How AI Will Disrupt HR: Tectonic Shifts in HCM - Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent - Episode # 104

Mike Vannoy: Technology is going to change HR. It just is. And so you can get run over by it, or you can embrace it and lean into it and use it. But it begs the question, how will we spend our time in HR?

And where can we have the biggest impact in an AI world?

AI. What used to be just the villain and science fiction movies has rapidly become a very real part of our everyday lives. And it's poised to affect the way businesses run HR. Hi. I'm Liam. The producer for permission to grow and your standing host for this week. Mike's currently at a conference. And as he's unable to record an episode, we'll be featuring a presentation.

Mike gave at the 32nd Sherm long island annual conference where he covered some of the ways AI will change the landscape of HR.

Now without giving too much away. Some of the topics you'll hear. Mike explore in this episode include the impacts HR has on revenue growth. The effects of the rapid adoption of AI and the shifting landscape of HR. Please enjoy the episode.

Mike Vannoy: me, there is something that just special about mountains. They, they captivate me. This last summer, my wife, Ashley and I, we took the kids, uh, to the Smokies. We, if you've ever been down to Smoky Mountain National Park, we, uh, in the area of Townsend, we rented a little cabin for a four day weekend. We took our hikes in the morning.

We did the stupid touristy stuff for the afternoon, paid way too much money so the kids could pick through buckets of rocks that had pre planted crap. Uh, but they had a great time. It was a great family four day weekend. This is on a lookout. Um, we're on the Foothills Parkway, uh, scenic drive. We're at about 2000 feet elevation here, way off in the distance.

That peak, um, that's the dividing line between Tennessee and North Carolina. That's about 6, 600 feet. And I got to tell you this morning, it just took, it took our breath away. There's no way the iPhone can capture it, right? No way a camera can capture how you feel we're in the mountains. And we're like, these aren't, that's not fog.

We're looking down at the tops of clouds. It's just, words can't describe, right? And I think something about mountains do that for most of us, if you've ever visited. And I think the bigger the mountain, the more awing it is. So this is the big one. This is Everest, 29, 000 feet, not 6, 600 feet. So about five times the size of the biggest mountain in the Smokies.

And this one is special, right? It is so big. It makes us feel so small that it has, for some people, a spiritual element to it. Uh, the, the, the ancient now Tibetan people, the Shiva, they They call it Komalinga, means mother of earth. They literally worship it as a religion. And I think one of the reasons mountains do this for us is because it, it feels so prominent, like everything feels so temporary though.

Our world is changing so fast. There's so much going on that when we see a mountain, we visit a mountain. It's not just the fresh air. It's not just the beauty. It is those things, but it's like an anchor that we can cling to that feels permanent, right? Well, you probably don't know that thing right there.

It grows seven, excuse me, four centimeters a year. It's not permanent. It hasn't always been there. It's literally growing four centimeters a year. It's so big and it's so slow. We don't see it. It feels permanent to us, but that's like a lot of things we experience in our business world. And I think really in the, in the HR world, um, And so I think a helpful tool to understand what's happening in our HR world is to understand how these mountains actually form.

You can see in the 3D look, the contours here, I'm going to take you 60 seconds through 200 million years, and I think it sets up the rest of our conversation. So 200 million years ago, this is the single continent of Pan GM taking you back to middle school earth science. And you get to about 150 million years ago, you start to see what we know is today's continents.

North America starts splitting off about 120 million years. You're gonna see South America breaking out from Africa, and it's starting to look a little more familiar, right? Well, there's this island down here that's not Australia, that island is Indian. Think about the magma boiling up in the center of the earth and shifting.

Well, that island is about to hit a hot spot over the neck and it accelerates at twice the speed of all the other continental shifts. And when it does that, it goes bam into that Asian continent. And because it's going twice the speed of all other continental drifts, it has the reaction, it slides underneath the Asian continent and boom, up comes the Himalayas and the largest mountain in the world.

Now, when you hear that explanation, you can totally see it, right? You can see how that just slid underneath, big mountain range. So, so why use this reference to open an HR talk? I think there are tectonic plates at play. And the last one we're going to talk about today, it's the speed of that change that is going to have the biggest impact and it's going to change our lives the most.

The three tectonic plates are the supply of labor, HR laws, and technology. I think it's so easy for us to think about what, what impacts HR today. Um, well, it's presidential politics. It's a pandemic. It's a war. It's a, it's a real estate bubble, a. dot com bubble, an economic bubble. It's inflation, whatever, because these are the things that drive unemployment.

