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The White-Collar Recession · Humanity Working

• 0:05
  SPEAKER_01: This global company is not for the week.
• 0:13
  SPEAKER_01: Hey Paul, I've been reading about a white-collar recession.
• 0:16
  SPEAKER_01: Yet U.S.
• 0:17
  SPEAKER_01: employment is sitting near historic lows.
• 0:20
  SPEAKER_01: Are knowledge work jobs really in recession, or is something else hiding underneath those full employment numbers?
• 0:27
  SPEAKER_00: Yeah, hey Matt, everybody, this is a really, really interesting topic.
• 0:33
  SPEAKER_00: So as we're recording this right now, the most recent figures for unemployment in the US are, I think, 4.2%.
• 0:42
  SPEAKER_00: And while the way in which economists view um what is full employment has changed over the last uh 20 years based on individuals' behaviors and people doing multiple jobs and all that kind of stuff, um that's more or less a figure that would generally be considered more or less full employment.
• 1:08
  SPEAKER_00: Um but it sure doesn't seem like that, right?
• 1:11
  SPEAKER_00: I mean, if we're uh watching our feeds on various social media channels or we're following the news, you're seeing all the time not just layoffs, but significant layoffs and significant layoffs in a whole bunch of different fields.
• 1:28
  SPEAKER_00: And I, for one, certainly know people that have been uh out of work for months um and are really struggling to find uh really struggling to find a good opportunity.
• 1:40
  SPEAKER_00: Um we are almost certainly close to a white-collar recession.
• 1:49
  SPEAKER_00: Now, of course, I suppose I guess we should specify terms.
• 1:53
  SPEAKER_00: So by white-collar recession, what we really mean here is that um it's a type of recession that is impacting a segment of the economy.
• 2:05
  SPEAKER_00: And that's why there's this disconnect between the overall unemploy unemployment figures and then what's happening in these areas.
• 2:11
  SPEAKER_00: So the lower paid jobs in certain areas like hospitality and and uh healthcare would be two good examples.
• 2:20
  SPEAKER_00: Um those those lower paid positions, um, there's lots of those that are available that are available right now.
• 2:29
  SPEAKER_00: And if anything, um there is uh there's a shortage of workers in that space.
• 2:36
  SPEAKER_00: Um but it's those, it's the knowledge workers, it's those uh senior individual contributor, those middle manager type positions, um where there are too many employees or too many potential employees and not enough positions.
• 2:53
  SPEAKER_00: And that's leading us to uh to where we're at.
• 2:57
  SPEAKER_00: Um it's a little different.
• 2:58
  SPEAKER_00: It's a little different to uh what the work environment has been um over the last even 30, uh 30, 40 years, and it's a it's a real challenge for people.
• 3:08
  SPEAKER_01: Yeah.
• 3:09
  SPEAKER_01: Yeah, and it strikes me also that those individual contributors or knowledge workers in that kind of middle area, especially if they've been at an organization for a long time, um almost have this uh inability to recreate themselves because they had this kind of niche or they were they were uh they didn't realize their potential because they were in an organization.
• 3:38
  SPEAKER_01: You see that sometimes too.
• 3:39
  SPEAKER_01: So not only do they have to reinvent themselves, but the organizations have to reorient themselves around this loss of you know, sort of like we talked about last time, intangibles around the cont the contributions of these these folks.
• 3:56
  SPEAKER_01: So it has to go both ways.
• 3:58
  SPEAKER_01: And if uh in you know, in many layoffs, companies seem to you know pick a thing, so cut whoever's highest paid or easiest to quantify.
• 4:08
  SPEAKER_01: So firing the wrong people sometimes, right?
• 4:12
  SPEAKER_00: Yeah, yeah.
• 4:15
  SPEAKER_00: Of course, yeah, there's a and we we need to obviously be sensitive here, right, right, because because like hiring if if you're the person uh firing anybody is firing the wrong person.
• 4:25
  SPEAKER_00: But but there is a there is a a larger challenge here, which is that when a company fires people, um there is a significant adjustment that company has to make.
• 4:42
  SPEAKER_00: And in most cases, the company does not does not fire people and say, oh, while we're firing these people, we're just gonna stop doing a whole bunch of stuff.
• 4:54
  SPEAKER_01: Right.
