A Champion for the Human Age of Work

Seventy years ago, it was just two lawyers in Wisconsin helping businesses find temporary typists. Today, it’s a global company with annual revenue of over $20 billion. Meet the Manpower Group.

The Manpower Group is the one of the largest workforce management companies in the world, with nearly 2,700 offices and 29,000 corporate employees in 80 countries. On any given day, hundreds of thousands of Manpower’s temporary workers support hundreds of thousands of clients.

The Human Age

Manpower has developed its own point of view about the global economy. In this view, we have entered the “Human Age” where “human potential is the major agent of economic growth and access to talent has replaced access to capital as the key competitive differentiator for organizations.” Contrast this point of view with the “we will all be replaced by robots” perspective that dominates today’s popular narrative.

Sure, this framing is in Manpower’s self-interest to promote, however several trends seem to favor this point of view. Global demographics are shifting from younger to older populations of workers. Technology changes are requiring the rapid acquisition of new skills. Employers require more and more flexibility, complemented by workers who have more choices about when and how to work. Manpower obviously plans to be at the nexus of the Human Age, and is taking several strategic steps in this direction.

The Human Age in the U.S.

Manpower’s latest strategic step came to our attention as we’ve followed the aftereffects of President Trump’s executive order 13845. As we noted in our recent article, EO 13845 was signed alongside a challenge to American companies to commit to new training and apprenticeship programs called the “Pledge to America’s Workers”. We noted then that “as with so much else this Administration has done, it creates a (potentially) self-fulfilling perception of progress, that despite its illusory beginnings has the potential to yield real-world benefits.”

As we predicted, many companies have since signed the Pledge, including Manpower, which committed to train more than 130,000 American workers over the next five years, making it one of the 10 largest pledges to date. Their commitment will be implemented via Manpower’s MyPath program, an “education as a benefit” program started by the company in 2016 before “education as a benefit” even was a thing.

The Manpower Story

Manpower has been publicly listed on the NYSE since 1967 (with the hilariously politically incorrect ticker symbol: MAN), and was founded in 1948 by attorneys Elmer Winter and Aaron Scheinfeld. The attorneys needed a typist to work on a deadline project but weren’t able to find a anyone to fill their temporary position. Polling other businesses, no one else knew how to solve the problem either, so the founders scratched their own itch and started a temporary help agency.

Manpower grew organically for the first several years, and then in 1954 began to franchise temp agencies as part of their business model. By 1957, the company had expanded to most major U.S. metro areas, as well as opened offices in the United Kingdom and France, which is now Manpower’s largest international market. By the 1960’s Manpower was in South America and Asia, and in the 70’s had over 50% of its revenue coming from international market. Today, their global revenue stands at 87% of total.

The Manpower Group today is considered to be one of the most ethical and admired companies globally. It is composed of 4 business units:

  • Manpower — Provides temporary staffing and permanent recruitment and represents over 60% of its gross profits.
  • Experis — Delivers professional talent specializing in Information Technology (IT), Engineering, and Finance.
  • Right Management — Helps organizations and individuals with skills assessment, development and coaching to increase productivity and optimize business performance.
  • ManpowerGroup Solutions — Is the global leader in outsourcing services for large-scale recruiting.

It’s American Business represents about 12% of global revenues at $2.7 billion, and is Manpower’s second largest global market after France, which is 2x higher at $5.5 billion. Manpower competes in a highly fragmented competitive market composed of a few global peers, such as The Adecco Group and Randstaad, as well as specialized players like Recruit Holdings, and Robert Half.

The Talent Shortage

Given its global reach and status as one of the largest staffing companies, Manpower has a front row seat to the global labor markets. Since 2006, Manpower has been surveying companies in its markets about talent shortages. The 2018 Talent Shortage Survey includes over 39,000 employers in 43 countries, and asked respondents:

  • How much difficulty are you having filling roles compared to last year?
  • Which skills – hard skills and human strengths – are the most difficult to find, and why?
  • What are you doing to solve talent shortages?

The results of the survey are fascinating. First, there is a clearly a global talent shortage, with 45% of employers reporting difficulty filling roles, the highest level since the survey began.

talentshortage1.png

Employers cite a lack of applicants (29%), the “skills gap” (27%) (a lack of hard and soft skill abilities), and inexperience (20%). To put it another way, there are too few applicants, with too few abilities.

