How could the boys head to Europe for UNLEASH World and not get a hot take on the current state of the continent when it comes to the world of work? European businesses like Personio, HiBob, Job&Talent and others are shaking things up, and it goes both ways with the likes of Appcast reshaping European stalwarts like Stepstone. That's why we invited Hendrik Schmahl, Partner at EY in Berlin to the Textkernel booth for a chat. Schmahl is busy leading the consulting practice advancing HR transformation and digitization, but found some time for Chad & Cheese. If you're looking for a different take on how the economy and tech are evolving in Europe, and particularly in Germany, then this interview is a must.
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Intro: Hide your kids. Lock the doors. You're listening to HR's most dangerous podcast. Chad Sowash and Joel Cheeseman are here to punch the recruiting industry right where it hurts. Complete with breaking news, brash opinion, and loads of snark. Buckle up boys and girls. It's time for the Chad and Cheese podcast.
Joel: Oh. Yeah. What's up everybody? It's your sous-chef's favorite podcast, AKA, the Chad and Cheese podcast. I'm your co-host, Joel Cheeseman. Joined as always, the Eiffel to my tower, Chad Sowash is in the house. And we are happy live from the Textkernel booth at Unleash in Paris to welcome Hendrick Schmall...
Chad: Schmall?
Joel: Partner at Ernst and Young or EY in the wonderful city of Berlin. Welcome to the show, Hendrick.
Hendrik Schmahl: Thank you, thank you. You're welcome too. Yeah, of course.
Joel: Thank you. Thank you. So our listeners unlikely know who you are. So give us a Twitter bio about Hendrick.
Hendrik Schmahl: A Twitter bio. It's more, it's more like that I'm doing 30 years almost on consulting in HR particular.
Joel: Okay.
Hendrik Schmahl: Made a perfect consulting career from Accenture to Deloitte to Korn Ferry to Ernst and Young. And in particular focusing on the issues that CHROs are actually having.
Joel: Oh yeah? You have any kids?
Chad: Yeah, where's the personal stuff?
Hendrik Schmahl: I have three kids.
Joel: You have three kids? Okay.
Hendrik Schmahl: I have three kids, yeah.
Joel: Three kids.
Chad: How many pairs of Lederhosen do you all...
[laughter]
Hendrik Schmahl: Actually two. Yeah, after...
Chad: Zwei, zwei.
Hendrik Schmahl: Zwei.
Chad: I love it, I love it, I love it.
Joel: So your focus is on Germany for sure, but I wanna get your take on Europe because we have a European show. We're two dumb Americans. Give us and other dumb Americans that listen to the podcast and even some Europeans, the state of the business in Europe as a whole, from how you see it.
Chad: It has a bunch of countries in it.
Joel: It does have a lot of countries in it.
Hendrik Schmahl: Yeah. A lot of countries.
Chad: We don't want a state or country by country breakdown. Just give us a 30,000 foot view.
Hendrik Schmahl: What we're usually facing is that a one size fits all logic, which is coming globally quite often from America.
Chad: Yeah. Yeah.
Hendrik Schmahl: Then they have boundaries when they're facing the challenges in EMEA, in Europe. And that's mainly driven about the different cultures we have within such European region. The regulations, of course, it's a major topic. Quite different country by country, even state by state.
Chad: Right.
Hendrik Schmahl: And then coming back to the culture. Yeah. It's not as... The culture is something we are very proud of. And I think in Italians very proud of the Italian culture. The French guy is very French and the German is very German. And how to tackle this as a business, even with the one size fits all logic. And then you have your challenges.
Joel: So you're saying the EU hasn't brought everyone together in harmony in Europe.
[laughter]
Chad: Is that what you're saying?
Hendrik Schmahl: No. We are trying hard. Yeah. But we respect each other.
Chad: You're trying hard.
Chad: Trying hard.
Hendrik Schmahl: That's for sure.
Joel: All under one note.
Chad: And then Britain leaves and screws it all up. Damn it.
Joel: Fuck them. That's all I gotta say.
Hendrik Schmahl: But also economically driven, right?
Joel: Yeah.
Hendrik Schmahl: That's a difference. So one has a recession, then you have the industry logic where the one country is larger in the pharmaceutical companies and industry rather than the production. The production is suffering right now.
Joel: Why is it suffering? Is it a supply chain thing? Why is it suffering?
Chad: Is it a Russia thing?
Hendrik Schmahl: They all came a lot with the Ukraine war too.
