Building a talent pipeline for the AI era

Welcome to McKinsey Talks Talent, featuring McKinsey leaders and talent experts Brian Hancock and Brooke Weddle. I'm Lucia Raheli. I think in a world of AI what you really need is judgment and knowledge of what works for your company and what's the way it delivers value to its customers and that knowledge is often embedded in the heads and the hearts of your current employees. So unless you invest in them what you will have is a more generic potentially AI-driven answer and you'll have lost that overlay on top that your incumbent workers bring. That's Beth Cobert. She's long been a leader helping organizations think differently about talent including and former roles as a senior partner at McKinsey and president at the Marco Foundation. She's now president of affiliates and strategic partnerships at Strata Education Foundation and she joins Brooke Brian and me to talk about how to build a pipeline of talent in the age of AI. Beth Cobert, welcome to McKinsey Talks Talent. Great to be here with you. Brooke and Brian, so great to see you. Great to see you. Great to see you. Beth, you recently joined Strata which is an education foundation aimed at clearing the path between education and work especially for folks who may have significant obstacles in their way. Tell us a little bit about Strata and what attracted you to this particular organization and its mission. What really appealed to me is Strata's focus on driving systems change. Strata is a national nonprofit and it's focused on connecting education to opportunity especially for those who face the biggest barriers. Our aspiration is that no matter where someone starts, people can see the way to a quality education and fulfilling career and actually get there. We do grants, we do a lot of research, we do policy and advocacy work and one part of Strata we make strategic investments in for profit companies but a piece that had been a part of Strata for a long time were a set of things we called affiliates. These are operating non-profits that Strata controls and the role was really created to help align this group of non-profits much more tightly with Strata's mission and especially on the part of the mission that was aligned with systems change. Beth, when you think about systems level change, talk to us about what that enables. So let me give you an example. When I started at Markle, one of our first programs was in Colorado supporting a set of career coaches helping working adults figure out what kind of technical training was going to help them get to the next step in their career. We had to basically do the work by hand to try and figure out what were the programs that met their needs in terms of timing and flexibility and even more importantly which programs had good outcomes. It took a huge amount of work and we basically realized that we just couldn't replicate this so maybe we could solve it for 20 people but you couldn't solve it for 20,000. The way Strata's thought about that is say that's a big issue and so one of our affiliates is a new organization and national data trust we've created called Credylens and Credylens is creating that infrastructure, that utility, that can support players all across the system with verifiable data on if you go to these different kinds of credential programs, what are your outcomes? That system change takes investment and so that's one of the ways where again that coach shortly will be able to say okay I can get this information, I can help you do it, it's at the touch of a button and it doesn't take a team of people spending weeks and weeks and months to get outdated information so it's thinking about those kinds of things that can make change sustainable for all. And who are the different stakeholders as you're thinking about the education to employment ecosystem? How much of it is researchers and people frontend, how much of it is employers, how much of it is credential issuing organizations, educational institutions, how much of it is governments. We need all those people around the table thinking about what is going to make a difference today and very importantly what's going to make the difference going forward because the world is changing as we sit here. The education to employment ecosystem is I think too often a set of individual organizations and institutions not acting in a coordinated way. And so I pause on the word ecosystem because in an ecosystem there's clear ways where things interact and connect when I see the best places that is what they are doing. And I think we have under invested in the connections, strata spent a lot of time in looking at what works, whether it's helping design programs in Colorado, there's a fantastic advanced manufacturing institute in Denver. That is a joint venture of the Community College of Denver, Metro State University and University of Colorado Denver campus. They share a big facility that has all sorts of fantastic advanced manufacturing in it in partnership with Lockheed Martin and a large number of other employers in the state. So the individual who's going to the Community College of Denver finishes that program can automatically transfer those credits to Metro and the Metro students can get access to the graduate programs at the University of Colorado and it's all intertwined with the set of employers so they can build a workforce. It's a connected ecosystem as opposed to having a set of institutions which because they are all in a place are not an ecosystem then they're just a set of institutions in a place. What's your view of AI? There's a thought that there are certain careers