The solution employers use to solve this problem are not surprising: providing employees with additional training (54%) and changing their hiring standards to consider a broader range of candidates (36%). However, what is actually very surprising is that “over half are investing in learning platforms and development tools to build their talent pipeline, up from just 20% in 2014”.

To say it a different way: The number of employers offering learning programs and training to employees has more than doubled in the last 4 years. This is the wave of employer interest that companies like Guild Education are riding to grow businesses focused on helping large corporations train their workers.

Manpower’s business units map nicely to the strategies they advocate for solving the talent gap, none of which will surprise anyone in tech. Namely, that companies need to choose a “build, or buy” strategy, where “build” includes investments in worker training, and “buy” is means paying more in salary and benefits to attract the employees with more abilities from the start. The numbers above clearly indicate that most employers are actively choosing a “build” strategy, and this trend only promises to continue as the global labor market tightens.

MyPath

Manpower was an early leader in the “Education as a benefit” model. In 2016, Manpower launched MyPath to provide their employees with free college education opportunities at for-profit colleges, currently in the form of an exclusive partnership with the University of Phoenix. Manpower gets both a tax write-off as well as a more highly trained worker than can be billed out to clients at a higher rate. These two factors are sufficiently rewarding to offer the benefit to over 50,000 people working for Manpower in the U.S. every year.

In addition to its partnership with the University of Phoenix, MyPath seems to also be in the midst of exploring additional skill acquisition tools.  Examples include:

  • Pathways: A tool that offers data on the career pathways available to people in office administration and warehouse work, including the training required to move from one role to the next.
  • powerYou: Free access for Manpower associates to thousands of videos, similar to Lynda.com, that help with knowledge acquisition in topics like business or data analysis.

It’s clear that the University of Phoenix partnership is the cornerstone of MyPath. But, despite the fact that the other efforts feel like they are in “beta mode”, they are all worthy attempts to help workers gain new skills.

The Future of the Human Age

Expect to hear more about Manpower, especially as we delve into more of the reports issued by their Workforce Insights Group. We have an article in the works on “Learning Culture” and its importance relative to innovation, diversity, and many other elements of culture that impact organizations. We’re also going to highlight the ways in which Manpower (and other workforce companies) are helping large organizations map out skills gaps internally, a proxy for innovations to come externally in the broader labor market. Finally, we’ll look more at the data behind the Human Age and show how robots and algorithms are new tools for humans to use, rather than replacements for humans themselves.

Manpower believes in the Human Age, and we do too.

Higher Education’s Competitive Moat

Technology has changed dramatically, but distribution technology in higher education has not. We figure out how higher education bundles different products together to create a competitive barrier to new entrants, and then make a prediction about how everything will change in the future.

Two Ways to Make Money

Jim Barksdale, legendary entrepreneur, and the former co-founder of NetScape along with venture capitalist Marc Andreessen (also legendary), has been credited with the following aphorism:

In business, there are two ways to make money. You can bundle, or you can unbundle.

Marc Andreessen explains:

The way I think about it is– at least in the world that I work in, sort of tech and internet media– bundles sort of emerge as a consequence of the current technology.

So the newspaper bundle– of the idea of this kind of slug of news, and sports scores, and classifieds, and stock quotes that arrive once a day– was a consequence of the printing plant, of the distribution network for newspapers, using trucks, and newsstands, and newspaper vending machines, and so forth.

But that newspaper bundle was based on the distribution technology of a time and place. And when the distribution technology changed, with the internet, there was going to be kind of the great unwind.

I’d like to talk about this aphorism within the context of higher education. The bundle in question is “college” or “university” itself. That’s the bundle.

Higher Education Distribution Tech

Like newspapers, the higher education bundle evolved in a technical era completely different from the one that exists today. The technical innovations available in higher ed hundreds of years ago were effectively pen and paper, chalk and chalkboards, and lots of books. Based on these technologies, the “distribution technology” of knowledge evolved accordingly and required:

  • Finding humans who could teach something of value and hiring them to teach full-time (professors)
  • Creating a physical space for professors to teach other humans (a classroom)
  • Knowledge assessment by professors in classrooms (proctored, written tests)
  • Efficient utilization of both professor’s time and classroom capacity (full-time instruction)
  • Learners with the time and resources to afford spending their days doing nothing but learning from professors in classrooms (full-time students)
  • Accommodations for students to live close to classrooms and professors (a campus)
  • Activities for students to engage in when not stuck in a classroom (college athletics and Greek life)
  • Credentials distributed on hard to copy, elaborate pieces of paper (diplomas, often framed and hung on a wall)

