Unlocking Overlooked Talent: Second Chance and Inclusive Hiring in Hospitality - Jeff Korzenik, Fifth Third Bank

Josiah: 0:00

What is second chance hiring and how might it be an answer to the talent shortages we're experiencing now in hospitality? According to new data from AHLA this month, more than 80% of hotels are still experiencing staffing shortages. Today, we're learning from Jeff Korzenik, the chief economist at Fifth Third Bank, one of the largest commercial banks in the US, about some ways that we can address this challenge. Jeff, thanks so much for joining the show today, I guess maybe to kick us off, I'm curious why a chief economist and former investment management executive focuses on hiring?

Jeff: 0:55

Well, as an economist, and a chief economist of a $200 billion bank, I care a lot about having better economic outcomes. That includes making sure that the companies we bank have talent that they can access to grow their business. That's really the start of my whole investigation into this area. I started looking at what went wrong with the labor market and how can we fix it.

Josiah: 1:20

Let's jump into that. You and I initially connected after I spoke with Craig Poole, a guy's doing some incredible work through a hotel. He's using his hotel business as a platform to show other businesses what can be done with regards to hiring. What you and I wanted to talk about today a little bit was this notion of Craig calls it second chance hiring. What's the opportunity here?

Jeff: 1:40

Sure. Second chance hiring broadly refers to hiring people who have a criminal record, who have made a mistake in the past. It's also often called fair chance hiring. I use the terms interchangeably. some people have different definitions. It's an amazing opportunity because we have a structural labor shortage in the United States and yet we have this enormous pool of potential talent that is consistently overlooked by the business community. People who made a mistake in the past. By no means do I believe that every single person who's made a mistake that delivered a criminal record can be a great employee, But we have 19 million Americans with felony convictions and tens of millions more with misdemeanor who are consistently overlooked. You can find a lot of talent that hasn't been tapped in a pool that size.

Josiah: 2:34

I want to get into the structural nature of the issue, because the hospitality industry has talked about for the last number of years. okay, maybe this is pandemic induced, maybe and there are factors here, but from your work I understand there's something bigger at play that our listeners need to understand.

Jeff: 2:51

Absolutely, and I've been out very publicly saying a labor shortage is coming since at least 2017, 2018. In writing. I will tell you when I submitted the manuscript for my book on tap talent, the unemployment rate at that month was 11%. And I pause because my introduction says a labor shortage is coming. We'll get through this and there's a labor shortage coming, and indeed it has. I think what business leaders everywhere have to understand is just how built-in this is. We stopped having enough babies 25, 30 years ago. So that's data point number one. Data point number two and what was accelerated by the pandemic was the retirement of the baby boom generation. The way that I think of it is not just that there's not enough younger generations to replace the baby boomers or the associated growth and employment you need, but think of it this way baby boomers are retiring. That means that they're still out there as retirees demanding goods and services, and often those are very much focused on the hospitality business but they're no longer involved in producing those goods and services because they're retired. And that is a tension that's going to exist in the economy, with this mismatch between the number of people who are still buying goods and services but aren't producing them. That's going to last really until the baby boom generation dies out, so this is a decade plus problem for the business community.

Josiah: 4:24

Let's talk a little bit about the solution. Your book is Untapped Talent. Tell us a little bit more about this group of people who maybe were previously incarcerated, and maybe have a criminal record. What should business leaders know about this community as it relates to hiring?

Jeff: 4:39

Well, the starting point is that having a record may not mean what you think it means, and it's very common to associate it And this is the approach I had, this is what I knew. We all, somewhere along, learned this kind of heuristic of people with criminal records bad people, cops, good people. The fact of the matter is that an awful lot of people get a criminal record because they are young and have used bad judgment or have bad surroundings, and we know, to a large degree people grow out of some of that bad judgment. And so the starting point is looking at the actual numbers 19 million people with felony convictions. It's very telling that fewer than half of them were convicted of a crime of such threat to public safety that it even required a prison term. Most people with felony convictions didn't even serve a prison term. Might have been probation, might have been some time pending trial in a county jail, but they weren't actually assigned a prison term. That's very telling that the criminal justice system may not be what we think it is, and even those who did deserve a conviction and did deserve incarceration may not be the same person they were at age, say, 18, that they are today at age 35 or 40. And so when you start with this 19 million number and then the tens of millions more with a misdemeanor conviction, that's a big pool to choose from and it is largely overlooked. The second point I'd make that is really important is that there is a way to find those in this community who are ready to be good employees and ways to support them and ensure that they thrive. So you can't just approach it like any other hire, oh, i like him or her. Let's bring them on That. It is more complicated than that. The good news is, however, that if you set up a process for hiring, selecting and supporting people with criminal records, that process tends to serve many other employees. Typically, those who have been marginalized by deep poverty also benefit from this, and so it really broadens out your talent pool and broadens out as you saw with Craig Poole broadens out your ability to deliver an outstanding service to guests and prosper as a business.

