The Higher Ed – HR Paradox

According to Gallup’s Brandon Busteed, “barely one in 10 (11%) business leaders strongly agree that college graduates have the skills and competencies that their workplaces need”. However, he continues, “A whopping 96% of chief academic officers at higher education institutions say their institution is ‘very or somewhat’ effective at preparing students for the world of work”. Clearly, there’s a disconnect.

Furthermore, according to Gallup’s findings the vast majority of Americans think that the purpose of going to college is to get a good job (i.e. one that is best-fit).  Accepting that the collective will of the market is accurate and honest then it is so. The business of developing ability (the higher education imperative) is to enable people to be happy while they are being productive. The business of hiring ability (the human resource imperative) is to provide an acceptable return on investment.

Unfortunately, according to Gallup, “The vast majority of U.S. workers, 70%, are ‘not engaged’ or ‘actively disengaged’ at work, meaning they are emotionally disconnected from their workplace and are less likely to be productive. Actively disengaged employees alone cost the U.S. between $450 billion to $550 billion each year in lost productivity, and are more likely than engaged employees to steal from their companies, negatively influence their coworkers, miss workdays, and drive customers away”.

So, there’s a “chicken or egg” paradox which is this: Is learning quality being delivered to the population not valuable enough or are employer’s evaluation of ability developed disconnected with higher education’s learning quality? Whatever the answer it’s clear there’s a disconnect; a failure to communicate where both higher ed institutions and employers play the role of “boss man” at different times. 

Asking Better Questions

Modern society has been conditioned to measure things so that we can manage them. It seems to pervade everything in our lives. In turn, as we attempt to solve “big” problems the more important or valuable measurement becomes. As great a management principle as that is I do NOT think “What is my value?” is the right question to ask. The better question to ask is, “Why am I important?” because I believe that we are at the cusp of an improved understanding that we are here to help each other. Better questions improve that understanding.

I think that solution providers should consider designs that focus on us, as individuals, as benevolent rather than themselves as such. Jim Clifton writes in The Coming Jobs War, “The will of every person on earth is to have a good job”. Can new designs change how we develop and place ability that encourage a life well-lived

Winner Takes All

The development and placement of ability that serves us, as individuals, can be provided by higher education institutions or employers. Higher education is getting more efficient and effective at developing ability and employers are getting more efficient and effective at hiring ability. However, if they switched imperatives and higher education got very good at placing ability then they could subsidize development with placement revenue. On the flip side, if employers got very good at developing ability for themselves then they could be even more productive.

Okay, now you might be thinking that it’s unrealistic to expect higher education and employment leaders to create and scale solutions that push ability development and placement from 1.0 to 2.0 then towards 3.0. For each is too busy focused on eliminating their greatest pain point of today, that is viability. I agree. Neither will be the winner as a result.

The winner will most likely be a 3rd party solution that enables interactions that place ability at best-fit for us, as individuals.

Have you experienced a disconnect between higher education and employers in your own life?

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Using First Principles to Enable Human Capital Interactions at Scale

I spend a fair amount of time reading and thinking about disruptive innovation because I need to understand the past failures to enable interactions that place ability at right-fit and bring better careers to life. Here’s a great post by Ketan Jhaveri that dissects Elon Musk’s approach to disruptive innovation which is based on reasoning from first principles.

So, here’s the problem: According to Gallup, 53% of American workers are “not engaged” and 19% are “actively disengaged” at work. In The Coming Jobs War, author Jim Clifton writes:

The 53% of not engaged workers are not hostile or disruptive, and they are not troublemakers. They are just there, killing time with little or no concern about customers, productivity, profitability, waste, safety, mission and purpose of the teams, or developing customers. They’re thinking about lunch or their next break. They are essentially “checked out.” Most importantly, these people are not just part of a support staff or sales team. They are also sitting on executive committees.

And then there are the 19% of actively disengaged employees who are there to dismantle and destroy employers. They exhaust managers, they have more on-the-job accidents and because more quality defects, they contribute to “shrinkage” – as theft is politely called, they are sicker, they miss more days, and they quit at a higher rate than engaged employees do. Whatever the engaged do, the actively disengaged seek to undo, and that includes problem solving, innovation, and creating new customers.

