Latest / Recruiting Evolution / Industry Spotlight | Alex Chausovsky - Director of Analytics & Consulting - Equipping Your Team for Success: Navigating Economic Challenges in Staffing and Recruiting
Transcript
- Alex Chausovsky [00:00:00]: I think you have to first and foremost kind of look yourself hard in the mirror and say, have we gotten away from the basics, which is what we talked about? Like, am I still doing sales and marketing efforts, or am I just waiting for the business to roll in? And part of your time, which is obviously very valuable, has to be, I've got to be out there hunting for the business in addition to the existing customer relationships that I already have. Kortney Harmon [00:00:23]: Hi, I'm Kortney Harmon, director of industry relations at Crelate. This is the industry Spotlight, a series of the full desk experience, a curlate original podcast. In this series, we will talk with top leaders and influencers who are shaping the talent industry, shining a light on popular trends, the latest news, and the stories that laid the groundwork for their success. Welcome back to another episode of the full Desk experience. Industry Spotlight welcome to the full desk Experience, the podcast for staffing and recruiting professionals looking to grow, scale and thrive in today's ever changing landscape. I am your host, Kortney Harmon, and in today's fast paced business world, having a pulse on economic trends and labor markets is crucial for success. That's why I am thrilled to welcome Alex Chow soft ski to the show. Sorry, Alex, I needed to break it down phonetically so I said it right. Kortney Harmon [00:01:23]: Alex is a highly experienced economist, market researcher, business strategist, advisor who has spent two decades in the industries like automation, industrial technology, healthcare, business services and manufacturing. And right now, in his role as director of analytics and consulting at the Bundy Group, Alex is a trusted resource for owners and executives for privately held companies and trade associations. He's consulted and advised hundreds of enterprises across the globe, from small business to Fortune 500 corporations. So in this episode, we're going to dive deep into Alex's wealth of knowledge to explore the latest jobs reports, economic indicators and what they mean for the talent industry. So we're going to also hopefully maybe get some actionable strategies from Alex because he's been in our industry for many years and hopefully help position your firm for success in today's rapidly evolving market. So get ready to take notes because this conversation, I'm sure is going to be packed with real world wisdom and practical advice. Alex, thank you so much for joining me today. I'm so excited for this conversation. Kortney Harmon [00:02:29]: Tell our listeners a little bit more about you and kind of what you've done. And obviously you have been in the talent industry for a few years, so kind of give them the overview of you. Alex Chausovsky [00:02:38]: Alex sounds great, Kortney, and thank you so much for having me on the show. It's a pleasure to be here. So my career over the last 20 plus years really has focused on one key element. It is using information and data more specifically to help business leaders make improved decisions and drive their business forward, be more profitable, grow their share of the marketplace, and really be the best version of their organization that they can be. And that's taken on multiple formats. I spent the first part of my career in the market research field, doing things like market size analysis, market share segmentation, and leading a team of researchers, not only here in the US, but around the world. I had folks reporting to me from the UK, from China. And so I have kind of a comprehensive global perspective on markets, on what drives demand for various industries, and really what companies can do to take advantage of the opportunities that exist. Alex Chausovsky [00:03:40]: I then got recruited by a small but very well known boutique economic forecasting firm called ITR Economics. I spent six years doing macro and micro forecasting and analysis. I spoke at about 100 keynotes every single year during that timeframe. And so I really had a lot of exposure to a variety of sectors, everything from consumer sectors like retail environments and consumer packaged goods, to the industrial, manufacturing and automation space and everything in between. So that really gave me a good understanding of business cycle theory and this notion that economies and industries don't just continuously grow in a straight line, but they go through these cycles up and down. And it's really important for decision makers to recognize where they are in terms of their industry and their own company performance in those cycles and make specific adjustments to their business, the levers that are available to them to pull in order to take advantage of the opportunities and to mitigate the risks. To your point from earlier, I then spent a couple of years at Miller Resource Group. I built a consulting practice for Gary Miller, who's obviously very well known person in the space, having run that company for over 30 years. Alex Chausovsky [00:04:59]: And I learned a lot about labor market dynamics, about what works and what doesn't work, in terms of attracting, hiring and retaining talent, and really the actionable, specific things that companies should be doing in order to get better at not only building, but continuously refining a strategy when it comes to their number one asset, their talent. Right, their folks. And now with the Bundy Group, I've entered the world of investment banking. So Bundy Group is a boutique investment bank located in Charlotte. So in addition to all of the things that I've already mentioned, I'm now helping companies with capital raises when they want to get some financing for growth or for an acquisition. We're primarily focused on helping sell side. So when a business is ready to transition from an existing owner, whether that's to a strategic acquirer or a private equity, a financial sponsor, as we refer to it in the investment banking world. And so we advise, we don't buy and sell businesses, but we are advisors to how to maximize the value of the organization, how to achieve the type of outcome. Alex Chausovsky [00:06:03]: Because everybody's goals are different, right? Sometimes they want to pass it down to their next of kin, sometimes they want to maximize the sale price, other times they want to give back to the people that help them build the business. And so it's all very adaptive to what the owner or the shareholders want to achieve. It's not always about the money. And that's really filled out an understanding for me about what is it that the marketplace finds valuable about businesses and how they can really focus on that, whether or not they want to sell the business. But really that's the way that you should be running your organization, is