An Exploration into the Frontline Workforce with Josh Bersin

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

Welcome to our next session of The Conversation. I'm here with a personal idol of mine, Jack Berson, obviously industry analyst extraordinaire, who's fresh off the stage at Unleash and just mind-blowing keynote and always thinking about the future. And we're always so excited to hear from you. And we're going to be talking today about the frontline worker and frontline hiring trends, and no better person to be able to geek out a little bit about this with you. You and I have been talking for 4 years at least on the importance of frontline hiring. You've heard me get really excited about it, and I'm now equally excited because you all have done a lot of research on frontline not only hiring, but the frontline experience and its impact to business and revenue. Can you tell us a little bit about the report and maybe why, why now?

Well, we're really starting this research campaign for probably a period of years, and I know we'll be doing a lot of work with you guys. I mean, I'll tell you, one of the things that sort of went through my mind was in the last 12 months the white-collar workforce has been flat to declining in size. I don't know if that's AI or the economy. I mean, there's a whole bunch of contributing factors to that. But if you talk to the US Department of Labor and we've just talked to the secretary and the assistant secretary about it, the manufacturing workforce, the healthcare workforce, the retail workforce, the transportation workforce, the repair and service All of those jobs are in very short supply. Those are the— in the U.S. at least, those are the jobs that are constraining the growth of this economy and this world that we live in. And of course, the immigration policy has a lot to do with this. So we felt, you know, in all of the CHRO conversations we've been having over many, many years, we're not talking about this enough for some reason. And we want to make sure that the executives that we have access to really know what they can and should do and how much attention they should play. Because in a lot of organizations, the management issues of the frontline workforce are really mostly managed by the managers of the retail operations or the manufacturing plants or whatever it may be, or the hospitals or whatever. So this is the beginning, I would say. The first finding is that, and I don't know if everybody knows this, 70% of the jobs in the United States are frontline. And around the world, it's almost 80%. So this is a much bigger population of people than the rarefied sales, marketing, software engineering types we keep worrying about all the time. The second thing is the frontline workforce is the face of the company to the customer. So every single person has a massive amount of impact on the customer brand, on the customer's potential interest in doing more business and coming back, on the revenue of the company. Whereas, you know, most of us working in corporate, you know, maybe we're somehow influential on the revenue, but not that influential. On the quality of the product and the service, frontline workers know what's broken and what's working. They know what's wrong with the company because they see it every day. We don't listen to them that much. We don't have time. We don't always have the tools. A lot of research shows that frontline workers are very disconnected from the company strategy. They don't know what it is. They're not hearing about it. They're not included in a lot of the company communications. So, you know, they're a little bit disconnected from the culture in a lot of organizations. And, you know, even though they may be a high turnover group of people and maybe they're a little bit lower pay because they might be younger. They need a tremendous amount of development and skills and operational training. And they have careers and they become consumers of the company that they're working for. So if they have a poor experience in the frontline job in a company, they may not ever do business with that company again. So there's all sorts of really big dynamics of frontline. And then of course, if you're a nurse, you know, this is a life or death situation. If you're in manufacturing, you know, similarly important. So we want to really make sure that people in HR understand the complexities and the opportunity and the benefits of investing in this part of the workforce. And I think the, you know, the feds, they don't believe— and I don't know if this is true— they don't believe that the American employers are paying enough attention to this market. So It's everything from the education pipeline of how people get into these jobs to how they're taken care of during the time that they're working and so forth. So, so we're just going to spend a lot of time working on all these things.

We had pretty big news on the Paradox front over the last several weeks with Workday acquiring us. I was curious of your, your take on that.

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

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

Well, in some sense, and I think because of the focus that you guys had on frontline, by the way, the other thing that I think is really cool about what you guys do at Paradox, which I've never seen another, I mean, SuccessFactors did this many years ago, is that you don't just sell software, you work with the customer to build the business case for re-engineering the talent acquisition process using things like time to market and revenue and so forth, which very few HR technology companies do, almost none. And that means you're really close to the business issues behind frontline and the sort of the revenue dynamics. And I think Workday is going to learn a lot from you guys. I think they got really quite a crown jewel from you.

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

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

Thank you. And I know a key part of our strategy is to be able to support on the frontline side for Workday current customers and continue to support, you know, over 80% of our customers are on other platforms and so, or utilize our ATS. And so a great way for us to continue to service hopefully the whole frontline industry.

Good.

Want to get into our next segment, which is all about speed. And so for this, we're going to talk about, you know, quick doesn't just mean quick-serve restaurants within Frontline. We've done some research, and I know we've kind of gotten to talk, but for you, what's the importance of hiring quickly in the Frontline space? Why has that become so important?