Technology Has Changed Enormously

Imagine all of the technologies that have changed over the last 100 years alone: television, computers, the internet, podcasts, video and audio recording and streaming. If it began today, higher education would evolve in a completely different way. Based on today’s technology, imagine how the “distribution technology” of knowledge might be different:

  • Humans can transmit knowledge by recording their knowledge and distributing it online in their spare time. No full time professors required.
  • Every human with access to the means of knowledge production and distribution (today, a smartphone and an internet connection) is a potential “professor”. (No imagination required for this example. Sal Khan basically founded Khan Academy this way.)
  • There are no professors or classroom resources to “utilize” because there are no full time professors and no buildings
  • Full-time instruction is unnecessary because education material only needs to be created once, then copied at a marginal cost of $0
  • Knowledge consumption can be done anytime, so the need to be a full-time student is also unnecessary
  • Knowledge consumption can be done anywhere, so even campuses are unnecessary
  • Since campuses are unnecessary, so is the need to fund campus sports and activities
  • Knowledge assessment can easily be performed by software and performed anywhere

Has Distribution Technology Changed, Too?

The level of innovation in higher ed should be measured by the distance the distribution technology has traveled along the continuum above: from professors, classrooms, and full-time students, to part-time, continuous learning, software certified networks. So, how has 100 years of technology innovation changed  distribution technology in higher education?

Bayliss-reconstruction(2)
Typical college classroom, 1903.
170417-A-BQ341-746
Typical college classroom, 2017

Answer: It hasn’t!

You may notice that PowerPoint slides have replaced chalk, projector images have replaced chalkboards, and laptops have replaced pen and paper. However, these are not the “distribution technology”! They are the presentation software technology, optics technology, and data storage and retrieval technologies. The “distribution technology” is all those full-time students in all those classrooms listening to lectures in person from full-time professors.

No change.

Higher Ed’s Competitive Moat

The transition to new, online-only, education models hasn’t happened by any stretch of the imagination. The college or university bundle, unlike the newspaper, remains largely intact. Turns out, higher education has used the last few hundred years to build a huge, competitive moat. The question is, how?

Humans have multiple abilities, some learned and some natural, that I call the Ability Ladder.

AbilityLadder2

It’s obvious that higher education helps students enhance and certify their learned abilities: knowledge, skills, and tools. Colleges provide a standardized bachelor’s degree to students that complete four years of education. We use bachelor’s degrees to demonstrate our level of ability in the job market. For example, a bachelor’s degree in Economics certifies that a person has a sufficient degree of knowledge, skills, and tools required to work in banking.

So, is a bachelor’s degree the secret to the higher education bundle? Not quite…

Consider the following: is a bachelor’s degree in Economics from Harvard the same thing as a bachelor’s degree in Economics from Missouri State University? If you’re thinking to yourself “No!”, the question is…why? Are the classrooms at Harvard shaped in a special way? Are the professors at Harvard exceptional at making PowerPoint slides for their lectures? Are there special chemicals in the air above Cambridge, Massachusetts that enable students to memorize more equations?

Looks like we’ve found the competitive moat of the higher education bundle…

Intelligence Certification

Higher education has pretty much everyone fooled that its product bundle is training students to learn new tools, skills, and knowledge. However, higher education has a competitive moat: its social role as the primary arbiter of a student’s intelligence.

bundle3.png

We all know instinctively that a degree in Economics from Harvard is not the same as a degree in Economics from Missouri State University, and this is why. Harvard has a higher rank, and therefore, if you went to Harvard, you’re perceived as being more intelligent than the person who received the same training, but went to a lower ranked school.

The brand or rank of a college or university is the way we (and most employers) judge your level of intelligence ability, and why every airport bookstore is cluttered with magazines ranking colleges and grad schools. Until there is an alternative method for employers to judge the intelligence ability of graduates and job candidates, the higher education bundle is going to be difficult to unravel.

However, “difficult” does not mean “impossible”.

The Great Unbundling

Here’s my prediction for the future. At a point in the not too distant future, the pressure of technological change will become too great, and the higher education bundle will completely unravel. I call this point in time the “Great Unbundling”. This is when every layer of the Ability Ladder served by the modern University, will have several, well-known, competing businesses serving each individual layer all by itself.

