'Compensation is very important' amid labor market tightness: Booz Allen CFO

Yahoo Finance Video
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Lloyd Howel, CFO of Booz Allen, speaks to Yahoo Finance Live about companies' efforts to keep talent, retain diversity, and hiring trends during the great resignation.

Video Transcript

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ADAM SHAPIRO: So we always talk these days about the great resignation. Perhaps we should expand the discussion to the great retention, and talk about what companies are doing to retain the people who they consider to be the talented among their staffs. Let's bring in Lloyd Howell, Booz Allen Hamilton CFO, to talk about this and the trends we're seeing, not only in hiring, but in people who are perhaps leaving to better their situation. Thanks for joining us.

LLOYD HOWELL: Good to be here.

ADAM SHAPIRO: What do you see in the recent job reports, you know, whether it be the JOLTS number or even, you know, the labor employment situation that our bosses should be paying attention to?

LLOYD HOWELL: Well, it was clear in the November jobs report that was released on December 4th that what we've seen is a highlight, a record 4.5 million workers quit their jobs in November. Furthermore, in the January 7th December's jobs report release, we saw that the economy was adding fewer jobs in December than what was expected. So only 199,000, when 422,000 was expected.

The report also highlighted the unemployment rate dropped to 3.9%, which is better than the 4.1 estimate. But the collection of these reports clearly point to it's clear that, to be an employer of choice, you have to recruit and retain top talent.

- This morning, JPMorgan Chase reported quarterly results that showed an increase in costs due to greater compensation expenses. And CEO Jamie Dimon said the bank wants to be very competitive on pay to attract talent, even if it squeezes margins a little bit for shareholders. Is Booz Allen taking a similar approach?

LLOYD HOWELL: We are. It is clear that we are collectively weighing into a very competitive labor market. And we at Booz Allen have been fortunate to see an increase in our labor, to the tune of 4.3 over the course of getting to a 2.1 billion record revenue. We saw an increase of about 6% year over year, as well as headcount growth of 2.3 on a consecutive quarterly basis.

So compensation is very important. We are in a position where we're able to pass on that increase. Our clients also recognize the tightness in the labor market, and are demanding that skill set. So we are recruiting and sourcing the best talent we have and trying to meet the expectations of the labor market.

ADAM SHAPIRO: How should your clients or even bosses react when an individual says, look, I am going to move on? Should it be an immediate decision, I'm going to attempt to retain?

LLOYD HOWELL: It should be. We feel, at Booz Allen, we've got a holistic view as to one's career. So part of our retention is really the retraining, retooling of our folks, redeployment, and really engaging them on what are their career aspirations. And for the most part, we've been able to do that successfully. Again, very competitive labor market, lots of opportunities for candidates to pursue, but we feel that we've got a very strong value proposition for our workforce, and apply lots of different techniques and are able to invest in them in a manner that, certainly through the pandemic, has resonated.

- In terms of recruiting and retaining diverse talent, how does that start for Booz Allen, and how do you ensure that you're continuing to maintain an environment that is welcoming and critical for these diverse talent to continue to succeed?

LLOYD HOWELL: Well, we certainly feel that you've got to walk the talk. And it starts at the top. In 2021, 30%-- 36% of our new hires were BIPOC and 30% were female. At our board level, we've got 73% diverse representation. 45% of our board members are women, 18% African-American, 9% Asian-American, and 9% Hispanic.

And that flows down to our executive leadership team, which is almost 90% comprised of women, 8 out of 9. And that's very visible to our workforce and, quite frankly, to the broader business community. So in addition to this-- you know, the statistics, we also have launched a diversity and inclusion program that really is inclusive and includes all of our workforce in an active dialogue with them about what we can improve upon, initiating programs, and what part they play, as we always seek to improve when it comes to diversity.

ADAM SHAPIRO: When you identify people that you might want to recruit in, there are obvious things to do, but are there new techniques to help recruit people to join an organization that you could share with us?

LLOYD HOWELL: What we're trying to do is really make the experience more intimate, and really address kind of the unspoken concerns or questions that a candidate may have. And it starts with the interview team. We work very hard to have a diverse interview team. We try to connect and build a relationship through the recruitment process and speak to all candidates about career aspirations, and how Booz Allen is a best fit for them.

Beyond that, once a new colleague is on board, we surround them with a host of support mechanisms that include diverse programs, diverse forums. We encourage them to not be shy about what they observe, what they would like in terms of their experience. And we're really focused on the inclusion side of DE&I.

What we have learned is that it's one thing to onboard a diverse talent, but it's another thing to retain. And inclusion is very critical to the success in that endeavor. So again, holistic. It's very consistent with our core values around diversity. And we're always looking to walk the talk.