
I'm all for efficiency, butthere's a huge cost to some of
this.
Speaker 2 (08:56):
Yeah, and my number one thing if your organization's
thinking about flattening sevento one ratio, If you're more
than seven to one, yourmentorship, your coaching is out
the door.
Speaker 1 (09:05):
Just know, yeah, just know, that's going to hurt.
Also, when you think ofsuccession planning, what does
growth look like?
What does your careertrajectory look like?
How is that shifting?
If there's now only a VP roleavailable, is it someone's
either got to leave or die forsomeone to get into?
Like, what's the track forgrowth?
Speaker 2 (09:26):
Yeah, or pay, or pay Right.
Speaker 1 (09:30):
How does your pay look?
What does that look like?
Are there caps Things toconsider?
Speaker 2 (09:36):
That's yes, absolutely so there's a lot of
questions.
I have Lots of questions.
Yeah, listen, flattening ordelayering that's trend number
one.
You and I were joking around.
Catch us in two years when theyrealize that they probably
overcorrected and need to layerthat back in, but this is
something that's happening, sojust be on the lookout for it in
(09:56):
your organization.
Trend number two Wall StreetJournal came out with this
article the big shift fromsalaries to bonus-based pay.
When surveyed, 28% oforganizations are thinking about
making a bigger percentage ofsomeone's pay be what they call
variable, ie bonus.
So, for example, if youtraditionally have 90% of your
(10:17):
pay be salaried ie fixed pay,and 10% bonus, now organizations
are saying, oh, you know what,we want to have 70% of that be
salaried and 30% of it bebonused.
Yeah, we're seeing a lot morepay percentages be incentive or
bonus pay.
Thoughts and feelings.
Thoughts and feelings.
Speaker 1 (10:37):
I don't think there's anything necessarily wrong with
incentivized pay feelings.
I don't think there's anythingnecessarily wrong with
incentivized pay If there ismassive amounts of transparency
to show someone how they getthat pay, what plays into it,
how are you tracking it?
How are you measuring it?
Do they have access to thatmeasurement, not just at year
end but throughout the year?
(10:58):
How is that discussed with them?
How do they know they're ontrack?
And it's not a mystery whereyou feel like you're going into
a casino and throwing a quarterin a slot machine and maybe I'm
getting something, maybe I'mgetting nothing, Because I think
most people's experience whenit comes to burial pay and pay
transparency pay transparency inthe workplace is opaque.
(11:18):
It is When's the last time itwas made really clear to you and
you got a certain bonus foryour variable pay?
Speaker 2 (11:30):
How has that?
Speaker 1 (11:30):
ever been discussed with you.
You know what I've gotten inthe past.
Let us know if you want aconversation to discuss this.
If organizations are makingthis move, they're going to have
to get really good abouttransparency for how this is
measured, very specific goalsfor how that's more productive
right.
Speaker 2 (11:46):
Also pay for performance takes a lot of the
onus of pay off of the employerand puts it more on the employee
(12:07):
.
It's also why you'vetraditionally seen pay for
performance mostly in salesorganizations, because sales
organizations they'requantitative right.
Speaker 1 (12:16):
How many calls did you do?
Oh yeah, that's very easy tomeasure.
Speaker 2 (12:17):
It's very easy to measure.
You're pulling it down thesales funnel and why I think
it's so important.
What you're saying around thattransparency and that clarity is
we're talking now about pay forperformance in HR and marketing
and engineering every singleaspect of the organization where
you don't have those clearquant, and so the ability of a
leader and an employee to be100% clear on what does success
(12:40):
look like for me to get thisbonus huge.
The other concern I have withthis is that it is about what
the employee does.
So even if you're 100% clear onthat success, even if you 100%
met that goal, most ofbonus-based pay is based not
only on your performance, but onyour organization's performance
(13:01):
and on your company'sperformance as well.
So you might kill it, but ifyour company didn't, you don't
get a bonus.
Speaker 1 (13:11):
Right, or if there are variables that are
ultimately out of your control.
So, for example, you mentionedHR being in this right.
How is that going to bemeasured?
By employee engagement?
Guess what?
Hr isn't responsible for all ofemployee engagement.
They help with part of that,but a lot of that has to do with
things out of their control,like how are leaders showing up
(13:31):
to help keep people engaged?
How are other parts of theorganization set up to help
people be engaged?
So it's got to be supertransparent how this is being
measured.
Yeah, and some guarantees,right.
There has to be some guarantee,because otherwise people are
just going to feel like theirlivelihood is a gamble.
Speaker 2 (13:49):
Yeah, it's a gamble.
You and I both know, because wework with teams on this all the
time.
We work with orgs.
One of the biggest complaintspeople have is they literally
don't know what success lookslike in their role Constantly.
The fundamentals of coming backto having really clear goals is
a major problem.
Having very crisp feedback,regular feedback, is a major
(14:12):
problem.
And so now we're saying yourpay is congruent on you meeting
some sort of goal that we're noteven clear about, Oy vey.
