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Welcome to the EY Tech Connect podcast, where we have candid conversation about the most pressing priorities facing tech, media and entertainment and telecommunication companies and provide strategic insights on the key issues that matter to them. As industry ecosystems evolve in new directions, we use these discussions to reflect on how companies can not only take advantage of new opportunities but also tackle emerging challenges.

Christina Winquist

Hello, welcome to the EY Tech Connect Podcast. Today we’ll be discussing a study EY recently released on how tech companies can create more agile operating models and how recruiting and retaining talent plays a huge role. We’re speaking with Susan Robinson, EY’s Global TMT People Advisory Services Leader and the leader for Diversity, Equity and Inclusion. We’re also speaking with Juliette Meunier, EY’s Americas TMT People Advisory Services Leader. And of course, we have my fellow moderator, Andrew Young, EY’s global technology industry analyst. Hey, Andrew.

Andrew Young

Hi, Christina and thanks so much for being here Susan and Juliette. I think we can all agree that today’s discussion on companies establishing new operating models that put humans at the center really couldn’t be more timely and important. Companies stand at a moment of transformation. Thanks to the massive disruption of the pandemic, climate change, geopolitical events and no shortage of other shocks and shifts, people are reevaluating their work life-balance, where they live, what they want to do, and they’re choosing more purpose led opportunities. Trends like quiet quitting are garnering headlines, disrupting the talent balance and presenting challenges to organizational resiliencies. Companies are so used to being in the power position, but talent is now calling the shots. As expectations shift, executives across the TMT universe recognize the need for a new approach.

An EY survey found that 95% of execs are acting to change their operating and supply chain model. But how can they navigate the roadblocks on the path towards a resilient people-centered enterprise? As part of their reimagined operating models, organizations are increasingly prioritizing their workforce and better understanding how to recruit, train, nurture and compensate their talent. Seventy-nine percent of executives indicated that employee satisfaction and well-being will be at the center of their operating model in three years time. A larger percentage of than topics like risk mitigation, 66%, legal protection for IPs, 68% and tax and other statutory regulations 73%. The priorities are clear. But how can organizations successfully optimize their operating model, increase their resiliency and put people at the center all while avoiding the pitfalls that have led to the failure of so many large scale people transformation initiatives across the TMT universe? So, a relatively big and important line of questioning here. We’ll kick off with the first question recognizing that the tech sector has experienced quite a bit of upheaval, including but not limited to challenges associated with the pandemic. How are you seeing companies reevaluating their operating models in order to build resiliency and increase agility? What are some design principles and good practices organizations can use to become more nimble? Let’s start with you, Susan.

Susan Robinson

Thank you so much for having us here. Tech companies are facing a great deal of disruption due to the influx of this digital transformation, certainly accelerated by the pandemic, but we’ve been in some mode of digital acceleration for some time now. We’re seeing cross sector trends including creation of industry ecosystems, rising investments of hybrid new tech, digitalization of everything, as well as exploration of new business models. So this disruption or accelerated demand for data is going to have an impact on the organization and workforce needs. Andrew, you mentioned some of the data from a recent survey that we led with 750 tech execs, and this was to gauge their perspective on some of these shifts and what’s the impact of the operating model and the organization. The significant finding basically was there’s a big urgency to transform the operating model in their organizations in order to face and manage the pace of change and disruption that’s coming at us. We’ve seen operating models transform and a variety of different reasons and scenarios, whether its transactions driven or leadership driven, but this is unique because it’s all those things, but it’s also very much market driven.

One of the big findings we saw as we went through this was 95% of these executives are seeing that they need to change their operating model and supply chain models in order to accommodate this. In addition, another factor we saw was 82% of these executives rated employee satisfaction and wellbeing as a key to that future success. So you can really see the link between growth, strategy, op model and the org and workforce here. So developing an agile operational structure; reimagining the workplace; redefining global compliance policies; and embracing environmental, social and governance needs, so that speaks to ESG, these are key principles in the drive to a future fit operating model. And there’s a huge impact here on the org and the workforce specifically in those tech organizations. We talk a lot about resiliency here at EY and Juliette and I spend a lot of time in the people space, so organizational resiliency is crucial to pay attention to. Look at where your vulnerable spots are, how prepared is the organization to support these growth strategies, weather the external disruption, external competition, and then of course, this big challenge of talent shortages. So having a comprehensive game plan on the org and people needs alongside all these shifts, disruptions and demands it’s paramount, it’s really, really crucial. Juliette, maybe you have some thoughts to share as well?