Joel: Yep.
Hendrik Schmahl: Of course. But overall recession, when they're suffering, they're suffering on the talent shortage.
Joel: Yeah.
Hendrik Schmahl: That's really something where you have to move actually your production to different countries.
Joel: Yes.
Hendrik Schmahl: To source talents over there. That's a major topic. And then of course, the increases of all the prices with the oil, with the energy. That's a topic.
Joel: Yes. What about Israel and Hamas? Do you think that's gonna be a big impact as well? I mean, 'cause it feels like we're clawing our way out.
Hendrik Schmahl: Yes.
Joel: Right? And then something else happens, right? We had Ukraine, Russia invades Ukraine, and then that obviously impacted dramatically for Europe. No question. Right? Do you think this war is going to impact as well?
Hendrik Schmahl: Emotionally, of course.
Joel: Oh of course.
Hendrik Schmahl: I'm not a politician but having just...
Joel: But just economically is what I mean.
Hendrik Schmahl: Economic footprint of having Iran...
Joel: Yes.
Hendrik Schmahl: Jordanian and all the stuff. And then in the end of the day, talking with the Americans and the Russians, again, I think that must have an impact.
Joel: Yeah.
Hendrik Schmahl: Then entering Africa, which is a market to go anyway.
Joel: Yes.
Hendrik Schmahl: More or less soon. And then you have the problems.
Chad: I wanna dig into the talent shortage that you mentioned in Germany. Are we talking service sector? Are we talking healthcare? Are we talking tech?
Hendrik Schmahl: We're talking everywhere.
Chad: Are we talking all of it? And what is Germany doing to remedy that? Are they opening up the borders?
Hendrik Schmahl: Yeah. I'm not sure whether you have seen our votes last week. So, no a major topic is immigration. Or migration actually.
Joel: Yes.
Hendrik Schmahl: And we were always quite bad in handling this. Yeah? And also even turning people coming to Germany into the logic of getting them, educating, getting them integrated into the business and so on so forth.
Joel: Into society. Yeah.
Hendrik Schmahl: It's a society topic since 30, 40 years. And no, we are not doing that well. Now it's really lying on the companies.
Joel: Yeah.
Hendrik Schmahl: They say, okay, what kind of integration approach, inclusion approach we are really doing?
Joel: Yeah.
Hendrik Schmahl: Who is applicable for what kind of work? And then of course there's blue collar work where it's getting more and more into the logic too.
Joel: Yeah.
Hendrik Schmahl: But it is company by company. It's less about the society or the Germany is taken care of.
Chad: How has the EV revolution impacted Germany? Because Germany is a juggernaut in producing autos, luxury autos, Volkswagens and Tesla's making inroads to building Teslas in Germany. You're smiling. So talk about the EV revolution, [laughter] and what that is gonna mean to Germany's economy.
Hendrik Schmahl: I'm from Berlin, so Elon Musk made a Tesla factory just next to Berlin or even still in Berlin. However, I think that this, in the end of the day, it is driving us for having more innovation. So keeping up the speed of this innovation coming from everywhere.
Chad: Yes.
Hendrik Schmahl: And then it's more like research and development and then really applying it into your production and supply chain. So it's changing actually jobs, products, and in my opinion, it's a very good logic to get more and more pushed to innovation rather than relying on the existing and making a couple of evolvements rather than revolutions.
Joel: So Germany historically has been very union heavy. Right? Elon Musk, historically not union heavy. How's that gonna work out?
Hendrik Schmahl: I think he's facing a couple of challenges in Germany. So as each company has to deal with it. Yeah. And the unions is not, not a bad thing about it, it's more like having a dialogue, getting them involved. Then you get also the support.
Joel: Yes.
Hendrik Schmahl: And at the end of the day, it's about the workforce and the human beings. And then we have the protection logic. We have a logic of being kind, keeping development, but also having the sort of job secureness. Which is a bit difficult for Americans to deal with. Yeah. So rather than saying, Hey, you're terminated and then...
Chad: Yeah. Yeah.
Hendrik Schmahl: And it's a different story. So you have to do a different kind of workforce planning and also along with this, with budget and expenses.
Chad: So Germany is at the center of a lot of interesting activity in the vendor space in employment. Personio is a company that we talk about quite a bit on the European show, which is a German company. You have...
Joel: Deutschland.
