Shaping the workforce of the future in retail and consumer goods

| Podcast

What does the postpandemic workplace look like in the retail and consumer-goods industries? How should companies set and manage the new expectations of corporate employees and field staff? Over the longer term, as automation and digitization advance, how can retailers and consumer companies take on the reskilling challenge? In this episode of the McKinsey on Consumer and Retail podcast, McKinsey partners Bryan Hancock and Ashish Kothari offer insights into the future of work. An edited transcript of their conversation with executive editor Monica Toriello follows. Subscribe to the podcast.

Monica Toriello: If you’ve traditionally worked in an office, the return to the workplace is probably something that you and your company have been thinking and talking about a lot these days. Indeed, the nature of work has changed for almost everyone in the past year and a half, raising important questions about the future of the workplace and the workforce. Technology is, of course, a huge factor affecting the future of work: e-commerce and digital channels, contactless solutions, automation and robotics in both stores and warehouses—all of these are having and will continue to have a major impact on what work looks like in the consumer sector.

Today we’ll hear from two McKinsey partners who have thought quite a lot about this topic. Bryan Hancock, a partner in our Washington, DC, office, is the global leader of McKinsey’s work on talent. Those of you who listen to the McKinsey Talks Talent podcast will already be familiar with Bryan. He has advised a wide range of talent-intensive businesses—not just retailers but also banks, healthcare providers, transportation companies, and so on. Also with us is Ashish Kothari, a partner based in the Denver office. He leads our “reenergizing organizations” work, which is focused on helping consumer companies as they support employees in combating pandemic fatigue and increasing well-being. He has worked alongside many leading retailers and packaged-goods players. Welcome, Ashish and Bryan.

Before we get into it, what has return to the workplace looked like for you personally? Have you started traveling again? Are you wearing jackets and collared shirts again?

Bryan Hancock: We’re slowly opening up our office; we’re doing it in phases. What I found most interesting is that the demand for meeting in person has picked up a lot, so we’re going on site visits and getting on airplanes. Honestly, it’s great to be back.

Ashish Kothari: I did my first client trip a few weeks ago. I got a chance to see a client whom we started working with in the middle of the pandemic; we hadn’t actually met them in person. It was wonderful to be able to see them.

‘Return to work’ dilemmas

Monica Toriello: “Return to work” or “return to office” and “future of work” mean many different things, even within just the retail and consumer sector. As you talk to CEOs and business leaders in the industry, what are their one or two biggest questions about the future of work?

Bryan Hancock: There are two things that are top of mind. One, consumer demand has shifted; therefore, the way work is done has shifted. The pandemic has accelerated the shift to online, and with that comes a shift in the type of skills needed in headquarters and the balance of roles needed in the field.

Two, what does “return to office” mean for organizations that have a national footprint but where many of their employees—or the majority of their employees—have been coming to the store every single day? What are the expectations for the corporate staff? Do we expect them to come back to the office because that’s been the expectation for the field staff? Or do we use this as an opportunity to rethink our talent—because maybe we’re located in the heartland, but some of the best tech-talent hubs in the country are in places like Austin; Atlanta; the Washington, DC, area; or Boston? Does this give us the ability to access that talent?

But if we do hire in those tech hubs, then how do we create the right connections? Are we saying they don’t have to come into the office? How do we manage this tension of, “We’re an organization that delivers our services in person,” with, “For some of our corporate functions, we may now be able to get better talent remotely.” How do we resolve that? This is what some CEOs are thinking through and thoughtfully wrestling with.

Ashish Kothari: I’ve had about 30 conversations with companies over the past six weeks. One of the themes that keeps coming back is the following: We knew before the pandemic that a flexible working arrangement was one of the top benefits that employees wanted, so how do we manage expectations and set the right rationale for why we’re bringing people back to the office?

The numbers are quite stark. Across different generations, we’re seeing that 25 to 35 percent of people want to continue working from home 100 percent of the time. Then, some percentage of people want two or three days a week in the office. Very few want to be in the office 100 percent of the time. So how do we manage that communication, that expectation setting?

The second big challenge that many companies are being forced to rethink is, how will work actually get done in a world that will be increasingly hybrid? It’s easy to say we’re going to be hybrid, but it’s hard to figure out the details of how we’re actually going to do work in that hybrid setting.

Monica Toriello: To some extent, everyone’s figuring this out as they go, right? What are the best practices that you’ve seen? And on the flip side, what are some of the most common mistakes that you’re seeing companies make as they navigate this next normal?

Bryan Hancock: One of the best practices is really thinking through, from a business standpoint, what work needs to be done in person and what work can be done remotely—and thinking about it by role and even by task. If I’m crunching through emails for a day, do I have to be in the office to do that? And how do we then segment into different roles and archetypes so that we can say, “For this type of job, it’s OK to be home one or two days a week to do this kind of work. When we need to do this other kind of work, let’s do that in the office.”

