Joe Fuller: It might seem counterintuitive that advances in white-collar automation would extend employees’ tenure. But as the pace of change puts a premium on the capacity to develop new skills, firms may need to revisit assumptions—particularly in fields like professional services. What does this mean for the talent strategies of consulting firms and their clients, many of whom find key skills hard to come by? Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Harvard Business School professor and nonresident senior fellow at the American Enterprise Institute, Joe Fuller.

I’m joined by Trent Henry, Global Vice Chair for Talent at consulting firm Ernst & Young. We’ll talk about the evolution of the CHRO’s role and how Trent’s move from leading a major business unit to heading the HR function globally reflects a wider trend. We’ll talk about the firm’s approach to skills – from recruitment and talent acquisition to skills inventories and training. We’ll also look at what it takes to craft and follow through on individualized skills plans—at scale—as well as E&Y’s focus on work-life balance and employee health and wellness, and its efforts to increase opportunities for a broader population. We’ll visit how the firm is using generative AI in HR and throughout the company, what Trent refers to as the integration of human and synthetic skills. And we’ll assess the factors driving remote and hybrid work across global organizations. And we’ll talk through the need for businesses to develop new processes and metrics in the post-Covid, AI-augmented organizations of the future.

Trent, welcome to the Managing the Future of Work podcast.

Trent Henry: Well, thanks very much, Joe. Delighted to be here and share a little bit of insight with you.

Fuller: Trent, you are a bit of an unusual figure, in so much as you had a series of senior, what most people call, line positions in the firm in EY Canada, where you were head of the business unit, and now you are running global talent, global CHRO. Tell me about that transition and what motivated you to pursue it, but also the logic the firm pursued in tapping a proven commercial leader and transplanting them into that role?

Henry: I think when you look at the evolution in the development of CHROs, it's becoming more common actually for people from the business to step into that role. I think having been the chair and CEO of EY Canada, which is one of the larger member firms, really gives you the breadth of business. And so for example, it's not just about the talent agenda in professional services these days, it's also about connecting the technology ecosystem, the alliance partners, and making sure you've got the right behavioral changes going on. So you're delivering with quality, you're delivering that scale, and you're also creating skills and developing careers at the same time. So I think that holistic knowledge gained from running a business is really, really important. I think the other interesting about my background is I have moved five times with the firm. I've worked in places like New York and Toronto and other offices, and really with my global reach, I've experienced around the world. But Joe, I'd be remiss if I didn't say this, this is a trend more broadly, and so we might've been at the forefront of it, but it is something I'm seeing amongst my CHRO colleagues.

Fuller: We've certainly seen the same, Trent, in our research here at Harvard Business School, which suggests that the motivating factors for changing the career path of the CHRO goes beyond just firm-specific or industry-specific considerations. Do you think it relies on that broad system change you talk about, much more complicated business relationships, or is it just the belief that we just need to get to a different level of performance and integration between operations and HR, as opposed to the world has changed?

Henry: I think there's another thing at play here too. Look, with generative AI, with needing to think through not just human skills but synthetic skills, the ability to stitch together the skills an organization has, is becoming even that much more important. So you really need to know what are your clients going to be buying, how are you going to be delivering your products or services to meet that demand, and then what does the role does talent have to play? Now, on top of this, at least in the developed markets, for the next 25 years, all the data would show us, Joe, that we're going to go through a time of immense labor scarcity. You're going to need to attract people, you're going to need to develop people differently, you're going to need to retain them for a much longer. People with experience, provided they're still skill building and developing skills at scale, will be invaluable for organizations going forward, which runs a little bit contrary to 150 years of how people were develop ed in professional services, those up or out models. Again, for CHRO, I think you need to be thinking through that whole career path and connect it to the evolving business trends too, that's going to be absolutely critical.

Fuller: Well, certainly, in our research, one thing we've seen consistently is there's a big disconnect between what policies related to human assets are being implemented by the company, or discussed at board level and strategic leadership team, or executive management team discussions, and what's actually getting executed at the coalface in operations. Sometimes that reflects bad communication, or a bad program design, sometimes it reflects just a lack of reality about what life is like producing the product or service. And so let's pivot a little bit to a specific area. We're speaking in the summer of 2024, and now we're really the better part of three years away from COVID being disruptive, being very much on our mind, really driving decision-making about personnel, about work attendance and whatnot, as you look at what you're doing at EY, but also the advice and work you're doing with clients, how are they settling in to this post COVID world? Have we gotten to a point of equilibrium, a new normal, or are we still experimenting?

