Podcast
Podcast
- 29 Nov 2023
- Managing the Future of Work
Why employers need to tune in to worker preferences
Bill Kerr: It’s a familiar theme. Covid-19 has accelerated many of the dynamics that are changing the nature of work, not least automation. But the effect hasn’t been universal. In the staffing and recruitment business, the post-pandemic reshuffling and reassessment of work seems to have bolstered traditional firms that have been struggling to adapt to an increasingly digital landscape. What can the HR services sector tell us about how the workforce is adjusting to the new normal?
Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Bill Kerr. My guest today is Sander van’t Noordende, CEO of Randstad, the multinational staffing and recruitment firm based in the Netherlands. We’ll talk about global trends like flexible and hybrid work, demographic shifts, and the increasing importance of employee sentiment and work-life balance. We’ll also talk about how workers view the impact of AI and the challenges to find the right talent. Sander, welcome to the podcast.
Sander van’t Noordende: Thank you, Bill. Great to be here.
Kerr: Sander, why don’t we begin with a bit of your background, and what drew you to Randstad after a long career in consulting?
Van’t Noordende: Well, it had actually a lot to do with the pandemic. I left Accenture after a long career, and it was a great career, a great company, in end of 2019. Then, my husband and I did a world tour, and then we came back, and then Covid hit. I was looking for a job. I was asked to get on a few boards, and Randstad was one of them. Of course, being Dutch... I live in the United States, but being Dutch, you know Randstad, it’s one of the Dutch iconic companies with an illustrious founder, I would say—Frits Goldschmeding. So if you get asked to join one of those types of boards, I mean, it’s hard to say no. And there’s a lot of similarities between Randstad and Accenture. It’s a people’s business. We work for very similar clients. We work very internationally. There was a succession, and then during the process, the board at some point asked me, “Would you like to be a candidate?” Then, I put on my best suit, I went to the interview, and that’s how things go, you get the job. So I was excited, and it’s a great company, great people, so I’m absolutely delighted to be here.
Kerr: Great. Sounds like in the pandemic, you may have been the one person putting on a suit, but I’m glad it landed you the right job. Walk us through a little bit of what Randstad does. I mean, most of our listeners will have heard the company’s name, but maybe not all the different businesses in which you’re in.
Van’t Noordende: Yes. So we are aspiring to be the world’s most equitable and specialized talent company, and that means we help our clients find talent. We help our clients develop strategies to find talent. So what’s their employment marketing, what’s their talent planning, find sources of talent. Then, we help clients to decide, “Do we want talent on a flexible basis, on a gig basis, on a permanent basis, on an outsourced basis?” Then, once the talent is in the door, so to speak, we help clients to retain talent by coaching, learning, and things like that. Ultimately, we help clients to transition talent, sometimes to another job within their company and sometimes to another job outside of their company. So we basically span the whole value chain of talent, if you will.
Kerr: For a typical client, are you working on all these dimensions at the same time, or is there a pathway that a client typically grows its relationship with you or works with you differently five years into it than they did at the very beginning?
Van’t Noordende: No. The typical relationship is, we meet the clients where their needs are. Clients need something, whether it’s outplacement or in their operational environment, some talent to work on the logistics department. That’s how we start to build a relationship. Then, I always say, when you deliver, clients want to talk about, “What more can you do for me?” So we develop the relationships. We broaden them. We go internationally sometimes. We go, let’s say, to other services. So you build a deeper client relationship over time, and if you look at some of the logos that we have, there are companies that we’ve been doing business with for the last 50 years, big global international names, but also some of the newer tech companies that we’re very close to with hiring the engineers and things like that.
Kerr: As we think about the variations on contingent work, we can talk about gig, we can talk about staffing firms, right? How do you distinguish across those, and where are you particularly focused at Randstad?
