Payroll systems are the Russian winter of corporate strategy

2016 USARAK Winter Games, by U.S. Army Alaska (USARAK)
2016 USARAK Winter Games.  Photo courtesy of U.S. Army Alaska.

Is there something about payroll systems that cause everyone who mucks with them to be destroyed?  It’s as if payroll systems have deep dark secrets, requiring years of study to allow people to interact with them safely.  Indiana Jones achieved a doctorate before his most epic physical quests.  How much do we need to learn about payroll systems before attempting to make improvements?

In last week’s blog post I provided a summary of the Auditor General’s report on the Government of Canada’s Phoenix payroll fiasco.  Whenever I read about the Phoenix fiasco, I shed a tear for anyone who has goals.  Payroll is supposed to be one of those things that happens automatically in the background.  The rules are clear, the numbers are known, and most of the decisions have already been made.  All that’s required is that we upgrade the software every few decades.  What could possibly go wrong?

But it is exactly that presumptuousness which is fatal.  Have you ever talked to a payroll person?  These are people who quietly persevere doing intelligent work with no glory.  They are careful, and they discourage foolish moves.  Do they know something I don’t about the risks of screwing everything up?

Payroll Systems are Like Russian Winter

I came up with Nazi Germany’s invasion of Soviet Russia as the right metaphor to describe the Phoenix payroll fiasco. It is a great allegory that demonstrates how grand plans can be ruined by a complex landscape and the blindness of arrogance.

There’s a really good article about winter combat produced by the U.S. Army.  It’s titled Fighting the Russians in Winter: Three Case Studies, by Dr. Allen F. Chew, December 1981 under the Leavenworth Papers series from the Combat Studies Institute.  It covers three major battles, the third of which is the battle between Germany and Russia in the winter of 1941-42.

With winter combat, preparing well in advance is key.  Combat engagements in the freezing winter are sensitive to whether troops have “…appropriate clothing, weapons, and transport for that harsh environment.  Acclimatization and pertinent training are also essential.”  Appropriate transport means pony carts, as the animals keep warm when busy.  For appropriate weapons, landmines malfunction when the detonator is encrusted with ice.  Burning campfires with charcoal instead of wood reduces the visibility of the plume of smoke.

The Soviets also had larger numbers of trained ski troops because they had learned from their engagement in Finland a few years earlier.  Skis are critical for covering longer distances without getting exhausted.  This lesson was available to anyone who did their homework.  For the Russians, this homework was like an overview of yesterday’s lecture.

Also, defense has the advantage.  Soldiers on the offensive must expose themselves to freezing winds in addition to oncoming gunfire.  Attackers also lose the element of surprise because sound travels better on the snow’s crust.  Those who stay-put are more likely to win.

There is a theme that you must hang back a little, and look for small tactical tips that make a big difference.  Leaders must seek out this information and reflect on what this means for efforts big and small.

The Cold Teaches You Humility in Leadership

Leadership and strategy are all about the embodiment and communication of the most suitable emotional state and mindset.  With winter combat, what is most important is having humility, knowing there is so much to learn.  There’s a traditionalist saying that we stand on the backs of giants.  Those who came before us learned their lessons the hard way, and we must heed their lessons.  Particularly if they lost.

…perhaps the most important lesson is simply the folly of ignoring the pertinent lessons. …the highest German commanders were slow to profit from Russian examples [of the past] because of their feeling of superiority, and some refused to learn until they went down in defeat. There may be a message for others in that conceit. [p. 41, emphasis added]

These lessons echo the Phoenix payroll fiasco, as Phoenix was an epic blunder of arrogance and the negation of contrary evidence.  We can interpret that the size and importance of a major project can warp a leader’s ego.  Unwieldy efforts can be intimidating, and in order to move them forward you may need some bold and reckless courage.  But that’s an emotional posture that you would need to choose, logically.  If you actually are a bold and reckless person whose courage comes from an illogical abandonment of information, then you’re in a pickle.  Instead of advancing emotional strength, you may be advancing emotions that are relatively stronger than a hobbled intellect.  And that spells trouble.

Phoenix was most significantly damaged by the failure to identify that centralizing payroll processing in Miramichi resulted in a skills and productivity dip amongst new staff.  The phenomenon was real, and incoming information that this skills dip was a material problem turned out to be something that could not be overlooked.  Executives negated the evidence, and small problems became part of a landscape that could not be overcome.