So here's my recommendation foremployees If your organization
is moving towards that, or ifyou're interviewing with an
organization where there's abonus structure, be very clear
it's your very good point, melwhat that looks like, what you
(14:33):
need to do, how goals are set,how people have met that in the
past.
Be really clear about it.
Don't just be like oh cool,it's fine, it's fine.
Be clear about it.
Speaker 1 (14:42):
Yeah, tough questions and review your contracts.
Speaker 2 (14:46):
A thousand percent and honestly negotiate the shit
out of your salary on your fixedpay, because that's the only
thing that's guaranteed.
Speaker 1 (15:03):
The headline here again was from expense to
investment.
Human capital, driver ofbusiness value.
The author is Dr Charis SolangeCharis, let me ask you a
question, francesca when youthink of human capital, do you
consider it an expense or aninvestment?
Speaker 2 (15:18):
It depends on what hat I'm wearing, but ultimately
I would say it would be aninvestment.
But if you're talking abouthuman capital, as in like
payroll, some people might thinkit would be expense, but I
think of it as an investment.
Speaker 1 (15:30):
But I think of it as an investment.
Yeah, it's an interestingconversation to have, right,
because when we met with MikeOhada and his book, it's like
how do you bring back humanityin the workplace?
So, thinking historically, Ithink human capital it's been
seen as a cost center, whichisn't very humane, necessarily
if you don't think of yourpeople as a base for your
business value, which they are.
(15:51):
So what you need to know, humancapital, which is employees and
talent for folks who are likewhat is that?
It's now widely seen as astrategic investment rather than
just an expense to manage, andthe shift has been largely
driven by regulatory changes,like the SEC's 2020 decision
requiring companies to disclosemore human capital data in their
(16:15):
financial reports, and thesechanges are forcing companies to
be more transparent about theirworkforce management.
For example, under the newrules, companies must report on
workforce composition, includingthe number of full-time,
part-time and seasonal workers,as well as provide more detailed
data on diversity, and this iscrucial because, according to
(16:37):
McKinsey's, diverseorganizations are 35% more
likely to outperform their peersfinancially, for example.
Speaker 2 (16:45):
I think it's so funny .
It's like all this argumentaround DEI and all the pushback
on DEI and this is a businessissue.
It's a slam dunk win forbusinesses.
Yet we're making it this dumbshit.
Speaker 1 (16:57):
Political stuff Like yes, more diverse teams are more
profitable, period, point blank, correct Not hard Because
people come from differentbackgrounds, experiences, have
diverse point of views, whichhelp with innovation.
So many things.
Yeah, don't have blind spots,it's unreal.
Speaker 2 (17:12):
It's the dumbest thing.
Speaker 1 (17:15):
According to the article, businesses that use
human capital analytics toinform their decision making see
an average ROI of $19.75 forevery dollar invested in their
workforce, compared to thosethat don't invest in such
systems, and this means thatorganizations are seeing
tangible returns on investing intheir people, whether it's
(17:37):
through leadership development,well-being programs or training
and development.
So something to consider ifyou're listening to this how
does your organization approachworkforce investment?
Are there any examples whereyou've seen clear returns on
that investment, like increasedproductivity, improved culture?
So spending more time measuringthose impacts?
(18:00):
Why does this matter?
The shift matters becausehistorically and you and I have
seen this on our own experiencescompanies have seen labor as a
cost, something to control andminimize.
However, more and more data isshowing that human capital is an
asset that directly contributesto financial performance.
We talk about this a lot onthis podcast, that your people
(18:23):
are the base of everyorganization.
For instance, gallup shows thatcompanies with highly engaged
employees and we talk about thisoften they outperform those,
and I love this analogy.
But they talked about how youwouldn't expect to get returns
from your technology investmentsif you're cutting corners on
the maintenance right, and sothe same goes for your human
(18:44):
capital.
If you aren't investing in yourworkforce through development,
well-being programs, diversityinitiatives, you're not going to
get the best results from youremployees and so you're not
going to get the best businessresults.
Why do you think organizationsare so slow to recognize the
actual value of their humancapital as a strategic asset and
not a cost?
Speaker 2 (19:04):
I think one of the long game right.
A lot of times organizationsare looking for results every
quarter as opposed to every yearor year over year.
And when you think about thereturn you're going to get on
human capital investment, thinkabout someone onboarding right.
Someone's not going to be 100%ready to go and able to really
(19:25):
hit the ground running on dayone, like historically we look
at like 90-day marker,three-month marker, six-month
marker, one-year marker.
The higher up you go, thatextends.
I don't think most executivesare really like feeling very
confident in their role untilabout a year in.
Quite honestly, two years iseven better.
So it's a long game.
It's one.
The other thing is mostorganizations don't do the
(19:50):
plumbing right or theinfrastructure right to set
their people up, the plumbingright or the infrastructure
right to set their people up,and so all of the problems fall
down to oh, this person must notbe operating well, as opposed
to thinking about are we settingup an environment that would
put someone up for success?
Speaker 1 (20:04):
Right, yeah, yeah it's a good shift that's
happening, I think.