Henry: I think we're still experimenting, but I think we're in another next iteration of what's going to happen. So of course, we went through COVID, most organizations in most parts of the world experience the great resignation. But what most of our clients are telling us now, Joe, they've gone through a period where retention has actually been very high in the organization. I do think as the economic cycle changes yet again, you're going to go through another period of high attrition, because most employers and most clients I talk to, engagement scores have fallen. Now, as the economy pick backs up, at least in places, you're going to see higher attrition as we go forward. So I think what organizations can do best, and we've done a lot of thinking around this, is ask your employees, in the current world, what do they want to see? And Joe, in my last two or three surveys that we do quarterly with our 400,000 people, it's interesting when you ask them, "If they had more time, where would they spend it?" And what our EY people tell us is they would spend much more time learning and on skills development. But really encouraging for me as the talent leader, they would spend more time coaching, they would spend more time investing in their own careers, they want to do more mentoring, they want to build professional networks, and I think this was really interesting too, they want to spend more time working in their communities. And the evolving trend though over the last 18 months is there's a new bucket, people are becoming much clearer that they want more time for their health and wellness or wellbeing. And so when you're developing your value proposition for your people, what they're really looking for is the opportunity for more personalization. I think organizations have made the mistake to narrow the boundaries and make it more of a one-size-fits-all. I think there's no doubt, even on skilling, for example, people want to personalize their own skills. We have great access to different skills at the firm, but we're learning more about what people want to do, how they want to gain those skills, and then ultimately, how do they want to build careers around that. So no, I don't think we're at equilibrium at all because on the wellbeing and flexibility front, there's much more to do there. Again, people have, I think in many cases, struggled to either define, do you need to come to the office, do you not need to come to the office? We don't think about it like that. We think about the evolving ways of working using technologies, again, anchoring back to what do people want, and how best to match them up with what they want.

Fuller: Trent, let me ask you to expand on that last point. Certainly, a lot of the large companies that I deal with and we deal with here through our project have begun to express a lot of concern about maintaining levels of productivity in a high hybrid workforce, where you've got significant percentage of your workers hybrids often out of the office two, three days a week and really beginning to express concerns about the sustainability of that. And of course, hybrid work for certain segments of the workforce is a very, very high priority criterion in selecting a job to pursue or to retain. You said you're not really concerned about that, you're more concerned about how you provide the service... tell me a little bit more about how you're managing that trade-off.

Henry: So we, as an organization, have roughly 400,000 people in 150 countries around the world. When I look at, say, our folks in China, most people come to the office five days a week, and that's, in part, because the technology and the space in the EY office environment probably optimize their experience more than, say, a cramped living condition at home. Now, don't assume though that all emerging markets are alike. Because when you go to India, in a place like Bangalore, where we've got 50,000 people, the commute times are excessive, and so many people there would not want to be in the office five days a week because they spend two hours each way commuting, or four hours a day, 20 hours a week. So we think, based on what employees want to do, and based on EY's desire to drive innovation, to drive teaming and collaboration, some type of hybrid arrangement makes more sense. But we're trying to design the activation around that to be more intentional. Let me give you an example. People ask me all the time, "Trent, how much in classroom learning are we going to do versus online or virtual type learning?" And I said, "Well, let's separate the skill building from the actual reason for getting together." Because I accept there is a reason to get together to build relationships, to collaborate, and to innovate. So Joe, we're still using the data to try to define the model going forward, but we will not come out and say, "You need to be in the office 3.2 days per week." We don't think that's the exercise at all. Hybrid will continue to evolve, but I think more interestingly now, that technology and things like generative AI are really pushing the business and the productivity in different places. So I do caution the business, and I've had many great discussions with clients on this, don't use traditional productivity measures to drive your business performance going forward. So for example, before COVID, presenteeism in the office was a major thing that certain organizations looked at, whether that was formal or informal. Leaders expected people to be in the office. During COVID, of course, with the evolution of Teams, and Webex, and Zoom, people were measuring time spent on calls. Again, I think those are lazy metrics, I think those are old metrics, and I think we have to be a lot more innovative around what really are the productivity measures going forward.