Van’t Noordende: Well, obviously, where we grew up, if you will, in the operational environment, in flexible work, that is how Randstad started. Then we gradually moved to the more professional environment—meaning, finance professionals, legal professionals, nurses, doctors, teachers. Parallel to that, we develop our digital specialization, and we just launched Randstad Digital, which is a $3 billion business focused on digital talent for digital transformations at our clients—so think about cloud, think about AI and data, think about user and consumer experience, think about software and product engineering. Then we have a specialization for our enterprise clients, and this is really about strategic talent solutions—think about recruitment process, outsourcing, think about coaching at scale, think about learning at scale, think about workforce advisory at scale. So those are really the four specializations that we focus on.
Kerr: I think it relates back to the way you first framed Randstad as being about a company’s talent. You’re going to try to use all these different points of contact or new business models that emerge for your purpose.
Van’t Noordende: Yeah. That’s actually interesting. We see much more involvement from business leaders and functional leaders in our clients’ organizations in the whole talent agenda, because talent is scarce. Clients—and also us—we need to work harder to attract, to retain, to transition. When I came into the labor market in the late ’80s, it was quite difficult to find a job for me and my fellow students; it was not at all straightforward that you would get a job right out of university. But it’s a different world now, fortunately, I would say, because unemployment levels are at historic lows in the United States, in most of the European countries. It’s a very tight market still.
Kerr: Yeah. We’re going to build upon this. You’ve done a great piece of recent research where you’ve gone and interviewed and surveyed employers and firms and people and so forth to come out with some future trends. Let’s pick up right on that talent scarcity front. Very different environment than 30 years ago where there was a lot of people out in the workforce due to demographic trends and similar to where we are right now. So how are you and the work defining and forecasting the future of talent scarcity? What do you see as some of the key causes that we should be grappling with?
Van’t Noordende: It’s aging populations. It is more work to be done by fewer people for more people. It is as simple as that. It’s the big demographic trend of our times. You just see the number of retired people versus the number of working people increase. You see the reproduction rates in most of the Western markets below the 2.1 that you need to stabilize your population. You just have to look at Japan and Italy, where the population is already shrinking in a major way. So that’s the demographic trend that drives talent scarcity. You might wonder, “Okay, what does that mean for talent?” Well, talent is more demanding, because they know they can be. It’s very simple. And there has been a lot of talk about the Great Resignation just post-Covid. I think the quit rates are now back to normal, but the market is still very tight, so talent still has options. People are looking for a career, another job. They’re looking to work for companies with a purpose, and they want to be working for a company that does good in the world, so to speak. They want to feel belonging in the workplace. People want flexible work. Flexible work has really become a thing over the past two, three years. It’s also here to stay. They want to learn and grow. So it’s a much more broader set of things that people are looking for, and not everybody is looking for the exact same thing. About a third of people in our research says, “If I don’t feel belonging at work, if I feel bad at work, I’d rather be unemployed than working for that organization where I feel bad.” So people want to take consequences as well from those kind of things.
Kerr: The macro trend you described with the aging workforce is so dramatic, and it’s not even that suddenly we’re becoming older and that the worker populations are shrinking in their number. Wind it back 30 years ago, and all of what are now the current headwinds were tailwinds. It was all about the growth of the market and gave many opportunities and employment from that. I’m curious. As you work with so many clients on this front or you’re trying to help them through this, how many of them appreciate that this is a decades-long future that we are entering into, versus see it as something that they’re just trying to solve October 2023’s problem and that this will be different in a few years? Is this permanent recognition with the clients?
Van’t Noordende: It depends a little bit, Bill, on the types of clients you’re talking to. If you talk to your big global international companies—whether it’s Google or whether it is Nestlé or whether it is Nike—I mean, those names, they know what’s happening in the world. They’re very smart. They know that they need to look in all pools of talent to get a more diverse workforce. They know that belonging is important. So those companies are actually quite sophisticated in all of this. That’s still the case, although less so, I would say, for, let’s say, the local champions, and that depends very much on the culture and on the local circumstances, if you will. So it’s different in the United States, where companies are typically a bit more adVanced on this whole theme than here in Europe. For the companies, and for your SMEs, I think they’re getting to grips with it, but they don’t really have the resources to do the research.