Compliance changes, et cetera. And of course they have an impact. Be silly to think they don't. We'll talk about it, but these aren't the big changes that are driving and have created the situation we live and work in today. Let me explain why. The first one is shifting labor. Now, this is not, uh, this is not a classic HR talk where I talk about how old fogeys, my kids call me a boomer.

I'm a gen X. So I wanted that to be clear. Um, uh, how Gen X can work with Gen Z, Gen Y. That's not this talk. This is the demographics talk. And if you do the math, the boomers are retiring about 10, 000 a day. And I shouldn't even say retiring because what is retirement today? That's being something very different than I meant to be called 30 years ago, but they hit retirement age about 10, 000 a day, 30 days a month.

That's 300, 000 a month, right? That's 3. 6 million a year hit retirement age. There's something really cool also happening in the world. The world is becoming less poor. I'm not talking about the world is becoming more rich. This is not about the one percenters versus the rest. This is not that talk. This is about the world being lifted out of abject poverty.

The blue line across the top is people living worldwide above 40 a day. That's increasing very slowly over time. The big red buckets on the bottom, that's people living in abject poverty worldwide. And in our lifetimes, it's decreased 400%. A lot of us don't realize that. It's decreased 400%. When people are not living in abject poverty, they have better health care.

They have prenatal health. They have, uh, uh, healthier food. Uh, in modern Western economies, husband and wife might want to actually go on a vacation occasionally. And that's hard to do with a whole bunch of kids. Maybe we don't live on farms anymore, so we don't need a whole bunch of kids as free labor.

Maybe we just want a couple of kids to have this happy little family. Combine all those things, when the world becomes less poor, birth rates plummet. So if you think about where the boomers came from. Post World War II in the U. S., uh, going back in the fifties, uh, the, and the green line is the U. S. The red is the world.

So as the most advanced Western economy of the U. S., I'd say we're ahead of the curve, but I put both lines in there on purpose to show you, this is a worldwide phenomenon. This is not a U. S. thing. This is not a political thing. This is a tectonic plate that is happening. So it used to be back in the late fifties, the average adult woman had, uh, somewhere between 3.

2, 3. 4 children by the mid late seventies, it was like 1. 7. And you can see over, call it a 50 year period since then. It's had its ups and downs hovering around two, now it's a little bit less than, than two children per adult woman in the United States, 50 years. That's a trend we can't ignore, right? When you combine boomers retiring at 3.

6 million a year and birth rates dropping, it changes the shape of the entire demographic, right? So if you guys ever hear of a population pyramid sound familiar, if you think about it. And all of humanity, you got lots of young people being born every day. And the tragedy of life, people die. And so as they get older, the population decreases because people fall off.

Right. And so it's a population pyramid. And if you look at 1960, the U S had about 176 million people and we were kind of a classic pyramid, right? You can see at the bottom, this is all the boomers that just. We're recently born and entering the world, but I'm going to hit play. This is 30 seconds to go from 1960 to 2024 projection.

And what you're going to see in the top right, our population continues to increase, but the shape of that population changes dramatically. And so we're no longer in a population pyramid. We're in a population column, right? So with the boomers retiring, birth rates declining, the result is a demographic shift.

That has nothing to do with presidential politics, whether your guy's in the White House or my guy's in the White House, has nothing to do with a pandemic, has nothing to do with the war in Ukraine. All those are super important things that impact our lives. Yes. But it did not change this. Because the next slide is the available workforce.

So the U S population by 2024, we went from 1960, about 176 million people going up to 340 million people. The population is increasing. The available workforce is not. This little thing of a pandemic and some crazy presidential politics took our eye off the ball. Something really important happened. In 2020, first time in U S history, we crossed the threshold, more people over working age than under working age.

It's the flip of that population pyramid that we just looked at in the previous slide, right? And so what happens, people exiting the workforce from the boomer era, not as many replacement workers coming in. Few people know it. We hit the tipping point in 2020, but our, our, our, I was focused on pandemic in the news cycle.

The workforce has flattened and it's not changing because of birth rates 50 years ago. It's not changing. Last slide on this section. This is straight from Bureau of Labor Statistics. The red line is unemployed people per job opening. And so it's not the unemployment rate. We know how that is. Looks, that's a number that we, I think, sometimes inappropriately focus on, but the number of unemployed people per job opening, that's the red line.

And you can see during the recession in 08, went way up. Also went pretty steadily down. And I'll say this, uh, hopefully you don't find out any of my political innings. I have strong political opinions. But there were red presidents and there were blue presidents scattered throughout there. That shape of that line didn't change much, did it?