Fuller: Of course, the other big change since the end of COVID in most of our organizations has been the advent of generative AI. Of course, AI has been present in all sorts of domains and applications for consumers and businesses for a long time, but generative AI has had a profound impact, and certainly, in our research, has the potential to significantly improve the productivity of workers, especially, and arguably, for the first time, in any major technological innovation, the productivity of higher wage white collar workers, whereas previous technologies has often affected middle skills, middle wage, or lower wage workers. In a massive organization that is so dependent on processing information, disseminating information, testing hypotheses as EY is, how are you managing that transformation? How do you see this affecting, over time, the nature and configuration of your workforce?

Henry: The average age of our 400,000 people is about 30. So we have a relatively young workforce. And when we're talking to the roughly 5 million people that apply to EY each and every year, many of them are very interested in how do we use technology. Then I think, as we think forward, particularly in professional services, we've had pretty aggressive pyramid models for 150 years in professional services. You've got in our world one partner and 15 to 20 staff. That will change dramatically because I think what we're already seeing with generative AI is it's producing some of the, what I call, synthetic skills. So it is skill building for an enterprise, but it takes out some of those mundane or routine tasks that we've typically used more junior people for. So it does impact our talent strategy significantly, because as I said earlier, we're going to have to attract a different cohort, we're going to have to create skills at scale, but we're going to have to retain that workforce longer than we have traditionally have to make sure the business can be successful and we can win that war on talent. So we're really focused on a couple of things right now. One is making sure all EYers have access to our skill building. We've developed AI for all campaign, which most of our people have gone through at this point. We also have a micro-credentials program called Badges. We deliver badges at scale. These are quite immersive skill building programs that are done mostly online. We've had the fastest tick up and the fastest completion rate ever on these type of badges. Maybe profound is we've developed our own kind of ChatGPT tool called EYQ that all EYers use. And day-to-day, the penetration and use of this tool to share knowledge, to play with, to test insights is growing significantly. And so it's by that day-to-day usage, Joe, we think you're really going to get into the skill building and the knowledge base as we go forward. And on a macro basis our clients are telling us too, they are struggling to build skills at scale. So in professional services, I think you've got a unique opportunity to do just that, and in some respects, our clients are telling us, "You have to help us understand these trends so you can sell us more work."

Fuller: Let's turn to the subject of what you see in terms of your clients adopting AI and turning to you to say, "We need help in terms of developing skills at scale in this very dynamic, rapidly changing environment." Our observation is a lot of companies have been cautious, maybe even getting more cautious about deploying AI. You've had a number of prominent investment bank analysts say, "Well, this is more expensive than everyone thought, and harder to implement than everyone thought, lots of concerns about data sovereignty, lots of concerns about getting crosswise on other people's copyright." What are you seeing in terms of adoption by clients, and do you think that, on the whole, clients are responding at an appropriate pace? Are they being incautious or too cautious?

Henry: Yeah, so it's really interesting. I see almost daily, sector by sector, more clients moving beyond proof of concept into ready-to-use tools that they're deploying. But I think this is one of those gradually then suddenly moments where there is so much work going on in these proof of concepts and we're seeing real world implementation in consumer products and financial services and energy, for example, that I think it's coming faster than most people appreciate, and the leaders in those sectors I see moving quite quickly. They're way down the path in terms of understanding the use cases that could have kind of the biggest impacts on their business going forward. So you will see them I think over the next 12 months make adjustments to their workforce, again, not just numeric or quantitative adjustments, but also adjustments based on the capabilities to compete, and maintain, or improve their market positioning going forward.

Fuller: I can certainly confirm that, and I think that, in itself, raises a pretty interesting question because with generative AI, they that have the most data that started using it for learning sooner win. So it's a dangerous game to fall too far off the pace. From a human assets personnel perspective, how do you see AI, or what discussions you're having about how AI are going to change the way you approach managing people, as opposed to the deployment of the technology to do their work more effectively, both in terms of things like what skills you're going to be looking for in the future, or how you might configure teams, or how you might evaluate performance?