I’ve come to realize that designing solutions around first principles might allow for looking at a problem from a more foundational level—where the seed of disruptive innovation can be planted.

Musk is quoted as saying:

“First principles” is a physics way of looking at the world…what that really means is that you boil things down to the most fundamental truths…and then reason up from there…”

The utility about Musk’s approach is that it provides a framework with which to do this. Breaking a problem down to its core components and then building back up from there helps me arrive at very different designs than relying solely on analogs.

The other really nice benefit of reasoning from first principles is that it can get me out of the “it can’t be done” mentality. And that’s especially handy when I’m trying to understand the failures in the human capital services industry. If I reason by analogy and I can break the problem down to its core first principles, then I can logically state “If all of these things are true, then there’s a problem that can be solved.”

I’ve identified the following first principles that will lead to the improvements we are looking for to place ability at right-fit and bring better careers to life.

Abundance: Every abundance creates a new scarcity. For example, a wealth of information creates a poverty of attention. Attention can be monetized.

Information: Scarce information wants to be expensive. That is, the price of context is valued at marginal utility—what it’s worth to customers. Scarcity can be monetized.

Context: Context is embedded with experience, license, proxy, credential, or reputation and the like and is distributed far down into the long-tail of ability placement markets. Context can be monetized.

Search & Influence: The advice and counsel of a trusted and liked advisor is always searched for when a placement process decision is important enough. Search and influence can be monetized.

Goodwill: Enlightened self-interest motivates goodwill. There are enough people who want to help others gain a commitment at best-fit in their community* if only to improve their status. Reputation can be monetized.

Less is More: As technology reduces coordination costs it enables more small placements and interactions—monetizable actions, reactions, and transactions—that had been previously dismissed below the economic fringe. In aggregate the monetized value of these small placements exceed that of high-dollar placements.

When a problem is broken down to it’s component parts at a fundamental level it becomes possible to see how seemingly disparate themes, when connected, can be part of the solution. Placement Loop is a platform forged from these first principles for solution providers on the supply-side to solve problems for talent seekers and candidates on the demand-side.

Which of these ‘first principles’ resonate with you?

*Community can be defined geographically, by industry or by common interests.

Recruiter vs. Referrer

First, let me just say to all the recruiters in the industry who will read this post and immediately say that successful recruiting depends on a skill set earned from professional training and experience. To those, let me suggest that they are motivated to service the elite segment of markets otherwise known as the short-head. For they simply can not afford to service the long-tail of markets in a traditional recruiter business model.

On the other hand, we are in the midst of a seismic shift in business models, powered by the internet and a generation of connected users. Today, platforms are being developed that connect diverse participants with one another and enable them to interact–act, react, and transact. They aid the creation of entirely new solutions to solve market problems and many times involve the contributions of every day people. Every day people with tacit knowledge and spare capacity that consumers value.

In ability placement markets three forces are powering the rise of new solutions that can reach farther down the long-tail of opportunity and ability: ubiquitous network access with ever-increasing mobile penetration, reputation systems that enable trust among distributed strangers, and access to low cost shared infrastructure with tools and data to capture and coordinate interactions. These are going to have a huge impact on how ability will be placed at best-fit.

As I build the Placement Loop platform I think about the role of the referrer, not the recruiter, and what they have that can be monetized.

So, here are some of the capabilities that I believe are essential for referrers to have to distinguish themselves in ability placement markets:

Sales and marketing capability. Referring opportunity or ability as best-fit involves sales and marketing. Referrals want to feel confident that the referrer knows and understands what they’re looking for in a match. But does it have to be done in a way that recruiters do it? Nope. In the long-tail the expectations and therefore the behavior of placement process participants is nothing like in the short-head.

Network building capability. There are members in every industry with deep domain expertise and the will to place ability at best-fit in that industry. I like to describe these people as network entrepreneurs, motivated by their empathy for the domain, whatever and wherever it may be. Influence coupled with empathy resonates with community members like no other. It is tacit and only found distributed in community membership.