A more reasonable goal is to not be destroyed by the landscape.  You would develop this goal because you observed from experience, and from your homework, that the environment is humbling.

Maybe you, too, can adopt the chill demeanor of a payroll representative wearing wool socks by the fire when it’s winter outside.  Who wants to go outside and play?  Not me.  I think I’ll sip hot chocolate while looking out the window, watching the snowfall, ever so slowly.

Rejecting feedback a corporate ‘true crime’

Exed Formation continue à l'Ecole polytechnique. By Ecole polytechnique
Exed Formation continue à l’Ecole polytechnique. Photo courtesy of Ecole polytechnique.

What if junior staff and those far from head office knew more than their superiors?  It’s an impolite question which may offend those who have worked so hard to get to the top.  But it’s an important question to ask.

In February 2016 the Government of Canada implemented the Phoenix payroll system, and it was bungled from the start.  According to the Auditor General’s report in Spring 2018, mistakes were consistently made by three Phoenix executives that negated the input and information coming from those lower ranking than themselves, and those who did not work in their particular bunker.  Auditor’s reports make for great reading, because they are often “true crime” page-turners of corporate malfeasance.  Let’s take a closer look.

The Productivity of New Employees at the Miramichi Pay Centre

The first stage of the Phoenix project was to centralize staff working with the old software, then the new software would be brought in.  But the project team chose Miramichi, New Brunswick as the geographic location for centralization.  The previous system was staffed by people all over the country, so the move to Miramichi was a tough sell.  Many experienced pay advisors chose not to move.

Because of the move, there was a loss of experience and a drop in productivity.  A lot of staff were new.  Think to the first time you have done anything – you’re slower until you hit your stride.  It takes months to get on top of the work, after which you eliminate errors and do things faster and easier.  But there was no allowance for this ramp-up in the Phoenix schedule, and no anticipation this time was even needed.  Prior to the move, each pay advisor could handle an average workload of 184 pay files.  After the move, productivity dropped to 150 files.

This was troublesome because Public Services and Procurement Canada had expected productivity would rise to 200 files per advisor.  This gap played out on the grand scale.

…Miramichi pay advisors could handle a total of about 69,000 pay files, not the 92,000 files the Department had transferred to the Pay Centre. …outstanding pay requests were already increasing because of centralization, and pay advisors in Miramichi were already complaining of excessive workload and stress.  …Even though pay advisors were less productive than what was expected of them, Phoenix executives still expected that their productivity would more than double when they started to use Phoenix. [Paragraphs 1.71-1.72]

Some Interpretations on How to Mitigate a Tactical Blunder

If information was shared and accepted, there might have been a clear opportunity to overcome the problems at the Pay Centre.  Centralization required either the acceptance of a downshift in experience level and hence more staff would be required. Or they could allow additional time for expertise and productivity to slowly build.  As a third alternative, centralization would need to include locations where there was an established labour market.

But these are all tactical solutions to tactical problems.  The strategic issue is that powerful people were negating information that was coming from the ground.  It’s a “no complaining” mindset.  And because the tactical complaints were real, leadership decisions to negate these voices caused tactical problems to overpower strategy.

Yes, Org Charts and Internal Audits are Important

The larger and more complicated a project is, the more important internal audit becomes.  The Auditor General’s report asserts that a proper audit prior to implementation “would have given the Deputy Minister an independent source of assurance…  that could have resulted in a different implementation decision.”  There were guidelines in place for independent review, but the review was controlled by three Phoenix executives.  Those executives determined the interview questions and the list of interviewees. The interviewees chosen were all members of the Phoenix project team, who were under the thumb of those same executives.  So, watch what you say…

The project had significant problems with governance and the chain of command.  The organizational chart shows a reporting structure that bottlenecks through the three Phoenix executives who in turn reported to the Deputy Minister.  There was no direct line to the Deputy Minister that was unfiltered by those three people.  Say anything you want, and they’ll pass it along.  Or not.