Kerr: As you think of cross sectors and types of skills, are there particular pain points that you’re encountering more than in other places, or is it just a general, economy-wide, “We’re struggling to find the people?”
Van’t Noordende: No. There are clear areas where there is more talent needed than on average, where there’s a lot of growth. Manufacturing is, of course, on a comeback, so there’s significant growth expected in manufacturing. Logistics driven still by ecommerce, as ordering from Amazon, to put it very simple. On the professional side, there’s, of course, healthcare. Aging population equals healthcare. Simple. There’s a lot of growth, significant growth, expected in finance. I suspect it has to do with lots of big investments that are upcoming, so we need finance skills, on top of engineering skills, to make that all happen. Then, digital, AI, cloud—there’s going to be significant growth. In terms of industries, I would single out life sciences, and it’s again related to healthcare, of course, because there’s a lot of professional talent needed around the clinical trials, the pharmaco-vigilance, and things like that. So those are the hot areas in terms of growth for the coming years.
Kerr: What are the labor market trends that you’ve labeled? I found a fascinating label. It was called “unretirement.” I’d love for you to unpack that for us. What does it indicate? What are some of the causes behind it?
Van’t Noordende: Well, I think it’s the coming together of a couple of trends. First, people grow older, and they are fitter longer. So they work longer. The segment in the labor market where labor participation has grown fastest over the last decade is the segment between 55 and 75. So that’s a trend. Then the other thing, and that is the change of pension systems that has taken place at different times in various economies, and that’s the shift from a defined benefit to a defined contribution—your 401(k) for the folks in the U.S. Well, and if you have the 401(k), I mean, it’s also up, into a great extent to your discretion, how much money you put aside. Whereas in the defined benefits, the money was put aside for you. So you have now a much wider variety in terms of the pension coverage that people have. Then, if the stock market is up, people feel very comfortable. Then, after Covid, the stock market went up, and a year ago, a year and a half ago, the stock market became a bit more challenging, if you will. Then people start to look at their 401(k), and they say to themselves, “Well, I’m fit enough. It’s actually not bad to do something, because I can hang out with other people,” because meeting other people is still a very important reason for people to work. Flexible work is much more possible these days, so there are more options. Also, employers are much more comfortable. When I was joining the workforce, there was a bit of an attitude. If you’re over 50, yeah, I mean, you’re old, you’re useless. Well, that’s changed by necessity, I would say. And by the way, rightly so, I’m 60, and I don’t feel myself useless at all. So it’s those different factors that play into all of that.
Kerr: Sander, we see a bunch of conversation about things like skills-based hiring, the role of traditional college degrees for job applicants, and so forth. How does Randstad work in that environment?
Van’t Noordende: I would say it’s still early days, but if you take a step back and you think about it, it makes total sense, because, of course, having a college degree says something about how smart you are and which exams you’ve passed, but does not necessarily say something about the skills you have. Of course, there are many skills—interpersonal skills, creativity, writing. So if you take a step back and say, “What are, really, the skills that we need for a role?” and try to match them with the candidates, I think it’s a more equitable way. And also it opens up a bigger pool of talent to attract and to have your interviews and discussions with. So it makes sense. But again, it’s one of those things. You have to describe the skills. What are they really? How do we measure them then? It’s a good concept, but bringing it into practice and then at scale, that’s a totally different thing. Of course, that’s where we come in.
Kerr: What would be the role of organizations like Randstad in terms of understanding the skills of Bill Kerr as he’s coming in and out of various employment opportunities and being placed into yet another company to work with?
Van’t Noordende: Yeah. So we will be looking, and we are already looking to build a longer-term personalized relationship with you, Bill. Right? So we know your background. We know your skills. We know your placement. We got feedback about you from your placement. We proactively give you a buzz. We say, “Bill, your assignment is ending in a month from now. What are you looking for? You want to take some time off, or you want to look for something completely different?” We advise you, “We see opportunities here” or “we see opportunities there.” So it’s all going to be much more personalized, because talent stickiness with Randstad is going to be so much more important than it used to be in the past. So we want to build that personal relationship with you, and we’re going to use all the technology, of course, that we have available in terms of the data about you and your performance, in terms of your background, in terms of the job market, in terms of the salaries. It’s also a triangulation between supply, demand, and the comp, so to speak.
