SI Review: December 2011

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People First

Jeff Joerres on the Human Age, the growth awaiting ManpowerGroup — and staffing

It’s been a difficult time for the staffing industry, to say the least. But this recession has had a silver lining. It has revealed the acute need for contingent labor and the value that the staffing industry can provide. Staffing Industry Analysts’ Editorial Director Subadhra R. Sriram spoke with ManpowerGroup Chairman and CEO Jeffrey A. Joerres about the slump and what he sees as a wake-up call for the business. He also touched on human potential, a conviction that has led him to coin the term “the Human Age.” Companies that empower humans to fulfill their potential will win the world’s talent wars, he asserts. The winners will be the corporations that build a culture based on innovation and employee engagement. The others will risk losing out on future opportunities. He believes that the human age will change the face of the next decade and the staffing industry.

Joerres has been with ManpowerGroup for 18 years and helped it reach the exalted position it holds today. According to SIA data, it is the second-largest staffing firm in the world with 2010 global staffing revenue of $18.8 billion. With Joerres at the helm, ManpowerGroup’s share value has more than tripled. Read what he has to say about the workforce, the future and ManpowerGroup’s plans as we move into 2012.

Q: The ManpowerGroup’s Manpower Employment Outlook Survey forecasts that hiring will weaken. How long do you think this period will last before things get back to more robust levels?

A: No doubt, we are in a period in which we have to work through all of the issues that got us into this downturn at the end of 2008 and 2009, and that will take some time. History indicates that any time you have a true financial crisis-driven downturn, it takes much longer to work its way out. Companies are saying that they want to increase their flexibility. They need to have a much more agile environment in order for them to succeed. Over a relatively short period of time these are really good things for our industry. It shows our value. It shows the kind of value that we bring and that bringing the right people in and out of organizations is much more difficult than most people think.

What do we need to get better at? Chief executives will be much more hyperactive, hitting the pause or fast forward or reverse button on hiring, depending on what’s happening within the marketplace. Therefore, the labor market will feel some of that jaggedness and volatility. We as a company are committed to showing our clients that we can be their workforce solutions provider with an incredible amount of professionalism, but also with a degree of speed that they cannot do themselves.

So you think that this whole period we are going through is actually going to help the staffing industry?

This period is driving home the true need for flexibility. We’ve talked about it for a long time in the United States. We’ve never gotten above 1.8 percent of the workforce being temporary [penetration rate]. What we’re seeing is what McKinsey & Co. covered in one of its most recent publications, “An Economy that Works: Job Creation and America’s Future.” The report stated that 57 percent of all companies surveyed [for the report] said they foresee a more flexible and virtual labor force in order to meet the demands of today’s volatile world. So these are good things for us. But being right in the middle of it is no fun. We need to make sure that, as an industry, we act appropriately and that we secure our place in the value chain of how a company looks at us.

I’ve been reading about the “Human Age” concept. When you talk about engaging with people on a human level, optimize human potential, what do you really mean?

It really comes back to how we came to the conclusion to introduce this as a new era. Part of this has been work that we have been doing with our clients and on our own. And in fact, several years ago we introduced something called the “world of work trends.” Four mega trends that we had talked about and still talk about are individual choice, customer sophistication, the technological revolution, and talent mismatches. What we’ve noticed is that the chaos that has occurred within this downturn really has accelerated those trends, but also changed the conversation with many CEOs.

Technology alone is not the topic of the future. It’s how individuals are engaged by companies and how companies are using that technology. Look at Facebook and Twitter, which allow you to collaborate, create and innovate virtually.

Humans can use technology now to actually make a difference. Individuals can create and innovate. People can create change and better companies. So when we announced the dawn of this new era — the human age — at the World Economic Forum in January it highly resonated with the chief executives there as well as the NGOs (non-governmental organizations) because it was an “ah-ha” moment. There was a sense of, “Yes, you have captured what this next era is.” It will be difficult because of the multiple generations within an organization, multiple cultures, global nature of business, and the speed of business. But without capturing this innovation and ingenuity and making it productive, companies would not succeed.