Here’s what the Great Unbundling might look like:

  • Every high school senior submits their SAT scores, GPA, and 3 essays to a national non-profit that grades each component and provides you with your national percentile score relative to your national graduating class. The percentile ranking comes with a handy guide for employers to compare your ranking to traditional universities (e.g. 95th percentile = Harvard, 65th percentile = State U), and an online badge to put on your LinkedIn profile.
  • Adults who never finished high school or took the SAT can complete an IQ test and write 3 essays, send them to the same non-profit, and get the same percentile ranking.
  • Some students and adults will choose instead to work with one of several companies to create a portfolio of work products that demonstrate they can do whatever may be required in their job of choice. Instead of signaling their intelligence to employers, they’re just going to do the work itself.
  • Finally, anyone can work with one of several companies to certify their knowledge of a subject matter, area of skill, or ability to use a specific tool. These micro-certifications, coupled with intelligence certification, will enable employers to evaluate them in a similar way as they could evaluate an adult who purchased the higher education bundle itself.

In the coming weeks, we’re going to look for evidence of the Great Unbundling, starting with the online education companies that are using technology to certify our knowledge ability. We’ll then look at how bootcamps are changing the way we acquire and certify skills and tools. Finally, we’ll find examples of technology that can help us shortcut the need for intelligence certification altogether to cross higher education’s competitive moat.

The Great Unbundling has begun.

 

 

 

American Workers Back in the Spotlight

On July 19th, 2018, President Donald Trump signed Executive Order 13845 to establish a National Council for the American Worker and launch a “Pledge to America’s Workers”, challenging American companies to commit to new training and apprenticeship programs over the next 5 years for 3.8 million workers.

Executive Orders – The New Hammer

As the old saying goes, when all you have is a hammer, everything looks like a nail. Well, in the current state of American political antipathy, Presidential Executive Order’s are the new hammer: the only tool in the tool box to try and get things done. With this, his 81st executive order (EO), President Trump is easily outpacing Presidents Obama, Bush, and Clinton in his executive ordering.

Political gridlock anyone?

So, what the heck are these executive orders anyway? The American Bar Association wrote this handy article to help us out:

An executive order is a signed, written, and published directive from the President of the United States that manages operations of the federal government. Every American president has issued at least one, totaling more than (as of this writing) 13,845 since George Washington took office in 1789.

Both executive orders and proclamations have the force of law, much like regulations issued by federal agencies.

Executive orders are not legislation; they require no approval from Congress, and Congress cannot simply overturn them. Congress may pass legislation that might make it difficult, or even impossible, to carry out the order, such as removing funding. Only a sitting U.S. President may overturn an existing executive order by issuing another executive order to that effect.

In other words, EO’s are a handy shortcut to circumnavigate the messy legislative process and proceed directly to Federal agency-esque rule making.

American Workers – Part 2 (yes, 2)

The purpose of Executive Order 18845 is to address the “skills crisis” that has led to over “6.7 million unfilled jobs”, a number that comes courtesy of the Bureau of Labor Statistics, which tracks these numbers from employer surveys on a monthly basis. The skills crisis has been brought about by changes is “technology, automation, and artificial intelligence” and an education system focused on training workers for “the economy of the past”.

So far so good…

To address this problem, the EO creates both an American Workforce Policy Advisory Board and a National Council for the American Worker.

The Advisory Board will be headed by the Secretary of Commerce (Wilbur Ross) and the Advisor to the President overseeing the Office of Economic Initiatives (formerly Dina Powell, and currently unknown since Powell’s return to former employer Goldman Sachs in February, 2018). The Advisory Board will also include 25 citizens appointed by the President for an unpaid, 2 year term, at which time the Advisory Board will be disbanded. The Advisory Board’s primary role is to support the National Council for the American Worker (Council).

The Council will be co-chaired by the Secretaries of Commerce and Labor (Alexander Acosta), the Assistant to the President for Domestic Policy (Andrew Bremberg), and Advisor to the President overseeing the Office of Economic Initiatives (Okay, since Dina’s out, I’m going to guess this is really Ivanka Trump‘s new title, but I can’t confirm).

