Welcome to the first episode of Thrive by Design, the Podcast. Today’s topic is the War on Talent. We’re in the 96 month of continuous job growth, but talent is at an all-time low. In this episode you will learn all about the current job environment, the war on talent, and creating a retention strategy.


Don: [00:00:00] Hi I’m Don Rheem, CEO of E3 Solutions and author of the book Thrive by Design.

Don: [00:00:06] I speak across North America on the neuroscience of engagement at work. I’m passionate about helping leaders at every level to create engaging workplace environments where employees feel safe, recognized, and validated. Employees who feel safe at work are happier, healthier, and more productive. Each week my team and I take on topics impacting managers and offer solutions to your biggest workplace challenges. This is the Thrive By Design podcast. Welcome to our first episode of the Thrive by Design Podcast. I’m Don Rheem, and today I’m joined by E3 Solutions Vice President of Client Experiences Kelly Burns.

Don: [00:00:51] This podcast is dedicated to giving organizational leaders at all levels science-based tips strategies and tools needed to create an engaged culture at work. To start our podcast, let’s start with one of the biggest pain points for leaders today: a war on talent.

Kelly: [00:01:09] Good morning, Don. I’m really excited about our topic for today.

Kelly: [00:01:13] This war on talent seems like such a salient issue. At the time of this recording you’re seeing a news report after news report [on the tightening labor market].

Kelly: [00:01:22] What I’m looking at right now: the U.S. weekly jobless claims jobs drops to a near 49-year low. That’s almost 50 years of us not having experienced the talent shortage that we are facing today. Why is this issue coming up, and why is it still important to leaders?

Don: [00:01:38] Well it is a key issue, and one of the reasons it’s so important is because it did seem to catch a lot of leaders by surprise. We are at the lowest level of unemployment we’ve had since the Vietnam War. It’s causing a struggle not just in the high tech or the professions that require a great deal of education and training. The Wall Street Journal ran one of their longest editorials last year on this war on talent this having an enormous impact on two industries. It wasn’t high tech, it was agriculture and construction. We’re seeing this across the board on our client. So how did we get here? Why does it just seemed like it has jumped on us? A couple of reasons.

First, we are now in our 98th month of continuous economic growth in the United States. This is the longest period of continuous economic growth we have ever experienced in our economy, and as an economy is growing what are employers doing? Hiring. So, we are now in about, I believe, 96 months of continuous job growth in America, meaning every month more people are working than the month before. This, too, has never happened before. So, a stronger economy, a robust economy, is hiring. And that would be well and good if there was an endless supply of talent, but there isn’t.

And now we get to the second reason. If you go back to the beginning of the Industrial Revolution and then take a step even further back when the United States is now an agricultural economy, an agrarian economy, and in an agricultural economy families were huge. Five-year-old can collect eggs from a chicken coop. So, families were big. They were assets to the farm. But, as soon as the Industrial Revolution began, parents began to realize something about these kids. They’re expensive. They have to be clothed and fed until they’re 13 or 14. Today 26, 27. It’s expensive, and as soon as they realized that, they started having fewer of them. Today in the United States our birthrate is 1.7 percent. That’s below replacement rate. So, we’ve actually had a declining rate of labor growth for a couple of decades or more. And so the supply of labor is constricted and its growth rate is in decline. At the same time, we’ve had the longest period of continuous economic growth the country’s ever experienced, and we’re literally running out of talent.

Kelly: [00:04:06] How does the fact that we also have significant changes coming out in terms of the generation that are showing up into the workforce today impact how are the workplace is in this war and talent?

Don: [00:04:21] You know it’s a really important question, and we always want to avoid making generalizations about generations. But there’s no question that Millennials and Gen Z, the people in the workplace below 35-years-old, view work differently than previous generations, and we look at this from a broad sociological perspective. The pace of change around the mindset of work and what work means has changed much more quickly than leadership’s ability to shift, and certainly it has changed faster than management theory taught in business schools today has been able to keep pace. We have a new generation of workers, the Millennials and Gen Z are the largest active segment of the U.S. labor force today, and they view work in fundamentally different ways than their predecessors.