Chad: You have Ronstadt buying Appcast, which was the 800 pound gorilla of programmatic advertising from the United States, and then bought Baird and created Appcast One. So there are a lot of things happening in Germany. What's your take on the companies that are being built, their impact on the German economy, how they're looked at from a brand perspective? Germany's having a moment. So bask in it and let us know your thoughts.
Hendrik Schmahl: Yeah. First of all, I'm very proud that German offers this room for startups. And then really not only being a startup with a smaller platform, but really then getting larger and larger and larger. And when you look at our decks to our most 30 valued companies, then half of them are former startups.
Joel: Really?
Hendrik Schmahl: So they really exchanged...
Joel: Half of them?
Hendrik Schmahl: Half of them.
Joel: Wow.
Hendrik Schmahl: If you compare it 10 years ago or 20 years ago. Yeah. Then the names just disappeared and went into the M Ducks, D Ducks and so on.
Joel: Wow.
Hendrik Schmahl: So like delivery or... And something like this. So Ronstadt is the one thing which is just doing a expansion by inorganic growth. So they have to do this anyhow, otherwise they are getting just not recognized anymore. And you want to keep business. And Personio is a great example So it's still called a startup, even though they are, I don't know, existing since...
Joel: Unicorn, yeah.
Hendrik Schmahl: Yeah. Yes. Or something like this, but the logic on the momentum...
Joel: Yes.
Hendrik Schmahl: Maybe from SAP, HCM and Workday and as a potential Newlogic and with the Oracle stuff and so on. So it was like, okay, there was a momentum.
Chad: Yes.
Hendrik Schmahl: And I think there were growing successfully and now they have one and 1,500 employees or something like this. I'm not so quite sure, but, so they're getting recognizable.
Joel: They're getting ready to expand into the US.
Chad: Coming to America baby.
Joel: And that's a big, big, big step.
Chad: Yep.
Joel: That's Neil Diamond right there.
Chad: That is Neil Diamond worthy. So we work remotely. Is there, is education in Germany focused on startups? Are governments focused on giving money to companies? Like what's in the water in Germany that's starting all these companies? Because this is something new in our industry.
Hendrik Schmahl: I think first of all Berlin is quite creative in the major hub for startups in Germany, followed by Munich. And now it's Hamburg I think.
Chad: Is that capital money? Is that investment?
Hendrik Schmahl: No.
Chad: Private money?
Hendrik Schmahl: It's private investment money.
Joel: Okay.
Hendrik Schmahl: But for me, it's a source, it's a creative people. So we are quite international in those cities. So it's not all about there's a German starting a startup. Yeah. It's more I don't care where they're coming from, but there's the environment, there's the ecosystem, and there are a lot of platforms you can exchange to learn from each other. And then you collaborate. And then I think ideas are getting larger and larger and then it becomes a company.
Joel: Well, when you don't have to go to Silicon Valley to get money, that makes a big difference. And we're seeing this happen in Europe, and we talk about it quite a bit on the show.
Chad: Yeah. But it's not... I mean, the Silicon Valley money, I mean Personio, they got a lot of cash. Right? But it's almost like they're spending cash better in Europe than they are in the US. I mean they're getting so much cash, or at least they were. Right? We were on that sugar rush for a while, and then there were nothing but fricking unicorns being manufactured. Do you think that as we take a look at all of these startups who got a lot of money, that we're gonna see a lot of dead unicorns soon?
Hendrik Schmahl: I hope [laughter] actually. I hope.
Joel: You hope?
Hendrik Schmahl: I hope.
Joel: Explain, explain.
Hendrik Schmahl: Yeah. For me it's... In my particular profession, if you look what are kind of startups and unicorns over there then there are quite a lot of similarities across the startups. And like everything which is quite often there must be a consolidation. And then I even think that they're either making it together or then they're just disappearing. But for sure that they will be using the new technologies, the new logics and possibilities.
Joel: Yeah.
Hendrik Schmahl: There must be unicorns. Yeah. And there's something becoming a unicorn maybe next year. And then there's getting commodity after three years. Yeah? So it's more like, I think there's a pace and the passion of technique and possibilities, they are just... They're there. They're just able to use it.
Joel: I want to pivot us.
Chad: Pivot.