Kerr: Yeah. That’s also back at this unretirement concept, and more generally, bringing people into the workplace that are not seeking full-time work. Usually, a core component of that is flexibility. And so tell us about the state of play in your industry in terms of providing things like remote work or hybrid work. I know you’ve been looking at four-day weeks. What are some of the big things you’re observing?
Van’t Noordende: Yeah, the four-day week is an interesting theme. So the four-day week is definitely not the silver bullet. I think there is no silver bullet, but in Randstad, we call it flexibility with intentionality. That means, first of all, work is about work. Let’s say you’re in the finance team. You’re closing the quarter. That’s the moment that you should be in the office, because that’s when lots of stuff is happening. You’re always in a pressure cooker, so you need to act fast. So the team lead says, “We’re doing the finance closing. We’re going to be in the office for a week or two, and we get it done.” Same thing if you’re working on a campaign on the marketing team, similar thing. So, the intentionality; there must be a reason to come to the office. It can be, “We have a bunch of new people coming in. We need to train them. We need to coach them. We need to guide them. So we need to be at least three to four days per week in the office.” So the intentionality is really important, because that’s basically saying to the people who work for you, “If there is a reason to come into the office, we expect you to come into the office. We don’t expect you to come into the office to do Zoom calls from the office. What’s the point?” You need to come to the office when we decide as a team that we come to the office.
Kerr: Yeah. I’m curious, just because you’re at the front line, and, I mean, your conversation with potential future clients, you’re seeing around the corner. Do you see a trend in aggregate toward more return to office, more flexible, keep it as it is? This is one of those questions that everyone from mayors to office building construct, everyone wants to understand the future of that aggregate trend.
Van’t Noordende: I think the trend of returning to the office is stalling. I think the conclusion is flexibility or flexible work is here to stay. That means you can trust people to work at home. It means the technology works. So there’s really nothing stopping us other than, back to the intentionality, if there’s a reason, “Okay. Let’s huddle. Let’s do what we need to do,” and then be flexible again, so to speak.
Kerr: Yeah. Usually, one of the places that people most circle about concerns with being out of the office or at some distance is about the onboarding process and that early mentorship. And that’s something that your company does time and time again. So how do you advise companies on how long they should be or at the frequency to interact with somebody in person, even if, ultimately, they may give them more flexibility?
Van’t Noordende: First of all, a lot of that is still happening in the office—in our case, in our branches. And that’s perfectly fine. The other thing, of course, is if you have new people joining, and you do not automatically have those interactions, you need to plan for those interactions better. You do a call every morning with the team. You plan individual calls with new folks to do a bit of coaching and whatnot. So you need to just think about it more and plan more than you used to. Flexible work seems to have the same productivity as work in the office. It’s basically a massive experiment at the global scale. It’s quite interesting to be part of it.
Kerr: Yeah. You could find variations. I don’t think the productivity studies have typically included, for example, the wages that are being paid to the talent, and if you can have somebody that’s willing to work remote and take a 15 percent lower wage, that’s giving you some cushion, perhaps, on a productivity dimension. Okay.
Van’t Noordende: Yeah, that’s actually a very good point that you make, Bill, because I was just talking to some of our folks who operate in the North America market, and they said, “Well, we have created different career tracks. People who are, I would almost say, full-on in the office doing their stuff, and we have created some other roles, which are more remote, more flexible, but with accordingly a lower compensation.” Actually, there was quite a bit of interest, more interest than they were expecting for that second type of role. So it’s also there’s not also one-size-fits-all. Some people have other preferences. “I want to go for my career; I want to get the big bonus,” or “I like to be a bit more flexible. I get my work done, and I don’t get the big bonus.”
