- Major support for Carolina business review provided by Colonial Life.

Providing benefits to employees to help them protect their family, their finances, and their futures.

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And Sonoco, a global manufacturer of consumer and industrial packaging products and provider of packaging services, with more than 300 operations in 35 countries.

- Low country company Blackbaud was exactly where they should have been decades ago.

And it's panning out now post COVID.

CEO of Blackbaud will join us later on this program.

I'm Chris William and welcome again to the most widely watched and longest running program on Carolina business policy and public affairs seen each and every week across the Carolinas.

In a moment, we kick the dialogue off with Andy Shain of the Post and Courier and Laura Ullrich from the Federal Reserve here in the Carolinas.

We hope you stay with us cause we start now.

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The Duke Endowment, a private foundation enriching communities in the Carolinas through higher education, healthcare, rural churches, and children's services.

On this edition of Carolina Business Review, Laura Ullrich from the Federal Reserve Bank of Richmond, Andy Shain of the Post and Courier, and special guest Mike Gianoni president and CEO of Blackbaud.

(upbeat music) - And welcome again to our program, Laura.

Nice to see you, Andy.

Welcome back to the show.

Andy you get the first pitch about a week ago, certainly a tragic news.

Not unexpected, but long time South Carolina Senator, Hugh Leatherman, one of the most powerful men in the state and you could say rose to the iconic status of a Strom Thurman type of leader passed away.

How would you characterize Leatherman's impact on the Palmetto state?

What would you say?

- His impact in the past couple of decades was immense.

This was the man who essentially controlled the state budget over this period.

If you wanted anything done, if you basically - And that's not overstating it, right?

You're not overstating.

- Not at all.

And it's unique cause in South Carolina, it's a, we're a legislature heavy state.

It's really, the governor doesn't have much power, the legislature wields power.

So if you run the budget committee such as the way Senator Leatherman did, you wield a lot of power and he also was on a lot of other committees, including those that oversaw road priorities, that oversaw salary, salaries for agency heads.

I mean, this was the one person you needed to go to for a lot of things in South Carolina.

You know, one of the things he, one of the legacies he will leave is that he helped negotiate the incentives that brought the Boeing plant to North Charleston.

In fact they, he was jokingly called Senator Boeing because of his support.

And also he did it again when they, when, when Boeing expanded.

So again his, his, his contribution and his influence in the state cannot be measured.

And it's, it's a huge loss for those who are economic develop fans of economic development in the state, because he was very pro economic development and giving those incentives so that South Carolina could win these jobs, win these businesses.

- Yeah, thanks Andy.

And of course our, our sincere condolences and respect to his family and those who worked with him.

Laura, let's bring you in the conversation.

Andy used the term jobs.

Boy, we can't not talk about jobs, workforce, labor participation, the rate of employment, the rate of unemployment.

Are we forever changed, Laura?

Is that, when the Fed looks at jobs, how would you describe what's important to know about jobs and labor now?

- Yeah it's a great question, Chris.

And I'll, I'll say this is really what I'm spending a lot of my time on these days, is looking at the job situation in the regional comments for North and South Carolina.

So I cover both states.

It's a very interesting situation right now because at this point (audio cuts out) levels, so we're making as much stuff in the United States as we made pre COVID, but we're doing it with 4.2 million less workers.

And so in the state, in the Carolinas, we have fared better than the nation as a whole.

So as of the last report, North Carolina was down 2.25% employment, South Carolina, 2.2%.

So very similar compared to pre COVID level.

So the question is, who are the people that have left the labor force and can we get them back?

We can see that the labor force participation has gone down.

Nationally we're about 3 million people short.

It looks like about 30% of these, or maybe even more were early retirements and accelerated retirements.

It is unlikely that those folks will return to the labor force because many of them have turned on social security and they've decided to retire, but the other 70% that have left that aren't retired now that aren't in the older age groups, they are likely to return at some point.

I think the question is when and how do we get them to come back?

- Andy, let me loop you in on this.