Kelly: [00:05:13] So I’m hearing two major issues I think that we’re facing that can impact this war on talent. One is that the changing economy, the talent shortage, and one is that employees who are showing up to the workplace today look, or maybe desire, something potentially fundamentally different than their predecessors before them, then Gen X and Baby Boomers, etc…So what do leaders need to think about as they consider these two major issues, and how do they lead in a way that helps to engages employees and certainly helps keep them there especially if they’re facing talent loss?

Don: [00:05:52] Yeah. It’s a really big question. Traditionally, for 250 years, organizations have focused on their hiring strategy. This is in an environment where there is an abundance of labor. People didn’t work out, it didn’t really matter. Just have a pipeline of people come in and replace them. Today because of this talent shortage, we’re recommending to clients to focus on a retention strategy, at least equally important probably more important than their hiring strategy. You can’t afford to lose good people in this economy because it’s going to be extremely difficult to replace them of people of equal talent.

We talk about employee engagement, and that’s the bread and butter of what we do, but it also it is also the backbone, the heart, the foundation, of a retention strategy. Employees who are engaged when they come to work are much less likely to quit. And this issue of quitting is an enormous issue for companies. In July, a record number of employees quit, 3.8 million American workers quit that month, the highest ever seen on record, and it’s not because they’re going on unemployment. They’re going to different employers. They’re leaving toxic environments, toxic managers, dysfunctional systems and processes where they don’t feel safe, they don’t feel validated or recognized, and they’re trying to find a culture where they will be, so leaders need to focus on how do I hold onto the people I have?

Now let’s just look at that generationally. We come back to the Millennials. The last time I looked at the U.S. Department of Labor Statistics on the tenure of Millennials it was 2.5 years. This generation is enforcing their view of work with their feet. When they go into a culture and they don’t find a place that provides recognition and validation that helps them find meaning and purpose in what they do. When they don’t, when they’re unable to extend their social network when they’re at work because of how work is set up or organized, they walk, and they will continue to walk, and they can walk because there are more places to walk to than in the last 50 years. This is a target-rich environment for employees who want to find a better place to work.

Kelly: [00:08:06] So getting them on board is not enough. We have to figure out the key ways that we keep our best employees. You just mentioned a few of them. It was interesting that you didn’t mention anything that somebody might traditionally think about when they think about working at a really awesome workplace. For example, fabulous benefits, bring your dog to work day, having a nap pod in the office, massage chairs, happy hours. Those are some of the things that might traditionally come up when you think about a really cool place to work. You didn’t talk about that when you were talking about keeping people, so I’m curious what you think is the most important factor or factors that drive retaining your best employee.

Don: [00:08:52] That, too, is an important question, and I’m not going to knock some of these various perks and benefits that happen in the workplace. First of all, let me tell you why on one of them. In some recent research with Millennials in what they value at work and what motivates them, what is attractive to them at work, the research actually identified for many in this generation, the ability to have more flexibility in their schedule is more important to them than a raise, equally or more important, that is they would forego a raise if they could get more flexibility in their schedule. Now, if I’m a CEO, and I’m thinking about my retention strategy, I want to pay attention to that. If I want to hold onto this cohort of employees, it is the most likely new source of talent, I want to be thinking about these things whether it’s nap pods and these other things. And of course we see out in especially in California and in Silicon Valley all the perks that are bestowed upon people in certain industries, and I’m not going to knock those.

But, I think, if you will, about two levels of motivation. The level that we focus on is neuroscience. It’s the neurochemistry of the brain. What do we know the brain needs in order to thrive? and that’s where we focus. If you dropped down to a cognitive level, what kinds of things make employees happy or make them feel good? There are a lot of people that are focusing on the feel-good options and I’m not going to knock them, but they wear out. If you have feel-good options, if you have a nap room and massage chairs and other perks, but you report to a toxic manager, where you don’t feel valued at work, your opinions don’t count, there’s very little trust, those perks will wear out, and they’ll fray, and they’re not enough. So, for me it’s not necessarily either-or. There are hundreds of consultancies and companies out there pushing the perks. I don’t know of anyone that is talking about what we now know motivates human behavior all the way down to the cellular level and applying that in the workplace. That’s what we’re about.

Kelly: [00:11:03] So the perks are nice, and certainly taking care of our employees the best that we can through some of these physical gifts and benefits in the office would be really valuable, but it’s not enough in order to keep them for the long term.

