Five observations from the new Fortune 500

Dug out from my Feedly 'Read later' list was the announcement a couple of weeks ago of the latest iteration of the venerable Fortune 500 - the annual list of the largest 500 US companies (ranked by annual revenues).

The Fortune 500 has become a synonym for 'big business' in America, and taking a look through the list, and especially looking at changes and trends in the list, has become an annual exercise for folks like me who like to think about macro trends in the economy, and to think about how these trends suggest what might be coming next.

Also, it's just fun. If you are a geek like me.

So for an almost-summer Friday, here's my first five quick observations from looking the new Fortune 500"

1. For all the talk about technology that dominates most business news cycles and programs, old-fashioned retailer Walmart remains number one on the list - and it isn't really even close. Walmart has double the revenues of the next closest rival for the top spot, ExxonMobil. And while we know all about the massive businesses in retail and in cloud computing, (an odd combination), that Amazon has built over the years, Walmart still has almost 3x the revenue as their competitor from the Northwest. I know I like to think of Amazon as the most interesting and important company in America, but we can't or shouldn't forget the outsize impact of boring old Walmart. And don't forget their 2.3 million (with an 'm', employees).

2. Lots of 'The future is changing, are you ready' presentations like to talk about how much turnover there is over time in the list of Fortune 500 members. While interesting, I find it even more interesting, given the massive changes in business, technology, society, and more since the list's inception in 1955, that 53 companies (ExxonMobil, GE, Chevron, and GM to name some), have been on the list every year since 1955. That over 10% of the largest companies in American have been there for over 60 years is remarkable to me.

3. Despite point 1 about Walmart's staggering size, it is true that technology or tech-dominated firms make up large portions of the upper end of the Fortune 500. Household tech names like Microsoft, Apple, Amazon, Alphabet, IBM, Intel, Facebook, Oracle, and Intel all crack the top 100. And further down the list we see Netflix, Qualcom, Nvidia, and Adobe - all companies doing incredible things in their respective markets. And while the Fortune 500 ranks by revenue, if you think about company value as expressed by market cap, (subject to stock prices fluctuations), the most valuable list is also dominated by tech - Apple, Facebook, Amazon, Microsoft,  and Alphabet are five of the top six most valuable companies in America.

4. There are 30 'mega-employers' on the list - companies with over 200,000 employees as of the date the list was compiled. The above mentioned Walmart leads the employment table, but some other notable massive employers are Amazon, (566,000); Home Depot, (413,000); Starbucks, (277,000); UnitedHealth Group (260,000); JP MorganChase, (252,000); and Ford Motor (202,000). And coming in just below the 200k employee threshhold are big names like Disney, Marriott, Boeing, Oracle, Microsoft, and Apple - each having more than 100K employees. 

5. There are only 17 new companies on the list this year. The most interesting 'newcomers' to the Fortune 500 are, for me, Molson Coors Brewing, (Coors was my preferred beer once upon a time), Wynn Resorts, (I still need to get to Macau), and Conduent, (I just talked with them this week, look for an HR Happy Hour Show coming soon featuring some folks from Conduent). The last new entrant on the list is corporate supply company Cintas checking in at 500. For perspective, the last company on the list is a giant organization of 42,000 employees and 900,000 customers.

Ok, that's it from my quick walk down the Fortune 500 this year, I find it interesting every year, hope you do too.

Have a great weekend! 

One reason there are so many open jobs in the USA right now

The very best macro-economic report that helps to shine a light on current labor market conditions is the Bureau of Labor Statistics JOLTS (Job Openings and Labor Turnover Summary) report.

The JOLTS report covers job openings, hires, total separations, quits, layoffs, and other discharges, and offers us lots of interesting data points to better understand the US labor market - and by proxy, the health of the US economy.

Last month's JOLTS release, on May 8, included one pretty remarkable number in its summary - the number of job openings in the US as of the end of April had risen to 6.6 million - an all time high since the data series began to be compiled in 2000. 6.6 million open and unfilled jobs. That is a lot of openings. No wonder every time I go out I see a bunch of 'Help Wanted' signs.

Jobs stay open, or perhaps better said, remain unfilled, for a whole bunch of reasons - most of them pretty good reasons. Taking time to sort, screen, and interview candidates; trouble finding the right skill set for specific roles; companies taking the extra steps to really be sure a candidate is a good fit before making a hire - these and more are all decent reasons why jobs stay open.