Henry: So in professional services, if we can get rid of some of those routine and mundane tasks, we're getting more intentional about taking some of those so-called productivity savings and making sure our people benefit from that. And so how will they benefit? We'd like to see them spend more time gaining those skills. They've told us they want to spend more time building teams doing counseling and mentoring, we want them to do that. Very importantly and good for society, they want to spend more time working in their communities, and we've got an aggressive EY Ripples campaign to provide people access to work in their communities and do those type of things, and we want them to spend time on their health and wellbeing. So when you put all that together... and again, this is a societal issue, EY won't get to dictate where this lands, but we're trying to really push this concept, that with these productivity savings, we can accomplish more in terms of the value prop for our people, and hopefully, improve the health index of our workforce as we look at this globally.

Fuller: Well, certainly in COVID, leading companies, including EY, were, for the best of all possible reasons, declaring that the wellbeing of their workforce was a non-negotiable priority in all business activities, what business to take, how to structure work. And I think management and government leaders as well are to be congratulated for taking a high integrity position on that. But this notion that the wellbeing beyond just the firm is paying me enough to live decently and supporting me with benefits that are integral to living in whatever society I live in got extended more into things like people's emotional health, ability to balance caregiving and business responsibilities, a willingness to have just more flexibility and customization. How do you anticipate that that will evolve? You've really been touching on a theme almost that we're going to end up in a world with more and more customization, that individuals in the firm have a reasonable expectation that expectations for them are going to really reflect their uniqueness as opposed their job level, or their seniority, or even the office they live in. Am I putting words in your mouth, or is that the way you're thinking about it?

Henry: But maybe the reason I'm more optimistic, Joe, is there's good alignment between what our people are saying they want and what we need to be a leading organization going forward. So let me give you an example. The data would show that people that spend the most time doing skill building, doing the Badges, or working on our EY Masters programs are much higher rated, have better productivity measures, and get promoted faster. For EY Ripples, so people that spend a reasonable amount of time doing work in their communities, and working on their communities, we know they've got a higher rate of retention and they are promoted faster. So with generative AI and the right data, we're starting to get the proof points that really show, hey, what the employees want aligns so well with what EY needs. So again, if employers could, I think, draw those correlations better, stronger, and tighter, I think society does benefit, and that's where the health and wellness does come into it. Our employees and our potential recruits aren't shy to ask about, "What are enhanced benefits? What more are you doing?" With generative AI for professional services, what is this gift of time, what do you do with it, and how do you inspire your organization to move forward in a better manner, as we move forward?

Fuller: Let me change the topic here a little bit. One of the real questions as personalization sets in, but also more importantly as technology is able to take on more and more routine work is, what's my skills inventory versus my forecast for the skills I'm going to need? And in a professional services job, that's even harder because as the technological environment becomes more dynamic, it's harder and harder to forecast what those needs are. How do you think about that, and how can you start moving to setting up a system that is both more responsive about engaging the skills you've got dispersed throughout the organization, but also anticipating and getting on a track to have available for your clients the skills they're going to require a year from now, two years from now, three years from now?

Henry: Well, Joe, I think you've probably hit on the most strategic thing we need to solve for. First of all, for most of our last 150 years, we didn't have a good view of the complete skills we had in the organization. So we have built a tool that we call My Career Hub, where all EY employers update their resume, or update their CV, and then using generative AI and some of our alliance partners, we're able to identify the relevant skills. And so the first part of this is to create a skills inventory for all the people we have in the organization, and we're essentially done of that piece of work. The next steps to complete a full talent marketplace are to link the demand forecasting, so predict with our businesses what are clients going to be buying and then understand the normative model. And so with our strategic workforce planning, then using a skills-based approach linked that demand forecasting, we can then predict the skills we need an organization. I can then take our own skills inventory, match that to demand forecasting, and then tell the organization, "What are the skills we're missing?" Then we can either upskill, we can hire, or we can go into their gig economy and access those skills. But we do get more comfort, we can build the skills of the future at scale. The other thing this My Career Hub does for us is we've got the skills data now, Joe, and so within that, I can tell you how fungible our workforce is. What I mean by that, Joe might have 80 percent of the skills he needs to work on a generative AI project, but he's missing a couple of things. With the counselor support, then we can make sure Joe has access to the right badges or micro-credentials, do that course or get a different experience so he can close that fungibility index, and be ready to work on an assignment, say, in three months’ time. So again, we're not there yet on the complete talent marketplace, and I think it's still a challenge to stitch together the HR infrastructure. So we built this tool ourself. Again, it's based on generative AI, but for the first time ever, we have a complete repository and inventory of the skills we currently have. We'll get the rest of this stuff built out, but it gives our business a much better view about how do we invest in skill development, how do we expand our Badges and Masters programs, and then how do we recruit, where and how do we recruit and what does that look like?