Before we do that, Laura, I'm wanna tell you on the fly here, we're having a little technical issue with your audio.

So just make sure there's nothing covering your microphone up, or you're not hitting it.

Andy, let's talk about this workers in the skills gap, because this is, this is not a new phenomenon.

As you well know, companies, organizations have been complaining for years that they can't find the technology or the, or the, or the skills or the, or the bench that they need.

It seems exacerbated, but yet business kind of goes on.

So is it a crisis?

Is it something to complain about?

And that's an understatement, but I mean, how do you characterize it?

- Well I mean, what we're, what we're seeing here in, in my part of the, part of the state of South Carolina is we're seeing businesses shutting down temporarily.

So if we have a chain.

- Is that the answer to the labor thing?

- And that's what it's, and that's what it seems to be, or cutting down hours.

My local gym, cutting down hours.

Our local meat and three, as we say in the Carolinas, closed one of its locations, because again, they needed to consolidate workers at the other locations.

We're, we are seeing a local coffee shop, again, closing one of its locations.

In fact, it's downtown location where you could imagine probably business is down because folks are staying home and the downtown crowd isn't coming in, again, closing temporarily.

And, and again, adjusting hours, adjusting schedules to make do.

I, you know, I think the most common thing we're gonna see this holiday season, in addition to Christmas wreaths and Christmas decorations, are help wanted signs.

Those are just all over the place.

You cannot turn around and, and, and not, and not miss one or not see a big something on the highway saying look, we're looking for help.

- You know, can I, can I follow up with something on that, Chris?

So I think one of the really interesting things for us to be paying attention to, and there's some right now, some, some interesting pieces that have been written on this is the demographics of the United States.

And if you think about the baby boomer population, you know, this huge population that really provided an immense amount of employees, right?

At a time when also women were entering the labor force at much higher participation rates.

So we really had this wave in the seventies, eighties, nineties of employees.

And now that the baby boomers are retiring and I read the other day, the typical year there's 2 million baby boomers that retire and this last year 3 million retired.

There were an extra million.

There's not another generation behind them that's the same size, right?

People have had fewer children, and so these entry level jobs, there may be a dearth of workers for, you know, when you asked, have we changed permanently?

This may be more of a permanent thing.

This may not be a COVID thing.

And so.

- Laura, but let me tease something out on you.

You talked about those that retired early, maybe around a million, and that's gonna be, apologies for the way I'm gonna ask this question.

Can people afford to retire at that?

I mean everyone is inaffluent, right?

- Right, but actually baby boomers on average have about $1.2 million, and now that's on average, that's on average.

So the median is probably less than that, but the baby boomer generation is a wealthy generation.

And so I think so, I mean, or they're at least making the decision that they did all right.

It'll be interesting to see maybe 20 years from now if they still have enough money.

But, but I think they believe that they do and this period of time has been interesting because while many businesses and many individuals have struggled during COVID, the stock market has done very well.

Right?

So people's retirement accounts, their 401ks, their IRAs look a lot healthier now than they did pre COVID.

- That's of course, assuming capital markets hold up and kind of go the other way and the wealth effect all of the sudden becomes not wealth.

- If you don't mind me asking, I'm kind of curious Laura and Chris, what you guys think, what you all think of the idea that basically also for the folks who are not in the baby boomer, who are younger, the reason they're not coming back to these jobs is A, they obviously, we had all the stimulus money come in and B, wages really haven't gone up in the Carolinas.

So why am I going to, why am I gonna go ahead and go take a $10 an hour job when I've saved up all during this time because I wasn't spending money during COVID and I was getting money because of the, the three waves of stimulus that came through.

- So I will say Andy, the evidence now is that especially lower income families that would have people that are making, you know, $10 an hour and I'm, they do still have some extra savings, but not enough to float them for a period of time.

I think actually it's a much more complicated matrix of decisions that people are making.

And it's about childcare, it's about feeling safe at work, it's about health, it's about all the stimulus from last year.

It's about all these things, and that's why when, when the, you know, unemployment insurance ended, some people thought we would see this rush of people back in the labor market.