• 4:55
  SPEAKER_00: Right.
• 4:55
  SPEAKER_00: Most of the time, right, yeah.
• 4:56
  SPEAKER_00: What they do is they fire a bunch of people and then the people that are left are left, you know, picking up the can and doing things differently.
• 5:04
  SPEAKER_01: Yeah.
• 5:05
  SPEAKER_00: Now, as we've discussed, right, humans are amazingly adaptable and humans can adjust.
• 5:10
  SPEAKER_00: And that's one of the reasons why when companies often do fire people that that everybody else that remains kind of copes, right?
• 5:18
  SPEAKER_00: It's not it's not that often that when you fire a bunch of people, that the company then just spirals in, spirals into nothingness.
• 5:25
  SPEAKER_00: People do adjust, they do adapt, they are often resilient enough to be able to be able to do their best at these at these very things.
• 5:34
  SPEAKER_00: But it doesn't mean, it doesn't mean that companies are great at figuring out if you have to get rid of 10 or 15% of your people, who those 10 to 15% of people are.
• 5:48
  SPEAKER_01: Yeah.
• 5:48
  SPEAKER_00: And they wrestle constantly.
• 5:51
  SPEAKER_00: Um I don't know if you've been in or around reductions in force yourself, but but they wrestle constantly with the idea of how much time am I going to spend measuring this versus how much time am I going to spend just pulling the band-aid off and letting us uh and letting us adjust.
• 6:07
  SPEAKER_01: Yeah.
• 6:08
  SPEAKER_00: And um the reality is that almost any method that is used often winds up being feeling like the most arbitrary method.
• 6:19
  SPEAKER_00: I've actually encountered a company once where they had to they decided that in certain teams they had to get rid of 50% of the people in the team.
• 6:29
  SPEAKER_00: And so they just got basically rid of everybody in the first half of the alphabet whose first name was whose last name was in the first half of the alphabet.
• 6:37
  SPEAKER_00: And if your last name is in the second half of the alphabet, you stayed.
• 6:39
  SPEAKER_00: Wow.
• 6:40
  SPEAKER_00: It was very, very strange.
• 6:41
  SPEAKER_00: Um, and but at least managers had something that they could that where they could they could pick and they uh and they could go and they could go forward.
• 6:52
  SPEAKER_00: But the reality is that if you do get this wrong, then those intangibles that you're talking about can really, really suffer.
• 6:59
  SPEAKER_00: Because the people that go might be the people that are really good at yeah, integrating well with other people or or collaborating well with other people who maintain the culture, who dive in and and solve problems.
• 7:13
  SPEAKER_00: So when you do this, you never really know until you go through it what the ultimate impact of it is going to be because of those intangibles.
• 7:20
  SPEAKER_01: Yeah.
• 7:22
  SPEAKER_01: Man, it is complex.
• 7:23
  SPEAKER_01: Um well, for the higher skilled employees that do stay, or maybe not necessarily higher skilled, for the for the folks who are left.
• 7:30
  SPEAKER_01: Yeah.
• 7:30
  SPEAKER_01: Uh, where does where does the pain show up first?
• 7:33
  SPEAKER_01: You know, stalled weight, stalled wages, promotion freezes, uh, subtler risks like skills just go away or blurred career paths.
• 7:41
  SPEAKER_01: Like there's so many possible bad outcomes that people have to deal with, right?
• 7:47
  SPEAKER_00: Yeah, I'll mention a couple of things just because it's something that we don't often think about.
• 7:51
  SPEAKER_00: Um, so one is that there's been several pieces of research that show that um if you look at health outcomes of people who fire people, um, the health outcomes of people who fire people are often worse than the people who are being fired, um, which is really interesting because the person doing the firing still got their job, they've still got their livelihood, et cetera.
• 8:11
  SPEAKER_00: Um but it's that it's the act of doing it that can cause major uh major issues for the uh for the people that are that are doing the firing.
• 8:23
  SPEAKER_00: I'm sure a lot of people have been fired, they can say, well, well, that's the penalty that they have to that they have to pay to do it.
• 8:30
  SPEAKER_00: Yeah.
• 8:30
  SPEAKER_00: But of course, often inside organizations, particularly larger organizations, managers are uh, you know, managers are just pawns in the game, right?