To me, that's a proof point. This is not political. This is demographic tectonic plates at play. Okay. There was a recession and it came down over a 15 year period. We had this hiccup that changed everybody's lives called the pandemic. So some unemployed people, and we regressed to the curve, right, as the stat guys would call it, and we're right back down the clear trend line, unemployed people per job opening down into the right job openings.

The recession hit, oh, you know, we're gonna close some of our wrecks. We're not gonna hire, but we still gotta do business. We're still a growing economy, trying to, we go up, up, up, up, up, up. Again, you got some blue guys in the white house. You got some red guys in the white house. I don't see a change from when it switched to one from the other.

It just kind of went up based on demographics, in my opinion. And again, you know, a pandemic blew things up, but you regressed to the mean. What's the punchline of all this? The labor shortage is here to stay. It is a function of demographics. It's not a function of politics, wars, and pandemics. Baby boomers are retiring faster than their replacement workers are being born.

That's the math. Unemployment sits at about a 50 year low. Boomers retiring, I said, 300, 000 a month. I want to say the jobs report last month was 187, 000 jobs added.

We're out of balance, but we don't see it because we're consumed by the news cycle. This leads us to tectonic shift number two. Okay. Because of the change in demand and supply of labor has changed, it is fundamentally changing the laws and the benefits in the culture that we live in. If I think it's 1903, 1906, I think it's 1906.

Think back to high school history class, Upton Sinclair wrote this book called The Jungle. Um, it's a fiction, but it was, uh, uh, like a historical fiction talking about, really exposing the terrible working conditions in the Chicago meatpacking industry. You know, little kids getting arms shut off, cut off, terrible working conditions.

And I'd say this started HR laws that were on the books, uh, going back, you know, a hundred years before this. But there weren't like big ones at the federal level, protections for employees. It was still the employers who had the power. And I'm, and I don't subscribe to the fact that it's a bunch of old men smoking cigars, thinking, how am I going to squeeze every dime out of little people?

And I don't care if they get hurt. I think this is just a function of supply and demand. There were, there were more people than there were jobs. And so people are willing to work for crap jobs and crap conditions because they got to feed their families. And so it's just that, it's that balance of supply and demand of labor in my mind.

And it took about 25 more years and a depression before we finally got something really big on the books, right? And this is the granddaddy of them all that we live in, in HR today, the FLSA. We finally established a minimum wage. We established overtime pay. We said you had to keep good records. Um, uh, you, you, you couldn't abuse kids in the workforce, right?

And it took another, call it 15, 20 years before we're like, you know what? It's not enough just to have good standards. We should treat our people better in, you know, a woman should get paid the same as a man for the same job. You know, by the way, we shouldn't discriminate based on your color, your, uh, religion, where you're born.

Uh, right. So the focus kind of shifted to equality. Well, you go about another decade and a half. It's like, Hey, it's not enough that we have good standards and we're going to treat people fairly. Uh, we should insist that employers provide a good, safe work environment. You can't walk on rickety old ladders.

You can't go down in a ditch without proper shoring. Let's just ensure some basic safety for our folks. Right. But that's not kind and gentle enough. We need to. Uh, we need to take care of, but for what? Man, God forbid you get fired, you get laid off and you have a heart attack or a car accident and you don't have insurance.

Oh my gosh, that's terrible. Right? Now, retrospect, it's like, we don't care that you're going to pay an obscene amount of money for that insurance after you get fired, but we're going to at least guarantee that you have insurance that never existed before that. Right? So what seems a little crazy to us now.

Was like life changing then, right? And Oh, by the way, just a few years later, it's like, Hey, remember that equality thing from the sixties? We forgot people who had special needs. So let's include them in the mix. And, and by the way, you know, you shouldn't lose your job if you got to take care of a sick kid or a sick parent so that you can see the continuum continuing to happen all the way up through.

Let's ensure that we, everybody gets healthcare, et cetera. It's not quite this simple. I'm oversimplifying, but I'll say there's eight really big federal laws in 80 years. Call it a big law per decade. And what started out on the far left, people in this room would have been part of the personnel department, and now we're the HR department, I think it was manageable.

It was a lot, but, uh, you know, employees vote with their feet from job to job. They didn't have tons of flexibility based on the number of people versus the number of jobs, but they do have power at the ballot box and vote for the people they want to enact the laws that, that satisfy their desires.

Here's what changed. And I think it's spun all this out of control. Um, you guys remember the term Cambrian explosion again, like probably middle school earth science. This is when the fossil record several hundred million years ago, you had, you had plants, you had crustaceans, you know, shells and stuff like that.

And all of a sudden in a very short period of time, it just, the fossil record explodes. And then you got people, you got all of a sudden stuff growing arms and legs crawling on land and basically the basis of today's. Uh, uh, life forms all kind of emerged in this really short window. I feel like we're in this Cambrian explosion for HR where, you know, the Equal Pay Act.