Be thoughtful in the segmentation and link that segmentation to how value is created. Be very clear that, “When we’re required to be in person, let’s make sure we’re optimizing that time.” We’ve heard some clients describe coming to the office as “the new off site”—it’s the time when we have intentional interactions working together to advance what we can do jointly.

Adaptability and resilience

Ashish Kothari: If you look at any external surveys out there, they’re showing the same as what we’re seeing internally: burnout is at an all-time high. So how do we train employees to tap into their inner resilience? Our future world is going to be a fundamentally more volatile and unpredictable world, so how do we build skills around adaptability and an ability to learn continuously?

Bryan Hancock: Let me pick up on that and tie it to something very practical, which is the daily commute. The daily commute was a time when you were largely alone with your thoughts. You might be listening to a podcast like this one; you might be listening to music; you might also be thinking through your day and what you need to do. And it’s a time of transition from home life to work. The commute home is a time to reflect, decompress, and process the day. That time for processing and that separation between home and office have been shown to be healthy.

If we’re in a world where that separation starts to blur more, as it has in the pandemic, teaching people how to inject that time for reflection and transition and how to adapt their rituals are things that can very practically be done to help them adjust. That commute, for all its frustrations, had some good mental-health side effects. How do you make that transition happen if you’re home more? And then, if you combine that with all of the other changes happening, to Ashish’s point, instilling a broader adaptability mindset and teaching resilience tools can be very beneficial.

Monica Toriello: I imagine adaptability and resilience are pretty hard to teach. Are there examples of companies that are doing a good job with this?

Ashish Kothari: First, let’s define what adaptability and resilience are. We define “adaptability and resilience” as the ability to bounce forward not necessarily just bounce back. Implicit in that definition is this core ability to learn.

Through research, we found and identified seven key mindsets and six core capabilities that resilient and adaptable people show. The mindsets include a growth mindset versus a fixed mindset, a mindset around abundance versus scarcity, and a mindset around agency, which is an ability to take action versus being a victim. These are absolutely things that can be trained and measured.

The same goes for the six fundamental capabilities, which include self-awareness, perspective taking—which is being able to hold multiple perspectives versus just simple stories of black or white and right or wrong—and capabilities around well-being, which means taking care of ourselves mentally, physically, and spiritually. There are skills and behaviors around building connection with each other, even through simple moments. I’ll give you an example. How many times do you ask, “How are you?” And how many of those times are we really interested in hearing how the other person is? Or, when somebody asks us that question, how often do we truly share how we are feeling? Taking some of those simple moments to give people a chance to open up and share can increase connection.

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There are two other capabilities: one around purpose—defining the organizational reason for existing and tying that to an individual purpose—and one around creating more psychologically safe environments. These are capabilities that are trainable.

One company took its top 250 leaders through a series of sessions to help them build these skills; the company also rolled out a digital training program for about 50,000 employees. They measured the skills, through both participants’ inputs as well as inputs from others who these individuals worked with. What they found was amazing: significant improvements among all those who actively engaged with the learning journeys.

Bryan Hancock: A sports analogy can be helpful here. My son is a high-school lacrosse goalie. A high-school lacrosse goalie who has a great game against a very good team will let in at least ten goals. Resilience is a key part of what it takes to be a good lacrosse goalie. So I would think about how his coach talks to him and what he teaches him, which includes some meditative practices but also the rituals the team has.

Every team at the end of every game goes and gets their goalie. What does that do? That shows it’s a safe environment. “You worked hard for us; you let in a lot of goals, but, win or lose, we’re going to go get you”—so you see lacrosse teams run to their goalie. It’s a ritual in the lacrosse world that says, “This is how we’re teaching our goalie, who has psychologically one of the hardest roles on the field, to be resilient.”

How do you translate that to your organization? What coaching and interventions do you have? If you think of this as an analogy for your organization, you’ll get a lot of the elements of what it takes to teach resilience—because it’s more than just the training. It’s also creating a safe environment.

Best practices in reskilling

Monica Toriello: Research from the McKinsey Global Institute has some staggering numbers: in the US alone, about 17 million people will need to change their occupations by 2030. So reskilling is obviously something that companies need to do. What’s your favorite example of a company that’s really moving the needle on reskilling?

Bryan Hancock: I think the next horizon of reskilling is recognizing the skills that you learn in places like retail. The Markle Foundation—with McKinsey, the Atlanta Fed [Federal Reserve Bank of Atlanta], and a group of other organizations—has put forward a report as part of the Rework America Alliance. The report shows that some of the most important skills that help you move from an entry-level role, whether it’s in retail or other fields, are interpersonal skills that you learn on the job, like customer-service skills. If you can learn those skills in retail and then transport them to healthcare, which is going to have huge growth, that’s where the next “unlock” is.