Fuller: I'm sure that there are listeners who would be really, really interested to hear how it is you keep the inventory up-to-date?

Henry: Yeah. So once you're in the tool and update your resume for the first time, there's an authentication process that you work with your counselor to make sure that, first of all, you've got credit for everything you had, or if there needs to be amendments or corrections, because generative AI, despite its productivity gains, does have hallucinations and other things. So you've got to work through that and you need humans to certify that message. But then in the system, there's a one-pager checklist for the counselor every cycle to sit down with that employee and update their skills inventory. And so we do have a very active dialogue for all new people that start, Joe, and as you know, we hire at scale annually. The first thing they do on day one is update their CV into My Career Hub. And our systems are well-connected, I've mentioned a number of times now our bachelor's programs, our master's programs, and other courses through our core infrastructure, we use SuccessFactors, that uploads automatically into My Career Hub. So if you do a badge on AI, that will update automatically into My Career Hub, and without you doing anything, your skills and our database will be updated.

Fuller: But it's linked to the performance management and professional development system in a way that people can't endlessly defer updating, which is historical systems for tracking skills always suffered from the fact that no one wanted to take the time, particularly in a busy professional services environment, to update things in the programs, and user interfaces weren't very compelling, and it was time-consuming, and taxonomy problems. So well, it sounds like you've really got a well-balanced system

Henry: Right. And I think many of our listeners too, Joe, will be regulated businesses that are required to track things like CPE, or other kind of development hours as well. And so we're fortunate I think in a firm of professionals where people need to track this and want to track it, so it does probably help with adoption. The employees want to have a robust discussion with their counselor about their next experiences or the skills that they want to acquire. And we meet with the business monthly now to say, "What new badges do we need, or what needs to be iterated and updated and how do we best do that?" And so again, I think it's a work in progress, but we're really pleased that we've got the skills inventory, and it really starts the whole pivot, the skills, in terms of designing the rest of your HR functions. You can look at the promotion, the succession planning, the reward, the recognition, you start to align all these function within your HR team, and it makes it much more provocative in terms of how you manage the supply chain going forward.

Fuller: Trent, very, very few companies have the type of geographic scope that EY has. I'm curious about what you're hearing across the regulatory landscape from the jurisdictions you operate on in, what they want to know about your application of AI to human assets, what concerns they're articulating. There's a lot of concern, particularly in American headquartered global companies, that foreign jurisdictions will adopt all sorts of rules that make it very, very difficult to apply AI to all sorts of processes because the standards will be different. And as we know, one of the big advantages of globality is get scale, and if all of a sudden it's causing you to have to customize the way you do business in multiple markets, that economic prop of growth, it's knocked out from the profit formula, how are you approaching this?

Henry: Yeah. Well, look, you raise, I think, one of the fundamental challenges that most truly global organizations are having right now, and that's around data and privacy. In some countries, as you know, Joe, you're not allowed to share data, the infrastructure must be contained and maintained within that country, and the data goes nowhere. So you do end up with, from AI perspective, multiple data lakes, and that's unavoidable. So I think that's the first step to comply with the local laws and make sure you understand your data integrity, the standards, and the compliance requirement in that country overall. But for the most part, the solutions, or the process, or the methodologies are scalable, such that you can take that methodology into a country even if the data is contained within that country. You can still use methodologies, you can still use policies and procedures tailored for the local country, but there's no doubt it is becoming more challenging. And if anybody thinks in the 150 countries that we could simply aggregate the data and run a generative AI model, that's absolutely not how it works. Even within some countries, you can't do that because the state requirements and other things. So you need to be very understanding of the policies and procedures, know the local laws. But honestly, it doesn't hold us back because the bigger proof of concepts the regulators understand is good for things, like audit quality, it's good for the competence in tax systems, and it builds confidence in the capital markets. So you do need to scale many of these things globally, it's just your execution will depend on the local country requirements.