I mean that was 1963, but there's all kinds of states and local municipalities saying their own versions of these things, right? And the Medical Leave Act. I think the Probably the fastest trending topic in changing legislation has to do with leave types. Pay leave, not pay leave, more than this number of employees, this, that number of employees, this industry, not that industry.

So there's been this explosion in the last decade. Uh, I mean, minimum wage alone, used to be one minimum wage. That was the FLSA. All of a sudden, first state says, you know what? That's not enough for us. That doesn't suit our, our, our environment is different. Our people have different requirements. We're going to do our own thing.

Another state jumps on. Today, 33 of the 50 states have their own version of minimum wage. Of those 33, 27 have updated those, this calendar year. There's 155 unique minimum wages. If you go down to the local municipalities, I mean, Nevada, It's a state, but they have two different minimum wages, whether you do or don't have health insurance.

California has two minimum wages, depending on how many employees you have. You get down to a local near Oakland in Emeryville, California, not a big community. Here's the minimum wage, less than 55, here's more than 55 employees. This explosion of laws, especially in a world with remote workers being accelerated post COVID and you got to get treated legally and paid legally based on where the work is performed.

Small and mid sized businesses are getting crushed. They cannot keep up with this. Right. And you guys are stuck in the middle because you're trying to have a senior seat at the table and offer strategic value add services to your organization. And the administrative requirement is crushing all of us. I won't read all of them.

Pay transparency laws, salary history bans, leave laws, fair chance laws. Um, it's, it's kind of endless. I mean, just, just take marijuana. It's still illegal federally. We're taught in HR that you, you apply the law that when they layer on top of each other, like minimum wage, you apply the one that it advantages the employee the most, right?

So if federal is 7. 25 and my local is 15, you gotta, you gotta honor 15. Well, how does that work with weed? Federal government says it's illegal. Your local state says it's legal. Can you drug test? I mean, it gets ridiculously complex. Um, and it's not just laws. This is why I say this goes back to demographics.

It's the law of supply and demand. If you look at all of the developed nations in the Western world, days off from, from work, um, it just obviously goes up into the right. Employees over time, the power is shifting from the employer to the employee. And they vote with their feet and they'll go to the company that offers them more PTO or has the leave policies that work for them.

And it's not just businesses. It is our society. You go back a hundred years, 1920, there's not a country in the developed world that spent more than 5 percent of their GDP on a social safety net. That's healthcare, that's education, that's infrastructure. Not nobody more than 5%. Now, all the leading Western economies.

They're 20 and 30 percent of their GDP is spent on social safety net. I don't care if you lean left or you lean right. You love this or you hate this. It is a tectonic shift that you're not stopping. I'm not stopping. This is the tectonic play that's happening and it's unfolding. So what's the punchline?

This changing supply and demand of labor is taking power away from employers and giving it to employees. And employees vote in two ways. First, they vote with their feet. Because if I don't like your, I now have to work three days a week in the office policy, I'm going to hop on the interwebs and find myself a job that I can work from home, thank you.

I don't like your leave policy, I'm going to go work somewhere I have a leave policy. I might take less money to be able to work from home and have more time off. I might be willing to go to an office and, and commute into a big old city because I want to maximize my compensation. For Employees have choices and they vote with their feet.

They also vote at the ballot box. And as they continue to gain more power, it's clear. I don't know if you picked up. I had a little, uh, donkey versus elephant along all those presidents signed those laws. This is not a Democrat thing. This is not a Republican thing. This is a tectonic shift that is happening.

So where does this leave us? I think it leads us to technology and I've intentionally chosen the subtext here for a reason. I think it's the productivity wildcard. So if you look at gross domestic product, that's basically the, you know, this is the output of an economy, right? And let's take you guys, you three in the front, in the front row here.

And so if each of you produce 10 widgets a year, your GDP in this row is 30 widgets. And let's say your workforce grows by one person. We add you to the workforce, your productivity doesn't change. It's 10 each. You just went from 30 to now 40, right? And so your GDP grew by 25 percent simply by adding workers to the workforce.

Now there's another side of this equation. It's not just workers. It's also consumers. Because this 15 to age 65, this is the available workforce. Those people age 25 to 35. They also consume like crazy, because what happens when you fall in love and you get married and you start having babies, stuff gets real expensive real fast, right?

Kids are damned expensive. You need bigger houses, more cars, more seats, more food, more doctors, more schools. It gets expensive. And eventually those little crumb crushers leave the house and maybe your house 20 years earlier. Your car's probably paid off. You don't have as many mouths to feed. Your expenses also go away.