And we didn't, and I think that's because it is this really complicated matrix.

You know, I feel like I've told people a thousand times this last year, but I'll say it one more time.

As a working mom of three, this has been the hardest 18 months I've ever had being in that demographic.

And so, you know, I think about what would life be like for me, if, if I wasn't my demographic and was only making 12, $15 an hour?

I might've made a different choice too, right?

So I think, I think families are having to make decisions with a really complicated set of inputs.

And so getting them back into the labor force may also be equally as complicated, unfortunately.

- Yup, okay.

We're gonna, we're gonna have to move on.

Good point, Andy.

It was a good question.

And thanks Laura.

Andy you get the, you get the last pitch here.

We've got about a minute and we'll bring our guest on.

Transportation, infrastructure, raising money, take your pick.

Right at the center of South Carolina, pretty stinking close, centralized is this, this project that is unaffectionately called malfunction junction.

So the idea that a DOT in South Carolina is remaking a critical juncture.

Where do you think that ends up, especially given now that we, seems like we're pulling out of COVID and this public health crisis.

How do you think that plays out?

- Well, and again, for anyone who's driven through Columbia, they know what malfunction junction is.

It's the intersections of interstates 20, 26, and 1-26.

And for those who don't know, interstate 26 intersects the entire state.

So you're going from the upstate through the Midlands, to the low country.

So you know, all those trucks, again we've been talking a lot about logistics, has to get through this very crazy, this, this, this very busy, this very crowded and poorly designed intersection.

So for the next eight years, they're gonna tear it apart.

So we all know with any construction project, things get worse before they get better.

So, you know, it's a $1.7 billion project.

It's the largest roads projects in South Carolina history.

It was the number one project on the hit parade before COVID, of course money is coming in to help it.

But that said, it's gonna, it's gonna have a major impact throughout South Carolina and to a certain degree, even, even Charlotte too.

Again, I-77 coming down from Charlotte, it ends in Columbia.

It ends near malfunction junction.

Again, you hit 26, you know, you go to the right, you go to the upstate, you go to the left, you go to Charleston.

And essentially, you know, it's, it's gonna be interesting to see how this plays out, but, but there are many people in South Carolina and I'm assuming, of course, also in North Carolina, who, who come down here who are gonna be happy once this is done and taken care of because it is such a mess, but you're gonna have to put up with the traffic in the meantime.

- Okay.

Thank you.

And we know from, from street chatter, no pun intended, that a DOT secretary Kristi Hall is probably the exact right person to lead that.

Andy, thank you.

Laura, thank you.

The great hockey player Wayne Gretzky once said, to be successful you need to be where the puck is going to be.

Well Blackbaud out of the low country, technology slash good firm that does good and well was certainly there in the early days of digital transformation and all things around ESG.

We welcome now the CEO of Blackbaud.

We're glad to see Mike Gianoni.

Mike, welcome to the program and thanks for joining us.

- Thank you.

Thanks for having me.

- Mike, let's talk about this idea that we've all experienced now that the transformational thing that we, the thing, the just transformational moment in our, in our history.

So we've got digital transformation.

We've got this future of, of workforce where we're working remotely.

We've got a term that you coined, if you don't mind me using called location agnostic approach.

Mike, when we take all of these things together and we hear all the great things about working remotely, the darker part of that is quality control productivity, the integrity of the worker, the casual nature.

How do you square those and how do you manage those in an environment kind of like Blackbaud?

- Sure.

Yeah it's been quite interesting in the last 20 months.

What I believe has happened is we've seen an acceleration of what was gonna happen anyway.

Especially for information based companies like Blackbaud, we're a cloud software company.

I think this applies to financial services and any business that's information-based.

So for us, you know, the pandemic which began in, in March of 20, we became quite aggressive probably in, in just a couple of months after it started, related to thinking about the fact that we were gonna be a remote first company.

We had always had about 25% of our employees being not near a Blackbaud office.