to maximize value. And there are some key pillars there that people have to understand. So it's rounded out my knowledge and now I feel very strong in just being able to sit in the boardroom and advise on a number of topics. Kortney Harmon [00:06:50]: I love that. Yeah, you have such a wealth of experience. I'm so excited for this. I know we talked previously and yes, I want to get into the jobs reports and all the things, but give me your overview of today from me, my perspective and what I'm hearing from all the offices that I'm talking to. Obvious specifically only to recruiting and staffing. There are many organizations that have been struggling, whether they're down 15% to 30%, whether they're starting to see things move, kind of. Give me what you're seeing overall in your perspective and then maybe we can get into after that, what do you see changing? Because the latest job reports came out just recently. So what does that also mean? So let's talk all things. Kortney Harmon [00:07:34]: Let's start there. Alex Chausovsky [00:07:35]: Sounds good. I think it's a great place to start, Kortney, because the best way for me to describe the state of the economy right now is varied, meaning that there are pockets of tremendous growth and opportunity, but there are also pockets of weakness and in some cases outright contraction that are going on. And that's, I think, reflected in what you're seeing in the recruiting world. Some folks that are placing people like, you know, engineers and healthcare workers are still seeing a robust demand. Other folks that are placing tech workers, for example, or people in the manufacturing space, they're seeing less and in some cases, as you mentioned, they're actually seeing shrinkage in their business because of multiple factors. Right. And there's so many to go through, but a few of the ones that are top of mind, you know, the cost of borrowing is very high right now because of the interest rate environment. And so that by design and with the Fed's intention is meant to cool the economy to prevent inflation from surging once again. Alex Chausovsky [00:08:37]: But of course, the downside to that is that with borrowing costs, high, capital improvement projects, so buying new machinery, new buildings are suppressed right now relative to where they were in 21, 22, and early 2023. So the industrial side of the economy is feeling some of that pressure, more so than the consumer side, which consumers remain gainfully employed. In most cases, they're continuing to see wage growth. The good news is that for the last year or so, wage growth has exceeded inflation. And so people aren't feeling like they're falling back as far as they did, you know, in 22 and 21 when the inflation surged. But wage growth wasn't keeping up with it. And really even at the individual person level, I talk to a lot of people in all my travels and there are folks that are doing quite well and there are folks that are struggling, right, depending on which industry they're exposed to, what type of job they have. And so it's really the devil is in the details when it comes to understanding how the macroeconomic environment is going to affect you personally. Alex Chausovsky [00:09:38]: You can't just look at the media reports, whether it's online, in print or on television, and just kind of take it at face value. You have to understand really what drives the commentary. Is there an agenda that the source is trying to push and really be a data driven decision maker? In terms of understanding, how do you mitigate those risks and take advantage of the opportunities out there? Kortney Harmon [00:10:01]: Very good observation. And this isn't new. Our economy has always gone up and down. This is nothing new. Let's talk about the latest jobs report. Obviously, with your experience analyzing economic trends, labor market data, give me your key takeaways on the latest jobs report from what it was to the past few months to I know you and I even talked pre Covid, so kind of give me your thought process and key takeaways from the last jobs report. Alex Chausovsky [00:10:29]: Yeah, so the most recent data that we have available is for the month of April. We saw that the US economy added 175,000 jobs during that month. The bulk of those jobs were highly concentrated in sectors like healthcare, for example. But as well as kind of some of the frontline industries, leisure and hospitality, the retail environment. We did not see a lot of job gains in some of those more industrial leading industries like manufacturing, construction, wholesale trail, which is distribution. And so, yes, at the face value, 175,000 jobs is a lot to add. To put things in context, pre pandemic, it would have been considered a very strong month of hiring by traditional standards when we add that many jobs to the us economy. But as I already alluded to, the strength is really in certain pockets. Alex Chausovsky [00:11:20]: And so tech workers, manufacturing, for example, at a almost no jobs, there was some contraction in the technical sector. So it's really kind of alluding to that point that the devil is in the details. You have to look beyond just the top level number. In addition to that, we have to understand our memory is really focused on the recent experience that we had. And if you look at over the last 18 to 24 months, on average, the us economy was adding over 300,000 jobs. Feels substantially slower when you add 175,000 relative to something that you've been experiencing for the last couple of years, which is twice or more than that every single month. So the job market is clearly showing signs of slowing down relative to the fervor, the frenzy that we saw in 2021, in 2022. But I think this is actually a good thing. Alex Chausovsky [00:12:13]: We had a massive disconnect between the available talent versus the number of jobs that needed to be filled. At the peak of this kind of craziness in the labor market in early 2022, there were 12 million job openings and just 5 million people actively looking for work. So that Delta, the gap was 7 million people, which is why you had the surge in wages and you had such struggles at the company level of filling open positions that companies were trying to hire for. Now, over the last two years, since early 2022, we've seen that gap close. As of right now, we have about eight and a half million jobs open and being advertised in the US. We have about six to six and a half million people actively looking for work. So that Delta is now a much more manageable two and a half million people. It still shows that it's a candidate driven market. Alex Chausovsky [00:13:06]: Right. The pendulum has not swung back into the employer side, but it's much more manageable. And what it means and the ground, the practical aspect of this is it's going to be somewhat easier to find people to fill your open jobs, and it's going to be less likely that your folks are going to be quitting. The great resignation is clearly