The Fake Consultation Meeting

In order for a meeting to be productive, you need the right people in the room and freedom for those people to share information and opinions.  However, the key meeting prior to implementation was rigged to provide one-directional information flow.  The briefing was January 29, 2016 when 30 deputy ministers from across government were told that Phoenix was about to be implemented.  Fourteen departments and agencies provided feedback prior to the meeting that they had “significant concerns with Phoenix”.  But the people leading the project assured those in attendance that all the issues had been resolved.  Critics were cautioned that any delays would cost too much money and cause a knock-on series of additional delays.  They were going ahead.

The project’s leaders didn’t have to try hard to win people over.  That is because Public Services and Procurement Canada chose this particular briefing meeting because it did not have any decision-making authority.

As an information-sharing and advisory forum, the Committee could not formally challenge the information it received from Public Services and Procurement Canada or the decision to implement Phoenix. [Paragraph 1.100]

All subsequent stories were about pay advisors struggling to get out from under a backlog as their workload doubled while grappling with a new piece of software.  In the story of this project’s failure there is little discussion about the quality of the new software itself, because the project was eaten alive by the landscape.

Appropriate Leadership Styles in Information-Heavy Strategic Efforts

It’s too bad there weren’t low-level people who were free to speak their mind about how things were going.  And it’s curious how high-ranking people could develop a lifestyle where they never talk to lower-ranking people.  Why do leaders do this to themselves?  I know that democracy can be unpleasant and messy.  And egalitarianism involves a lot of extra work.  But for senior people to be so single-minded in their goals that they would bar feedback from those they are affecting goes beyond arrogance and into strategic self-harm.

It’s like reverse-provincialism.  Provincialism is the notion that there are people living in remote areas who are less sophisticated and overly concerned with their local issues, to the detriment of higher-level goals.  But what if people in the provinces and remote pockets of the hierarchy are the ones who have a better grasp of the truth?  What do we do about high-level people in head offices who know nothing about what’s happening in the field?  What do we do about people who think their big fancy plans are brilliant and best, when they are really just playing fancy board games for which the only prize is a slightly more expensive used car.

I know what we should do with these people.  We should teach them.

Keeping Old Things Beautiful

Tower Bridge (HDR), by Adriano Aurlio Araujo
Tower Bridge (HDR).  Photo courtesy of Adriano Aurlio Araujo

We need to get excited about maintenance, according to a great counter-intuitive article by Andrew Russell and Lee Vinsel.  The authors propose that we should give “maintenance” higher priority in our society.  By maintenance they are mostly referring to government-owned physical infrastructure; ensuring it is functioning, well-maintained, and not closed-down for emergency repairs.  While the authors also tip their hats to computer infrastructure, the connection to public transit keeps the idea tangible for everyone.

The article asserts that “Americans have an impoverished and immature conception of technology, one that fetishizes innovation as a kind of art and demeans upkeep as mere drudgery.”  They highlight that while “innovation” describes the art of doing something new, technology broadly-defined should rightfully consider technology that is mid-life or old.

Many of the coolest stories in business shine a light on this misunderstood area.  There are vulture funds that pick up the assets of distressed companies and refurbish the “old” company into something new.  There are entrepreneurs that buy old, depreciated assets at bargain-basement prices and in the process net high percentage returns on the asset they got for cheap.  There is a company in my region that tried to close down their business, held an auction to unload their old equipment, and discovered that auctioning is an incredibly lucrative business to get into.

But those stories are a little too sexy; let’s get back to drudgery.  It turns out that a large number of engineers and computer programmers are devoted to maintaining something that has already been created.  In addition, maintenance workers are often paid less than those who are closest to ribbon-cutting ceremonies, IPOs, and product launches.

Workforce Management and the Maintenance of Human Capital

The connection to human resources is that people are trying to articulate how we should think of employees as “human capital.”  The phrase itself invokes a metaphor that the people who show up every day are a treasure that you invest in and get great work out of.  Perhaps we should extend the metaphor into the importance of human capital maintenance.  Do we have opportunities to conserve, re-build, renovate, and polish-up our pre-existing cadre of staff?  If you think about it for a while, examples abound:

  • When employees are injured, there is significant value to intervening early to help them stay at work or return to work sooner. The “return to work” field is a specialized field which has a knack to it, and major employers take these efforts seriously.
  • It is well understood that new hires have higher engagement than longer-serving staff.  By default, the implication is that if you want to improve engagement, your greatest opportunity is with longer-service staff.  At the crux of workforce analytics and employee engagement is the opportunity to refresh the workplace experience of those hired long ago.
  • In the c-suite, there is the recurring challenge that “culture eats strategy for breakfast.” (Drucker) However, it is understood that workplace culture changes very slowly. This tension implies that those who want to advance a strategy must have significant understanding of the longer-serving staff who carry the workplace culture.  Perhaps looking to the wisdom of longer-serving staff is an easier way to predict which initiatives will take hold in the pre-existing culture?
  • When attempting workforce analytics and workforce planning efforts that align to strategy, stale strategy documents and longer-serving executives can be your only opportunity for alignment. New executives and new strategy documents can have a long runway, in some cases with a perpetual churn.
  • Long-serving staff tend to learn a number of shortcuts that allow them to achieve their work goals more easily.   This grab-bag of quick-tips, tacit knowledge, and mature social networks are a troublesome source of high productivity.  Workplaces fear the retirement of long-service employees who understand the physical and organizational machinery in a manner that is undocumented.  In such cases there is a demand for knowledge management, the active cultivation of repositories of information where tacit knowledge is curated and transferred between newer and longer-serving staff.
  • As millennials age, our struggles to understand this generation are going to shift. It’s not so much that we don’t know what they’re thinking (they tend to just tell us).  Rather, what will their experience be as millennial managers, dealing with the next batch of young whipper-snappers in Generation Z?  This multi-generational transfer of energy and wisdom will demand a workplace culture of humility and curiosity.  Workplace traditions can emerge in just a couple of years, and can evolve around the behaviors of employees young and old.  Yet it is not so much the best perspective that matters; it is the ability to move a diversity of perspectives amongst peers.

As the shine comes off workforce planning and workplace analytics as a novelty, we are obliged to take our practice into a mode where great work is done quietly, well, and with a known value.  As we look at the legacy of buzzwords that came before us and the shiny new practices to come, there is a new opportunity to understand the boundary between engineering drawings, breaking the ground, and replacing broken parts.  Cultivating and maintaining people, their knowledge, their relationships, and the workplace culture are key to delivering strategy.  There is an opportunity for your employees to age gracefully and keep delivering the goods.

“I’m busy” is the call of the meek (and they shall not inherit the earth)

It's All in the Eyes. By Chris Gilmore
It’s All in the Eyes. Photo courtesy of Chris Gilmore.

Have you ever been stressed and overwhelmed by your workload, but then got the satisfaction of getting a grip of your to-do list?  I manage this several times a month, and I find it empowering and calming.

My favorite part is when I write a fresh list without dragging over the crossed-out items from the prior list. Then I write next to each task the priority number in which I would like to approach them.  After that, I write an new fresh list, prioritized in the order I had chosen.

It turns out I was onto something.  Having a clear sense of purpose and direction is the thing that makes us productive.  And that’s totally different from being busy.

Instead of resorting to the “I’m busy,” proclamation, simply organize your obligations and commitments.  You’ll realize it’s a good thing.

But once things are under control, you lose your bragging rights about being busy.  That’s a bad thing.

“I’m Busy” is a Humblebrag

In an article by Jessica Stillman in Inc.com from 2016, she shares research showing that people who say they are busy are perceived to be more important.  People know the “I’m busy” humblebrag is compelling and they use it liberally.  I think people only say “I’m busy” because others are saying it too.  Kind of like straight people drawing attention to the fact they’re straight, or women’s right activists saying they don’t call themselves feminists.  If there weren’t these crowd-sourced self-impositions to look busy and conform to norms, would we still be grabbing for labels that allow us to fit in and be validated?  Surely it would be easier to bring our best to the workplace and be our usual, weird selves.

As people increasingly say they are busy, the evidence suggests otherwise.  In another article by Stillman she reports data from the U.S. that people are sleeping more and finding more time to watch television compared to a decade ago.  This article was from two years ago when people were still watching televisions instead of being addicted to their phones. On average, people are not more busy.  “It’s not entirely surprising that we fit in all [that]… leisure — the average full-time workweek is a moderate 42 hours.”

Busy People Are Not Always Giving Their Best

In those cases where people are truly busy, it’s not a good thing.  Beyond a certain point people suffer cognitive overload.  In an article in Inc.com from June 2018, Wanda Thibodeaux interviews Fouad ElNaggar, the chief executive of an employee experience portal called Sapho.  ElNaggar cites oft-quoted research that people “…check email 47 times a day… And it takes an average of 25 minutes to get back on task after being interrupted.  They experience an endless tidal wave of beeps that require an acknowledgement or response and with mobility.”