• 8:38
  SPEAKER_00: They um, you know, we've heard multiple stories at this point where managers are uh inside large organizations where managers wake up to an email with a list of people that they've got to let go and they've got two hours to do it.
• 8:51
  SPEAKER_00: Right.
• 8:51
  SPEAKER_00: So these are um it's not it's not pleasant for uh for anybody.
• 8:56
  SPEAKER_00: Um another challenge that you that you often do see is um the the shock of the new situation and a sort of form of survivor's guilt that sits inside inside companies, right?
• 9:12
  SPEAKER_00: You've got colleagues, you've got friends um that were working with you, you survive, they've gone.
• 9:19
  SPEAKER_00: Um there can be a bunch of guilt that stick uh for the uh for the folks that stick around.
• 9:24
  SPEAKER_00: And so what you're hear me referring to here are kind of like subtleties, right?
• 9:29
  SPEAKER_00: And uh intangibles that are uh that are associated with it.
• 9:32
  SPEAKER_01: Yeah.
• 9:32
  SPEAKER_00: Um and almost any organization that is going through this process has that adjustment period.
• 9:41
  SPEAKER_00: So the one thing I would urge organizations to do is if you do have to go through this process, um yes, expect the fact that uh people are gonna need to adjust to their new roles, but also expect the fact that there's a psychological adjustment that has to happen as well.
• 9:58
  SPEAKER_00: And so it's gonna take a bit longer than you think it is for everybody to get to get kind of back to normal.
• 10:04
  SPEAKER_00: And so you should really think about um the wave, you know, if you're gonna do this in waves, what's the impact of that?
• 10:10
  SPEAKER_00: Because every wave you do is gonna be uh there's gonna be a period of getting back to normal after each wave.
• 10:17
  SPEAKER_01: Yeah, I mean, there's such a a human cost to it.
• 10:21
  SPEAKER_01: You have, you know, considerations for so many different things uh in terms of the human aspects that go on.
• 10:31
  SPEAKER_01: You mentioned the health outcomes of of the person doing the firing.
• 10:34
  SPEAKER_01: That's very interesting.
• 10:35
  SPEAKER_01: It it is a horrible thing.
• 10:37
  SPEAKER_01: And a lot of times companies, you know, for for many reasons, there's a script you have to follow.
• 10:42
  SPEAKER_01: You can't really be human about it.
• 10:44
  SPEAKER_01: Maybe it wasn't your decision.
• 10:45
  SPEAKER_01: None of those things come into play and can't in that scenario.
• 10:49
  SPEAKER_01: So it it it it dehumanizes it and then expects the human reaction to fix the problem after it's over, and it's it's just crazy.
• 10:57
  SPEAKER_01: So I don't know what's what does doing layoffs right actually look like if there is a business uh benefit or in some way, shape, or form to it.
• 11:08
  SPEAKER_01: Um but is there a way to do it well?
• 11:10
  SPEAKER_01: Is uh does it matter for both people leaving and those who remain?
• 11:13
  SPEAKER_00: Yeah, Matt, I've been thinking about this quite a lot recently, actually.
• 11:16
  SPEAKER_00: So there's a uh company that um I've been working with called Exodus.
• 11:21
  SPEAKER_00: Um they're a they're a startup that is really going after this problem, a couple of ex-googlers that are looking at this.
• 11:29
  SPEAKER_00: And um in working with them, there's a few things that they've brought to light for me that I that I hadn't really thought of too much before.
• 11:40
  SPEAKER_00: One is that even when the economy is doing well, there are large numbers of people.
• 11:48
  SPEAKER_00: Don't quote me on this, I think it's in the millions of people that are laid off every single month.
• 11:54
  SPEAKER_00: And so it's a very strange thing when you think about it that while from the perspective of an individual, this is quite a rare thing.
• 12:04
  SPEAKER_00: From the perspective of the economy as a whole, this is a very common thing.
• 12:09
  SPEAKER_00: And yet, almost many, many organizations that do this, every time they do it, it's almost like they're approaching it for the first time.
• 12:15
  SPEAKER_00: Yeah.
• 12:15
  SPEAKER_00: And so there's no real sharing of best practices, there's no real infrastructure set up inside these organizations in most cases for when they do layoffs.
• 12:24
  SPEAKER_00: There's no real way to make sure that it's done humanely or any of those things.