But I have another reason, and some research, I want to point you to that is another reason why some jobs remain open, and open longer than perhaps they should be. It's the concept of 'degree inflation' - the tendency of employers to require that candidates possess more advanced educational degrees than the job function truly requires, and that many candidates simply do not have.

Over the weekend I read a really interesting report on the subject of degree inflation, what it means, where and how often it is occurring, how it negatively impacts the organization, and finally, offering some suggestions for employers to avoid unnecessary degree inflation when hiring.

The report, titled 'Dismissed by Degrees: How degree inflation is undermining U.S. competitiveness and hurting America's middle class'by authors Joseph B. Fuller and Manjari Raman, both from the Harvard Business School, is an interesting and deep look at just what happens when companies try to use artificial degree requirements as a screening tool and a proxy for candidate skills and suitability for a given role.

This is a long report, and I definitely encourage you take some time and read it through, but here are the top three most interesting points or pull quotes from the study that I want to share.

1. In an analysis of more than 26 million job postings, we found that the degree gap (the discrepancy between the demand for a college degree in job postings and the employees who are currently in that job who have a college degree) is significant. For example, in 2015, 67% of production supervisor job postings asked for a college degree, while only 16% of employed production supervisors had one.

2. Seeking college graduates makes many middle skills jobs harder to fill, and once hired, college graduates demonstrate higher turnover rates and lower engagement levels. A systemic view of the total economics of hiring college graduates shows that companies should be extraordinarily cautious before raising credential requirements for middle skill positions and should not gravitate toward college graduates based only on a vague notion that it might improve the quality of their workforce.

3. Degree inflation particularly hurts populations with college graduation rates lower than the national average, such as Blacks and Hispanics, age 25 years and older. In addition, degree inflation raises the barriers to entry for Opportunity Youth, the nearly six million young adults who are currently not in school or in jobs. Companies that insist only on a college degree deny themselves the untapped potential of eager to work young adults as well as experienced, older workers as pools of affordable talent.

Really interesting and plenty to think about in just those three short pull quotes from the report. Even when current holders of a given role in the organization largely do not hold college or advanced degrees, many companies try to require said degrees for new hires into the same role. Then when companies do manage to hire candidates that are say, 'over-degreed' for a role they have to pay them more, the new hires are less engaged, and are more likely to leave - driving up costs and starting the entire process all over. And finally, imposing artificial degree requirements on roles effectively screens out groups of candidates disproportionately and may make any organizational diversity hiring initiatives even harder to progress.

The conclusion of the report does offer some solid suggestions to reduce or eliminate the degree inflation tendency, (chiefly having a better understanding of the critical skills and competencies needed to perform in a given role, and a broader understanding of how candidates can demonstrate these skills), I won't run through them all here, but take a few minutes to read through them as I think most organizations can pretty easily take steps to better understand this issue and make adjustments and changes to their hiring practices.

There are 6.6 million job openings in the US right now. I bet a fair number of them have 'Bachelors Degree' listed as a requirement, when, if we were to be honest, it isn't really required.

Have a great day!

The downside of performance transparency

Openness, transparency, shared and socialized goals - and progress towards attainment of those goals are all generally seen as positive influences on workplaces, organizational culture, and individual performance. We seem to value and appreciate a better understanding of what other folks are working on, how our own projects fit in with the overall organization, and probably more than anything else - we like the idea that performance management, ratings, promotions, and compensation are, above all else, "fair". And when we have that better sense of what people are working on, how much progress is being made, who in the organization is succeeding, (and when we believe the metrics that define success are also clear and visible), it seems logical that it will translate to increased engagement, productivity, and overall positive feelings about work and the organization.

But, (and you knew there had to be a but), sometimes, openness, transparency, and increased visibility to employee performance and the ability to compare employee performance can drive undesired and even detrimental employee behaviors. And a combination of performance visibility along with the wrong or even misguided employee goals can lead to some really unfortunate outcomes.

Example: What happened when surgeons in the UK began to me measured primarily on patient mortality and these measurements were made much more visible. 

From a 2016 piece in the UK Telegraph:

At least one in three heart surgeons has refused to treat critically ill patients because they are worried it will affect their mortality ratings if things go wrong.