So it’s really about what companies can do for people rather than what people can do for companies?

And when companies do things for people the company will benefit. That’s the point. It’s about pulling this together in a loose but very directed way, so that you harness the potential of humans and make things humanly possible while at the same time knowing there will be chaos out there.

So allowing people to work from where they want, more flexible arrangements, is that what you’re suggesting?

Offshoots of the human age are modernized work models and people practices. The main concept is harnessing the power of the human within the context of your culture to create a better organization. Redefining work models, which is how work gets done; people practices, how you treat people, including their holiday time and vacation; and succession plans as Baby Boomers retire — are all critical responses to the human age forces we’ve reported on.

How did you arrive at this whole human age concept? Was it over the years?

It was a culmination of the world of work trends and talking with clients and then really stepping back and asking what does all of this mean to us. It is very personal to us. We’ve always put first and foremost the individual and the candidate and how we treat people, and this notion of the human really resonated when we thought of it and came up with it and then when we expanded into the human age concept it became even more compelling. So this fits with our DNA. What’s also been gratifying is that since we’ve announced (the human age concept), many other organizations have done variations of it. The Economist ran a story based on a scientist and anthropologist report that confirmed we’ve entered the age of man.

And how does all of this tie in strategically with ManpowerGroup’s plan?

It’s central to our plan because we are taking on the responsibility of bringing creative workforce solutions to our clients. And in fact, a part of this is how we even renamed our organization. Manpower’s been in business for almost 65 years and it’s been known as a staffing company and we’re very proud of that. But we have so many other solutions that we’re bringing together that we wanted to tell the world that the umbrella of solutions we offer is bigger than what people may have previously thought. Therefore, we’ve changed the name of our company to ManpowerGroup.

So now Manpower is the staffing business, Experis is the high-end professional resourcing business, Right Management is talent management and career management workforce solutions, and then ManpowerGroup Solutions is a vehicle that we use to pull many of those assets together to create some very powerful solutions for our clients. So we believe that this quest for innovation, for talent and for productivity is actually right in our wheelhouse for us to solve. What we’ve really done is create an organizational structure geared around the client, not around us. We’re making it harder on ourselves to be easier for our clients to do business with us, and this whole effort has been very well received by the marketplace.

Please describe your outlook for the industry and general labor market for the next couple of years.

Short-term, we will be suffering some pains because demand within and GDP growth is absolutely what drives everything. What we are seeing is a good undertow and a very solid undertow of secular change. Companies are using us to be flexible and agile, which will strengthen the value of the industry and strengthen our overall place within the value chain. We are quite optimistic about our organization because of the emerging as well as the mature markets. Besides, we are confident of the diversity and suite of our offerings, and the direction that the industry is going. Clearly, we must be cautious during these more difficult times. But if you were to look out one, two, three years, we are immensely optimistic about where we’re going and where the industry is going.

Despite the global slowdown in hiring?

It’s a speed bump in the road that you have to deal with and in fact this global slowdown in hiring, again, highlights the fact that flexibility is what companies are seeking. It’s highlighting the need for agility, because if we were to then just keep driving down a straight line, companies would’ve said: “Well, yes, I guess maybe I should do this myself.” This was a wakeup call because just when you thought it was safe to go in the water, the shark fins started popping up again.

What is your outlook for ManpowerGroup five years from now?

Five years from now, ManpowerGroup will see the emerging markets taking a much higher place in revenue and importance within our organization. We will see workforce solutions and our ability to deliver solutions in an outcome-based way — based on talent and the amount of talent that’s going into an organization — become a much higher percent of what we do. On an annual basis, we have over a billion dollars of solutions business and that was grown from not much just three to four years ago. We also will be more of a trusted advisor to our largest clients. The ability to have identified something like the human age, building the credibility that goes along with delivering those solutions, we would see ourselves in many different conversations at much deeper levels with our larger clients.