Joel: I want to pivot us to something that the HR practitioners out there need to hear, they probably want to hear, is around business and being more focused on business. Now, I know that, I mean, that's really, that's your wheelhouse. One of the things that we haven't been able to do, a lot of CHROs see themselves as cost centers instead of the actual people who are the heart and soul of the organization that make things work. 'Cause without talent, can't build cars. You can't develop cars, you can't... Right? You can't do any of this. So what are you doing to be able to help those companies get past time to hire, cost per hire and get all the way to the bottom line? Because the bottom line is the only thing that the board and the CEO and the C-suite care about, all the rest of those, they don't care. So what are you doing to help them?
Hendrik Schmahl: We are helping them by the portfolio and the impact of the P&L.
Joel: Yeah.
Hendrik Schmahl: As we're really talking about, okay, what is necessary, either in your supply chain, in your whole value chain. And what is it meant to be influenced by HR or by the workforce, by the people, by the skills you have or not have anymore, and so on. So it's more about becoming the business partner. That's an old fashioned word. Yeah. Like a buzzword. But understanding the business is first, listening to the business, is even weird. But that's a necessity. And then we are consulting CHROs or the HR organization that's more like a, should we really talk with a business or do they really know what they are expecting from HR?
Joel: Right.
Hendrik Schmahl: They say, Exactly. Listen to this, understand it, and then get the sense for the P&L impact. That's not about getting the payroll right. Yeah. So that's commodity. But it's even hiring. Yeah. As we hire as the best people in the short time when they are really necessary and on time, on sequence, we would say. Yeah. That's something that has an impact. If you're looking for salesperson and then they're not there, then you are not selling anything.
Chad: Well and especially vital roles, right. Because we just saw many of the FANG organizations, the Facebook, the Amazons, the Googles, they were bloated. They did... These were not vital positions. They were hoarding talent. Right? And now they're flushing talent out. And then we're starting to see more companies and more companies doing that, who were trying to keep up with them before. Are we going to start focusing on the vital roles as opposed to just because the CRO wants to fill more roles, we know that the roles that we are focusing on are vital as opposed to we're just, we're just burning cash.
Hendrik Schmahl: Yeah. And the other perspective. Yeah, you have a platform where people are working and all aiming for the same target. And that's great. There's creativity in the room, and then you develop something. But how to make out of a platform, a real functioning organization? That's something most of the countries are not capable to do. You may have incubators Yeah. And becoming a new business unit with new ideas with new people. Yeah? That there's something like that. But we have the governance in place that has to be applied for this too.
Joel: Yeah.
Hendrik Schmahl: We have all those procedures and so on. But then they are starting to struggle, and then they are losing the talent again. It's more like a platform capability. And I don't want call it agile organization. Yeah. It's more like, it's really a platform. It's a competence. And then being able to distinguish between your hardcore production stuff.
Joel: Yeah.
Hendrik Schmahl: Where there's crazy ideas. My new products, my new innovation actually.
Joel: That sounds fancy. Platform.
Chad: We're here at the Unleash World Conference in Paris. We're here in the Textkernel booth. What are some of your early takeaways and insights from the conference?
Hendrik Schmahl: As I'm very impressed by all the startups I don't know.
Joel: Yes.
Hendrik Schmahl: So I really, I'm here actually to run around getting known each of the companies, of the startups to be just ahead of the new wave of innovations coming up. It's more like, you know, the standard softwares.
Joel: Yeah.
Hendrik Schmahl: And what they're capable. I love Textkernel. Yeah. I was really grateful for all the skill management and recruiting stuff. There are so many add-ons. Yeah. So many actually using AI stuff to make lovely work perfect and even smarter. That's actually why I'm here. And I'm very excited. So I met already 20 companies, I was not aware of them.
Joel: Excellent.
Chad: What an optimistic, feel good way to close this interview with Hendrik Schmahl everybody. He's the partner at EY. If they wanna know more about you Hendrik where would you send them?
Hendrik Schmahl: To LinkedIn actually.
Chad: LinkedIn.
Joel: LinkedIn.
Chad: That's Hendrik Schmahl everybody. We out.
Joel: We out.
Outro: Wow. Look at you. You made it through an entire episode of the Chad and Cheese podcast. Or maybe you cheated and fast forwarded it to the end. Either way, there's no doubt you wish you had that time back. Valuable time you could've used to buy a nutritious meal at Taco Bell. Enjoy a pour of your favorite whiskey. Or just watch big booty Latinas and bug fights on TikTok.
Outro: No, you hung out with these two chuggle heads instead. Now go take a shower and wash off all the guilt, but save some soap because you'll be back like an awful train wreck, you can't look away. And like Chad's favorite Western, you can't quit them either. We out.