Juliette Meunier

Yes, for sure around designing your organization to be nimble; and it’s definitely a hot topic these days. Many of our TMT organizations are looking for that really hard to find workforce — an agile workforce that can flex up and flex down with the needs of the business. And unfortunately, traditional employment models don’t always allow for that kind of flexibility when there is a downturn in the economy or when the business has a spike in demand, because salaries and benefits of most TMT workforces are fixed. So, this need for agility has caused many organizations to turn to their contingent workforces and their non-employees within the current gig economy. So as we know, many TMT companies have historically used large numbers of contractors and contingent labor due to many years of layoffs and hiring freezes, but oftentimes, it wasn’t using them in a purposeful manner, and it wasn’t integrated with the workforce planning of the employees. As a result, the makeup of their workforce can appear a bit more accidental than purposeful. It’s not unusual for contingent workers to be in the 40 to 50% of their overall headcount, which isn’t always planned to be at those levels for the TMT sector. But now, for purposes of agility, but also to reduce costs and reduce risks, companies are being purposeful about their contingent workforce.

They’re deciding which roles non-employees should fill and which roles should be held only for employees. So, for example, should non-employees do the exciting work or keep that work in-house and outsource the monotonous transactional work? Should non-employees be customer facing with your customers, or should employees own those customer relationships? Should nonemployees have access to intellectual property? So, these are just a few questions that companies are sorting through in order to better take advantage of this workforce to remain agile. But once you have those questions answered, then companies can bring together employees and nonemployees within the workforce planning process so that they can better plan for the demand and meet it with the right type of resource for that need. Speaking of workforce planning, I am seeing one other trend in this area relating to workforce planning based on skills rather than roles, which allows again for that agility that companies are seeking. On the demand side, companies are doing a much better job of using data analytics to predict turnover and therefore the demand for those resources. But on the supply side, there’s also been some changes on how to fill those roles, by looking at capabilities and outcomes rather than the traditional method of filling jobs and roles. So, for example, a company may have a need for a PMO role in the accounting function, but there might not be an available PMO resource in accounting.

And maybe you don’t want to hire another person in the accounting function. So thinking outside of accounting, we find that we have a great person in HR who has PMO skills and who has that availability. So companies are now looking to match these demands for skills and outcome to the capacity within their current workforce rather than looking to hire a new person or bring on a contingent worker. With the current technologies that are available, talent can actually now be sourced and leveraged from pretty much anywhere for shorter periods of time with fewer transaction costs. Previously, companies had difficulty sourcing for skills because there wasn’t technology to maintain that skills inventory. But now, we’ve got real time deployment of resources to where they’re most needed, which allows for amazing developments in workforce planning, such as including this broader population that is location-agnostic and you can be much more purposeful with utilizing your contingent workforce.

Winquist

Wow. Yeah, lots of dependencies and things to consider when encouraging and empowering talent. It’s becoming increasingly evident that companies can differentiate themselves and increase their resiliency by prioritizing employee satisfaction and wellbeing. How are leading companies looking to bolster employee wellbeing?

Meunier

I’ll take that one first. All of the events and changes that employees have been through these last few years with the pandemic, and now with the continued back-to-back video calls, they’re now definitely feeling that strain and burnout. And, so, wellbeing is no longer a “nice to have”; it is really a “must have” for organizations to be successful. Companies have been shifting from wellbeing as this concept or idea to wellbeing as a key tool for attraction, retention and productivity within their organizations. Previously, companies were developing concepts around wellbeing, so thinking about various types of wellbeing financial, emotional, physical and social wellbeing — and now these general concepts have been made a reality for many organizations. I’ll share two examples with you. From an employee perspective, companies can’t just check a box on wellbeing anymore.

It needs to be specific to the needs of your employees. So what does mental health mean for your employee population? And if you don’t know what it means, then ask them. It could mean a four-day workweek. It could mean logging off by 6:00 p.m. It could mean additional monetary funds for things like therapy or fitness equipment. And, so once you have your employee data, then get tactical with it. I’ll give you an example of the EY wellbeing fund. It started as a temporary fund during the pandemic because we thought many of these issues were temporary. In this fund, EY pays up to $800 a year per employee for some of the things you would imagine, like home office equipment, work out equipment, meal delivery services, but then we’ve expanded to other types of wellbeing like e-bikes and blenders and juicers, or massages, camping equipment, and in 2022, we expanded to include things like mattresses for quality sleep, or airfare, rental cars and hotels. We added vacations, because as people started to travel again, we realized the impact of vacations from a mental health and wellbeing perspective.

Young

That’s great.