Social media capability. Just behaving normally and being yourself will attract those like you. Share. Give. Help others. Those who want to become the go-to person in a community to place ability at best-fit will build trust and a reputation. They will be rewarded for their efforts in ways not imagined when they started.

Context production capability. I am not saying that distinguished referrers have to become prolific content producers. What I am saying is that talent seekers and candidates alike are bombarded with all the content being thrown at them. This creates so much noise that they can’t hear a signal that resonates. A distinguished referrer, as a deep domain expert in their industry, can share their understanding of content within the marketplace. Messages from community-based referrers resonate with community members more than any alternative.

Technology capability. This where Placement Loop comes in with a motivated ecosystem of suppliers that work hard to earn referrers attention by making their life easier. The whole ecosystem of suppliers on the platform is motivated to assure referrers are able to provide advice to employers/talent seekers and candidates accurately, quickly, and affordably.

I hope I have stimulated your thinking that it is time for anyone to have the opportunity to become a distinguished referrer in their industry and get rewarded for it.

Do you think community-based referrers will help make improvements we are looking for in ability placement markets? 

Distributed Spare Capacity To Place Ability

Technology is allowing a degree of sharing so large that new mediums of communication are creating a cascade of new engagements. As a result, we are entering a new era where solutions to market problems can be optimized by tapping into spare capacity held by individuals distributed in the community. Several monikers and catch phrases are used to help describe this new era: Shared Economy, Web 2.0, Crowdsourcing, Cognitive Surplus, Collaborative Consumption, App Economy, or Gamification. Welcome to the rise of the platformed business model to solve market problems!

In human services, adopting a platformed business model to place ability at best-fit can reinforce the career development paradigms of vocational guidance, career education, and life design. However, leaders in this space must accept that a fourth closely aligned paradigm is needed to subsidize development. I call it placement liquidity. I believe that best-fit is achieved by utilizing these four paradigms:

  1. Placement liquidity that views talent seekers and candidates as principals (i.e. buyers and sellers) in a transaction who may be characterized by willingness and compromise and who may be helped by participating in efficient marketplaces to eliminate pain points quickly.
  2. Vocational guidance that views principals as actors who may be characterized by individual differences, styles, and scores on personality traits and who may be helped by matching for resemblance to identify occupational fit.
  3. Career education that views principals as agents who may be characterized by individual development and readiness to make decisions appropriate to stages and who may be helped by implementing new attitudes, beliefs, and competencies to foster individual development.
  4. Life design that views principals as authors who may be characterized by autobiographical stories and who may be helped by reflecting on themes to construct a satisfying and productive life.

Depending on talent seeker and candidate constraints however, assistance may apply interventions that reflect any one of the different paradigms.

Most importantly, solution providers (professionals and academics included) must be aware that the market will not benefit from any solution unless it is built on a viable and sustainable business model to deliver the value proposition. As such, we shouldn’t forget the adage: “Businesses don’t fail, business models fail”.

What do you think needs to happen to see the improvements we are looking for?

The Enterprise and Placement Improvements

My previous posts titled Evaluating Placement Information (Parts 1 – 3) prompted a request for me to read an article by Don Fornes, CEO of Software Advice which sponsors The New Talent Times blog. I was asked by Software Advice to opine on the article.

The article, titled “The Psychological Profiles of the Dream Team”, was published on BusinessInsider and refers to a commissioned project by Mr. Fornes to analyze the high-performers at his company, to see what drives and motivates them. The research concluded with four distinct personality profiles which describes what makes their top players tick, the management style they respond best to, and how to identify and hire more people like them.

The following is my opinion about the problem the article addresses but in a more expansive view.

First, let’s define the problem. The problem is that an increasing number of people in the world are miserable, hopeless, suffering, and unhappy because they don’t have a good job—one that is a best-fit. The United States is no exception and, in fact, may be the poster child for workplace unhappiness.