So I want to talk about what itmeans for organizations,
leaders, employees, I think, fororganizations, companies that
shift their.
They've increased retentionbecause of it.
They've also improvedinnovation because of it.
They focus on providingtraining and career development
(20:36):
opportunities for employees,which fosters long-term loyalty
and boosts creativity.
And you and I both come frompretty heavy L&D backgrounds
ourselves.
We know that training is supervaluable for that.
For leaders, they play really acritical role in this shift,
(20:57):
this mindset shift and way ofthinking about people, and they
are the ones that need to ensurethat human capital investments
are the ones that are alignedwith overall business goals.
There was a Korn Ferry studythat found that organizations
with effective leadershipdevelopment programs, for
example, saw a 25% higher profitmargin than those that don't.
So leaders who prioritizeemployees' growth, invest in
(21:22):
leadership development andcreate cultures of engagement
are going to see those betterfinancial results.
And then for employees, today'sworkforce just expects more
from their employers.
Right, we talk about this allthe time.
Employers aren't going to beeverything to everyone, but
there has to be a two-way street, and Deloitte always comes out
with that human capital trendsreport, and they noted that 80%
of employees say, for example,being is critical to their
(21:45):
success and the organization'ssuccess.
So employees are looking fordevelopment opportunities,
diverse work environments,well-being programs that support
their professional and personallives, and companies that
prioritize those elements toretain their talent.
What are some other things thatyou think leaders can be doing
or should be doing to transitionor help with the transition
(22:07):
from viewing employees as anexpense to seeing them as an
investment?
Speaker 2 (22:11):
I think this comes down to a philosophical thing.
Quite honestly, if you're aleader, do you think your people
work for you?
Do you work for your people?
Are you trying to figure it outtogether?
That's one.
What do you think yourresponsibility is in, helping
people reach their potential ornot?
I really think it comes down tothat.
What is your philosophy onpeople?
(22:33):
And if you really believe that,for instance, my philosophy on
leadership is that my job is tomake sure that these people are
reaching their full potential,that's my job.
That means the investment isgoing to reach their full
potential.
It's not that these people workfor me, it's what's my
responsibility in that.
Speaker 1 (22:52):
And it's just a philosophy thing yeah.
Interesting stuff Globally.
There are also some globaltrends and regulatory changes.
I'd love to recognize.
So in terms of regulations,globally, there are tighter
regulations around human capitaldisclosure.
For example, europe's Europeansustainability reporting
(23:14):
standards require that companiesdisclose how their workforce
strategy contributes tolong-term success for their
employees.
Similarly, japan's corporategovernance code calls for more
transparency in workforcemanagement, and these
international trends arestarting to push US businesses
to prepare for stricterregulations under this new SEC
(23:35):
ruling, such as reporting onworkforce composition, turnover
rates and the total cost of theworkforce.
So it is signaling thatworkforce management is becoming
just as critical as financialmanagement, and a failure to
provide transparency could harma company's reputation with
investors, employees, customers,future talent, etc.
(23:57):
So becoming extremely relevanttoday.
So want to wrap it up by justsaying with for leaders, if
you're listening to this today,you're right in the middle,
right, but you have the greatestimpact.
So it's time to rethink howyour company approaches human
capital.
Here are some things that youcan do Consider implementing
(24:17):
data-driven strategies likeworkforce analytics, to see how
those investments are trulyimpacting the bottom line,
whether it's through leadership,development, being performance
programs, diversity initiatives,treat your employees like the
asset they are.
That's critical to businesssuccess.
You might ask yourself how is myorg preparing for the future
(24:37):
workforce?
How am I doing that?
How am I offering transparency?
And then I had a fun Googlealert for a small organization
that I wanted to call outbecause they had a really good
motto First, take pointers fromany external orgs doing this
really well.
In my Google Alerts this weekfour L&D trends that I was
(24:58):
following something came up thatwas super interesting.
It was an insurance agency andthey were nominated in the
Insurance Journal's 2024 BestAgency to Work For.
They took home the gold for thebest agency.
In the Insurance Journal's 2024Best Agency to Work For.
They took home the gold for thebest agency in the West.
Their motto we treat ouremployees like we treat our
clients.
Hey friends, this episode ofyour Work Friends was hosted by
(25:27):
Francesca Ranieri and myself,mel Platt.
Speaker 2 (25:31):
This episode was produced and edited by Mel Plett
and myself, Francesca Ranieri.
Speaker 1 (25:35):
Our theme music is by Pink Zebra and you can follow
us over on all of our socialmedia platforms Instagram,
TikTok, YouTube and, if you'reso inclined, join us over on
LinkedIn in our large andgrowing community.
And, if you're so inclined,join us over on LinkedIn in our
large and growing community andyou can email us at
friendatyourworkfriendscom orvisit us on yourworkfriendscom
(25:56):
Also.
Folks, please like, subscribeand leave a review if you
enjoyed this episode.
And if you really enjoyed it,please share with a work friend
or two.
Bye.
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