behind us. We are now back at normal levels of quit by historic traditional standards. And so from a retention perspective, that's really good news. Folks are not going to be losing people nearly as much as they were in 21, 22 and early 2023. So at the face value, the number of jobs that we added still is healthy, but certainly slower than what we saw over the last couple of years. Alex Chausovsky [00:13:49]: The other element that I'll mention here is the unemployment rate. So unemployment rate today, again with that same Bureau of Labor Statistics job report, 3.9% as the national average. But as I mentioned earlier, the devil's in the details. So if you look at management positions, for instance, they have an unemployment rate of 2.2%. So if you're trying to hire a mid level manager for yourself, company much tougher than someone you know on the front line, or a salesperson, for example, positions that are business or professional roles, especially accounting roles, super high in demand, not enough people getting accounting degrees. So again, I hope you can start to see this pattern, is that you've got to look beyond the surface of the numbers and understand what's going on underneath in order to get a true sense of the state of the labor market. But overall, I would say it's a healthy place right now. And to me, that's a very positive thing. Alex Chausovsky [00:14:41]: Which means that the US economy is not likely to go off a cliff. We're not about to enter this chasm of recession. If anything, we're going to see slower growth, but not anything that we think of. When we think of the word recession. Kortney Harmon [00:14:54]: What does that match up to pre Covid numbers? Because obviously Covid was crazy. Like, we had more job orders that we could fill. You know, we talked about that being a client driven market, but it's really the idea of, are we getting back to sub, like, normal numbers of pre Covid? Like, how does that match up? Because oftentimes we only look at least the offices that I'm talking to. They think year over year. They don't think what it was five years ago, they don't think what it was two years ago, they think of what it was last year. So how does that match up? Is that something that we're missing the full picture on and visualization of the economy, of what it really was before all of this? Alex Chausovsky [00:15:30]: Yeah, this is a very important point that you're raising, Kortney, because as I mentioned, this recent experience drives our thinking and feeling about the state of affairs, but you have to zoom out. And so you're right. Year over, year 175,000 jobs is down. Let's say, by almost 50% relative to the 350,000 that we were running a year or 18 months ago. So from a recruiter's perspective, it's going to feel like an overtly negative experience. Right. In that year over year comparison. But if you go back to pre pandemic timeframe, then we're actually up the trend line, even though we have peaked and have come down. Alex Chausovsky [00:16:13]: But the general trend line is a positive one moving up and to the right. So it is imperative to have a, call it a minimum two to three year, ideally more three to five year type of perspective, and not to give into the panic. Oh, yeah, my year over year comparisons are down. And so I've got a, you know, it's a crisis on my hands. No, I mean, you do have to, as a recruiting organization, tighten your belt a little bit, watch your spending. Kind of be aware of the fact that your year over year numbers are not going to be looking good. If I remember, MRI overall, something like 30% down in 2023. I don't expect to have a similar type of contraction in 2024. Alex Chausovsky [00:16:54]: I'm thinking more flattish with perhaps a little bit of an upside or downside bias, depending, again, on which industries you're placing people in. But it's going to be that step backwards that we saw in 2023, because, again, that year was marginally weaker than what we saw in 2022. And 2024 is actually going to be roughly on par in terms of the total number of jobs that the us economy is going to add. It's tracking to be a very similar year to what we saw in 2023. So you're not going to see those double digit declines on a growth rate percentage basis. Kortney Harmon [00:17:28]: Amazing. Now, if I'm an office in one of those spaces that has not seen growth, and you're mentioning there is people with growth, I mean, do you suggest, I mean, I'm not a abandoned ship ever kind of concept, because this too shall change. Yes, but do you suggest these offices, or these industry like, these offices, I should say, look into these other industries of having an additional vertical to their business? Or do you think that's desperation in how they are pivoting? What advice do you have to those people who are down? Alex Chausovsky [00:17:58]: Yeah, so the advice is going to be very pragmatic and the advice is don't do anything rash because you're feeling pain right now. That doesn't mean that you have to stay still and not do anything at all. So, a few thoughts here. First and foremost, I would say my observation is that a lot of the recruiting businesses that really boomed during 22 and 21, they kind of got away from the basics, meaning the sales and marketing efforts. Right. Cold calling and like going out there and hunting for the business. There was so much business coming in that they were kind of on cruise control. Right. Alex Chausovsky [00:18:34]: There was not this business development activity. There was not as much marketing going on. And so I think before you start thinking about going to a different vertical, just go back to the things that got you successful in the first place, which is call on clients new business development greenfield opportunities. Pursue the people that you haven't talked to in a while in the industry that you're serving right now. The other element that I'll mention and I think about dig expansion from a recruiter's perspective on a three dimensional axis. Yes, I would say you could certainly look at sectors that are tangent to what you're doing right now. So I'll use the example of packaging industry, for example, right. You have material handling, you have robotics, these are all elements that are similar in nature, also have similar roles that what you're typically used to filling. Alex Chausovsky [00:19:27]: Right. So you can go sideways into markets that have some parallels to your industry. I wouldn't all of a sudden advise a packaging company to go into healthcare or into tech staffing, but be open and creative to what other industries do we think we can enter without a huge learning curve in terms of the technology, in terms of the nomenclature, the terminology that we're using to describe similar positions, as I mentioned, I think that's a part of the consideration. But I don't think it's the low hanging fruit. The low hanging fruit in my opinion is. So if you think of that as like the x axis, you're moving sideways relative