• 12:29
  SPEAKER_00: And there should be.
• 12:32
  SPEAKER_00: And there's two reasons really that I can think of more than anything else as to why there should be beyond the fact that we should just be humane to each other, right?
• 12:43
  SPEAKER_00: Yeah.
• 12:44
  SPEAKER_00: That's uh I'd like to I'd like to think that that's a given.
• 12:47
  SPEAKER_00: But the two but the two business reasons are one we've already discussed, right?
• 12:53
  SPEAKER_00: You do this humanely, you're gonna lower the psychological impact on the people that remain, and therefore you're gonna increase the productivity and the engagement and the effectiveness of the of the employees that remain because they see this as done humanely.
• 13:10
  SPEAKER_00: But the second reason, of course, is as well is that everybody that you fire is a human being that now has a different opinion about your company.
• 13:20
  SPEAKER_00: Yeah.
• 13:20
  SPEAKER_00: And they're gonna share that opinion, and they're probably gonna share that opinion freely.
• 13:25
  SPEAKER_00: So just from a public relations perspective, doing this really well is is really, really important.
• 13:34
  SPEAKER_01: Yeah.
• 13:36
  SPEAKER_01: Yeah.
• 13:37
  SPEAKER_01: Well, uh almost out of time here.
• 13:39
  SPEAKER_01: Finally, when let's let's talk about when when the demand does soften for these professional roles, which capabilities do become non-negotiable and what smart moves can organizations and individuals make now to emerge stronger when the cycle turns.
• 13:53
  SPEAKER_00: Yeah.
• 13:54
  SPEAKER_00: So one I think we've already uh touched on a little bit, which is like um we need to get smarter at the people that we're keep uh at the people that we're keeping, right?
• 14:03
  SPEAKER_00: So really look for those intangibles.
• 14:04
  SPEAKER_00: We've been talking a lot about the intangibles, really look for the intangibles of great work.
• 14:08
  SPEAKER_00: And try to make sure that you're uh that you're keeping some of your your you know, your most adaptable, your most resilient employees, that you're that you're keeping them and um and so they can kind of lead the charge as you as you work your way out of it.
• 14:25
  SPEAKER_00: The second thing I think that is really important is that um when you fire people inside your organization, you know that you're putting the people that remain under a great deal of stress.
• 14:37
  SPEAKER_00: But why are you firing people in the first place?
• 14:39
  SPEAKER_00: You're probably firing people in the first place because um you're cash poor or you see some uh financial difficulties for the uh for the company moving forward.
• 14:50
  SPEAKER_00: So, but all that said, don't throw out the baby with the bathwater here.
• 14:56
  SPEAKER_00: You've got to make sure that you're not just looking after the people that you're keeping, but you've got to make sure that for the people that you are keeping, that it becomes a place where people can learn and grow.
• 15:08
  SPEAKER_01: Yeah.
• 15:09
  SPEAKER_00: Some of that will happen automatically by virtue of the fact that the people that are remaining are having to take on new responsibilities.
• 15:16
  SPEAKER_00: But do not make the mistake of firing people and canceling things like learning and development programs for the people that remain.
• 15:27
  SPEAKER_00: Right?
• 15:27
  SPEAKER_00: Because now all you're doing is sending a message to people that the only thing that they that should keep them there is some blind loyalty to you.
• 15:35
  SPEAKER_00: Well, you've just shown no loyalty to their colleagues.
• 15:37
  SPEAKER_00: So why would they show loyalty to you?
• 15:39
  SPEAKER_00: So you have to invest in the development of the people that remain.
• 15:44
  SPEAKER_01: Yeah.
• 15:45
  SPEAKER_01: All right, Paul.
• 15:46
  SPEAKER_01: Well, it seems that when we uh don't have our chest timer, we talk a little bit longer, but that's okay.
• 15:52
  SPEAKER_01: Okay.
• 15:54
  SPEAKER_01: Have a good one.
• 15:55
  SPEAKER_01: See you on the next one.
• 15:56
  SPEAKER_01: All right, thanks.
• 15:56
  SPEAKER_01: Bye.
• 15:57
  SPEAKER_01: Humanity Working is produced and edited for Billion Minds by Matt Neo.
• 16:01
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• 16:05
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• 16:07
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