So it's not just number of people in the workforce producing widgets that is flattening, it's also those consumers. Now, I'm not an economist. I tend to, I'll say as a marketer, I study human nature and I think, uh, us humans are really good at consuming as much stuff as we possibly can. We're, we're, we, we leaned toward, we lean towards consumerism.

And so to me. This dark blue line, GDP for the United States, this stops in 2018. The wild card here, and the GDP is just the macro, the company you work for and do HR for is the micro. How are you going to continue to grow when the workforce flattens? I'm making the bet, if we are productive enough, You know, my, my grandfather, uh, ran about a 200 acre farm in the middle of Nebraska.

And it was my dad and a strong back, uh, in seven days a week, 12 hour days that squeaked out a living to feed a family of five. My dad, 30 years later, ran 5, 000 acres with a handful of men and some big ass tractors. Because the technology had improved to make him more productive. So I don't think this is necessarily a doomsday scenario for GDP and your ability to grow your company or our economy, but it is something we're going to have to deal with.

We're going to have to figure out how do we become more productive. And it's not through a slogan, let's bring manufacturing back. I just, you know, there aren't any more agricultural jobs. People aren't returning to be farmers. I know. I mean, my wife raises chickens and she's about to buy bees. So we're kind of part of that whole fad and it's pretty cool and fun.

We're not farmers. I have a job, right? I mean, that's the world is not going back to agriculture jobs. Just like we're not going back to manufacturing jobs. If you go downtown Austin, uh, we got a beautiful office, 18th floor. You can look to the East and you can see the new Tesla plant. It's the biggest building in the United States.

It's not filled with people turning wrenches. It's a bunch of robots. Um, Think about 3d printing. How many jobs does that create? When we, if we return manufacturing, the economy has fundamentally changed to a service economy. And it doesn't mean flipping burgers. It reminds, it includes things like providing payroll, HR services, benefit services.

It's good, noble work, just like the companies you guys work for. I'm sure. So we need to think about how we absorb, uh, and adopt technology. I want to say, so it was in New York. Um, I think he's like 1888. Uh, 1890 Thomas Edison built the first commercial power generation facility. And it was like early 1900s before the practical transmission of that energy to homes and businesses became practical.

And so. Electricity from call it 1905, all the way up to about 1955. So 45, 50 years to go from no penetration to a hundred percent market penetration. Kind of expensive to put out there, but the utility was super high. You can think in a world before electricity, what was the first thing you get that helped with was a light bulb, right?

So you didn't have to have candles that were unhealthy to breathe in and burn your house down if you, if the cow kicked it over. So it was really just light bulbs, but as inventions that use electricity came about, these technologies, if practical and affordable, got adopted really quickly. So the refrigerator invented in about 1925 only took 20 years to go from zero to a hundred percent acceptance.

Now things that were bigger and more expensive, like cars and washing machines. Some people need them. Some people don't. You might live in an urban area. You don't need a car. Um, you can use a laundry mat. These are bigger, more expensive. They've neither one of those things have ever hit a hundred percent adoption, right?

They've gone up and you can see how they've flattened off, right? But they're expensive. When you think about more modern times, computers and cell phones, as soon as you hit the tipping point of affordability and value, Oh, the entire world adopts it within the decade, a lot of people forget this thing was invented in 2006.

And, and our kids have had them at school in their back pockets. For the last decade, this, this thing went from zero to nothing kind of overnight. So we're going to talk, we're going to shift here to AI in a second, but we can't ignore the fact that this is a tectonic plate and this isn't us sitting on the outside, social media, good social media, bad AI, good AI, bad.

It is a tectonic plate that you are not going to stop because we as a society. We have a pattern already established. When technology makes our lives better and it's affordable, we scoop it up and we change our lives with it. Just happens. Uh, about six weeks ago, I guess it was, uh, my oldest, my baby girl, Cecilia, was, is 18.

I had the opportunity to help move her into, uh, as a freshman at, uh, Arizona State. Uh, emotional weekend. Uh, she cried. I didn't cry for the record anyway. Um, I dropped her off. True story. I met an intersection dropping her off on my way to return the rental car to the airport. And I counted five autonomous vehicles at this same intersection.

And I'm like, man, why is this so big here? And I got thinking, it's like, okay, um, there's no cold winters. There's the, the roads are really wide. The, the streets are all laid out in a grid, you know, kind of a perfect environment if you're going to experiment with this new technology, probably a lot tougher in the Northeast for a bazillion reasons, right?