to the center point, right, to the left and to the right. There is another way to move, which is vertically. So if you're typically thinking about placing mainly white collar positions, let's say you're placing primarily engineers, salespeople, marketing, HR, and then all the way up through the C suite, consider moving up and down. Alex Chausovsky [00:20:27]: So what I mean by that is be open to some of the blue collar positions within those same organizations. Field service technicians is an example of huge robust demand even today. Lower fees because their base comp is lower than an engineer's. So you would have to do higher quantity of those placements to get the money that you're looking to get. But it's there for the taking, right? So you can move down. And also if you're well positioned, you really look for those higher quality the C suite roles because, as I mentioned, management, for example, is in super high demand, very low unemployment rate right now. So you can kind of adjust by going outside of the comfort zone on the types of positions that you're filling. And then I think the third element, and this is more of like a z axis, if you think about it from a three dimensional perspective, which is, I think the expertise that you have can be applied to other sectors, but you've got to be out there marketing that expertise. Alex Chausovsky [00:21:28]: And I think that the traditional way that I've seen most recruiters use tools like LinkedIn, for example, which is obviously a huge driver of business for most recruiting organizations, is you kind of stick to your lane. Right. I think my recommendation would be showcase expertise in a given set of industries and a skill set and expand beyond what you're typically. So if you always go to the food processing shows, right, start talking about other things that are related to that, that will give visibility to new potential customers in areas that you haven't served before. So it's more of a development of the pedigree of I can be not just a recruiter. This is not a transactional thing. This is a advisory that I'm bringing to the table. I can help you with compensation analysis. Alex Chausovsky [00:22:20]: I can help you with all of these elements that go beyond just filling the jobs that you have. And that type of relationship tends to be much stickier in periods of down market than if you're just in a transactional type of environment. So I think if you have a combination of those factors, it's much more effective than just all of a sudden pivoting to an industry that you have not served before. Kortney Harmon [00:22:45]: I love that. And sometimes in these situations, people are so very desperate to get business. So, you know, even in my conferences and I'm going to, people are like, I need new logos. Well, do you need new logos or do you just need to go nurture the ones that you had that you haven't spoke to in five years? Do you need a new vertical or do you just need to expand within your vertical? So I love that you're saying this. We need to think not out of desperation, but the idea of where are we good, how do we expand and how do we, you do have maybe downtime. So nurture those, those relationships are what matter in this industry. So I love that we're not abandoning ship. So thank you for that advice. Kortney Harmon [00:23:22]: You have worked with companies large and small, small business to Fortune 500 enterprises. I want you to think of those markets that are hard to attract talent for, and I'm just going to go based on what you're seeing and what are some best practices you can share for attracting and retaining top talent in today's market? Because I'm not going to lie, the non compete piece that's coming out into play is going to change. So our industry is fundamentally going to change within the next hundred and 80 days. So that's going to be important for us. So talk to me. Any thoughts on that? Alex Chausovsky [00:23:57]: Yeah, I have quite a bit of thoughts on that, actually. And it comes down to, I think of these as the pillars of a talent strategy for any organization. And this applies to recruiters the same way that it applies to manufacturing companies, the same way that applies to technology companies and to consumer packaged goods companies. So the idea is, when you are trying to attract a potential employee to your organization, what you really need to be able to answer is the question of why would somebody want to come and work for me? What would be the driver for someone to say, I want to work for this organization? And in order to answer that question effectively, I think you have to do two things. Number one, you have to understand what is it that motivates people to make a decision in a specific direction. Right. And the factors of motivation are numerous. Right. Alex Chausovsky [00:24:47]: There's the management team, the industry that you're in, the products that you sell, company culture, vision, mission, values, all of these things that go into it. But all of it is centered around this point that in the past, the old elevator pitch idea, which is if you find yourself in an elevator with a CEO of a company that you want to work for, you've got 60 seconds to give them a eloquent, concise message of why they should hire you. Well, this idea has been flipped on its head. The post pandemic labor market requires companies to treat talent attraction as a sales and marketing function. So you have to develop that message of why somebody would want to work for you. And you have to take that message proactively to the market in all of your materials and your website and the job postings that you do. You also have to have it resonate with everybody within the organization, not just the HR department, but your frontline people. Because word of mouth advertising is very robust right now in terms of getting people to work with folks that they already know they can put in a good word for the company. Alex Chausovsky [00:25:51]: So I think that's element number one, is address the things that really matter to people. And in my experience, if you talk about why your industry is attractive and sexy, that it's not mature and boring, but rather you use the latest technologies. There's all these growth opportunities. So you attract people to the industry itself. You then talk about what you're doing to address that market is different, meaning why will they be successful specifically at your organization? What tools, what products, what services will they have access to and will they be offering to the marketplace that makes it really attractive and positions them well for success? I think one of the things that people don't do enough of is highlight the team that you're going to be joining. So talk about the successes that you've already achieved, the goals that you've broken through. We don't do this enough, celebrating the people that they'll be joining, because individuals are attracted to success. So if you talk about the