Aug 12th 2019
Weekly News Update
How to talk to employees about the future of work, Quartz
You don’t have to work in a dying field to feel the threat of workplace obsolescence. It’s not just the impending threat of job-displacing technology. As companies evolve, offering new products or transforming the way they deliver existing ones, more of us will be left doing “legacy” work that’s perhaps necessary, but far from cutting-edge.
If you’re in the kind of job that helps your employer keep the proverbial lights on but doesn’t represent the company’s imagined future—if, as Robert Falzon puts it, “you’re doing critical stuff, but you’re not doing pivotal stuff”—then it may be a good time to have an honest conversation with your boss about the skills you’ll need to stay relevant.
At Prudential Financial, the US insurance and investment giant where Falzon is vice chairman, those kinds of discussions are already happening. Instead of viewing the future of work as a far-off problem to be dealt with decades from now, Falzon says the company is actively taking stock of the talent it has and the skills it will need to create the next wave of products and services. Telegraphing these conclusions to staff is essential, Falzon says. In an unusually tight labor market, a giant company like Prudential, with natural attrition of 1,500 to 2,000 workers a year, can’t expect to hire in all the talent it needs.
Big employers that want to evolve are going to have to get comfortable putting people in roles they haven’t tried before, Falzon says. Some jobs may not have even existed before. Bridging the skills gap is a major priority for the Prudential executive, who spoke with Quartz at Work about how he talks to employees about the changes to come, and about who’s responsible for smoothing the transition for employees whose experience hasn’t necessarily prepared them for the future. This transcript has been lightly edited for length and clarity.
Quartz at Work: How are you seeing “the future of work” play out at Prudential right now?
Robert Falzon: I’ll give you an example. What’s happening in society today? Amazon. Two clicks, two days to your front door, right? That’s your experience. Now when you as a consumer are thinking about buying life insurance, you’re thinking, “Why should it be any different? Why can’t this be two clicks in two days and I’m done?” We have to live up to that kind of expectation. So we’ve introduced artificial intelligence into our underwriting process. We’re not quite down to two clicks, but with seven pieces of information and 48 hours you can be insured for up to $1 million.
Now, what’s happening to the labor that I need as a result of that? Before, I needed a whole bunch of underwriters that were taking in all these forms and reading the information and then profiling you about based on that information; I needed nurses and doctors, a medical staff to take samples from you in order to be able to do a part of the underwriting. Now, I no longer need the medical component of it, and I don’t need an underwriter to be looking at several pages worth of applications, right? What I need are data scientists and actuaries that can do the modeling for me to create the artificial intelligence that can get the process down to the seven questions I really need to ask, and to know the external databases that I can search so that I can then marry the data to the answers to those seven questions in order to be able to then turn that underwriting around.
How quickly is all of this happening?
We only introduced this AI-driven offering gradually during the end of last year and it’s already climbed to 6% or 7% of our sales. Now, it’s only up to $1 million in coverage and we sell a lot of other policies well in excess of $1 million, but you can see this growing rapidly, which means I’m going to need fewer and fewer of the kind of people I needed to do a traditional underwriting. But I am going to need people that understand how we can continue to refine this. I still need to get this down to two clicks in two days.
So when you talk to people about what their work will look like in 20 years…
Well, you don’t have to boil the ocean on this. The reality is, at best we can look three or four years forward. So you’re not trying to forecast out a decade from now what skills they’re going to need. I can take this in three- and four-year bites. That’s a more manageable undertaking.
I think this idea that you have to forecast out two decades, or a decade from now, what the world is going to look like—you should be thinking about that, but it’s going to evolve in increments of three years, not increments of 10 years. And if you’re solving ahead every three years, you’ll be ahead of most of your competition because they’re not even doing that. Are you already talking directly with employees about what’s changing? How do you do that? Yeah—it’s sitting down with individuals and saying, okay, group by group, function by function, business by business, this is what we’re forecasting.
And what do you actually tell them?
We already have an idea of where we’d like to be. Now we can ask ourselves what does that look like and where are the gaps that get created as a result of that vision? And then you can begin to have conversations with people and tell them, “You need to be thinking about this kind of skill development, because in the next three years, if you’re not, you could find yourself actually without a job, because what you’re doing today, we’re gonna need a lot less of it.” That’s the kind of conversation—honest conversation—to be having with individuals.
And if you don’t engage in that kind of forecasting and honest conversation?
If you don’t do that, then your eventual response to new technology is reactionary and that’s where you get this dislocation. So I can apply new technology, I can wipe out people and get rid of them—I think that happens to be very shortsighted, but that’s what a lot of companies do. They’re reacting as opposed to planning. But if you anticipate, you can actually have this be a good outcome for both employees and, importantly, for the company.
This “fourth industrial revolution” that we’re going through is so pervasive both in terms of the breadth of industries that it affects and the breadth of functions. It’s not isolated to any particular manufacturing sector or service sector. It affects all industries, and it affects every aspect of a company. There’s no place where you can’t be thinking about the application of technology and artificial intelligence as a way to enhance the operations. There’s no hiding from it. And as a result of that, the concern is that it could be highly disruptive, and it will be—but how you manage that disruption can result in very, very different outcomes.
How do think employees feel about these kinds of frank conversations?
If you accept as a premise that this is affecting everyone, would you rather be working for the company that’s having that honest conversation with you, and has a program helping you to manage your career as that change evolves? Or would you rather work with a company that says, “Nothing’s changing and we ‘promise’ you a long-term career?” Because what I can tell you is that the latter instance is a company that is not going to be around long enough to actually fulfill that.