And so this was not new to us, but the rest of the company moving this direction was, was quite new.

And we did quite well.

We had, in the previous five or six years, had gone through an internal transformation of our IT systems.

And so we were able to support this fast move to all of our associates being remote.

We also had really started to focus a few months after that, so call it August, September, a year ago, in training our 500 or so managers around leading in a remote world.

So things like onboarding new associates, running team meetings, building one-on-one relationships, and how to be a leader in a, in a world that's remote because we knew it was gonna be for a long time.

For us now it's permanent.

And so we've started to focus on sort of the softer side of leadership and development and culture and relationship building over a year ago now, knowing that, you know, running the operations remotely was gonna be permanent.

Now from a quality standpoint, we had already put in the metrics in each of the departments in our understanding productivity and quality.

And so things like our call center, software engineering sales, we already had those metrics because again, 25% of our workforce was remote.

And so we had partial, each of those departments, partial of the total headcount was remote.

And so we're able to build on what we already had put in place and it has gone quite well.

We, we had not missed a beat operationally and in every department in the company.

- Well, I'll open this for questions.

Laura, question?

- Yeah Mike, to follow up on that, I'm curious how that impacts your, your acquisition of talent, so people.

Have you opened the door entirely where people can be located anywhere across the country?

And I'm also curious if it goes even beyond the US borders, does this allow you to recruit some, some talent overseas?

- Sure.

Yeah.

It's, it's been fantastic for us Laura.

We started this immediately ,probably April of 20, and we basically removed the zip code requirement of a job and it was more about time zones than zip codes.

And time zones meaning, what team are you on and what time zones are they in?

Or if you're a customer facing associate, you have to be in a relative's common time zone.

It's easy in the US with, you know three hours, but we're an international company so we had to be cognizant of time zones.

So we started that immediately.

And our access to talents in diversity is like never been, we've never had before.

And it's been significant.

So we spent now 20 months hiring in this way.

And so we're bringing on folks from think, you know, Silicon valley engineers that don't wanna move, senior operating executives in Toronto.

And it's just been fantastic.

And so it's, I believe we've sort of laid down a new future of Blackbaud, which is a lot more diversity, which is in our ESG and DNI programs, which has been a lot more successful because of removing the requirement of zip codes and then access to talent is like I've never seen before.

And this is my 40th year in the tech industry.

It's been really fantastic.

Even things like our, our internship program was 95% diverse.

- Wow.

- Andy?

- Let me ask you, I know you said you cannot comment about the 2020 ransomware attack on Blackbaud, but in general, can you talk about what tech companies can learn from these kinds of breaches?

From these kinds of attacks, seeing how they seem to be happening more often?

- Yeah, sure.

Happy to.

I can comment a little bit on that.

I mean, we got some legal stuff going on.

I can't talk about that, but in general, you know, we did really well in that because we were one of the few that sort of discovered the issue and shut it down before it impacted our operation.

So we never had a negative impact to our operation.

We had some negative impact of some data being exposed for customers, but the operation was never impacted.

This is, I think the biggest problem we have related to, you know, foreign influence in the US.

It's a war, and a lot of people don't understand the scale of this.

Here's an example.

This is a multi-trillion dollar industry with a T. This is not a couple of folks in a garage, right?

If you wanted to spend a couple of hundred thousand dollars, you could buy software and be a cyber criminal.

It's for, softwares for sale.

It's very sophisticated.

It's nation state sponsored.

Here's another data point, which I think is interesting.

So we have a lot of sophisticated software systems that sort of monitor what's going on, and we can see sort of generally traffic out on the internet.

This, these are not things that impact us, but, so we see a flow of bad things if you will.

You can't imagine what, what the volume is.

In a single month, it's almost a 100 billion instances monthly, and that's just what we see because it's all software automated attempted attacks.

This is a massive problem and we can't expect every business from a two person coffee shop to the multi-trillion dollar market cap companies we have now, to be able to alone protect themselves because institutions of all sizes, all sizes are being breached.

It's a massive problem.