And it turns out in that same area, Arizona has actually has legislation that they want to encourage this. They, they, they want to be a leader in this area. In 2021, the first autonomous semi truck, that's an 80, 000 pound vehicle hauling goods and services, was built. Traveled 90 miles from Tucson to Phoenix.

It was the first ever unmanned semi drive. Okay. So truck drivers, uh, get sleepy. They have fights with girlfriends and spouses. They make mistakes. They're not perfect. Just like we were not perfect. We have car accidents, right? Things happen. Um, this sure feels like an inevitability. I think we're going to probably hold a much higher standard than we will to the humans.

When a human makes a mistake, we're like, okay, They made a mistake. We might put them in jail for manslaughter, but we'll, we'll say they made a mistake. And we don't say people can't drive anymore. We're going to hold a higher standard to autonomous vehicles for sure. But it's coming, it's inevitable. And by the way, there's 9.

1 million over the road truck drivers, almost all of which are men without college degrees. When this tipping point happens, they're not going to be happy, right? Their, their world's going to change and they're going to vote with their feet. They're going to vote with their wallets. They're going to vote at the ballot box because, I mean, this is sad.

I grew up on a farm. I, I, I'm kind of blue collar. I mean, I see this as a space. These guys are going to get decimated. And I think, and unlike truck drivers, they're probably not going to go start coding, they're not going to go to a coding camp, right? They're going to have to find major different ways to feed families.

So my heart probably breaks more here. I think, I think our cheese is going to get moved just as much. But I think we're going to be in a better place to deal with it, to leverage it versus getting run over by it. There's a really great book, um, called the future is faster than you think. Highly, highly recommend.

Um, one of the cool things they talk about in this book is this concept of convergence. I think that's the name of the first chapter. And, you know, so we think about, you know, we'll talk a little bit about artificial intelligence. You got AI, but it's also networks and virtual reality and robotics. This concept of convergence is when it's not these technologies in and of themselves, but when they come together, that's when change happens really fast.

So think about, think about this in your back pocket or your purse. I mean, when I start doing a search in Google, it's auto suggesting to me the next words in my search. That's artificial intelligence. But it's able to do that over a mobile device. So I've got nanotechnology here. I've got artificial intelligence sitting at Google, and that only works cause I'm on a 5G network that's fast enough that it can actually interact that quickly.

So it's the combining of these technologies, right? And when you do this, forget the previous chart where we're talking, how many decades does it take to get to a hundred percent adoption? It took Uber 70 months. That's just under six years to get to a hundred million users. It took Pinterest 41 months. It took Instagram 30 months to get to a hundred million users.

That's less than three years. A hundred million people. That's the third of the United States. TikTok nine months. ChatGPT, it took two months. Two months to get to a hundred million users. So the story is the same. When we see technology that is beneficial, it adds value. It has the right price point. We swoop it up really, really fast, probably a lot faster than we're prepared because I think mentally we kind of, that previous slide that showed how many years it took to adopt, say cell phones or washing machines and like, okay, that makes sense.

This is going to catch us all flat footed if we're not ready for it. On this topic of convergence. So this, this next thing, this is a made up scenario, but I'm hoping you see how true it could be. The icon on the left, that's Chet GPT's icon. The middle one is a company you might not know. Uh, uh, it's pretty popular, growing in popularity in the L& D circles.

It's Synthesia. It's a video artificial intelligence. You can type in or copy paste text. And what looks to be a human speaks that back at you. It's kind of that deep fake kind of stuff. Right? Um, the logo on the right is my company, uh, Asure. This is not a pitch for Asure. What I did is I wanted to just conceptualize what a mashup might be of these three things.

So, uh, this, I got about, it's about a 60 second video I'm going to play. Uh, before I click next, this is, this is a screen cam I did just a few days ago. I had to submit this presentation last week. I submitted the, uh, this is me in ChatGBT, where I tell ChatGBT, Hey, this prompt is to give you instructions how to answer my next prompt.

You will answer my prompt number two, uh, refer to me in the first person as Mike. Your answer will be concise and factual, but it will also sound like a real human conversation. You will spell out numbers and symbols, as this will be used as a script for another AI to read. You will include information from this webpage as part of your knowledge base.

www. employerpass. com forward slash employer insights forward slash New York labor laws. I'm a marketing guy. I'm not a SHRM certified professional. I've been in the HR world for 25 years helping HR companies. I don't know this stuff. I don't even know if that's a good website. That might not be authoritative.

Maybe it is. The reason I pointed out is CHET GPT, a lot of us think, Oh, well, it gives us bad answers. It's not authoritative. Well, it's because it's relying on the public web and the public web is filled with crap. Lots of good stuff, but filled with crap too, right? These LLMs, large language libraries, uh, um, they, they are just sitting on data sources and you can apply the AI to whatever data source you want.