Josiah: 7:08

To that point of additional consideration for hiring from people in this community. What are some things that you've seen? it could be within the hospitality industry or outside of it, of someone or an organization that took a smart approach doing this. What did that look like?

Jeff: 7:24

Well, sure, i'll hold out. For instance, wind hotels, which started with one hire that they liked And Artie Nathan was the director of HR at the time and ended up having such a good experience that not only did they end up petitioning the Nevada Gaming Commission to expand the opportunities because it's a heavily regulated industry so that they could hire more people. As Artie mentioned to me, you're not going to have someone convicted of a financial crime in the cage right. There's still common sense protections that work, but often the regulatory restrictions have been overly broad. So they removed restrictions and then they also set up. Artie is one of the founders of a nonprofit called Hope for Prisoners that does an outstanding job at taking people come off of a conviction or incarceration, selecting, developing them and then critically providing mentoring for something like 18 months after, because so many people who have a criminal record came out of a life of really limited vision of what they could do in the world, lack of mentorship, lack of stability, and when you provide that kind of support and mentorship, you get outstanding employees. So Hope for Prisoners is a conduit to the business community, and particularly the hospitality community in Las Vegas has relied very heavily on them, and very successfully so.

Josiah: 8:54

That's a great story, and I wonder if we could spend a few moments speaking a little bit more broadly, including people who are maybe formerly incarcerated, but just other populations that may not have the sort of labor participation that they could have. In some of your work in writing and speaking, you've looked at Japan as an example of Things that we should think about. Can you tell me a little bit about that, and why should we look at Japan?

Jeff: 9:19

I partnered with a Japan economist I see three, nakajima and Jessica, and Nakajima and I have been working on this talk about this for years. He used to be a research provider for me and has gone off. He's actually started a sake import company, cedar sake, and He and I have marveled at how Japan has grown their labor force even as their population has shrunk, and We've asked ourselves are there lessons we could learn? and we have learned that there are ways that Japan has moved the needle and Successfully unearthed talent that they previously overlooked. Now in Japan, of course, a largely overlooked population had been Female workers, and so they grew their female labor force population. They're not as overlooked, of course, in this country, but it's interesting that Japan, among what economists call prime-age workers 25 to 54, 20 at females actually have a higher labor force participation rate in Japan, meaning they're employed or actively seeking employment then they have in the US or in the Eurozone. So we can do better with women is one of the lessons that we should be immediately taking away. But the broader takeaway, of course, is this Look to populations that have been marginalized. That's ties in, of course, to the work with criminal records. Then Japan, of course, infamously, has a great difficulty in accepting foreign-born workers and the immigration restrictions put our political battles you know They may make our political battles over immigration seems small. So in Japan they sidestep this. They grew a guest worker program enormously to a great, really increased by hundreds of thousands of Workers. Our h1b visa program, by contrast, has only grown by something like 85,000 workers or a couple decades, dwarfed by the weight that Japan use guest workers to augment. And now it's kind of opening up the doors to broader immigration possibilities and as well. And then the final one that's really been Exciting to see in Japan is the inclusion of older workers, and they are structured in such a way There's plaza governmental structures that support the return of older workers who choose to work. We have and many of your listeners are familiar with workforce boards. They tend to serve sort of marginalized populations. In Japan they don't have that. They have the Silver Jinzai Centers which serve older workers who want to return to the workforce And at any given time you have something like 700,000 older workers, often very experienced, very disciplined, are registered with these centers. They may retrain for a different line of work that they prefer to do in retirement, but employers know how to find them, they go to their Silver Jinzai Centers. I think like 80% of registrants have been placed over time. With this I'll also add beyond the Japan, but also kind of interest to looking at international issues. I'm increasingly hearing of employers who are looking to refugee populations within the United States And as the grandson and great grandson of refugees who were hired in this country, i think that's a great opportunity as well.

Josiah: 12:44

That's great, and more that we can look around the world for inspiration. who's doing it well? I think you've articulated quite well the business case and the business opportunity and hospitality something we're talking about a lot But we need to kind of look at best practices here. I wonder if you could speak just a little bit to the ethical, the moral case for inclusive hiring, kind of what's. I think it's important to lead with a business case to get stuff done, but is there also an impact on communities that this results in?