Employees receive the honest conversation well because they’re smart enough to know that anywhere else they go, they’re going to be experiencing the same rate of change as where they are today—and if they’re not, then that’s not a secure place for them to be for the long term in any event. And so I want to work for a company that’s helping me to manage my career in light of that change.
Does that put all the onus on you, the employer, to provide training, or are there things that employees should be doing on their own?
I actually think it runs the full gamut. It is, importantly, the individual’s responsibility; they own their career. And then I do think it’s the company’s responsibility, as a steward of their employees but also as a steward of their shareholders—because it’s hard to find talent and it’s hard to find the right talent. And if you’re relying on the idea that you can displace a bunch of your talent through technology and outsourcing and process automation, and then thinking that you’re going to hire entirely externally for whatever new needs you have and not take advantage of that pool of labor that you just freaked out? I think you’re kidding yourself.
I think academia has a role in this as well, preparing people for continuous learning as a basic skill that they need to understand coming out of school. We need people trained in learning, not trained in just the subject matter itself.
And I think there’s a role for government in this as well, in terms of creating the right incentives for both academia and companies to undertake these things … and helping the private sector make this transition in a way that doesn’t cause the type of social disruption that we’re already seeing in populist politics here and around the world. A lot of that earlier pain was isolated to specific industries—now it’s going to be much more widespread.
Do you worry there will be people left behind again?
I think there are two categories of people that won’t make the transition. The first are the ones who don’t own their own careers, they don’t have the motivation to invest in themselves to make the change. These are just people who feel, “No, this is not what I expected. I’ve got my BA and I have this career and I expected to do this for the rest of my life” kind of thing. And I think those individuals, you know, they may eventually wake up to the realities of the world, but they’ll have a hard landing. Maybe from that, they learn, and in the next instance they’ll figure out how to embrace change more constructively. So we’re worried about that group of constituents.
The second are those that try but just can’t make it. You know, not everyone’s going to be able to pick up the skills that we need in the future, no matter how hard they try. I hope to minimize the amount of that … but we may have needs that may not fit well with an individual’s skills.
Do you recall experiencing massive change like this over the course of your own career?
My MBA was in finance, and the study of finance exploded with the personalization of the computer about a decade or so into my career, maybe a little earlier than that. And what I found was that the body of knowledge around finance and had grown exponentially, and I felt like I almost like I needed to get an MBA all over again because there were important new things that, you know, were at best footnotes in my textbooks. So I went and got a CFA, instead of getting an MBA again, and I did that as a way to stay current.
Then I wanted to do investment banking. I started out in this general pool, and then went into a real estate group because that’s where the market exploded, and then went into structured securities because that’s where the market exploded next. And so I had to constantly evolve what I was doing in order, and that moved my career along because I was able to successfully continue to pivot into areas that were growing for the firm.
In light of all the change to come, how would you advise young people today to think about what kind of work experience they go after?
One of the messages I give to people is that there’s depth and breadth. Yes, become an expert in an area because you build credentials and credibility as a result of that. But it doesn’t end once you’ve done that. Seek broad experience, because that broad experience is going to prepare you to do a whole bunch of more interesting things down the road.
Particularly in places as complex as our organization, you want people who are very capable. Once they can show that they’ve got the depth down, then the best thing they can do for their careers is figure out how they branch out and get different types of experiences. They can always go back to the core thing that they were doing—or they could decide that ultimately there’s some other path that they want to pursue.
Old-fashioned management training programs had it right in that you would come in for two years or whatever it is and you go from department to department and see what’s out there. And I think big companies are great at doing this at the most senior level, too—you know, every few years, Jamie Dimon shuffles around everybody on his senior executive team at JPMorgan Chase again. But there’s this vast middle where we don’t really do that for people. And this is the very thing we’re focused on—creating this mobility for the middle of the organization. When I was the CFO, and they still do this in the finance organization, we looked at every individual who was in a place for four years or more and we asked why—and then we used that as an opportunity to try and move them. We may have moved them within finance, but at least they were getting different experiences within finance.
Now the opportunity is, how do you move them out of finance and into other business areas? When you have people who are doing the same thing for decades, maybe because they are very comfortable and that’s all they wanted to do, you know, that’s great, but recognize that you’re at risk—because that thing that you’ve been doing the same way for 15 years? We can probably get someone else to do that, and that somebody else might be a machine.
That’s a scary prospect for a lot of people.
Yeah. But if we can get people to start embracing the opportunity to move, they can learn a new skill. And the response has been actually quite positive—people love it, particularly the younger generation. They’re not afraid to learn, they’re not afraid to be new at something, whereas I think a lot of people—I don’t know if it’s people as they age or if it’s people of a certain generation—they don’t want to start on the bunny slope again.
And even if they did, the bunny slope might look a lot different than it used to because of the ways in which technology has transformed entry-level work in a lot of industries. That’s tough for a lot of people to stomach, too, right?
Well, they’re almost threatened by it, right? Because they’re saying, “Wait a minute. That’s how I built my career. All those things that you’re doing away with now, that’s how I started. So you’re telling me the way which I built my career is no longer the way in which people can succeed?” And the answer is, “Yes, that’s right.”
What do you make of concerns that the real focus for businesses is to automate as many tasks as possible in order to cut as many jobs as possible?
There will be categories of jobs out there that will be eliminated entirely. But when I look at our organization, we’ve been through a fair amount of transition already in terms of everything from outsourcing to artificial intelligence, and we’ve continued to grow from a labor standpoint. It’s just a function of growing with the right talent and how you create these models that allow you to take that combination of internal and external talent to continue to feed the engine so that you can continue to grow your businesses.