Don: [00:11:20] Yes. And let me give you a little story. And this is with someone here in the mid-Atlantic region, a CEO that we were having a conversation with, and he talked about how he had put his company in a shopping mall, and he thought man, this is great. The rent was wasn’t too bad, and his employees could shop easily on breaks, they can get all these things done, and there was a food court. So, there’s endless food supply. This is great for my employees. But then the food court closes, so it can be renovated. Now he’s feeling terrible because his employees have to go so far to get lunch. So, he says this isn’t right. And so, he starts catering lunch. Tuesday, Wednesday, Thursday he brings lunch in for free for his staff.

Doesn’t that sound cool? Who wouldn’t like that? We’d like that, except something happened, and it started in the second week. What do you think started happening in the second week from employees getting a free lunch three days a week?

Kelly: [00:12:14] They started getting pretty picky about their options?

Don: [00:12:17] Yes, they did.  They started complaining about the food choices, and they didn’t like the brand of fried chicken that was brought in: I want to a different brand. Oh really, tacos again? My point is, these things that are wonderful perks that we think people would be endlessly grateful for. A perk with within a few days, becomes an entitlement, so it starts to lose some of that perk luster, if you will, and it becomes something that’s considered part of the norm. So, what I worry about for the CEO is what happens when the food court opens again. And now all of a sudden there’s food available, and he’s not catering lunch.

Kelly: [00:12:56] Now they’re going to complain they have to pay for it.

Don: [00:12:59] And are they going to expect a stipend or raise because now they have to pay? Look, again I’m not against these things as part of a package if you will, but to think that these are enough to create the emotional velcro that holds an employee to a company is a fool’s errand.

Kelly: [00:13:19] I love the term emotional velcro, and I’m curious as we start to get really practical here for leaders, if you can describe what emotional velcro looks like and maybe one or two really key ways a leader can create an emotional velcro with their employees in order to not just attract but retain for the long haul.

Don: [00:13:38] It’s a really important concept, and I like the metaphor because what leaders at every level in the organization need to be doing is creating the hooks and loops that form the velcro, that form the bind. I’ll tell you another quick story from a CEO in Phoenix, the CEO of a construction company. And he said, look this is this is my issue I’m building a project on the south side of the street and on the other side of the street, the North Side, a competitor is building another project structure, so I need to know how do I keep my employees from walking across the street for 25 cents an hour more because they do? Now if there is no emotional velcro between the employee of the company, why wouldn’t they? Wouldn’t you?

This is the key issue for us. How do we create that connection between an employee and their company? And that’s the heart and soul of what we do at E3 Solutions is helping leaders understand what those are. Now let me give you a couple of examples. We have a 28-question online survey that our clients use to measure how engaged their employees are. And we measure by manager, so we know for every manager what’s the locus of engagement around them. We also include some open-ended questions. One of my favorites that I’d like to end the survey with is: what are the three reasons why you like working for AcmeCorp? And in those answers, when we have an employee that says it feels like family, that is probably the quintessential example of emotional velcro, where someone comes to work and it feels like family.

I’m assuming it’s a functional family full of love and not a dysfunctional family. It’s just crazy here at home! But this this is where we want to start making these connections with employees at an emotional level.

So other examples: simple validation, recognizing people, using their names so they feel seen and valued in the organization, recognizing them for when they do things that help the organization and the team. And they don’t have to be big things. We talk about looking for smaller increments of discretionary effort that employees give, and then we want managers to see it and to comment on it. There are issues also around do they feel challenged when they’re at work and that shows up in the literature around engagement. But I want to caution managers and leaders, it’s not just the challenge. Some organization then create these challenge goals that are just pretty out of reach for most people, and they don’t realize that part of the attraction of challenge is the successful accomplishment of the task and celebrating the fact that they got it done. Hey we did it! We got it done! It’s like a team winning the game. If it would be very hard to motivate the team continuously if they never won. So this winning, getting across the finish line, is a really important part a challenge

Kelly: [00:16:29] If leaders were to do just one thing differently today after listening to this podcast to help them be a stronger leader that create this emotional velcro, what would you say they need to do starting today differently than maybe they’ve done in the past?