The Council will also include designees from the Secretaries of Education, Treasury, and Veterans Affairs, the Office of Management and Budget, the Small Business Administration, the Assistant to the President and Deputy Chief of Staff for Policy Coordination, the National Economic Council, the Council of Economic Advisers, the National Science Foundation, and finally the Office of Science and Technology Policy. (For those of you playing at home, that’s 14 administration officials in total.)

The Council plans to meet quarterly to formulate recommendations on how the Federal Government can work with private employers, educational institutions, labor unions, non-profits, and State and local governments, to “create and promote workforce development strategies that provide evidence-based, affordable education and skills-based training for youth and adults to prepare them for the jobs of today and of the future”. In other words, train workers to fill those unfilled jobs.

Within the next 180 days, the Council is required to develop numerous recommendations and initiatives including:

  • A national campaign to highlight the issues above
  • A plan to recognize companies that invest in worker training (see below)
  • Plans to implement recommendations from the Task Force on Apprenticeship Expansion, itself the result of Executive Order 13801 (see below, again)
  • Increase worker access to data on job openings and skills required to fulfill these jobs
  • Develop recommendations on how the public sector should assist the private sector with worker retraining
  • Suggest reforms to private and public expenditures on worker retraining

Needless to say, both the Advisory Board and Council have a Herculean task ahead of them to try and synthesize and develop cogent recommendations for any of the topics above, let alone all of them.

Pledge to America’s Workers

As part of the marketing genius one would expect from the Trump Administration, news of the Executive Order, which would otherwise have been mostly yawn-worthy, was accompanied by an announcement of a more newsworthy Pledge to America’s Workers.

Here’s the commercial:

At least 20 companies and industry organizations signed a pledge to hire or train 3.8 million American workers over the next 5 years.

The top 5 pledges include:

  1. Walmart – 1,000,000 workers
  2. Fedex and American Builders & Contractors – 500,000 each
  3. National Restaurant Association – 369,975
  4. National Retail Federation and North America’s Building Trades Unions – 250,000 each
  5. Associated General Contractors – 172,500

It’s unclear how much these pledges represent net new training initiatives above and beyond pre-existing company goals for training, such as Walmart’s recent education benefits offering with Guild Education. Nonetheless, as with so much else this Administration has done, it creates a (potentially) self-fulfilling perception of progress, that despite its illusory beginnings has the potential to yield real-world benefits (check the stock market lately?).

To whit: shortly after the initial pledges were announced, Apple and Boeing jumped in to sign the Pledge and support 10,000 and 100,000 workers respectively, despite the fact that Boeing’s pledge was part of a pre-existing commitment to invest in worker training announced in 2017 following the tax cuts.

American Workers – Part 1

Given that a large component of the work scheduled for the Council is to further refine proposals from the Task Force on Apprenticeship Expansion, a useful question would be: what did this Task Force Accomplish?

The Task Force, composed of effectively the same set of Administration officials as the National Council for the American Worker above, was only formed back in June, 2017. In less than a year, it prepared a final report highlighting 26 individual recommendations. (Don’t worry, I won’t list them all here.)

The top 4 recommendations from the 4 Task Force subcommittees included:

Education and Credentialing:

  • A recommendation for the wholesale government recognition and endorsement of Industry-Recognized Apprenticeship programs. The contrast here is with Registered Apprenticeship programs (private apprenticeship programs that go through a lengthy Federal approvals process), with the report diplomatically noting that “potential industry operators and others have identified several concerns regarding the operational efficiency and/or bureaucratic nature of Registered Apprenticeship.” LOL.

Attracting Business to Apprenticeship:

  • A proposal that the Industry Recognized Apprenticeship program come with simplified Federal funding criteria and streamlined State grant access.

Expanding Access, Equity, and Career Awareness:

  • A request that the Federal Government fund a brand awareness campaign for apprenticeships (hopefully by actual advertising executives vs. government agencies)

Administrative and Regulatory Strategies to Expand Apprenticeship:

  • A recommendation to start a pilot project for Industry Recognized Apprenticeships in an industry without well-established Registered Apprenticeship programs.

Moving Forward

Say what you will about the Trump Administration. In the end, within the Federal Government, there is renewed, high-level interest in revitalizing apprenticeship programs and pushing employers to do more worker training. These issues are as bi-partisan as baseball and apple pie. Everyone should be able to agree that having American workers back in the media spotlight, even if only for a single 24-hour news cycle is a welcome reprieve from business as usual.

Enjoy it while it lasts.