So in this case, I pointed the AI to use that web page as my authoritative source. And now I say prompt number two. As you know, we have about 40 employees working in our Austin, Texas marketing agency. That's me. Uh, one of my top designers wants to work virtually for the next couple of years to take care of an elderly parent in New York city, are there things that I should be concerned about?

I'm going to just hit play and just, this is real time. There's no speeding up, slowing down in the editing. 1 1000, 2 1000, 3 1000. It's searching that article. 5 1000, 6 1000, 7 1000. Okay. So 5, 6, 7 seconds. And here it's typing faster than I can talk, but it's talking about the New York hiring laws, wage and hour laws in New York, uh, New York's version of paid family leave, PFL, sick leave, meal and rest breaks.

Okay. And so it digested a website that fast, spit out what I think is an authoritative answer. And if it's not, it will learn over time and we can point it to more authoritative sources. Right. Now I'm copying that text. I'm gonna copy. Now I'm going to toggle over to Synthesia, the video AI. I hit paste, you can see some faces.

You got me over there and this made up person, just an avatar. I'm just an avatar there too. And I hover over this button, generate. Can't read it in the back. I'm sure it says 17 minute processing. So the technology exists today to do what I'm just going to show you next. It's just not necessarily in real time.

I can do, Hey Siri, voice to text. I shouldn't have said Siri. Now she's trying to answer me. I can, I can do voice to text, turn off Siri. I can do voice to text and that happens kind of in real time, right? We're not really totally there between voice to text to GPT, having all that knowledge stored to answer me in real time.

I had to think for seven seconds and there was the delay of me copy pasting. You can imagine how I could integrate those things together. So there's no copy paste. It just happens. Uh, but then there's this 17 minutes of generating video that ain't nobody got time for that, right? But you can imagine in about a year or two, all that just happens in real time.

So, um, this is screen shot of our payroll HR software self service for employees. This thing right here, the AskAstrayHR, that's me. I just made that up. That's a PowerPoint image. That's not real. So I'm not, I'm not complaining that it is. I've heard this term, how do we get, how do we help HR execs have a senior seat at the table for 25 years?

Remember talking to big fortune 1000s, fortune 500s about this topic in the, in the nineties, and it still persists. I would argue our lives are consumed. With the task orientation of an administrative orientation of compliance. We don't get to spend the time we want. You guys know how to do strategic work to improve employee cultures and improve talent.

We don't have time to do it because we're so focused on, on compliance. Hopefully what you just saw there, it's undeniable. Technology is going to change HR. It just is. And so you can get run over by it, or you can embrace it and lean into it and use it. But it begs the question, how will we spend our time in HR?

And where can we have the biggest impact in an AI world? Last couple of topics here, um, about nine months ago, I did a study across all of our customer base, uh, really happy, got 2, 065 responses. So big, big data set here. Now, most of the things, if you read, uh, uh, online, you're going to talk about, you know, one, two, and 300, uh, representative datasets.

This is over 2, 000 businesses. And I asked 40 questions. It was five questions in each of these eight areas from pre employment to post employment. They were binary. Do you do this? Do you do that? Basically five best practices, HR best practices in each of those eight areas. I then asked one final question.

What best describes you last year? Was it a down year? Were you flat? Did you grow or were you a fast growth company last year? And so then we can correlate all these HR best practices, both 40 of them and the eight categories. Is there in fact a correlation from HR best practices to revenue growth? Cause I'm just, I'm here to tell you, you can love me or hate me.

I don't care. I think it's true. The only way you're getting a respected seat at the senior table is if you're part of the revenue equation. If you're, if you're in a compliance conversation, you are a required part of the business and an important part of the business. But unless you can align yourself with revenue generation and growth, you are where you are.

Okay. We have proofs that HR best practices are in fact correlated to revenue growth. A couple of things jump out. We're going to take a couple of layers deeper into the data. On the down year folks in the red. So each dot is each of the 2065 companies. And you see on the red, the down year folks, they're kind of all over the board.

You have some people with bad HR, as in they don't do any of it. We have some people that actually said yes to all 40 questions. You, you can have great HR and still be a movie theater in 2020, and you're out of business. So having great HR doesn't guarantee you're going to have revenue growth. But if you look at the fast growth companies, 91 percent of the fast growth companies implement at least half of them.

There's obviously clustering that happens. Now, this is one Where each individual company happens. If you average out the responses at each of the categories, the picture becomes clearer. And so for you nerds who understand statistics, the down year to fast growth companies, it's a 0. 745 positive correlation, which in statistics is huge.

