What kind of a company are we? Take a look at the expense budget

Take a look at the graphic below which shows how some of the world's largest pharmaceutical companies allocate funds to marketing and to Research and Development (spotted on the Big Picture blog):

As you can see from the chart, 9 out of 10 of these massive pharma giants spent more in 2013 on marketing efforts than on R&D. Disclaimer - I am by no means an expert in big pharma, so I can't and won't declare this seemingly reversed set of spending priorities as somehow 'wrong' or even unusual. But it is, to an outside observer at least a little surprising. We think, or at least I think, of these kinds of companies dedicating immense budgets to finding, developing, testing, and gaining regulatory approval of their products, not as massive marketing operations. 

Step back from the pharma industry for a second to think about what this kind of data suggests more broadly. How these companies, and any company, decides to allocate their expense budgets says heaps about what kind of a company they are, or are intending to become, (or are being forced to become).

Moving funds over to marketing and sales and away from activities like R&D or customer support isn't necessarily a bad or less noble thing, but it is something. 

The natural evolution of growing and maturing companies often dictates this kind of transition in spend and priorities. But when this shift happens and then takes hold over time, it eventually defines the company to some extent. One could argue that some of these big pharma companies are really marketing and sales organizations that do some product development to just keep the pipeline running.

Company culture is one of those HR blogging evergreen topics. It will be written about and discussed forever. But I can't recall the last time I saw a 'culture' piece talk about one of the most important 'tells' about what a culture really is and what is values. And that is how the 'culture' decides to spend its money.

As an HR/Talent pro it is probably worth a periodic check - how is your company allocating its funds, how are these allocations trending, how does that stack up with your peer companies?

The kind of company you are is as much defined by the expense budget as it is by anything else we do in HR.

Have a great week! 

Long Robots, Short Human Beings

The below chart from a indeterminate Bank of America report seems to be making the rounds today, interesting not just for the data, (which has two problems, one, it is kind of obvious to anyone watching the American economy over the last 30 years or so that manufacturing has been on the decline; and two, that it attempts to compare US manufacturing employment to Global industrial robot production). 

 

But still it is kind of a fun chart, not the least of which for its title, Long Robots, Short Human Beings. Clever Bank of America!

Except it might not be all the funny, even for the highly educated, well-paid types of folks that are likely working at Bank of America and would have put together a chart like this.

The robots are not just going to be satisfied and content with the boring, industrial, just another machine in the machine type factory jobs that are the main subject of this chart.

No, Mr. and Ms. Bank of America hotshot. The robots are probably coming for you too. Just a couple of examples to consider.

From the Abnormal Returns blog - 'The rising challenge of robo-advisors'  

It has been my hypothesis for some time now that the rise of the exchange-traded fund, or to be more specific the ultra low-cost, indexed ETF has made possible the growing wave of online, algorithmic asset managers (or robo-advisors).* In short, this abundance of low-cost portfolio building blocks available from a host of fund sponsors makes low-fee online portfolios possible. A couple of years ago I noted that most investors’ portfolio needs are not all that unique. Therefore algorithms could handle the bulk, but not all of their needs.

Or perhaps the disruption to the Bank's models will come from IBM Watson. The below is taken from the 'Watson at Work' section of IBM's site:

Watson is being designed as the ultimate financial services assistant, capable of performing deep content analysis and evidence-based reasoning to accelerate and improve decisions, reduce operational costs, and optimize outcomes.

In a bank, an advisor can use Watson to make better recommendations for financial products to customers based on comprehensive analysis of market conditions, the client's past decisions, recent life events, and available offerings.

The ability to take context into account during the hypothesis generation and scoring phases of the processing pipeline allows Watson to address these complex financial services problems and assist financial services professionals in making better decisions.

The context in which this capability of Watson is one in which Watson is a resource to the financial services professional, simply a tool or resource they can use when advising clients. But it is not hard to envision a time when the clients could simply 'ask Watson' directly questions about their investing strategies and get information on anticipated outcomes. Why would we need, forever, an intermediary between us and the source of knowledge?

These are just a couple of quick examples I found in about 10 minutes of writing this piece this AM, but I bet there are plenty more out there (and more coming).

I guess my point is really that everyone, including bankers in expensive suits should be taking what is happening with robots and automation seriously. It's all fun and games until the algorithm can do your job better than you.

And who knows, maybe the next investment planning chart we will see in a few years will be titled 'Long Automated Advisors, Short Bankers'.

Have a great day!

The end of retirement

Some highlights, (or lowlights, depending on your perspective), from the recently released Wells Fargo Middle Class Retirement Study, an annual look at the attitudes, preparedness, and expectations for retirement amongst middle class American worker:

1. More than half the middle class (59%) are very clear that their top day-to-day financial concern is “paying the monthly bills,” an increase from 52% in 2012.

2. Saving for retirement ranks a distant second place, with 13% calling it a “priority."

3. Four in ten middle class Americans (42%) say saving and paying the bills is “not possible.”

4. 48% are not confident they will be able to save enough for a comfortable retirement.

And last but not least the major implication for HR and Talent pros from this pretty depressing report on the state of American middle class retirement readiness:

5. 34% of the middle class say they will work until they are “at least 80” because they will not have saved enough for retirement, up from 25% in 2011 and 30% in 2012

A pretty grim situation on the current state of the average middle class American worker you would have to say. Even allowing for some sample size error, and for the inability of folks to accurately estimate the amount of funds needed for their retirement, (and their likely life spans), which I would argue would put even more folks in the 'there is no way I can ever retire' category, when over a third of folks think they will be working until they are 80 years old then I think we have to pause and think about the implications of that conclusion.Save my seat. My shift at Walmart ends at Noon.

I know it has become perhaps even trendy to say or think things like, 'I'm never going to retire', or to look at the traditional view of 'Full' retirement, i.e. doing absolutely no work at all once you leave the workforce as a relic of our parents generation, many of whom logged 30+ years at one employer and hit 65 (give or take), and started drawing a nice monthly company pension check that combined with their savings and Social Security payments would see them nicely into their golden years. With long-term employment at one employer and guaranteed pensions no longer the norm, the entire geometry of the path to retirement in 2013 looks almost nothing like it did even 25 years ago.

But it seems to me like the folks that I hear that proudly talk about 'never' retiring, really aren't the same ones that the Wells Fargo survey is measuring. Mostly, it seems, that 'I'm never retring' people are the ones that are making that decision quite consciously and out of a desire to continue the interesting and challenging work that they have been fortunate and industrious enough to have been doing. They probably could, strictly speaking from a financial point of view, afford to retire in the traditional sense close to the traditional retirement age.

No, it seems to me that most of the rest of us, and the majority of the survey respondents, still remain philosophically attached to what is fast becoming a relic of the past, that after logging 30 or 35 years as a loyal and diligent cog in the corporate machine that you'd have at least 10 or 15 years of front porch sitting, lemonade drinking, and grandchild spoiling to look forward to, all unencumbered by the demands of work, (and some 32 year-old hotshot and clueless boss).

But this survey, and likely a dozen other we can find, tell a very different story, one that is more about the mismatch between expectation and reality, and one where we see what has long been a cherished and venerated ideal bucking up against the reality of life in corporate American in 2013.

Retirement might indeed be over in America in the very near future.

Is your workplace ready to accommodate even more workers in their 70s and 80s?

Have a great week all!