Kerr: We’ve also heard the other side of the concern which would be I worry if those people that are closest to the office are in there more frequently or more likely to be the ones that get seen by the boss, get promoted, whereas we wanted to have a more equal talent distribution. I think, to your point, we’re going to learn a lot about how this should work and the role of different tracks, the role of different types of career ladders that people will be experiencing.
Van’t Noordende: No. Absolutely. Let’s say, and of course, you would want people to have equal chance and no bias, et cetera. At the same time, we’re all human beings. If I see you every day in the office and we get along very well, then I think, “Well, this Bill is a great guy. He’s doing a good job. Okay. Let’s promote.” It shouldn’t be like that, but it’s very difficult, and you can, of course, make your processes such that you try to remove as much of that bias as possible. But we’re all human beings, I would say.
Kerr: Yeah. You’ve written a lot about the U.N. Sustainability Goals. Can you talk to us a little bit about your interest and approach to sustainability?
Van’t Noordende: Yeah. So, for us, sustainability or ESG is all about the S. We have a big effort, for instance, in Spain, where we have a big contingent of people with a disability working at our clients. In the U.S., we have a program called “Higher Hope,” which is for women who come from challenged environments, who haven’t finished school or who have challenges finding or staying with a job. And these are sometimes single mothers. We care about making sure that men and women have equal opportunities, things like that, that we have diversity in all categories, ethnicity, LGBT, men, women, people with a disability, et cetera.
Kerr: As we’re recording in 2023, I think the world is still trying to understand the full implications of generative AI, ChatGPT, and so forth. You both work with companies that are being affected by this, and even parts of your business may have implications based upon what comes next. How are you experiencing right now? What’s the take that you’re able to see?
Van’t Noordende: I think AI can be a very welcome addition to our arsenal of weapons to improve productivity. Talent is scarce. If we can be more productive—and most of the time, the work that we automate is the repetitive work—so if we can be more productive as a world, I think that will benefit the world, ultimately. One thing that is, of course, very important, 50 percent of the jobs, according to the World Economic Forum, will be affected. So we have to do a much better job than we did with the Industrial Revolution. I don’t know if you have read the book about Janesville in the car belt. I mean, that’s just a terrible book in terms of groups of people who were making $35 per hour and had a good life and thought they had a job for life, who then had to either go eight hours down the street or accept a job at $11.50. We have to do a much better job and make sure we don’t leave anyone behind. We reskill, we help people find new jobs, we make sure there’s maybe remote jobs. So we have to do, as a society, much better than we’ve done in the past, first of all, because it’s the right thing to do, and secondly, we need talent. We need people to do the work.
Kerr: Yeah. The book on Janesville, Wisconsin, follows the close of a General Motors plant and the workers that were laid off from that.
Van’t Noordende: So, Bill, I’m a fan of AI, and the interesting news is the workers or the employees or talents are also a fan. Fifty percent of the people that we have surveyed say, “Interesting, AI. I want to hear more. I want to learn. I see opportunities in my job.” So people are, to a certain extent, I would say, excited. The thing that they are not so excited over—or even disappointed with—I would say, is the training they get, because 50 people say, “Really, I’m excited.” Only 10 percent of the people get training from their organization. I think personally that is a time-lag problem. It will happen. If I look here in Randstad, we have had a couple of months ago an “AI Week.” What are the use cases for AI? How can we move fast? Now, we have a first use case for the large language models, then, because we’ve been using AI in other areas for a while for writing job descriptions. This is a very simple example that takes generally between 20 and 25, 30 minutes. With AI, it takes 5 minutes, because you type in a few things, you push the button, and you say, “This is the tone I would like. I would like optimistic, or serious, or more for skeptical people.” So you push the button, and out draws the job description. It’s brilliant, and our consultants love it.
Kerr: Sander, let us talk a little bit more about the tight labor market. And I want to raise the—well, it’s been with us for quite a long time—work-life balance. I’m curious as to how you see this playing out both now and where you’re projecting it for employees in the future.