I mean, there's a whole bunch of reasons why speed is important. First of all, if you, if you have to do it faster, you're going to do it better. Um, faster doesn't mean sloppier. Faster means more precision. So there's more precision in the process if you do it faster. Candidates for these kinds of jobs don't wait weeks. They find another job the next day. So you lose them and then you're going through another, you know, kind of cycle again. Obviously, time to revenue is huge if you can staff correctly. Seasonal issues come and go very quickly. You can't afford to lose a season, a hot buying season. And I think it forces the TA function to reinvent the way it works because the traditional approach that a lot of us sort of white-collar types have been through is very slow. Get a bunch of candidates, screen a bunch of people, schedule a bunch of interviews, do a bunch of interviews, talk about the interviews, go back and look at who you talked to again. Meanwhile, the candidates twiddling their thumbs wondering what's going to happen. That just doesn't work in this industry. And from a candidate perspective, speed is such a value to them because they got to get along with their life too. They can't wait forever and, you know, they're gonna find something else. And it's also a brand value that if you can get back to a candidate quickly and either make them an offer or not, that's actually a great experience for them. They're gonna think more highly of that company the next time they wanna do business with them because the worst thing that can happen is somebody gets dropped as a candidate and then they decide they're never gonna do business with that company again 'cause they were treated so poorly. So there's a bunch of drivers for speed that are counterintuitive to the old white-collar, let's slow it down and, you know, kind of take this thing down to the nth degree of detail, which happens on other kinds of hiring.

I think really well said because I— so at Abercrombie, I was really focused on corporate.

You tell me because you know about this firsthand.

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

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

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

And there's a shortage of these people anyway.

Right, especially depending on what type of industry. If you're looking for a skilled worker, that's even more precious to be able to go after. An unskilled worker, potentially they might be applying to a lot more jobs. So that's interesting. The other piece of data, and this comes from, you know, we've got now billions of interactions largely on the front line of Perodactyl. 52% apply at night or on the weekends. And this ties to our previous point of who's doing the recruiting. We don't have a recruiter in a restaurant. We don't have a recruiter in— It's the manager, and the manager sleeps, right? So now we're in this, we need to make sure that our stores are staffed fast, and we've got people applying, we've got all this competition, and then they're applying at night when we can't get to them. And so it's been a really lovely solution of where automation has been so sticky, because essentially it's like having a recruiter working 24/7 in every single store. And so One of the pieces that I've just been really proud of within the market shift, and maybe personally proud because McDonald's was the first to have a conversational ATS that leaned into all this automation, but 7 years ago, the average time to hire in frontline was 21 days. We just pulled our data, and the most recent is just over 3 days on average. So we've got some that are going way faster. And just like to be able to see that, and to your point, I think you have some where they get hired the same day they apply. We do. And that's also a fascinating model in this average. And you've got some in the warehouse distribution centers, less maybe frontline customer-facing. And those are finding that they can do same-day hiring. And it's really fantastic.

This is a perfect example of where AI can change the dynamics of the entire system. Because without AI, the idea of hiring that fast means you would have had to have 100 recruiters, 100 interviewers staying up all night talking, which is ridiculous. So you can basically re-engineer this process with AI in a way that was impossible before. That's like an order of magnitude faster.

Yeah, and it's— I like how you're thinking about it as re-engineering because I think some of our most innovative clients, 7-Eleven comes to mind, re-engineered. It wasn't, let's take our same process and add a little bit of automation or a little bit of AI to it. So they had 400, you know, field, centralized field recruiters, and most of those are contractors. And the reason they had that was because understaffing was an issue and they didn't want to burden their managers. And so by being able to figure out ways to be able to automate that, they were able to reallocate that 400 headcount and be able to put that responsibility back on the managers and still return 40,000 hours back to their system per week. So they received 2 million hours of manager hours back to 7-Elevens within, within the year. And so that's, yeah, that's, it's exciting. That's, that's business impact. It's not only cost savings, but it's actually revenue-driving business impact that I think is quite, quite neat. It's great hearing about manager pipelines as well. It seems like most frontline industries are seeing that managers, their best managers, are coming from within versus coming in and training from outside. And what's also, not only is the pay package gone much wider and bigger, which is amazing, it's tied to revenue that's being driven, but you're starting to see very clear and transparent paths for training to get someone from a crew member position to a manager position. So I was sitting with a CEO of a regional restaurant group and they said, you know, our goal is to really get someone there within 3 years, but once they hit the manager level, you know, it's a significant 6-figure role because of the volume, you know, the—

Well, yeah, I have a funny story on that. I don't know if you guys have done any business with Wegmans, but Wegmans really spent— and they're just a really highly regarded, you know, supermarket. I guess they're more than a supermarket, but I think that's the category they're in. What they told me is that the way they develop managers is they take a team of people that are running a really well-run store, including the sort of lower-level department heads, and they move them, and they— when they open a new store, they— those people get to go to a new store and train all the people in that new store on how to run that store. And that process teaches a lot of the institutional knowledge that they have and helps them understand why they've been successful. And so then they move those, many of those people get to run that new store. They get promoted when they run that new store. I mean, these are sort of innovative ideas on how to develop leadership in organizations that really have a big impact on frontline.

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

Thank you, Josh. I appreciate all your help.