March 24 , 2019

‘Corporate Skill Pivots’ May Signal the End of the Permanent Employees

Forget the job threats created by the march of the robots, because the new skill sets required by radical new technologies are much more likely to cause you to lose your permanent corporate job!

In case you missed it, General Motors recently underwent a dramatic corporate-wide “skills pivot” that resulted in thousands of layoffs. Not because it had too many workers, but because the workers they had had antiquated skill sets. But before you quickly dismiss its situation as irrelevant to your own, read on because GM may be the first of many corporations that will be forced to make what can be only labeled as a transformational “skill pivot.” A dramatic change in the skill composition of its entire workforce because their new products will require more advanced intellectual skills.

In my view, executives, talent managers and recruiters in every industry should consider this as an ominous warning sign. It likely signals the beginning of a wave of similar upcoming technology and product disruptions that will challenge the concept of having permanent employees. The rapid and continuous implementation of radically new technologies (in the GM case a shift from mechanical to digital skill sets) will require advanced skill sets that current workers simply can’t learn fast enough, which means that employees with outdated skills will have to be continually “swapped” or replaced with new workers from the outside who already have the needed skills and experience.

In the case of GM, this “talent pivot” meant thousands of employees in their old established skill areas (primarily mechanical and administrative skills) won’t be retrained, and face layoffs over the next year. As an added benefit, releasing these obsolete workers provides surplus resources which can be used for the significant ramping up of the acquisition of high volumes of already trained technology skilled workers needed for their emerging electric and autonomous cars. This new “skills swap approach” came as the ultimate surprise to GM workers who had spent decades worrying that their jobs would primarily be taken instead by robots.

The Corporate Skills Pivot Explained

A corporate skills pivot can be defined as … a planned strategy where because of the completely new skill sets required by emerging technologies, within two years a firm shifts the skill sets that it is targeting for its workforce in a completely different direction. The targeted skills change by at least 20 percent.

I call this dramatic shift in corporate talent needs a “skills pivot” because of the dramatic change in the type and the level of the skills required. But it could also be called a “skill tack” because it is similar to when a sailboat must make a severe change in direction (known as “a tack”) in order to take advantage of the wind. The feature that puts permanent jobs at risk is that current workers are not given the opportunity to retrain in the new skill areas.

Traditional Retraining, Redeployment, and Lifelong Employment Options Become Less Viable

New hiring supplants the retraining of current employees primarily because the new skills are needed almost immediately. Once a new technology approaches viability, workers with the skills related to acquiring, implementing, and developing the new technology are required almost immediately.

Unfortunately, retraining current workers is slow and often has a high failure rate because the skill shift is generally from physical skills to intellectual skills. In addition, many workers simply will be reluctant to undergo the often painful retraining process because they haven’t been required to do any major retraining in years.

Another traditional solution, redeployment (where a volume of employees are transferred to other areas within the firm) also becomes a less viable option because there are few remaining areas where their old skills are still needed.

Taken together, this means that employees must become aware that the promise of lifelong employment will gradually be replaced by the promise of continued employment “only as long as your skills match the continually changing mix of skills that our new products and technologies require.”

Be Prepared for an Era of Employee Obsolescence and Talent Swapping

Every HR professional must become aware of the dramatic impact that new technologies will have on the skill needs of corporate workforces. Technology’s impact on the shelf life of current skills means that the skill sets of most employees will now effectively have a “use by date.” Yes, that means that when the required corporate skill sets undergo a quantum change, individual employees will literally become “obsolete” within your firm. And that means that HR will have to shift away from its established long-term employment model and towards an approach that I call “talent swapping.” HR must develop a new strategic model for continually “swapping” scores of employees with obsolete skill sets with newly hired workers that meet the current skill set needs. These new mostly intellectual skill sets will mostly be in areas like machine learning, robotics, genetics, autonomous/electric vehicles, and quantum computing.

Maintaining a Fluid Contingent Workforce Becomes More Important

Skills swapping involves the periodic releasing of workers with no longer needed skills. This obviously means that in order to maintain a high degree of workforce agility/flexibility, the percentage of the workforce that would be considered as relatively permanent must go down dramatically. The firm will need the capability to quickly add or reduce talent with the appropriate skills for short-term needs, without legal and PR problems associated with releasing permanent employees. Most workers with skill sets that might soon expire will have to be hired as contingent workers or shifted from permanent to a contract basis.

The Top 8 Characteristics of an Effective Skill/Talent Pivot Process

In my experience, most corporate workforce-planning efforts have produced mostly straight-line projections, with little forecasted change in either talent volume or employee skill sets. Historically only planning for minimal variations was fine when the adoption of completely new categories of new products was relatively rare. However, with the upcoming projected dominance of new technologies, executives will need to immediately begin planning for radical shifts in the types of products that will dominate their industry. Executives must begin demanding that talent leaders develop a permanent process for identifying and meeting the continual and dramatic pivots in the skill sets that must be covered by a firm’s workforce. In addition, to the key components covered, there are eight additional characteristics that I have found to be essential for any successful skill pivoting process. They include:

  • A plan for significant and continuous skills and talent pivots — First, rather than assuming that corporate skill requirements will remain relatively constant, executives must begin assuming that they will instead be in constant flux. To start, talent leaders will need to begin planning for at least a 20 percent change in the skills/competencies that will need to be in place 12 to 18 months prior to a major operational or product change. In most cases, the plan for a skill pivot should be based on two factors. First, a foundation cause for a skills pivot should be the need to develop completely new categories of products (like electric cars in the GM case). And the second foundation cause should be the need to introduce radical new technologies into operational processes (in the GM case, machine-learning capabilities for speeding up the development of autonomous cars). In most cases, simply updating product features will not require a skills pivot.
  • An increased emphasis on recruiting — In most cases, entering a new product category or technology area will require a corporation to have already trained and experienced workers available almost immediately. This will require the recruiting function to have already dramatically ramped up its hiring capabilities so that it can recruit currently employed individuals with the newly needed experience, knowledge, and skills away from their current employers. Recruiting must also learn to identify and target those rare individuals who have demonstrated their capability to automatically, on their own, update their skill set.
  • The timing of talent acquisition will be critical — Recruit the talent with the newly required skills early enough, so there is sufficient time for them to acclimate into working teams. But leaders must also be aware that if the talent is acquired too soon, any new-hire idleness will be expensive. And executives must also be aware that there is a risk that this idleness may cause frustration and early new-hire turnover.
  • The timing of current talent retention will also be critical — Keeping current workers with obsolete skills too long will be expensive, but so will losing this talent “too early” while they are still needed. So, retention programs and incentives may need to be put in place in order to keep enough workers with their legacy skills right up until the point where they are no longer needed. However, employee-retention programs would no longer be a high priority in areas where there is clearly a surplus of employees with no longer needed skill sets.
  • An increased emphasis on buying firms for talent — because there will be a continual war for recruiting highly desirable talent with the new skill sets, firms will be forced to acquire a great deal of their needed talent by buying startups and through mergers and acquisitions. This “buying firms for talent” approach has the added advantage of acquiring talent that already knows how to work together as a team.
  • The geographic placement of skills will likely also be important — if the current global trade and tariff battles continue, it might not be enough for a corporation to have the right skill sets if those skills are not physically located in the right country. For example, if tariffs make importing U.S. products into China too expensive, the talent with the skills needed to produce a product may have to be located in China itself or in another a low-tariff country. As tariffs continually change, shifting the talent with the right skills to the right place will continue to be problematic for workforce planners and production managers.
  • Benchmark skill pivots as a warning tool — You can identify when a competitor firm is making a “skill pivot” by tracking the types of jobs and the skills that are required in their public job postings. Watch the skill shifts that are being planned at other firms first, because these skill pivots at other firms can serve as an early warning sign of skill pivots that your firm might have to make. But also, because being aware of these pivots will help you identify the skill areas there will be intense competition for recruiting even average talent.
  • Expect an increased emphasis on work being done by non-humans — in addition to continually updating the skill sets covered by their human workforce, talent managers will also have to plan for multiple situations where robots or software algorithms will supplement or replace the work that can be done by humans. HR will have to develop objective criteria for deciding the areas of work when humans have higher ROI.

There Are a Few Notable Benchmark Firms in the Skill Pivot Area

Although they are not common, in the recent past there have been several cases of successful corporate workforce skill pivots that you can learn from. For example, the U.S. Air Force learned to shift toward drones and away from exclusively operating manned fighter aircraft. That transition required both a significant cultural change, as well as a major shift in recruiting. Netflix in a relatively short period of time successfully shifted away from a business model where it primarily distributed CDs. It replaced that approach with a model that required the technical skills for online video streaming and the creative skills to oversee the development of its own content. Microsoft learned to pivot away from the skill sets exclusively required to produce packaged software and toward the completely different skills required for successful cloud, laptop, and gaming products. Amazon is the single firm that has adapted a scientific talent model where it continually pivots and adds to its targeted skill sets which allows it to rapidly and successfully enter utterly different product categories and service fields on a continuous basis.

Final Thoughts

Other than in this decade and during the Industrial Revolution, history reveals no other comparable time when the skill sets required to produce the rapidly changing products of an industry have shifted so fast and so dramatically. So, in the absence of historical benchmarks to learn from, talent leaders will have to be innovative when they develop their corporate process for rapidly pivoting the skill sets of their workforce. Unfortunately, in my experience, they begin at a weak starting point because I have found that the workforce-planning capabilities of nearly every major corporation lack even the rudimentary capabilities needed to make anything beyond a partial skills pivot.

So, in conclusion, I urge executives and talent leaders in every industry to take notice because there doesn’t appear to be an end in sight to the speed and the impact of technology on new product development and operations. And because of that seemingly unending march of technology, I go further in predicting that the ability to make a continuous series of skills pivots will become a critical success factor for all corporations that operate in this disruptive environment.

The time is now for executives to send a signal to both shareholders and their board that your firm is in the vanguard of preparing for the future where workforce skill needs are continuously changing and fluid, and where few corporate employees should consider themselves to be permanent.

Author’s Note: If this article stimulated your thinking and provided you with actionable tips, follow or connect with me on LinkedIn, subscribe to the ERE Daily, and hear me and others speak at ERE’s April event in San Diego on “recruiting in a candidate-driven market.”

As seen on ERE Media on 12/10/2018.

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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