success that's already happened, they'll want to be a part of that. Alex Chausovsky [00:26:50]: Right. And then I think most importantly, you've got to talk about what the business does that goes beyond making money. So this is kind of the mission of the organization, particularly in attracting young people. This is very, very important. And it's the community engagement that you do, and it's the philanthropic causes that you support. And what is it about your work that makes life better for folks? Right? It's not just about the bottom line. Yes, you're there to make a profit, but that's not the driver of why somebody would want to come and work for you. They're not like, yeah, I want to go and help somebody make a very profitable living for themselves. Alex Chausovsky [00:27:24]: Right. That's a side effect of having a lot of passion for the work itself. So if you can take those elements, put them into a nice message, and then proactively take it to the marketplace, you're going to see a lot more talent attraction than just putting up job postings and doing that. The flip side of that coin is to really understand, again, those factors that people care about that will make the decision for them. So one of the most amazing things I saw Gary Miller's outfit, Miller resource group, do is using the Clamps survey, which I'm sure most of the offices know by now, but in case they don't, clamps is an acronym that stands for challenge, location, advancement, money, people, security. It's a very basic six line questionnaire that asks people to rank these things in order of importance to them, one through six. And I think the power here is that having the insight itself is not enough. Communicating that insight of what motivates this particular individual to the person conducting the interview is going to make a huge amount of difference because they can adapt the conversation to the factors that this person cares about, thereby vastly increasing the chances that they're going to want to say yes to the job when offered. Alex Chausovsky [00:28:34]: There's perceived alignment between the candidate and the organization, and so that really makes a huge difference. So I would say, if nothing else on the attraction piece, those two things, taking the message as a sales and marketing function to the market and understanding candidate priorities, those will make a huge world of difference for any company trying to attract more people to their doors. The retention component, which is obviously not something that recruiters deal with on a day to day basis. But I've done a lot of research here and I would say on the retention side, it comes down to really the willingness of the company to listen to what their people tell them. And I've seen best in class companies that do this really, really well. Their senior management is open to the idea of change. They're committed to being flexible and adaptable, and they actually invest resources, time, money, people's focus into listening to their employees and then implementing changes that they're asking for. There's many ways to do this. Alex Chausovsky [00:29:36]: One great tool that I've seen is the Gallup Q twelve survey. So it's a twelve line basically questionnaire. It costs about $20 ahead to administer. They're actually statements that you're asking your employees to agree or disagree with. And the statements are really powerful. The statements are like, I know what is expected of me at work very clearly, right? My fellow employees do quality work. I feel proud of that. I have a best friend at work and I feel listened to by my superiors. Alex Chausovsky [00:30:09]: My opinions actually count. If you have agreement with these types of statements, the retention rates are oftentimes 2030 40% higher than if people within your organization disagree with those statements. Therefore, ask them, encourage them to provide truly honest answers. If you have to anonymize the survey, then do it. Because people are sometimes skittish in putting their name on things. Make it anonymous. But then you at least understand where the work needs to, to be put in in terms of addressing the pitfalls and the gaps that you have in your retention strategy. So that's another simple idea that most companies don't implement. Alex Chausovsky [00:30:46]: But they should be, and they should. Kortney Harmon [00:30:48]: Be thinking very hard about those pieces as the non compete thing comes into play with our organizations because I think it truly will change our industry. Alex Chausovsky [00:30:57]: I agree. I agree. And I think that the other element that I will have to talk about in the retention category is you have to be competitive in terms of what you pay people. Pre pandemic, the number one reason why people left organizations was their direct manager conflict between themselves and their superior. Since the pandemic, the number one reason has become compensation and benefits are not competitive. And so step one to fixing that is understanding what the competitive rates for the market are. And number two, having those honest, transparent conversations with the employees that say, look, we've done the research. We realize you're not where you need to be. Alex Chausovsky [00:31:34]: We want to help you get there over time. I can't do it overnight. It's not just like a light switch that I can flip. My business doesn't allow me to pay you all of a sudden 25% more than I'm paying you right now. But let's have a conversation. What else do you value? Is it some flexibility of schedule? Is it perhaps a few additional days of off the books pto that you can arrange with your manager in advance and then make sure your shift is covered and take that time off because it gives you an opportunity to go to your kids ballgame or to run the errands that you don't have time to run during the week. This type of analysis, all of this is really connected to one very simple idea, which is the old mentality of I'm the boss or I'm the company and you're the employee, and it's this power projection downward. You do what I say you do. Alex Chausovsky [00:32:21]: That doesn't work anymore because people have a ton of options and choice. The new dynamic is we're in a partnership. I as an organization will tell you what I need from you as an employee in order for me to meet my goals and objectives. But I'm also willing to listen to you in terms of what you need from me, and I will do my best. I can't promise I'm going to be able to do 100% of it, but I will do my best to react to those things and try to fix the things that you see as shortcomings within your experience here at the organization. I think the companies that adapt that partnership mentality in terms of relative to that traditional power dynamic are going to see much better outcomes on the retention scale. Kortney Harmon [00:33:03]: I love it. All right, I'm going to switch gears on us. Alex Chausovsky [00:33:06]: Cool. Kortney Harmon [00:33:06]: Because AI is a topic that