that are going to continue to be in demand, a healthcare. There are going to be certain careers that are going to largely go wet. Executive assistants have reduced since the great recession and continues to decline. And there's going to be new things that AI can empower people to do and therefore you may have new career paths in entrepreneurship that actually wouldn't have been as feasible before because with your background and network you actually needed to get a foot in the door somewhere else more established before you could go. And so as we think through the broader shifts in the workforce, the broader shifts in what entry level careers are doing, how is that dynamic looking from where you sit? I think that change is going to be very broad and far reaching. Do you got to figure out a way to build experience and judgment so that people when they skip the entry role still have that when they're in a different position of decision making? And so then the question becomes how do we change the nature of how they're taught and what they're learning? How do we integrate learning into work and work into learning? And so that's going to have to change and one of the places that's really important has to be the communication between employers who are seeing their needs change and the educators who are training workers so that you are not educating them to a role that doesn't exist anymore. You've got to educate them to the new role and that's going to take a level of dialogue and interaction that will require frankly faster pace of change in many traditional education institutions and they have been used to and a higher degree of communication from employers about what they really see changing and what's working for them and what's not. I'm wondering though Beth do you think in addition learners are already adapting their behavior meaning for some younger kind of future workers in a four-year college this technology is even more intuitive to them and so they're already maybe sorting into different kinds of careers like an AI engineer or they want to go and be the next ontologist now right? Do you see early signs that that is happening that learners are adapting to the career choices that have been created? I do think you see a lot of initiative on the part of many students to try and say how do I use this in my day-to-day task and think about what skills I have and how do I prepare myself for different roles? On the other hand they then have to find a place to get hired and the question is how are employers recognizing that what are they doing to realize that these people are bringing skills that they may have built in a different kind of way? There are jobs as AI engineers but for all those other jobs whether it's executive assistants whether it's entry-level HR roles that had traditionally been a starting point to a good quality job you've got to find a different entry point now and I don't think we've solved that problem yet and certainly in the US we've seen so much in the press lately indicating that recent college grads even in software engineering from prestigious schools are having a harder time finding jobs than was expected just a couple of years ago. Do you see this trend toward diminishing entry-level jobs continuing? You definitely see some of it. We hear about it anecdotally of person-leaves and they're not being replaced. On the other hand I think it is also important to recognize that today when we're seeing those statistics we were in a period of very high economic uncertainty. When you look at like past periods that were sort of pre-recession. You see some similar experiences. And I also think in many companies, AI is taking hold but hasn't fully taken hold yet. And so I think we haven't seen the full impact of AI. It's coming but I'm not sure it's completely here. Do you see the potential for private sector investment rising in training as AI and other advances in technology alter the skills that employers need? I am a firm believer that investing in one's employees pays off for companies. I've seen that happen again and again. I know some employers believe that when they invest in their talent, all that happens is the talent leaves and that is not my personal experience. But I think in a world of AI, particularly for your incumbent workforce, it's a really interesting question. Because if AI can do some of the basic level stuff, what you really need is judgment and knowledge of what works for your company and what's the way it delivers value to its customers. And that knowledge is often embedded in the heads and the hearts of your current employees. So unless you invest in them, what you will have is a more generic potentially AI-driven answer. And you'll have lost that overlay on top that your incumbent workers bring. In Beth, we talked to many CHROs and they're constantly thinking about the upscaling, re-skilling challenge. What would be your advice to them in terms of understanding that path forward? I think it is incredibly important to think about partnerships and a more systematic response to this. And one of the reasons is because most people in America and most companies in America don't have thousands of people. They don't have an HR department that can think about learning and developing. So the reason we need a broader response is because there's a lot of companies out there like that who really do understand the potential of what they can do but they need ways to do that. And I think there's an enormous opportunity between organizations and places and communities and local education institutions to support that transformation. There's great examples