To make that unlock happen, we’ve got to do a better job of recognizing the great skills that people learn in retail. And we’ve got to create the right credentials so that folks can then say, “Ah, here’s somebody who’s learned something in retail, so now we don’t have to start from scratch, because some of the main skills needed in healthcare are customer- or patient-facing skills. Now, how do we add a little bit of technical skill on to it?” versus thinking that retail reskilling is about teaching somebody who used to be in a customer-service role to code. You can do that, too, but you can be more thoughtful about what the natural pathways are that build on the skills that people actually do develop day-to-day in their roles.

Ashish Kothari: I’ll give you an example of another company that I think has done reskilling so well. It’s a bottling-and-distribution company. Historically, a big part of what the sales force had to do was to visit retail accounts at least once a week, look behind the shelf, take inventory, and put it into their systems. They needed to figure out what products were selling and what products needed to be ordered, then they worked with the general manager or the shop owner to place the order.

Today, with distiller analytics, they don’t need to do that. If you’re a salesperson, before you even show up at a retail outlet, you can get reasonably close predictions of sales and figure out how much you need to order. So the company has done a wonderful job of retraining the sales force to worry less about that and focus on two or three other aspects. Number one is really building that customer relationship and doing suggestive sales: “Here’s what else is selling at other customers; these are the best-selling products.” Number two is competitive intelligence: “Now that I don’t have to worry about how much of my stuff is on the shelf, I can keep my eye out for promotions that competitors are running and interesting displays that they’re putting on the shelf. I can capture that information and send it back to the main sales office.”

The angle the company could have taken would be to say, “I don’t need a salesperson to do this,” or, “I’m going to have one person cover five accounts instead of five people covering five accounts.” It could have gone the efficiency route. The decision to reskill is one of the things that will make a big difference: How do we fundamentally rethink the roles and the value that people are adding and then train them to get there?

Tracking employees’ skills

Monica Toriello: Bryan, one thing I’ve heard you talk about is your experience at your first job—bagging groceries—and the skills you learned in that job, like customer service and empathy. You say that companies need to better track the skills that people develop in their jobs. But that sounds so hard to do. If I’m a retail CEO, and I want to start engaging in this skill-based thinking, what are my first steps?

Bryan Hancock: I think it can happen at two levels. At the corporate level, have it as part of the annual performance conversation. Turn the performance review from “How did you do this year?” to “What skills did you build this year?” Start tracking where people are and what skills they’ve demonstrated toward what’s required for the future. If communications or teamwork or what some people call “power skills” and others call “soft skills” are what will be important, track those. If it’s important to pick up certain technical or digital skills, track those too. We already have, in the annual performance review, a way to document. We’re starting to see some companies do that and then use the data to help better match people to opportunity.

On the front line, there are a range of assessments that you can use as people come in and as they progress. You can even empower frontline supervisors to sign off on the badges that somebody could get as they demonstrate progression through the skills. So it’s more a matter of defining the skills you want to track and being intentional about creating the process to track and credential.

Ashish Kothari: This is about fundamentally creating a learning culture, and that is something that can only be set at the top of the house. Satya Nadella did this beautifully: when he reoriented Microsoft, he fundamentally pivoted the company by emphasizing that knowing is less important than learning.

We also need to fundamentally rethink how learning happens. Learning does not happen only in classrooms. Learning happens in classrooms and on the job and in communities where we apply a lot of these things. So we need to rethink learning journeys.

And we need to measure our investment in learning with the same rigor that we manage investments in capital. This is investing in human capital. I’ve seen the weakest ROI measurements when it comes to learning, and as a result, L&D [learning and development] budgets are in freefall in a moment when we need them the most.

If we think about these three actions collectively—becoming a learning organization, moving away from classroom-based training to integrated learning journeys, measuring our investment in learning and continuing to optimize it as a core investment at the same level as any other investments—we can be really excited about the future.

Monica Toriello: That’s great advice for CEOs and companies. What about if I’m the person bagging groceries? How should I think about documenting my skills and making sure I stay employable? What advice do you have for recent college graduates or people who are just starting out in the workforce?

Bryan Hancock: Talk to your colleagues, parents, friends, and supervisors and define what your career ambition looks like. Set a vision for where you want to go.

Frontline workers are going to need some help along the way, though. In addition to setting their own vision, I think we collectively can do a better job recognizing people’s skills and creating a dialogue around, “If you’re a company looking for these skills, think about this talent pool.” There are tools, like the Rework America Alliance tool, that talk about career progressions that you can point to and say, “If you want to go here, these are some of the typical pathways,” and you can start to get inspiration and move. So we need to continue the work on that infrastructure. But I think it starts with having a vision of where you might want to go, and then seeing how it links up with the infrastructure.

Ashish Kothari: One of the positives that really came out of this pandemic is that virtual education has really boomed. There are tons of affordable courses on all of these capabilities, whether social skills or digital and analytics skills. Combined with Bryan’s suggestion of talking to people, take the initiative to enroll and start to learn these skills.

It’s not easy. People do need help; they can’t do it alone. But the other part is equally true: unless individuals decide to take the lead, what their company does will not be enough.

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