When you think about all the factors that drive growth in a business, do I have a good product or does my product suck? Are my competitors have good products or do their products suck? Is there demand in the marketplace for my product? Do I have financing to, to, to fund this growth? Those are obviously wildly important factors that would impact growth.

So to think that a 0. 745 correlation just for having HR best practices in place, it doesn't even mean you're good at them. Like one of them is, uh, do you conduct, uh, uh, uh, performance reviews? You could suck at performing performance reviews, executing performance reviews, but the fact you do them is an indicator of success because to me, it just declares your intent.

You're telling that employee you're valuable to me. Even if I'm going to fumble my way through this, I'm going to try to get better. So it's not a qualitative, it's a quantitative analysis and the correlation is crystal clear. Implementing HR best practices correlates to growth. When you go one layer deeper, where do they focus their time?

A couple of things jump out. The lowest scores from the fast growth companies are higher than the worst score than the best scores in the down year, uh, down year companies. So it's clear fast growth companies, they kind of do everything right. And it begs the question, the, the, and this is, uh, in statistics, that it's like, what's the causal correlation?

Is it the great HR best practices that caused the company to grow or is it Or was it in fact, just a great, really well run company and is growing and really well run companies do everything right, including HR. I'm here to tell you, it doesn't matter. The sample size is so big with 2065, the correlation is there regardless because the fast grow companies, whether it caused it or not, and it's silly to think it doesn't have some causal, right?

But at least they know, know enough that you have to have great HR as part of being a great company. Now, this is an oversimplification and I'm not trying to offend anybody in the room, right? If you look at the individual areas where I think the down year companies put more energy and it's see, you can just see where the bars jump out.

It's hiring, onboarding, compliance, performance management, and post employment. These things lend themselves to the ability to have, dare I say, a checklist. They're more administrative, more transactional. They don't have to be. To do them well, they wouldn't be, but they, you could answer yes to these questions and just treat them administratively.

Clearly the three areas that the down year companies ignored the most were recruiting, development, and retention. And that had the biggest gaps against the fast growth companies. So what does this mean for us in the room today? You can't change the demographics and birth rates of the last 50 years. The available workforce is the available workforce and the war for talent is here to stay.

Vote how you want to vote. I don't care. We can have drink over coffee and talk policy. That's cool stuff, but you're not changing the demographics. And because of that, the power is going to continue to shift from employers to employees who vote with their, at the ballot box and the jobs that they choose.

And you're also not going to stop AI. It's here to stay. I just gave you one example how I turned an artificial person into a New York HR expert, and maybe you're gonna tell me that she wasn't an expert, but I bet you could point me to a website that I could turn into an export expert in 15 minutes. Our job is to leverage that technology.

Your boss may have hired you, help me to stay compliant. You desperately want to have a revenue generation conversation. You, by the way, those things didn't cost me anything. I pay for like a couple dollars a month for the enhanced GPT, feel like 5 a month for synthesia. You go spend next to nothing and use the tools that are publicly available on the internet and you help your, your company stay compliant, help them, give them the information.

But you be the implementer of those compliance solutions. Cause just cause you have a checklist that says you have to, should do an I 9 audit and where do you store your I 9s? And are you, are you, are you making sure that your training managers how to properly fill them out? It still takes a talented human being to properly train and inspect it, right?

Use the technology to make you faster, better, more productive, like my dad did on the farm versus his dad. But the biggest impact you're going to have is on talent. It's not recruiting, meaning that you're going to have better applicant tracking software. I mean, that's great, but have a meaningful role in defining the job descriptions.

What are the key success criteria? Um, what are the competencies required to be successful in this job? And let that influence your recruiting, your interviewing, your onboarding, your employee development, your rewards and recognition, and your retention. If you can do that, you are in the driver's seat. You have a senior seat at the table because you are demonstrably impacting revenue.

With that, I thank you.

Creators and Guests

Mike Vannoy
Mike Vannoy
Mike is a digital-first marketing executive with 25 years dedicated to helping HR companies thrive. As a board member of an AI software company and Chief Marketing Officer at Asure, he's been at the forefront of AI, HR compliance trends, and the changing demographics that shape today's marketplace. Under his leadership at Sales Engine Media, the company predominantly focused on the payroll, HR, and benefits industries, earning multiple spots on the Inc5000 list. Actively involved in multiple small businesses, Mike is a lifelong entrepreneur adept at navigating the changing workforce dynamics. He has held multiple executive roles at industry-leading HR firms, showcasing his expertise and leadership in the sector.
How AI Will Disrupt HR: Tectonic Shifts in HCM - Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent - Episode # 104
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