- Let, let's go to, I wish we could drill a little bit more into that one, Mike, but let's, let's talk about these things called environmental social and governance or something, you know, well called ESG and many companies have ESG.

So the operating divisions of companies now include ESG and also as, you know, a diversity equity and inclusion DEI.

So they have become permanent fixtures of large and small companies.

How do you manage that is not a profit or even income center?

Maybe it is, maybe it isn't, but how do you make sure that that is, that it's assimilated into the company as it is, and as it should be, and not just a box to check?

- Yeah, sure.

So we, we at Blackbaud got started early in this and you know, the ESG trend really came from Europe.

European companies and European institutional investors who are much more focused on it.

And obviously the last couple of years, you can't listen to a business station and not hear the letters ESG in the US now.

And so that's a very big and very important trend.

As far as operationalizing it, I believe it has to become part of the regular cadence of the business.

So what we've done at Blackbaud, we have a regular cadence of things like monthly operating reviews.

We do things like annual operating plans and then three year strategic plans for things like software sales and different kind of, sort of operating units.

We've treated ESG the same way.

So we've got a steering committee, we have a monthly operating reviews of how we're doing.

We've got metrics set up.

We've included now and incorporated ESG at a board of directors level in our governance committee.

So there's board involvement and board oversight, you know, we're a public company, so we want to include it there as well.

We have now built for example, this time of year, there's a 2022 ESG plan and operating plan.

And there's also a three-year plan with metrics based on where we want to take ESG and DNI and Blackbaud.

So it has to be a part of the regular part of how you run the company.

- Laura?

- Yeah I want to ask, ask a question about the, the cybersecurity issues you were talking about.

Because in my head I spent a lot of time at the Fed thinking about workforce and, and, how you know, increase employment.

What types of skills are you looking for to have in your employees?

And what types of skills are other companies looking for to try to prevent these types of events and to protect the data that you do have?

And is it a hard time finding people with the skills?

- Yeah, so yeah there's a lot of skills required.

There's a core set of folks you need that have cybersecurity specific backgrounds that become a centralized group that are, that run sort of a governance function company-wide.

But then over in our engineering teams, everyone that's a software engineer needs to be skilled around the product they work on and the requirements for implementing best practices and cyber.

And then corporate IT needs to bring in best in class software solutions that we implement from cyber security software companies that we deploy inside of our business, and then every employee in Blackbaud goes through training and they must pass and be certified around cyber security related to using their laptops.

And so it's, it's, it permeates everything that we do.

We also, we also ask the board to participate in that.

So it really is every employee.

So you have sort of your, your core centralized experts and there's a war on talent related to those folks.

And then you've got basically every employee plays a role in this, everybody.

- Andy, we literally have a minute left.

Do you have a quick question?

- Sure.

You know, you talked about obviously how you're having more people work remotely.

What, what does that mean what you're going to do with your corporate headquarters you have now, as well as there were expansion plans, of course pre pandemic with, with all of this.

What does, what does that do to you, to your real estate functions?

- 30 seconds, Mike.

- Sure, sure yeah.

Well we're, we're remote first, so we're all remote.

We eliminated 50% of our global real estate a year ago.

We're gonna do, we're gonna eliminate the rest.

We're keeping our global headquarters and it's gonna be a building that's sort of a coalescing center.

So we'll have monthly operating meetings there.

We had a group of customers in last week.

So we'll use that as sort of a gathering place for, for the company.

And we will not be expanding beyond that at this point.

- Mike, thank you.

I'm sorry to rush at the end there cause that's, that's a deep one and that's a big one, but thanks for joining us and please come back.

- Yep.

Thanks for having me.

- Thank you, Mike.

Nice to see you, Laura.

Thanks Andy.

Until next week, I'm Chris William.

Hope your weekend is good.

Goodnight.

- Major funding for Carolina Business Review provided by High Point University, Martin Marietta, Colonial Life, The Duke Endowment, Sonoco, BlueCross BlueShield of South Carolina, and by viewers like you.

Thank you.

(upbeat music)