Meunier

One other example that I’m happy to share is around wellbeing from a manager or a leader perspective. So, how do leaders know whether or not their employees are focused on wellbeing and of course, try to catch these issues before they get to the point of burnout and it’s too late? Companies are starting to use these manager/leader dashboards to measure wellbeing — everything as simple as are they taking all of their vacation time, what does our turnover look like to things a little more complex, like how much time do people have in between meetings for creative thought or for rest? So these dashboards are really now enabling leaders to help their employees focus on their wellbeing. Susan, did you want to chime in on any thoughts there?

Robinson

Yeah, I love that we’re helping employees with air fryers and mattresses.

Meunier

Absolutely.

Robinson

Fantastic. Another angle we’re seeing in our sort of post pandemic world is the need for organizations to think differently about employee engagement and employee experience overall. To my point earlier with all of the adjusting to operating models, growth plans, the impact of market shifts, supply chain challenges, there’s also a talent shift occurring. We talked earlier about Great Resignation and quiet quitting, but there’s all these pivots that humans have come through just in the last three years, right: work from home, then there was another pivot to OK, well, we’re going to go back kind of in a hybrid way, and then there was kind of another pivot back to work from home again, and now we’re still in this little in between place where people are still defining where do people work and how do we work. In the midst of all that, it’s becoming so important to keep a focus on talent, culture, employee engagement and so on. It’s not just a differentiator, but it’s almost a business imperative. We launched a study in the last year with Oxford University and I loved that we referenced Humans at the Center earlier.

There’s a lot of great content and research that’s come out of this and it’s really looking at the criticality of keeping a deliberate focus on talent and workforce impacts across any organizational change or transaction and why talent is so imperative to driving success. So, to give you context, we interviewed 25 senior leaders across 10 sectors. This was a global survey, global research project. We surveyed over 2,000 leaders and employees across 23 countries and of course it was also cross sector. There were four key findings that kind of came out of it. One is transformation needs to be a fundamental business capability. Constant disruption requires continuous transformation, and we are in a stage and a period of constant disruption, whether that’s driven by what’s happening in a business itself or by these external forces that are bearing down on our day to day lives and our working environments. So that’s one.

The second one is increasing the pace of market disruption is forcing companies to transform faster and more frequently. So, transformation is no longer a once in a decade event. It’s a continuous process of refinement. It’s the new norm. So that initiatives and the intensity of work change over time, but the journey never stops because the organization is constantly self-disrupting. This requires building the institutional capabilities and culture to reliably transform again and again. So you’re starting to build some real muscle memory and capability and working that agility and competency into your workforce on a more day-to-day pace if you will.

And the final finding that is really powerful, we saw that organizations that put humans at the center in a very genuine, deliberate strategic way, when they do that in the midst of their transformations, they are 2.6 times more likely to be successful than those who do not. So there’s been studies on this topic for many years. We’ve seen a lot of these research points over the years, and we feel like we’ve known this a long time. But what’s really powerful about this study is that it’s done in a time when we are in the midst of so much disruption and digital acceleration. Our workforce is shifting generationally. The way in which we work is shifting and changing, largely picked up by virtue of the global health crisis. This study really doubles down on how we as organizations need to think differently and prioritize differently when it comes to those people and org needs. There were six drivers as well that came out of this study and I’ll just read the words to you of those six drivers because even those in themselves are I think very refreshing and much more relevant to our human condition today. So here they are: inspire, care, build, empower, lead, collaborate. I mean, it’s just, it’s a whole new way of thinking about how we show up at work, but also how we keep leaders accountable in managing that talent agenda. You know, it’s giving us a shared understanding clarity and belief on what we’re focused on. It’s effective management of the emotional journey, acknowledging that it’s an emotional journey and the ability to turn vision into a reality. As we talk so much about vision in our corporate worlds and how it cascades down through our organizations, how we measure it, how we reward people on it. For me, this starts to get to a far more emotional human personal level. These conditions, they feed a new definition of leadership and ways of working required to navigate this non-linear journey of transformation and the digital time that we’re in.

Winquist

Fantastic. That’s great.

Young

Wonderful, yeah. So there’s so much actionable insight there, and to continue down a similar path, as has been discussed, it’s been a difficult few years for workers and companies have faced near constant shifts in circumstance related to the pandemic and reopening among other issues. And in recent months, we’ve heard a lot about quiet quitting, labor shortages, a war for talent and other staffing and people challenges. How are TMT organizations navigating such uncertain times from a talent perspective? And maybe, Juliette, we’ll start with you on this one.