that you can find all over of collaborations between local employers and local community colleges, strata sponsors, some work in San Diego with Maricosta College to help build talent for the biotech industry. You had a bunch of mid-side fast growing companies who needed people to work in their labs and they weren't finding them. So they created a lab facility that they all could share on the campus of the college. They all contributed to it. They contributed folks to help teach those courses. They provided work-based learning opportunities so people could put things to work. And as a result, they have a program that's graduating students, 90 plus percent of those students are getting great jobs, quality jobs that they never would have had. There's lots of opportunities like that and we need those kinds of partnership for really going to have this work at scale across the country. Beth, as you're thinking about skills that will be valuable for students in the future, do you see a place for cultivating capabilities that are sometimes seen as complementing AI less technical, more critical reasoning or as problem solving or is the link to employment to indirect right now for students who are looking for a clear and more stable pathway into the labor force? So when I think about the pathway into the labor force, I have always been a believer in foundational skills. To be clear, you have to learn how to be facile and use AI. On the other hand, many people are not going to be technical AI high-end engineers. One, there's not enough of those jobs. And two, that's not what everybody's either suited for or likes to do. If you look at comments over time, people will talk about relationship building and communication and the ability and martiala set of people to get things done. Those skills have been valuable for decades. I think they will remain valuable. The challenge is how do you demonstrate to someone that you are good at that? How can you prove to them that no really you are the person that gets things done? Because I think all of us, when we think about the great folks on our team, junior folks, we've worked it. The one, at least for me, attribute that always stands out, is this someone who makes things happen and gets stuff done in a reliable and consistent way? And they do that, not just because they did a great spreadsheet or not just because they wrote a good paragraph, but because they figured out how to corral a set of people to do something differently. And so what I think we need is a better way of trying to look at how we help people learn how to do that. We can all learn how to do those things, but also how do we value that? And how can we look for evidence that that's the person who gets things done? And those people will be valuable and they will be using AI to help make that happen. Beth, that one really resonates with me. I'm working with multiple organizations right now where the CEO is saying we need a different kind of leader, right? And yes, there needs to be some minimum level of AI proficiency across the organization, including the C-suite, but we actually need leaders to show up differently. They need to be better at change leaders. They need to know how to be better at storytelling. Because there's a lot of fear right now. So how can you actually use storytelling as a way to help inspire and excite people in the ways that will be honestly more productive in terms of reaching all sorts of outcomes, including productivity, but not limited to productivity. There could be an outcome that could be higher levels of engagement, and that would be a positive as well. Adaptability, continuous learning, these are other attributes that I'm hearing a lot of, just curious if that's consistent with what you're hearing from the stakeholders you're interacting with as well. We do hear a lot about that from employers and the challenges, how do I find that person? There's a little too much of I know it when I see it, or too much of a scribing it to someone who has a background just like me, but you can find evidence of what makes people do that, and you know, part of the work in my mind is to help individuals to be able to articulate when they've been able to do that, how they did it, and what happened. So there's someone who has managed to get your child to daycare and back home every day, hold down a job for six hours, go to figure out how you could get enough child care to go to class three nights a week, and complete your work in a quality way and get your diploma, which is again, I'm describing a lot of college students, right? The traditional image of the college student isn't the right one. It is a single mom or a single dad who is doing this while holding down two jobs and maybe a side gig. That is someone who gets stuff done, but we've got to view those experiences as demonstrations of resourcefulness and creativity. So what is the future of skill-based hiring in a world where these are the types of skills that are going to be what matters most? So I continue to be a deep believer in skill-based hiring. Our favorite skill-based hiring story that to me really is emblematic of what skills-based hiring is, is the lens manufacturing work with in Boulder, Colorado back when we started skillful seven or eight years ago. This company had these very complex machines and they kept trying to hire engineers to run them, and they had this whole long list of requirements, and the requirements were so deep and so complex that literally the only person who could fulfill them was someone who actually worked there already. And the CEO one day ended up in this conversation with