ElNaggar references research that people compensate for the barrage of interruptions by working faster.  This leaves people stressed-out “…and subsequently, focus, concentration, and creativity – all tank.”  These are not the people who have got into the zone and got a lot of work done exceptionally well.  These are people who are controlled by clients, superiors, Facebook friends, and advertising algorithms coming out of the Silicon Valley.  These are people who have become unimportant.

He asserts responsibility for this problem sits with leadership, but notes individual employees need to share some blame.  He encourages individuals to take control of their calendar and decline meaningless meetings, assign narrow windows to handle email (i.e. not all day long), and keep the cell phone out of the bedroom.

However, this opens two controversial opinions.  One, he presumes we have enough control over our work-day to make these trade-offs.  Only leaders that give employees autonomy can expect employees to improve their work pace for the better. The second is that ElNaggar’s remedies imply you can become more effective by being less busy.

How Productive People Differ from Busy People

In an article from February of 2018, Larry Kim asserts productive people have a mission in their lives, have few priorities, and focus on clarity before action.  “Busy” people want to look like they have a mission, have many priorities, and focus on action regardless of clarity.

Productive people want others to be effective, and busy people want others to be busy.  The list of behaviours and attitudes are not mutually exclusive, but you get a sense of two different styles.

Described in this manner, people who say “I’m busy” are not actually drawing attention to their importance.  Rather, they are broadcasting that they lack focus, have no control, and are short on self-management.  “I’m busy” is a malfunctioning humblebrag, as it serves a backhanded compliment that insults the self.

But it might be early days for this realization.  You might have superiors and influential colleagues who have that busy buzz to them.  If this polarity between productivity and busyness comes into public view, it’s not going to look good for the busy-bees.

The biggest revelation from Kim’s article is that “Productive people make time for what is important.”  Productive people are all about mission, priorities, and focus, and they are allowed to target their time and effort.  If you have ten minutes to spare to get “important” work done, that important work is to consider your values and your mission, and create a fresh draft of your priorities that put everything into perspective.

People might not see you breaking a sweat, but with time you will deliver better results.  But remember, it looks way better when there’s no boasting.  And that will go a lot further after we’ve outed the “I’m busy” call of the meek.

Mini-Me Recruiting: Always Funny, Always Uncomfortable

Mini Me and Me (a.k.a. Verne Troyer) by Bit Boy
Mini Me and Me (a.k.a. Verne Troyer).  Photo courtesy of Bit Boy.

Who hasn’t wanted to clone themselves, especially when deep into a project that leaves a weekend in tatters. Dr. Evil of Austin Powers fame hilariously and awkwardly created Mini-Me as this right-hand man. While Mini-Me failed to carry out Dr. Evil’s plans for world domination, he succeeded in illustrating a major problem in human resources that needs more scrutiny than ever.  The actor Verne Troyer – who played Mini-Me – immortalized an uncomfortable concept.

The hiring of mini-me in organizations is a problem-behaviour caused by two cognitive fallacies.  One is the affinity bias, the liking of people similar to ourselves. The other is the exposure effect, where we like things that we have been merely exposed to. In the readings of cognitive fallacies it becomes clear that the majority of such fallacies are a variant of the “availability heuristic,” when we over-value thoughts that come to mind easily.  If we choose what’s comfortable, we reproduce our own status quo.

However, it’s usually the case that an employer needs a diverse team.  Even the most excellent leaders need people who have different strengths.  In an article at entrepreneur.com, George Deeb asserts;

“Maybe you don’t need a ‘glass half full’ optimist like yourself… Maybe you need a ‘glass half empty’ realist, who will bring a sense of caution to your investment decisions. Or, you may need a similar ‘A-Type Personality’ to lead your sales team efforts… But, maybe a ‘B-Type Personality’ may be a better fit to manage your more introverted team of technology developers. …Maybe what you really need is the opposite of yourself. You need your Anti-Me to help keep yourself organized, on plan and in check. It really comes down to what you see as your personal strengths and weaknesses, and filling in any voids in your skill-sets.” (Emphasis added)

Equity and Inclusion in Hiring Decisions

The most visible consequence of unconscious bias is that organizations hire and promote people in the same demographic category as the hiring manager, increasing the momentum behind historic privilege.  In an article in the Guardian in 2016, Matthew Jenkin notes that the context of a selection interview will have an outsized impact on who is chosen.  If the context is white and middle-class, candidates who are white and middle class will be favoured.