we can't not hear about right now. Obviously, with your experience in automation and technologies, how do you see emerging trends like AI, automation, whatever that looks like changing our industry in the upcoming years, how does that impact our economics? Kind of give me your total thought here. Alex Chausovsky [00:33:29]: Yeah, this is an interesting direction to take the conversation because I've been the leading analyst for a major technology firm for disruptive tech like AI. So my last area of coverage was 3d printing back in the early 2010s. You remember the frenzy and the fervor that existed around that and all the promise of we're going to be 3d printing everything any day now. Right. And my advice here is always the hype cycle is something that you have to be very careful with because we get ahead of ourselves in terms of the capabilities of the technology, in terms of how impactful it's going to be to our lives in the near term. And it oftentimes doesn't play out that way. And 3d printing is a great example. Like, yeah, there are absolutely amazing use cases for 3d printing today. Alex Chausovsky [00:34:17]: Tooling, prototyping. I mean, in certain very complex designs, low volume, high complexity makes sense. Mass production. No, we're not going to be 3d printing cars, right? We're not going to be 3d printing food. So I think of AI in somewhat similar context to that. I think when I do an assessment of the state of AI today, most of it is vaporware, which is just another term of they add AI to the name, but there's not real AI functionality or use cases that benefit from it. Now, that's not the case with everything. Certainly not. Alex Chausovsky [00:34:54]: But the vast majority of things that are dubbing themselves AI right now are nothing more than just, like I said, vaporware. There are some really promising areas from an application perspective. I'll give you a great example that I came across the other day. So in the construction industry, a lot of the job sourcing is done by folks that are walking around the site with a notebook and a pen, and they're like writing down what they need, but they're not using product names. They're like this many two by fours over here and some nails over here. Well, there are now platforms where an AI program can scan the document and convert it into skus for like, fulfillment. So it saves tons of time. Normally that's a manual process that a salesperson has to look up all of these different product categorizations. Alex Chausovsky [00:35:43]: But the I platform is actually bypassing that entire step. And it goes from notepad to order within like two minutes. So savings of literally days, if not more. In terms of streamlining that process, that's a great example of an application where it makes a lot of sense. Another great example, and I'll tie this to your question, more specifically, code writing up until a couple of years ago, the notion was that everybody who's smart should learn to code to some capacity. That was the advice all of the tech firms were giving people. We saw the demand for software engineers and for anyone that knew coding languages of any capacity. Well, a couple of months ago, the CEO of Nvidia stood up at their annual conference, and he said, that is the worst possible advice that anyone can take right now, because the vast majority of basic code is now going to be written by AI. Alex Chausovsky [00:36:37]: In fact, Microsoft. Of their massive amount of software engineers, about 70% of all of the code that's being written today is being done by AI. The copilot program that they're running now, the engineers have not been displaced. They are still validating the code, they're still tweaking the code. They're still making sure that it meets certain parameters and quality standards. They have not been removed from the equation, but their job is evolving. They're no longer writing billions of lines of code. They're using AI as a tool in a process that they're still very much in control over. Alex Chausovsky [00:37:12]: So you play that out, the quality of the code that's being written certainly is going up substantially. It's going to automate many of the processes. And so I think it's fair to say that the evolution in the tech space is less basic code writing, more understanding how to work with AI in order to write better quality code in a shorter period of time. So the volume of jobs might not be the same level in terms of the need for software programmers as we had in the past, but it also doesn't mean that the industry is going anywhere. It's just evolutionary in terms of how the jobs look. And so recruiting firms in the tech space have to adapt to that. They have to understand, all right, what are the requirements for a software engineer that can work with AI versus one that just knows a basic programming language like C? Evolution is key, but evolution always takes longer than we think. I believe eventually it will have extremely disruptive, in a positive way ramifications for our society in the near term. Alex Chausovsky [00:38:20]: And I'm talking about the next, call it 18, 24, 36 months. I think it's going to be incremental progress. It's not going to be revolutionary progress. So with that in mind, I mean, all technological leaps forward, you go back to the advancement of computing in the 1990s, then the proliferation of the iPhone and mobile devices in 2007. It creates entirely new industries that we can't even imagine prior to that device existing. So a great example of that is Uber and Lyft, Uber and Lyft could not exist without the geolocation data on everybody having a cell phone and being able to triangulate where the car needs to go to pick up this person, because that's the shortest distance and the most profitable route, those types of things. The same thing with AI down the road, I think AI is going to generate way more opportunities, entire new industries and a lot more jobs. Maybe not directly in terms of programming AI, but the industries that it's going to spin out. Alex Chausovsky [00:39:22]: And so I'm very bullish in terms of the opportunities that exist because of this leap forward that we're going through right now. But I'm also reasonable and realistic in terms of the timeline before we actually realize those opportunities. So I would say the big impact is probably going to come, realistically speaking, in the 2030s, like when we see new industries being born and new jobs created in the near term. The onus of everybody is to continue to stay educated and informed. Like, that's the thing that you can control, is keeping up with the developments and adapting to them as they unfold, because you don't want to be playing catch up. You want to try to be on the front end of the curve instead of trying to catch up from the back. Kortney Harmon [00:40:05]: Ok, the train has not completely left the station, but you need to be on the train just listening, idly moving. I mean, we have every ATS, every technology