Second, in almost all the content relating to ability placement there always seems to be an embedded assumption that we need to rely on the enterprise to make improvements. What if that assumption is wrong? What if the future of work is more about coordinating distributed work activity versus aggregated? Then, as solution providers, I think we need to design for the individual as a work network node, rather than designing for the enterprise as the work center, to realize the improvements we are looking for.

Third, we can look at the financial services industry for an analog to better understand how psychological profiles are used to help place capital at best-fit. After all ability is human capital. My experience tells me that psychological profiling of investors to facilitate the placement of financial capital at best-fit is more art than science. This is because the ongoing decision-making environment is extremely dynamic with very many variables. More specifically, in this space, best-fit knowledge may depend on tacit information held by individuals, distributed in a community network. If you accept this as a constraint and embrace it as such then you’ll be able to see the futility of trying to optimize the art of placing capital at best-fit.

So, in my opinion, psychological profiles can not be relied upon with a high degree of confidence to complete the job-to-be-done successfully. This is not to say that they are not an improvement but rather should be viewed as a sustaining innovation. It is my belief that to make the improvements we are looking for we need disruptive innovation.

Evaluating Placement Information (Part 3 of 3)

Skillfully evaluating information to place ability at best-fit will tend to have three parts: analysis, psychology, and constraints. Accommodating any one of these in a placement process isn’t easy. Being good at all three is rare. Let’s look at the constraints part below and tie up this series of posts.

The Constraints 

The third part of a skillful evaluation addresses constraints. The most important job for principals (i.e. the talent seekers and candidates) here is to manage recruitment risks, or the risks that arise because agent-actors (i.e. placement facilitators) may have interests that differ from those of principals. For example, placement facilitators who are fully paid or credited as of a candidate’s hire date may unwittingly employ conservative strategies associated with top-down recruiting initiatives versus understanding the true growth opportunities represented by the relevant edges of recruiting. More to the point, they might, aggressively market candidates who behave similar to a stereotyped benchmark.

I make this point by distinguishing between the profession and business of agency. The profession is about recruiting talent so as to maximize long-term returns, while the business of recruiting or agency is about earning rewards in the short-term. Naturally, current viability is essential to support the profession. But when a placement facilitator emphasizes the business at the expense of the profession, principals are not best served. Rather, facilitators should concentrate on helping principals find matches that provide sensible balance, relevant diversity, and are under priced. This requires going against the consensus and being willing to appear very different from the pack.

John Maynard Keynes, the renowned economist and investor, wrote about this in The General Theory of Employment, Interest, and Money, published in 1936. He discusses the conduct of a long-term investor: “For it is in the essence of his behavior that he should be eccentric, unconventional and rash in the eyes of the average opinion. If he is successful, that will only confirm the general belief in his rashness; and if in the short run he is unsuccessful, which is very likely, he will not receive much mercy. Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”

As Keynes suggests, the risk of losing credibility as a placement facilitator for straying too far from convention is important. As a result, facilitators will often strive to be different enough to succeed but not so different as to be considered unconventional. The reason is that they are often inappropriately judged by short-term performance. Likewise, a principal who makes a conventional decision that turns out to be wrong can fall back on the argument that the decision process was usual, even if uninspired, and hence the outcome was based on something unavoidable. A principal who makes a correct but unconventional decision that ends badly is exposed to criticism and the risk of losing credibility.

In hiring, the trend toward conformity is clear. It seems to me that workforces today look more like their stereotyped benchmarks than they did thirty years ago. Just as we see in investment portfolios the measure of how different a mutual fund portfolio is compared to its benchmark, has fallen from 75 percent in 1980 to about 60 percent in 2010 in the United States. Too many leaders in ability placement markets as well as in business fear straying too far from convention, even in cases where the convention isn’t all that great.

Because all three parts to skillfully evaluate placement information are difficult, they stand in the way of great long-term performance. Some can succeed in one or two of those areas, but very few can master all three. This fits with the conclusion of an analysis of skill and luck in hiring: only a handful can surmount the analytical, psychological, and constraint obstacles. The same is true in financial investing which provides an excellent analog to learn from.