Bias goes beyond blockbuster items like race and social class. Hobbies, personal experiences, and how we dress can be factors too. If the leadership of an organization is “all of one type” it is a reliable sign that the leadership has lost all curiosity, has no self-doubt, and does not take evidence seriously.  The leadership is not reading the news, and if they are, they are only reading it in print.

This is not the mindset of leaders who will make an organization successful in the near future.  Yes, we must achieve indicators of diversity, but we must also foster receptiveness to new information, a curiosity about diverse ideas, and ways in which an individual can be excellent in a manner that might be considered weird.

Why Structured Interviews Matter

The professional association in the UK, the Chartered Institute of Personnel and Development (CIPD), released a paper in 2015 entitled A Head for Hiring: The Behavioural Science of Recruitment and Selection. It looked at, amongst other things, the role of unstructured interviews.  The authors found a study that fed research participants a combination of good evidential information, plus random irrelevant information from an unstructured interview.  The research subjects upgraded the importance of the random irrelevant information and discounted the good information.  “This can be seen as evidence of sense-making – our tendency to identify patterns or detect trends even when they are non-existent.”

It’s not just the interviewers who are at risk of making bad judgment calls. The CIPD paper identified cognitive fallacies in the mind of the interviewee that caused them to self-select away from promising job matches.  And walking into an unfamiliar environment, where they feel like an outsider, can cause job candidates to underperform because of the additional stress.  When people are using their brains, they are vulnerable to issues of cognitive load in which a complex environment exhausts their brain prior to facing decisions.  Those coming from a different context face disadvantage in an environment that might seem “normal” to the host.

Solutions in Diversity Hiring

What is the remedy for these problems?  For one, structured interviews are key, as they narrow the range of evidence to information that is relevant.  Also, we must actively seek contrary evidence; not taking things at face-value, and seeking information that is outside of what is familiar and comfortable.  There is also diversity representation.  Charles Hipps, CEO of e-recruitment company WCN, was quoted in the Guardian article and  “…suggests having team members from the particular group you are trying to attract present during the recruitment process – whether that’s meeting and greeting candidates or on the interview panel.”  Structure a diverse context and it will set a balanced comfort-level with reduced cognitive load.

Employers are also starting to get hard-core, using new tools to improve the selection process.  The Guardian article spoke with one company, Elevate, that “uses algorithms to score every candidate’s CV, previous work experience, skills and education, and assesses their suitability for a role. It then ranks candidates much like Google’s search results…”   Another company, Joinkoru, conducts validated pre-hire assessments which provide candidate scores that are less sensitive to the candidate’s similarity to current employees.  It is also feasible to do blind selection in the process of creating a shortlist, in a manner that obscures the name and sex of the candidate.

Not all of these tools are perfect, and indeed there are emerging risks that algorithms can carry-forward the historic bias of past human behaviours.  The rise of the racist robots is a concern.  We might not be creating cloned versions of ourselves (yet), but we are at serious risk of creating artificial intelligence which has flaws identical to our broader society.

And the technology can be expensive.  Doctor Evil is the only one selling it, and he’s going to charge you (pinky to mouth) one million dollars.

Shift in Job Market Doesn’t Need to Be a Nightmare

Melbourne Zombie Shuffle 162, by Fernando de Sousa
Melbourne Zombie Shuffle 162.  Photo courtesy of Fernando de Sousa.

Are you a little scared of the future? I think we all are. And for good reason.

There’s so much to think about these days, especially with technology disrupting our jobs. But if you have watched a few horror films, you’ll notice things become far less scary when you understand what’s really going on.  For me, my shoulders relaxed a little and I reached for popcorn again after I read a report from the World Economic Forum about job transitions.

The report reveals next-job opportunities for employees displaced by economic and technological disruption.

The U.S. labour market will see a structural job loss of 1.4 million jobs over the next 10 years, according to the Bureau of Labour Statistics. However, the report also cites a structural growth of 12.4 million new jobs.  On average the job market will be better.