Patients have been able to see league tables showing how well surgeons perform since 2014.

But consultant cardiac surgeon Samer Nashef warned that increased transparency had led to doctors gaming the system to avoid poor scores.

Just under one third of the 115 specialists who responded to Nashef's survey said they had recommended a different treatment path to avoid adding another death to their score. And 84 percent said they were aware of other surgeons doing the same.

So to re-set - UK surgeons were measured on surgical patient mortality outcomes. These outcomes were highly visible in the industry and by the public. And, as humans always seem to learn really quickly, surgeons began to 'game' the system by increasingly avoiding riskier surgeries for the sickest, neediest patients so as not to negatively impact their own ratings. So the sickest patients, with the most difficult cases found it harder to get the treatment they almost certainly needed. And the best, most talented surgeons, who should have taken up these complex cases, learned to avoid them, or pass them off to other, less talented doctors.

So the combination of the wrong, or at least imperfect performance metric, (surgical mortality), with the desire (however well-intentioned) to make doctor performance against this imperfect metric more transparent and visible serve to incent the wrong behaviors in doctors, and reduce the overall quality of care to patients - particularly the ones who were in the most dire circumstances.

The lessons or takeaways from this story?

Be really careful when making employee performance measurements open and transparent across the organization and beyond.

Be even more careful if you decide to focus on a single performance metric, that the metric is actually one that is meaningful and relevant to your organization's customers (and isn't one that can be gamed).

And finally, before you do either of the first two things, you spend some quality time with your organization's best performers to figure out what it is they focus on, how they measure themselves, and how they make sure they are providing the best service possible.

Chances are, in the UK surgeon case, none of the best surgeons would have said they became great surgeons by avoiding the most difficult cases.

That's it, I am out - have a great day.

Best practices are not always what they seem: Amazon meeting edition

If Amazon isn't the world's most closely watched mega-organization, (due to all their data security drama, I think Facebook might tip them here), it is certainly in the top three or four. From their massive growth, increasing market share and market cap, dominance over such differing businesses as retail e-commerce and enterprise cloud computing, their massive lead in voice assistant technology - every day Amazon provides something about which to opine on for bloggers and podcasters and reporters.

And I didn't even mention their incredibly covered and public search for their new headquarters location, HQ2, and their founder Jeff Bezos' side projects like reusable rocket ships, drone-based delivery, and even the Washington Post.

So with any giant, powerful, and influential organization like Amazon, HR and workplace types like me, also like to look at the principles, culture, and approaches to human capital management and even the day-to-day practices of companies like Amazon, to see if there is some kind of 'secret sauce' that can be understood and perhaps even copied. Since Amazon is so successful, they must be doing something right, in terms of how work is organized, how people are managed, and how their culture translates into innovation and productivity. This kind of examination isn't new to Amazon of course. Companies like Google, Netflix, even Jack Welch's GE back in the day have all been scrutinized and dissected by outsiders in order to try and cherry pick HCM programs and strategies to be used in other firms.

But I think the problem with this kind of approach, the modern spin on the 'best practices' method of improving workplaces and business outcomes is that outsiders often miss the real purpose, goals, and intent of another organization's strategies and practices. After all, the nature of being on the outside suggests that we can't really know everything about how an another organization operates, and how their internal programs support their culture and business strategies. We can guess, sometimes make an educated guess, but usually we can't know for sure.

Which brings us back to our pals at Amazon, and one of their peculiar and unique workplace practices that has been reported before, and made the rounds again last week as a result of some comments Jeff Bezos made in an interview.

Amazon, it seems, starts internal meetings with everyone in the group reading a 6-page memo about the subject of the meeting that has been prepared in advance, and sets the tone for the impending discussion. Here is some of what Bezos had to say about this practice, taken from a piece on Business Insider:

"For every meeting, someone from the meeting has prepared a six-page, narratively structured memo that has real sentences and topic sentences and verbs. It's not just bullet points. It's supposed to create the context for the discussion we're about to have."

Everyone then sits and reads the memo silently, which often takes a good half-hour. And then they discuss the memo.

Think about that for a second - first, when was the last time you sat down and wrote 6 pages worth of anything? That is a lot of words. A standard memo, using a normal font size, margins, and spacing will run about 500 words per page. So 6 pages gives you about 3,000 words give or take. Trust me, as a blogger who has written probably too many words over the last decade, crafting 3,000 words is not easy.