Jeff: 13:13

There absolutely is. I rarely talk about it. So thank you for the opportunity. I think because I like to be known for the business case, because I don't want employers to think that there's anything less than a great business case. I don't want people to think that I'm on a moral crusade. I'm on a business crusade, an economic crusade that happens to have outsized societal benefits, And those benefits, to me, revolve around breaking this awful cycle we've developed of intergenerational poverty in the United States and also some of the racial inequalities that you see. The ugly truth of our criminal justice system is that, whether deserved or not deserved, one in three black men in America has a felony conviction. That's an astounding number, And when you couple that with the understanding that such a conviction can often bar you from employment or from economic advancement, you can see how this can come. Intergeneration You don't have a role model at home. I always challenge business audiences, CEOs who talk to you, how to dress appropriately, show up on time. Who taught you how to navigate conflict with a coworker? who taught you that when someone asks you how are you, they don't really want to know details? All of these things we learned from someone else. And when you have parents typically fathers who have been incarcerated, they don't have that knowledge to pass along, and you develop this intergenerational poverty. In fact, one of the best predictors of whether a child will ever end up in prison is if they've had a parent in prison, And so we have to break this kind of cycle. What that means, of course, is stronger families, safer communities, better role models, less waste of taxpayer money through the whole justice system. As an economist, I'm trained to think of everything as tradeoffs. For every win, you have to have a loss somewhere. This is a true win-win scenario, And at a time where we see rising crime hurting businesses particularly inner city business district businesses hurting those businesses, this is one of the best ways to fight that cycle of crime that we seem to be into.

Josiah: 15:36

I love that, and I think many of the people listening to this are going to be as inspired as I am listening to you, i guess. To what action items would you leave us with? Somebody's bought into this. They love the notion of it. What should they go out and do as a result of hearing this?

Jeff: 15:52

So it takes a while to get on board with this and to learn how to do it right. And I have to emphasize, there's a way to do it right. Many of your listeners may have had an experience with some of this record as an employee who wasn't a good employee. Typically, that reflects a broken process. You didn't know how to pick the right person. You didn't know how to support the person appropriately. So I'd urge anyone who has had a negative experience to try it again, but know how to do it right. To know how to do it right. There's a number of training programs around in the country, these co-work-based trainings. I was just part of one of them with the corporate coalition of Chicago, where it's a structured curriculum. In that case, it was designed by the Boston Consulting Group. Dave's Kill of Bread Foundation has now part of JFF. Jobs for the Future has a co-work program, kara. There are chambers of commerce, like Kentucky Chamber of Commerce has the Fair Chance Academy, so you can always go and get involved in one of those. I would be remiss if I did not mention my book as a resource And I will share with listeners that just in the last month, three businesses have told me that the book was actually instrumental in their starting second chance programs. But the book outlines and let me just share it here is there are ways that businesses can start testing the wars And one of the best ways is to go visit a business that's doing it successfully, particularly some of your listeners who work for larger companies. They spend a lot of money doing talent acquisition, going out to the Cornell Hort Hotel School to recruit or whatever it is. I would suggest and I don't want to ruin Craig Poole's calendar but why I'm eager to get to Reading, pennsylvania, see his award-winning hotels and see how he does it. Most second chance employers, people who do this, are willing to share and open up the doors and share that. Go meet with one of these nonprofits, these reentry organizations like a Hope for Prisoners, and see how they can partner with you. All of these are steps that lead you along the way And I'm also going to emphasize one thing that employers should do is recognize that they may have hard and fast rules, both for employment and even for vendor contracts, that prohibit people with a conviction And take that off. Be flexible. If someone has cried in their past but has been a good citizen for 10 years, has a career, rebuilt their life, that's just another employee. Don't bar them. If you have a property with an outside vendor, that's a second chance employer and you have them seeing a big hotel resort property. They come in and mow the lawn or trim the trees. Don't prohibit them from hiring people. Don't stand in the way of this great societal and economic good.

Josiah: 18:43

Great points for all of our listeners. to act on the book's untapped talent role, make sure to link to it in the show notes or you can find it wherever fine books are sold. before we go, is there anything you're hoping to cover? anything else top of mind for you?

Jeff: 18:54

The only thing I would observe is that when I look at the businesses that are doing this, they're not just pioneers in this area, they tend to be great businesses. Craig Pool and I'm sure you'll link to his podcast with you This is an award-winning, highly profitable business. The businesses that do this right benefit from lower turnover and higher employee engagement. That combination of someone who cares about their job because you've given them a chance and is loyal and stays with you is a great recipe for profitability. This is not just getting a body in a seat. This is getting someone who cares about the work and will stay with you.