has a shiny new piece that says AI, but that doesn't mean it's going to solve. I've not seen any piece of AI say, I'm hiring your people faster. It may get to a conversation in our industry faster. It may make sure we're more deliberate in our transitions or our conversations. But I love that you are very realistic. Alex Chausovsky [00:40:33]: People ask me if I use AI in my own work, and I say, yeah, absolutely. Alex's intelligence, that's what I use in my work. AI stands for Alex's intelligence. It's not artificial intelligence. And so I'll leave it at that. Kortney Harmon [00:40:47]: I love that. That is amazing. That's going to be my next go to. Okay, you talked about disruptions. You know, looking ahead, is there any other emerging trends or disruptive forces besides AI that you believe maybe would have a significant impact on the talent industry in the next five to ten years? Alex Chausovsky [00:41:06]: I think the jury is still out on this, but I think a potential disruptive force is the proliferation of robotics. Right. I think it could go in a number of different ways, but you certainly have the people that are advocating for humanoid robots best example is Elon Musk with his solution. They're talking about replacing a lot of the manual, kind of mundane, boring work that's currently being done by people with machines. I think that is not likely to happen in, again, the kind of the next three to five year period simply because the economics of it aren't there. So what I mean by that is, yes, you can have this very shiny, very attractive looking humanoid robot to do. Let's talk about healthcare. There's a lot of retirement happening with the baby boomer generation. Alex Chausovsky [00:41:56]: They're going to need medical care. It would be ideal to have a personal assistant in your home that can make sure you're taking your medicine on time, that can get you food, that, you know, I mean, we're talking about, like, irobot style type of existence. Right? Kortney Harmon [00:42:09]: I was thinking Baymax from big hero six because my kids are still little, but I totally am on the same page as you. Alex Chausovsky [00:42:15]: Exactly. The reality, though, is, like, if you look at the average cost to produce a robot like that, it's nowhere near affordable for the average person. And you can get very tailored, specific robots that are not nearly as pre looking that will do that task that you have in mind for a much lower entry cost, you know, $20,000 versus $400,000. Right. Because they don't need all the actuators and all the components to make their hands move. They just have, like, a robotic gripper on the end, and they can pick up stuff and move it over here, which is, at the end of the day, the goal that you have in mind. So I think that it could potentially be very disruptive from a type of jobs that we do. Meaning, if you think about Maslow's hierarchy of needs. Alex Chausovsky [00:42:58]: Right. Like, there's the basic stuff, and when it pertains to the job market, I would say that's the physical, manual labor type of stuff. So robotics could certainly replace construction workers. Right, in terms of being able to go in there and build buildings, physical men. Agriculture is another great example. Frontline production, manufacturing. Right. But the economics are just not there to do that right now. Alex Chausovsky [00:43:22]: So it could be very disruptive down the road. But again, I'm thinking it's medium to long term rather than anything in the near term. Kortney Harmon [00:43:29]: So interesting to think about just to see where we are today. And in 20 years, what my kids are going to experience when they enter the workforce, it's going to be drastically different. Alex Chausovsky [00:43:39]: Yes, absolutely. Absolutely. Kortney Harmon [00:43:41]: Okay, so I'm going to go. One final question for our listeners who are in the staffing and recruiting professions. What are some actionable steps or strategies you would recommend that they implement in their firm or agency to stay competitive, adapt to changes, drive growth during today's economic environment, some are even wanting to grow in scale. I mean, some of the wealthiest people have done that during downtime. Kind of give me actionable steps. What do you think people can be doing in today's environment? And if they're looking to scale? Alex Chausovsky [00:44:11]: Yeah. So we talked a little bit earlier about going horizontal and looking at similar industries. One of the things that I would also suggest is even within your sector, right. If you're particularly serving the manufacturing community, just to give you an example, you have suppliers to your customers that you can target. You have customers of your customers that you can target. So moving up and down the value chain, if you will, would be a really easy thing for most organizations to do, but they're not currently doing it. So I think you have to first and foremost kind of look yourself hard in the mirror and say, have we gotten away from the basics, which is what we talked about? Like, am I still doing sales and marketing efforts, or am I just waiting for the business to roll in? And part of your time, which is obviously very valuable, has to be, I've got to be out there hunting for the business in addition to the existing customer relationships that I already have. I think that's part of the growth strategy, looking at moving up and down the value chain, looking at similar but slightly different verticals as we talked about, looking up and down the type of positions that they're filling. Alex Chausovsky [00:45:20]: As I mentioned earlier, again, you know, blue collar executive suite, if you're somewhere in the middle, typically expand, expand your willingness, and more job orders will come with that. I think the most important element, though, is you cannot be complacent. You always have to be asking yourself, all right, how can I do things better? You have to continue to educate yourself, and it becomes overwhelming very, very quickly. I totally get it that as a business owner, particularly the leader of a recruiting practice, there are a thousand fires burning around you at any given point in time. Right? So you have to be very well organized. You have to obviously address the ones that are burning the hottest, but also leave room for ongoing exploration, ongoing education, and ongoing implementation of the lower hanging fruit initiatives that can really drive results for your business. Right. So I guess an easier way to put that is work on the business in addition to working in the business. Alex Chausovsky [00:46:21]: Don't lose sight of working on the business because a lot of times the ROI for doing that is much more impactful long term than the working in the business can be. Kortney Harmon [00:46:32]: I love it. And I know I said that was my last question. I lied. I know you don't have a crystal ball, so I will preface that and I won't hold you to anything. What do you think's