Meunier

Sure. Yes, I wish I had the one magic bullet to the war on talent. But I will share a few perspectives that I’m seeing at my TMT clients. First of all, employers are reimagining their rewards post pandemic. So, as you can imagine, there are certain benefits from the pandemic that we thought would be temporary because we thought the pandemic would and working from home would be temporary. But now, employers are finding that employees greatly value many of these rewards and are now actually carrying some of them forward permanently. So, some examples you’d imagine are cost of setting up home offices, offsetting energy and internet costs, meal delivery, wellbeing and nutrition. But other things that you might not think of do relate to pay, because we don’t often shift the way that we actually pay people, but having some of these changes be more permanent that happened during the pandemic are coming through in our clients. So increasing cash compensation, having premium pay for premium or hot jobs, having one-time bonuses where maybe we never had those types of things before, off-cycle or retroactive and one-time increases.

So everything across the board from a rewards perspective. Another example that may seem obvious to us in the war for talent is that employers are really using the “work from anywhere” as flexibility and an attraction or retention vehicle. So, while of course that was easy to do while everybody was at home, I think now that companies are shifting back to offices, really thinking about using that flexibility as an attraction and retention vehicle, it may be a little harder for those employers who are less flexible to compete with those people, those employers who are more flexible in that space. And then lastly, being resilient as the labor market is continuing to tighten and be more competitive, companies are at the same time looking to reduce costs due to the challenging macro environment. I’ve also seen that they’re turning to ways to not be as reliant on labor as they have in the past, through either automation or processes that are very transactional or frankly, to fully outsource functions that have traditionally been in-house before. Susan, do you want to add anything to that?

Robinson

I’d probably add a couple of additional points, just in terms of what we’re seeing some organizations pay attention to, but generally speaking, what seems to be some leading practices. There’s three I’d punch out. The first one is really keep an eye on employee engagement. Where are we seeing passive/active employee movement? Are people getting what they need? Are they plugged in? Are they checked out? How are they connecting with one another? We have a really great tool in PAS called our behavioral influencer platform. And, it’s a really, really effective yet painless way to gauge how your organization is connecting with one another and it’s a great readout of data that shows you who the influencers are, where people are going when they’re looking for support, where they’re going when they’re looking for problem solving or teaming with one another, but it also shows you where folks are isolated. And that is equally important to pay attention to. You know, there’s a great trend of loneliness in our world today and that is showing up in the workplace as well. And so it’s just really important to pay attention to those things, in addition to, you know, where the excitement rests.

The second one I’d call out would be the generational shift. And this one is kind of cool, because we do have different generations represented in our workforce today and, you know, we generally have, right, this is not something new. What I think is so unique about it right now is that our younger generations, these are people who have been immersed in digital fluency, perhaps their whole life and in ways that the boomers and the Gen Xers certainly were not. And so that has an impact in regard to how we communicate, how we collaborate with one another. And it also connects to how easily it is to access information, research things, call people out on things, you know, so that, for me, that level of authenticity is crucial also that ability to be fluid across the generations and be mindful of it is big. What gets those different generations excited? What gets them passionate? And what’s the layer of mental health, work life balance, family life, all of those elements as they come across those different generations and their needs? And I’d have to say the third one is really also pay attention to representation. You know, the topic of DEI has been in our working world for decades, and yet the needle has not moved as dramatically as one might think it should. Look, this is prevalent across all sectors, it’s prevalent across our firm as well in pockets.

The tech sector in particular has a lot of work to do here. There’s some great innovation, there’s some really great good work that’s coming out of these organizations. But if I even just look at it through a lens of gender, and you know, the representation there is still quite skewed, particularly as you get to senior levels. So, it’s really important to keep pace with that, alongside that generational shift, the demands for greater representation are just going to increase. I think a lot of younger generations, and not only younger generations, but they will select where they want to be based on how they see themselves represented and what opportunities are there. And I love that. And it can’t be just a compliance exercise. It needs to be a deliberate, strategic focus on cultivating a workforce that has a nicely balanced representation and quite honestly cultivates a culture of belonging.

Winquist

Absolutely. This is so important and so interesting as you look at different generations as well, so I love that answer. Nearly 80% of executives surveyed indicated that people centricity will be the core of their operating model three years from now. So what would success look like for companies working towards these objectives? Is there a North Star or a Utopia or a metric of success that companies can use to determine when they’ve truly put people at the center and have achieved that?