Don: [00:16:57] Well I’m going to start with where they should begin rather than with what. We know that about 70 percent of the variance in how engaged employee is is determined by their immediate manager or supervisor. So, if I was a CEO, I would start immediately by giving my managers, leaders at every level in the organization, better skills on how to create this emotional velcro. At its simplest point, it is creating a more relational culture as opposed to a transactional culture. Managers are the key pivot point for engagement. And as we say in our company: Employees join companies, they quit managers. I saw one study that said that 85 percent of people who voluntarily terminate work do so in large part because of their relationship with their immediate manager or supervisor. This is a huge issue.

I would start with managers, and I would start helping them lead and manage in new ways, especially non-negative ways. We’re not going to have time, but I hope we can go into the next issue in more depth on a subsequent podcast. But the old model of accountability at work is hierarchical, top-down, and punitive, and in a labor-rich economy, you can treat people that way, and they will still come to work every day. In the economy we’re moving into, that’s not enough, and this is a part of the key shift that needs to occur. How do we show managers, leaders, supervisors to hold people accountable in ways that are non-negative, and how can we motivate them based on what the brain needs to thrive rather than just money and perks?

Kelly: [00:18:35] So you bring up the brain, and I’m really curious if you can dig into that a little bit more because that’s one of the key focus areas of E3 and the work that you do all across the country is that we focus on the neuroscience that drives engagement. Why is the brain so important in this conversation? It’s unique to the work that we’re doing, what you’re doing. Why is the brain so important to the conversation of driving engagement and how the limbic system is a major part of why employees are engaged or not?

Don: [00:19:10] Yeah this is this will be the subject of another podcast coming up. Let me just let me touch on this a little bit. We focus not just on neuroscience because it’s a huge field, and there’s a lot going on. We really specialize in the field that’s referred to as social neuroscience, and in this field the neuroscientists are finding ample evidence, an abundance of evidence, on what motivates the brain. Why does the brain do what it what it does? Step back a little. Some of the early discoveries in neuroscience is where things happen in the brain. And that was really cool and exciting, but what’s more relevant for us in the workplace is why the brain does what it does. That is, what does the brain wants as a default? And we have really clear data on what the brain needs in order to thrive, that is, so people can work and operate at their highest capacity. You can’t get people to work at their highest capacity with bribe systems, compensation schemes, or with perks.

But we do know what it is, and you just hinted at it. It is about the limbic system the area of the midbrain that’s the epicenter for fight, flight, or freeze. It’s the emotional centers of the brain that is the is the area that we want to focus on and help managers understand. Not only do we share 99.9 percent of our DNA with each other, we also share what motivates our behavior. And it turns out it’s related to engaging and connecting with other human beings. As Dr. Coan at the University of Virginia in Charlottesville said, a brilliant neuroscientist, “the dominant ecology of human beings is other human beings.” We are hardwired to be in a tribe. We don’t grow up in tight-knit tribes today, but where do we spend most of our time when we’re awake? With other adults at work.

Kelly: [00:21:04] You just brought out a universal truth, which is an interesting juxtaposition to how we started this podcast around the changing generations in the workplace. There are fundamental desirable differences between Gen Z, Millennials, Gen X, Baby Boomers, employees and the work place across generations, and yet it sounds like at our core we all fundamentally want and need the same thing in order to thrive.

Don: [00:21:35] We are all hardwired for safe and secure connections, and that’s why I titled the book Thrive by Design: The Neuroscience That Drives High Performance Cultures. Any of our listeners can grab that book on Amazon or other sites.

Kelly: [00:21:54] Don, thank you so much for such a great conversation today. I’m excited to talk next week more about the limbic system and more about Dr. Jim Coan and social baseline theory. We’re going to get into that really soon, and listeners will be able to hear that just a week from today. Is there anything you’d like to see as we wrap up?

Don: [00:22:11] I just appreciate the opportunity to share this message. We want to reach as many leaders as we can with this message. We know that we can create healthier workplace environments, and when people have a healthier workplace environment they go home as better parents and better partners, and that’s a key part of this initiative as well.

Kelly: [00:22:29] Thank you so much, Don.

Don: [00:22:30] My pleasure.

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