Van’t Noordende: That’s back, Bill, to flexible work. Flexible work is very much in demand, and some people say, “I’m not going to accept a job that doesn’t have some degree of flexibility.” Actually, I think flexibility helps a great deal with work-life balance. If I work from home, in between, I can put the laundry in the washing machine or in the dryer that I would’ve otherwise done in the evening. That’s a very simple example, but of course, the other big thing for many people is they avoid to commute. Employers just will have to and are realizing that if we don’t offer that type of flexibility at all, I mean, your pool of available candidates will shrink.
Kerr: Sander, you hear a lot of discussion about industrial policy and how it’s increasingly tied to talent and workforce development. How does that impact your company?
Van’t Noordende: So if we talk about reshoring, it’s basically focused at making the U.S., and Europe, and Australia, and Japan less dependent on, particularly, China for a broad set of things. I mean, the CHIPS Act in the U.S. is a case in point. Europe has a similar thing. If you want to be independent, you need to bring manufacturing back, and there’s an opportunity for us at Randstad because manufacturing is coming back, and it’s not coming back in the same way as it disappeared, so to speak. It’s coming back in a high-tech way with different skills. Some of these big factories, they need thousands of people. So, for us, it’s an opportunity, and that’s why we have a single-line manufacturing, and within manufacturing, skilled traits, so skilled labor in manufacturing, your process engineer, for instance, as a growth opportunity for us at Randstad.
Kerr: You mentioned the pandemic at the very beginning and a few points to this. I’d love for you to reflect a bit on how the pandemic affected Randstad as a company. Are we fully through whatever cycle came from that, and what would be the impact you’re anticipating going forward?
Van’t Noordende: Yeah. The pandemic hit Randstad in a major way, I would say. So in Q1 of 2020—and specifically, in March and April, when this all started to evolve—our volumes were down in some countries by 40 percent. That was massive, and we didn’t know what was going to happen. So, at that point in time, we even decided to skip our dividend because that was that time of year because we thought, “Well, if this is going to continue, minus 40, maybe minus 50, 60, and what have you, then we need to preserve some cash to make sure we can take care of our people.” So, in hindsight, that was not needed, because the trough of everything was, let’s say, Q2 of ’20, and then it started to come back. Then, over ’21 and ’22, it came back roaring, if you will. Last year, Q3, so exactly one year ago, so September ’22, it was the biggest quarter of the company ever. Now, then we started to see—and I think it was driven by pent-up demand for, let’s say, in the pandemic itself, for stuff, because people were doing stuff around the house in those lockdowns. Then, after that, for services people going back, traveling, go to the restaurants, et cetera. Also, it was very much impacted by the war in Ukraine, where companies started to realize that their supply chains were much more vulnerable than they thought they would be. And as a result of that, companies started stocking up. Now, in hindsight, again, they have stocked up a little bit too much. So after the peak in September in Q3 2022, we are now on a bit of a downward trend, where we just published our results for Q3 ’23 here where our volumes are down by roughly 10 percent, which is very significant. So we’re now more in a path to normalization, if you will, which is, I have to admit, a bit painful, because we have to adapt our organization to the demand that we have. So now you need to think about, “How are we going to grow the company from here on in this new world?”
Kerr: I’m sure many of our listeners right now where they’re driving or whatever are nodding their heads about that volatility and trying to work its way through the system and get to what will be a more regular environment. Let me end with a question that I think draws upon the fact that you spend so much time with organizations on their talent and, of course, research-wise, but also where they are looking internally to invest their resources. What’s the workforce dynamic that you think is just most underappreciated, that you would consistently want more visibility for HR leaders on, and what’s some advice about how to approach it?
Van’t Noordende: Yeah. Good question. I would say the one tip I would give to business leaders and HR leaders: Be very cognizant of what talent is looking for, because if you want the best people, you need to give them what they want. Not everything, always, all the time. But if your proposition for talent is not the right one, you’re going to be in trouble as an organization.
Kerr: Sander, thank you so much for joining us today, and we appreciate your insights.
Van’t Noordende: You’re very welcome, Bill. It was great to be here.
Kerr: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.