Meunier

You’re right, Christina. It is a unique time in our careers. It’s really the “golden age” for employees. It will be so interesting to see what employees are doing with this leverage that they have, and how employers are reacting. Overall, I think it’s going to be a very positive change for workforces. It allows employees to explore new career paths and to find more meaningful work. And it allows employers to rethink their strategies around employee engagement, retention and recruiting. The employers that actually accept these workforce realities and address them are obviously going to be more successful. So, for example, companies need to really think about what’s the purpose of our office these days? How are you making decisions around in-office versus virtual work? Offices can’t and won’t be the same where people sit in cubicles and do their individual work on video calls. Each company needs to decide the optimal uses for their offices. Will they be collaboration hubs? Will they have areas for heads down quiet work times? Will they be a place where teams can get together socially and network? These answers are obviously different for every company depending on their business and the specific needs of their employees. But to circle back to some of Susan’s messaging, one thing that is for sure is that transformation is now a constant for all organizations. But as you’ve heard, success is far from guaranteed.

And as our study indicates that specifically focusing on the complex human factors can increase the probability of transformation success to more than 70%, which is incredible. Companies that put practices in place around a few key drivers can give organizations the best chance of transformation success - and I’m going to mention three key drivers. One is thinking about actively developing new ways of working. Don’t let it go back to the old ways, be proactive, be specific to your employee population. Second is make sure that you’ve got the right skills for the right people to lead that transformation and third is build your future design so to promote collaboration across groups which is becoming incredibly important for successful transformations. And when you focus on those three things, your people know how to do things differently, they are working in an environment that’s designed to make things easier for them, and they’re prepared for that change, which will then enable a successful transformation. Susan, I know you’re passionate in this area. What else do you have to add?

Robinson

Yeah, I mean, oh, that’s so good. I fully agree with all of what you said. The only thing I might add on to it is just the acceleration of the digital influx across all we do that’s happening in parallel. The pandemic certainly kicked in a major step change for our world and our working world and it’s just not going away. There’s this huge debate right, raging on about work from home versus being in the office, is our culture going to be impacted and so on. It’s a legit dialogue. There’s no question. I personally feel it’s the wrong debate. Rather, we should be talking about how do we collaborate differently, how do we work more effectively while we’re also keeping an eye on these generational shifts in the workplace, that crazy demand for talent that’s out there, the increased focus on mental health and wellbeing, and while it might feel like a jumbled set of challenges, it does pose a transformational time for the talent agenda. And I think C-suites, I think boards they’re seeing this in a new light.

And so to Juliette’s point, it’s energizing. This should be an exciting venture for us to be looking at versus holy cow, how do we manage all this stuff. I mean it’s still daunting, but nonetheless. Look, in our view, talent has never been a sideline topic for companies. And while the corporate world has definitely evolved over the last, you know, 10, 20 years, there’s still a lot of ground to improve on. And the moment we’re in now and the various shifting and shaping in the market, globalization, this increased demand for tech, companies who really listen and connect their talent strategies and game plans to the center of all the other imperatives, I think they’re going to be the ones to watch. And it’s going to be really, hopefully, further shaping and transforming what that working world experiences feels like.

Winquist

Right, right.

Young

Fantastic. Well, this has been such an incredibly rich and valuable conversation, it’s hard to believe that we’re now at the point of closing, but maybe just to highlight four of the real takeaways that stood out to me and, I could go on to many, many more because this has been such a compelling discussion, but some of the things that really stood out on my end were first, this central importance of organizational resiliency and that there this need for companies to identify vulnerabilities, including those related to talent and really be purposeful in how they go about reshaping their operating model to address and mitigate those vulnerabilities and position them for success and flourishing going forward. The second one is really that need for being more agile and nimble, including through a staffing approach that first leverages new talent sourcing technologies and capabilities and second, really centers skills and competencies rather than just roles or departments and how do you check those boxes.

Third, employee wellbeing and satisfaction are mission critical. Recent years have been rife with personal and professional challenges for people around the world and a focus on wellbeing is clearly critical for companies so that they can help employees avoid burnout and mental health strains, navigate generational shifts and ensure representation across their workforce and really to differentiate themselves as a great place to work that puts a premium on employee satisfaction and wellbeing. Finally, in terms of operating models, it’s clear that transformation is now a constant, work from home versus in-office versus hybrid arrangements, new forms of collaboration, building a winning culture workforce upheaval, shifting employee expectations. There are a lot of transformational questions and challenges on the talent agenda for companies and while the specific items on that list will change over time, what won’t change is the importance of establishing and regularly iterating a fit for purpose operating model that puts people at the center. So those are just a few parochial takeaways from my end, but thank you again Juliette and Susan, for this incredibly rich discussion and then I’ll hand it over to you, Christina to close us out.

Winquist

Yeah, thank you to Juliette and Susan. This has been really, really relevant for all of us. It’s such a passionate topic. So thank you for your time and thank you all for joining us today on EY’s Tech Connect Podcast. Thanks everybody.

(End of tape)

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