Fuller: Well, I think one of the things that much of the discussion certainly in the press about generative AI bypasses is that what you just said, Trent, that it's not merely that companies are going to become more efficient, so many products are going to become hugely better. For example, if we take audit, the capacity to, for example, verify 100 percent of the company's transactions using AI will, I think, revolutionize that business. So it would seem to me it's going to be a great market opportunity for you and your competitors, as well as a bit of a challenge, and something that's going to have to be managed and have some costs associated with doing that.

Henry: Yeah, but you make a great point, and for all your listeners that are in regulated businesses, I think it's really important you maintain a great relationship and work with a regulator on the evolution as we go forward. So for example, you mentioned audit. When I look at now the predictive analytic capabilities we have using generative AI, it's profound, but at the end of the day, people, at least at this point, still want humans to certify this work. So we have lots of incredible domain knowledge around sector, or tax, or transactions that are relevant to an audit, but there's still human certification required at this point, and we'll have to work even more closely with our regulators going forward. So we share knowledge, we collectively build better models, and to your point, ultimately deliver even more confidence to the capital markets as we go forward. I think we do have a unique role to play there.

Fuller: You mentioned at the beginning of our conversations, Trent, this notion of permanent structural labor shortage, and that's I think inarguable, it's certainly something we've been talking about for the better part of a decade here at HBS in our project. What does that suggest about the mobility of talent, about both the challenge of attracting talent into an organization but retaining it?

Henry: So it's a great question. We believe that labor scarcity rewards the organization that can build skills faster than their competition. It's as clear as that. So in terms of our approach, we want to be that skills generator, including the synthetic skills generator. So our clients don't need to be worried about building skills in every capability, we want to be, in some cases, that skills engine, that skills factory. There are opportunities in an organization that works in 150 countries for people to get mobility experiences, to work around the globe, or to even within the same city or same place, work in different businesses, work in different service lines, work in different sectors. So I think what we define as career agility, not just career mobility, mobility is a piece, but career agility is becoming more and more important, again, because it's what our potential recruits and what our people tell us they want.

Fuller: Well, Trent, this has been a bit of a tour... and we've really touched on a lot of themes that EY has worked on internally and pioneering with clients, when you try to look over the horizon, what are the two or three things that you see coming that are going to come into sight soon that people need to be preparing for?

Henry: I think first of all, to bring this all together is just the criticality of culture. People do want to work with an organization where they feel like they belong, and I think organizations need to work harder, frankly, to bring this value prop to life for all of our people. So I think continue to nuance your culture so you can drive innovation, so you can sponsor the use of new technologies, so you can build those skills and capabilities. And what's interesting, just being at Davos and hearing the discussion at WEF this year, the whole concept of social mobility. At EY, we talk a lot about... we've democratized access to skills. And what do I mean by that? It's free for all 400,000 people at EY. If you do a Badges or one of our Masters programs, it's free. Now, through our talent marketplace, we're democratizing access to experience, because if you're any one of those 400,000 people, you can apply for one of these mobility experiences, Joe. From a recruiting perspective and a social mobility perspective, I think we can, again, democratize access to EY. So in our recruiting protocols, how do we make sure we're casting the net broadly? We're finding people with those need and discreet skills that don't come from some of the traditional skills or some of the traditional markets. And so I'm optimistic that with an increased focused on social mobility and democratizing the access, we can continue to nuance our culture and make sure we've got the right kind of DE&I platform to make that happen. So we're actually really excited about that. I think it's going to be a piece that we can control. What we can’t control is how far and fast technology changes go, we just have to stay abreast of that and continue to, I think, invest ahead of the curve. But I think we can control where we want to go on culture and driving the right behaviors around this.

Fuller: Trent Henry, Global Vice Chair for Talent at consulting firm Ernst & Young, thanks for joining us on the podcast.

Henry: Thank you.

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