However, let’s set aside the average for a moment and focus on the 1.4 million individuals who will be put out of work.

The report analyzed at a thousand job descriptions representing the majority of the American workforce and looked for similarities in skills, abilities, qualifications, and the work itself.  The job-matching methodology was created by Burning Glass Technologies, a firm specializing in labour market analytics harnessing big data and artificial intelligence.

Using the 10-year labour market forecast, they identified the job families where the largest number of jobs would disappear, identified other job families forecast for growth, and mapped-out how people could transition from lost jobs into new jobs.

Production and Office & Administration jobs are projected to be the hardest hit. In every other area there are fewer job losses expected, and the new-but-different jobs created within a job family greatly exceeds jobs lost.

Jobs in Production (which includes the beleaguered manufacturing sector) have a high similarity to emerging jobs in Construction and Extraction; Installation, Maintenance and Repair; and Transportation.  Positions in Office & Administration have a high similarity to emerging jobs in Business and Financial Operations.  And a large number of handy and hard-working people can always find a job in custodial or food services.

But if you lost your job, would you want to be a barista?

The Desirability of Job Transitions

Thankfully, the report considers whether peoples’ next jobs are desirable.  A significant drop in pay won’t motivate employees to seek reskilling.  Stability is also a top concern.  The investment in re-skilling or moving costs can be expensive, so some transition opportunities might be rejected just because of the instability.

Desirability isn’t all in the mind of the employee. Governments want a successful transition to achieve a good return on their investment in training programs. They don’t want to undermine their tax base with a low-wage workforce. And some governments are also concerned about the experience of workers as voters.  Employers need successful transitions too, as they fear of a workforce of demoralized, dissatisfied, and under-productive employees.

The report factored-in all these concerns and categorized viable job transitions as those that have high similarity, stable long-term prospects, and wages that are equal or better than the previous job.

They found plenty of opportunities:

 “…our analysis is able to find ‘good-fit’ job transitions for the vast majority of workers currently holding jobs experiencing technological disruption — 96%, or nearly 1.4 million individuals…  Interestingly, the majority of ‘good-fit’ job transition options — 70% — will require the job mover to shift into …a new job family.”

Job Transition Pathways

One of the benefits of this sophisticated model was that the authors of the report were able to extend the career transitions from a one-time change into “a full chain of job transition pathways” covering three jobs.

For example, a secretary can downshift into becoming a concierge, then come out ahead as a recycling coordinator. Each new job has a solid 90% similarity score relative to the prior job, but the salary bounces from $36k to $31k to $50k.

There is a similar trade-off for the transition from cashier to barista to food service manager.  So yes, you might still want to become a barista.  Employees could come out further ahead if they could see these pathways and plan accordingly.

Job Transitions are Different for Women

There are mixed results based on the sex of the worker.  On the minus side for women, it is estimated that 57% of the disruption will affect women.  Women also have fewer job transitions options: “Without reskilling… professions that are predominantly female and at risk of disruption have only 12 job transition options while at-risk male-dominated professions have 22 options.”

But women also have a better chance at job transitions that result in increased wages.  Of those experiencing labour disruption 74% of women have a good match into higher-paying jobs while the equivalent number for men in 53%.

This difference may contribute to a “potential convergence in women and men’s wages,” but this impact would obviously need to be blended with those economic forces that don’t favour women.  By which I mean, most economic forces.

Men and women alike significantly benefit from reskilling efforts, resulting in a quadrupling of the new job options available.  With reskilling, opportunities for women jump from 12 job options to 49, and opportunities for men jump from 22 options to 80.

A Change in Societal Mindset is Required

The report recommends societal changes in order to make this all viable:

“…what will be required is nothing less than a societal mindset shift for people to become creative, curious, agile lifelong learners, comfortable with continuous change.” (Links added)

On the public policy side, there is an additional shift in mindset for corporations and government:  pick up the tab or everyone is toast.

The main item that would empower this change is a comprehensive re-skilling program funded at full scale.  Displaced workers need to take some responsibility and show some initiative. But nobody in their right mind is suggesting that the cost of all this should be borne by anyone other than business and government.

While the consequences of inaction are dire for individuals and society, the path forward is becoming better understood.  It’s that part in the scary movie where they can see the way out.  And for that reason, it’s not so scary any more, and might even be fun to watch.