There has been talk around a 3 to 4 percent temp worker penetration rate, but really it hasn’t been able to get past 2 percent in the United States. What do you think it will be like in the future?

The U.S. has never gotten above a 1.8 percent temporary penetration rate, where some countries are over 3 percent. The French market is an example. It does go back to that original idea that we’ve talked about, which is the increase of flexibility that companies seek. I’m confident we’ll drive the U.S. number above 2 percent, probably into the mid-twos if not higher in the cycle. It depends, though, once we really start picking up demand how fast companies really come onto that.

We know that the strategies of the largest companies are to have their temporary workforce be 10 and 25 percent of their overall workforce. Smaller and midsize companies have yet to discover the gold that they can mine and the productivity they can get by using our industry. I think it’s important that those companies see us as a real asset to what they can do as opposed to a small company saying: “That’s really for big companies. I’ll do this all myself.”

What opportunities do you see that go beyond traditional staffing services?

It’s really about the solutions. So traditional staffing services will clearly be here and will always be here and that’s a real advantage for our industry. But it’s a company’s ability, in our case ManpowerGroup’s ability, to package those various offerings into solutions that really address head-on the needs that companies have. Our vision is about helping our clients win and they want us to package it in solutions, so I would see it moving to a much more solutions-based industry.

What do you think staffing firms will look like 10 years from now?

I think what we will see is a bit of a bifurcation. We’ll see firms that feel very comfortable and are very good in the kind of classic staffing model, and then we will see other companies that really know how to do both the incidental staffing as well as the more advanced solutions.

When you say solutions you mean the MSP, the RPO?

The MSP, RPO, outcome-based pricing, where you’re actually pricing solutions on a unit price as opposed to a mark-up over pay.

Given the economy and the solutions that you talk about, MSP, RPO, what should staffing firms do? What tips and advice would you offer them?

Staffing firms need to make sure that they are feeling the responsibility for creating value for the industry. Too many staffing firms really go after the prize that’s right in front of them at the time without understanding the ramifications of devaluing the industry. So in many cases we have firms that are either not doing the right thing for the individuals, meaning the temporary workers, or are devaluing the industry by agreeing to do anything at any price. And we have to be much more careful about that.

Other tips you can offer these firms?

I think they should be able to navigate themselves. We’ll keep our special secret tips to ourselves.

Give me your three biggest challenges you’ve had since being at the helm of ManpowerGroup.

I have gone through multiple phases of some difficult economies. I became the CEO in 1999 before the Y2K bubble burst and then of course this last recession. Navigating through difficult downturns is never easy. The other challenge is continuing to drive the organization to expand as quickly as we have. We have more than doubled our business in the short period of time, emerging markets are immensely important and managing that more complex business is always a challenge. The third challenge is to continue to bring forward the value we bring to the industry and to our clients. Whether it is what we do in social responsibility or what we do in helping them win. But a major challenge is continuing to talk about the value that we bring.

What do you view as your single biggest achievement to date?

I would say the biggest single achievement is about building a fantastic team. And what we’ve been able to do across the world and how we’ve been able to increase the sophistication while keeping the core of how we do things — that strong DNA of caring about our work and the honor of putting people to work. Melding that with a super-smart, highly sophisticated team brings the biggest smile to my face.

How did you get into the business?

Actually, I’ve been associated with the business for some time. When I first graduated from university, the company that I went to work for, one of its largest accounts was Manpower. So I was assigned to Manpower in 1982 and got to know the business by selling to Manpower. Ever since that time, I’ve been attracted to what Manpower does and now what ManpowerGroup has in the way of strategy. So it’s been very rewarding for me.

What do you enjoy most about your job?

What is most enjoyable is that we put people to work. We find people jobs. We help them transition from one job to another. It’s very gratifying work. If I’m going to work 80 hours a week, I want to work in an area that does a lot of good for a lot of people. That I would say is the most enjoyable part of the job.

What do you do when you’re not working?

I think about work.

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