a sushi chef and it turns out that this sushi chef was someone he hired to operate the machine because what you needed was someone who had incredible attention to detail was really dexterous, lots of manual dexterity to get it right. They did not mind repeating the same task over and over and over every day, and they also didn't mind spending their whole day operating machine and not talking to 25 people. That's who this person hired. He ended up hiring a whole suite of people from the food prep industry and then later hired a bunch of manicurists because this is what you needed. You did not need the engineer, that's what skills-based hiring is and promotion. It is knowing what are the skills and looking for markers and evidence of them of real work and real experience and not necessarily the credential. And you have spent your career helping organizations think differently about talent from that vantage. What do you see as the most important thing employers need to get right and is there anything you see employers overlooking? To me, there's a couple things. One is thinking about what is it I really need and knowing what they need. That's the first part. Second, I think they need to open their aperture about where they can find that kind of talent and I have very little tolerance for the I can't find this. I don't think you've looked hard enough to look in a different spot. I think third, they need to recognize the talent and potential of the people they have. I have watched over and over again that when you give people opportunities to step up, they can do it if you invest in them and they believe you have confidence in them. And I think there's a big opportunities, the best employers that I know of, think about their talent in that way. And what can they do to get them to different places? And that it is a partnership between the employer and the employee with a joint goal, a successful career pays off for everybody, but they both have to make that investment. - From the standpoint of practicality, if you're thinking about an organization that needs to transform its approach, what are the skills and roles I need, one, three, five years out? How would you think about that? - In my experience, the best way to get going is to find a place where you have a real need and willing leadership. We're gonna go, we're gonna get a set of early wins, and other people are gonna start looking at that and saying, hey, I want a little of that. And whether that's in talent management or other forms of innovation, there's nothing like seeing something working that get other people excited, right? Typically say about three quarters of the organization that way, and then there's the, I don't know, pick your favorite number, five to 20% that's resistant. And at that point, you can tell them what to do because you've already proven it. But like trying to change the disbelievers in my mind, never a good strategy. Build a coalition of the willing, and others will follow. - Tell us, as you look at the labor market, are there any other trends that might be important to highlight from where you sit? - When I think about the labor market, I think about a couple things. I do think about AI for sure, but I think there's a number of other things we all need to think about. One is the changing demographics of the workforce. There are fewer 18 to 224 year olds, and it's gonna be like that for a while. So we have fewer people entering the workforce, we have lower immigration levels as well. So you have new needs, you sort of have to figure out how to take those individuals and enable them to do that. I think we have a labor force that is looking at a range of things and saying, what is my relationship with this employer? What are they gonna invest in me? And therefore, what should I invest in them? That relationship has become more transactional over time, and I think we have to think about what we do there. And I think there is a continued need to think about how do we create quality jobs for people? Because many of these jobs that are staying, certainly in the care economy, are really important jobs where human skills matter, but we all have to admit that many of those jobs don't pay well. So if we're gonna attract talent, you actually have to have a wage that will attract people and have them come. Beth, there's a lot of toggling between promise and fear in the current environment about employment. Are you optimistic about the future of work amid the current complexities and if so why? I see examples around the country of this working in a way that can be scale, that does the right thing. I'm optimistic because I see students and faculty at Preblo Community College when I was there for a Colorado Workforce Development Council meeting, talking about the amazing things they're doing to open up healthcare careers to individuals in that community so they can serve their neighbors and have a great opportunity. I'm optimistic because I spent lunch with 12 summer interns at strata who are from all sorts of schools from community colleges to elite research institutions talking about what they're doing and they were amazing. So I am optimistic about people and their potential and the need to unleash that. There are real concerns no doubt, but when I get down and I meet this person and I see what they're doing, I'm like, wow. They pulled that off. Why can't we do that more? - Thank you so much for being with us. - Thank you so much. My pleasure guys, really fun. - Thanks so much for listening. I'm Lucia Raheli with Brian Hancock and Brooke Weddle. Follow McKinsey Talks town wherever you get your podcast. [MUSIC]