going to happen in the rest of 2024? Going into 2025, obviously, we're in an election year. Those are always dicey. What do you see happening with the economy? And any insights to how we kind of stay ahead of all the upcoming changes? Alex Chausovsky [00:46:56]: Yes, I think I will caveat this by saying, first that any projections that I share are outside of the black swan events. Right. So when I say black swan events, I mean the Middle east could explode at any given point in time. The Chinese could invade Taiwan. Russia could attack a NATO member country. I mean, there's a lot of geopolitical stuff that's happening right now. It's kind of simmering, but it has the potential to be lit aflame any given second. So if those things happen, it really derails any kind of economic prognostication that I can put out there. Alex Chausovsky [00:47:31]: But given the status quo, let's assume that things remain relatively stable. So you're absolutely right. Elections are really important. Most people in the US don't realize this, but about half of the global population is going through a election process this year. So it's not just about the November election. But you've got countries like India, you've got a lot of the states in Africa, a lot of the states in Central and South America. And that's going to change the dynamics. It's going to change relationships. Alex Chausovsky [00:48:02]: It's going to change trade situations. There's going to be, I mean, you saw President Biden announce new tariffs just yesterday, right? So it's really going to have a big impact on how we deal with the rest of the world. And so think beyond just the US presidential election, even internally, we've got about 40 of the Senate seats up for reelection. All the seats in the House are up for reelection. Like eleven of the 50 governors are up for election. So domestically, at the smaller scale, the state and the municipal level laws could also change dramatically. So again, paying attention to all of that and understanding the implications on your industry is really, really important. Important from a macro perspective, I would say don't worry about it too much, because what we see is that elections don't affect the economy, the economy affects the elections. Alex Chausovsky [00:48:57]: And what I mean by that is if the economy is doing really, really well, the party that's currently in power tends to perform better. And if the economy is doing bad, then the opposition, the challenger, tends to perform better. What we do see from election years is uncertainty. We have spikes in uncertainty. And as a result, people pump the brakes a little bit in terms of the decisions that make major investments, hiring of lots of people, but it's minimal. It typically affects GDP growth by a few tenths of a percent, and specifically in the six to nine months after the election, not the longer term. In a bigger picture view, you have to understand it takes a significant amount of time to pass major legislation. We saw that both with President Trump and his trade policy and tariffs and with President Biden, with his infrastructure Recovery act, with his chips act, with all of these things. Alex Chausovsky [00:49:49]: And so focus on the things that you can really control. Focus on the elements of your business. Be profitable. Right? You're going to have rising costs. Your customers are going to be less likely to absorb price increases. So focus on protecting your profitability. Look for cost saving mechanisms that don't involve laying off your people. Right. Alex Chausovsky [00:50:07]: For manufacturing community, one of the things that I'm talking about a lot right now is the arbitrage that exists in terms of the logistics and transportation. Spot rates for trucking are much lower than rates. So shop, and this goes for all sorts of services that a company uses. If you haven't shopped around for a particular service or product that you're buying in the last six months, do that, you're going to get better pricing. People feel that anxiety and the concern, and they'll be willing to work with you to keep you as a customer. Focus on those elements that you can control. The economy going to be, in my view, there's this great survey that CB's news does where they ask people about their opinion of the economy, and then they track the responses by your party affiliation, Republican and Democrat. The last time we had agreement on the state of the economy was during the Clinton administration back in the 1990s. Alex Chausovsky [00:51:00]: Since then, what we've seen is the party that controls the White House always thinks the economy is doing better, the other party is doing worse, and it flips every time. So we went from Bush junior obviously, to then Obama to then Trump to now, and it's always flipped today. It's really fascinating. So the consumer in the United States is really focused on being negative. Democrats. Only 50% of us think that it's doing well. The Republicans, when we as Republicans think about the economy, our response is it's as bad right now as it was during the great Recession in 2008 2009, which is obviously not supported by the data. So my point is, remove the political bias, remove your own individual bias as well, and realize that the economy is actually doing better than most. Kortney Harmon [00:51:48]: This was amazing. I appreciate your insight. You have truly been a wealth of information given our people in our industry something to think about, something to drive, being strategic on what's next. Alex, thank you so much for joining us today and sharing your invaluable experience on these economic trends, labor market dynamics, and strategies for attracting and retaining top talent in today's rapidly evolving workplace. For audience and listeners. Alex really provided you with a wealth of actionable insights, practical advice, and I'm confident this will help our staffing and recruiting audiences navigate the challenges and opportunities ahead in the rest of 2024 and going into 2025, whether it's understanding the latest job market reports to preparing for disruptive forces like AI and automation, this episode was truly packed with real world wisdom that you don't want to miss. If you haven't already, be sure to subscribe to the full desk experience wherever you listen to podcasts. That way you'll never miss an episode filled with expert guest industry insights, workshops and strategies to help and grow and scale and thriving markets and landscapes. Kortney Harmon [00:53:03]: Until next time, keep making great hiring decisions and building exceptional teams. This is Kortney Harmon signing off. I'm Kortney Harmon with Crelate. Thanks for joining us for this episode of Industry Spotlight, a new series from the full Desk experience. New episodes will be dropping monthly. Be sure you're subscribed to our podcast so you can catch the next industry Spotlight episode and all episodes of the full desk experience here or wherever you listen.