And Amazon seems to understand that too. According to Bezos, "A great memo probably should take a week or more to write". Think about that - a week for someone to prep for a meeting. When was the last time you spent more than 15 minutes prior to a meeting going back through an email chain or searching for some PowerPoint presentation on the file server to make sure you knew what the meeting was really about and you were prepped.

But the reason I was interested in this approach to meetings was not just because it (seems) to be an interesting and novel way to make sure that everyone in the meeting is prepared to have a productive discussion, each armed with at least a common, baseline understanding of the subject. It is also interesting to me because their is, I think, another, more subtle takeaway from reviewing this 'best' practice.

And it is this:

Amazon is not successful because they hold better meetings, my guess is that they are successful because they likely hold fewer meetings than other comparable organizations. When the barrier to having a meeting, a week of effort to craft a 3,000 memo, is high enough, then I suspect that Amazon finds better, and more productive ways to avoid meetings in the first place. Maybe it is a phone call to the right person. Maybe it is more clear lines of accountability and decision making. Or maybe it is just, 'Gosh, who wants to spend a week writing about this before we can decide, let's just decide and move on.'

My takeaway from this 'best practice' isn't 'Let's have better meetings.' It's 'Let's have fewer meeetings.'

And while the 6-page memo idea probably wouldn't fly in most workplaces, having fewer meetings overall is probably something just about everyone would embrace.

Have a great day!

Note - this post is about 885 words by the way.

POWER MOVE: Who can get away with wearing sunglasses inside

There are only two reasons to wear sunglasses inside (excluding for any medical/eye issues).

Reason one (and this is by FAR the most common) - said inside sunglass wearer is a Grade A loser/jerk/poseur/idiot, and the sunglasses are screaming 'Look at me'

Exhibit 1 - Lane Kiffin (back when he was still coaching at Alabama).

As I mentioned - really jerky.

Two (much less common but far more interesting) - the inside sunglass wearer is competing, with you, me, pretty much everybody around him or her, and doesn't want to give away any hint to what they may be thinking or feeling. The sunglasses in this case are saying something totally different - 'Don't look at me.'

Exhibit 2 - Greg 'Fossil Man' Raymer - professional poker player most famous for winning the 2004 World Series of Poker Main Event (and a $5M prize)

Pro poker players doing the sunglass inside thing at the table is pretty common now, but back in 2004, Raymer was kind of an innovator - and a savvy competitor. Hard to get a read on a person when they are hiding behind the shades.

Exhibit 2A - And my new hero, one Anna Wintour, fashion industry icon, and in this picture seemingly disrespectful to Queen Elizabeth by not removing her trademark sunnies.

But why does Wintour rock the shades? Hint - it isn't because she is trying to be too cool for the room. It is because she doesn't want you (or me or anyone else), to know what she is thinking, particularly as she sits in the front row of a fashion show, eyeing the latest designs.

From a recent piece on Business Insider explaining Ms. Wintour's affinity for the shades: (edited a little)

If anyone's actually watched Anna Wintour in front row fashion shows before, they'd know she always wears her blacked out sunglasses so that people and prying media cameras cannot read and reveal her true thoughts on the fashion items as they pass her on the catwalk. 

And that's the reason the real ballers go with the sunglasses inside look. When everyone wants a piece of what you are thinking, and it is not in your best interests necessarily to let them know what you are thinking, then players like Raymer and Wintour put their guard up, and kind of dare you to call them out on it.

But when you win as much as Raymer and Wintour have in their careers, most folks don't bother to call them out after all, and if they do, it really doesn't matter, because after all, who is doing most of the winning? And one thing we see in most winners - they are often willing to do things that the rest of us wouldn't consider 'proper'.

So here's the move I want you to consider. That next 'big' project or staff or client meeting when things could get a little tense, when you do want or need to play your cards, (sorry Raymer), close to the vest, and to not reveal what you are really thinking or feeling - do you have the guts to walk in like Wintour, with a set of blacked out shades? How would Jerry from accounting react when he looked at you an all he got back was a stone face and a set of Ray-Bans?

Could you pull it off?

Wouldn't it be awesome if you did? 

Have a great day!