Unlocking Human Potential By Rethinking Talent Development for a Flourishing Future of Work with Stacey Dietsch

Ashish Kothari:

Hi Stacey, I am so excited for this conversation. Thank you for joining me on this Happiness Squad Podcast.

Stacey Dietsch:

I'm thrilled to be here. Thank you for the opportunity.

Ashish Kothari:

Stacey, you've had an impressive journey. You were one of my favorite partners at the firm—at McKinsey. In our old practice, you led all of our greatest thinking around talent and learning and development.

Then you transitioned and moved to Liberty Mutual, right? From consulting to really talking about real experience. Not many consultants have real experience like you actually do.

I'm curious—as you think about your life’s arc—who are some people or what are the philosophies that have really shaped your perspectives on this topic of talent and leadership?

Stacey Dietsch:

I love starting with this because it invites me to go way back. The first person who comes to mind is actually my dad, because he gave me—from the earliest days—an understanding that everybody matters, has something to offer, and deserves to be heard and valued.

He would talk to everybody: the receptionist, the janitor, the executive, the person passing by, the young children of friends. At his memorial service, there were so many people who came up to me and said, “Oh my gosh, your dad just always knew and remembered what was going on in my life,” and really made me feel special.

That’s something I've always taken with me—thinking about what those special ingredients are that each of us has within us that need to be exposed and unleashed, so that we can make a meaningful contribution in whatever way we want, just by being who we are. That’s really the first thing that stuck with me.

Then I really was not sure growing up what I wanted to do as a job. It was, of course, this amazing psychology professor who showed me that the study of human behavior, the care, the understanding of why people do what they do—why people think the way they do—and how you can positively influence behavior toward a good end, really helped me see that there was a connection between that first lesson of my dad’s and helping an organization, team, or individual find meaning through impact in their work and life.

The third thing is really the firm, and the way we talked about feedback. It’s in that opportunity of seeing where you have blind spots, where you have opportunities to grow, that you can propel yourself forward. It’s always so thrilling to watch somebody overcome a challenge and demonstrate a big leap in performance.

Ashish Kothari:

That's amazing. This notion of how special we feel when we run into people like your dad—what a beautiful gift. When you're with someone who's fully present with you and really makes you feel special.

Stacey Dietsch:

Exactly.

Ashish Kothari:

It’s such a gift. Who was the professor, by the way, who informed that second story?

Stacey Dietsch:

Oh gosh, her name was Professor Greenberg. It was so early in our journey of digitization that I definitely lost touch with her. I’m hoping she knew from our last interaction that she made such an impact. But I’m not sure if she did.

Ashish Kothari:

at the firm, and only around: 2014

The three people whose work I’ve been so blessed to learn from—I've read almost every book they’ve written—are Jane Dutton, Kim Cameron, and Bob Quinn. They're all at Michigan Ross, at the Center for Positive Organizational Scholarship.

Stacey Dietsch:

That’s such a special place.

Ashish Kothari:

Unbelievable. The role of positive, energizing leadership—ways of showing up that energize people—and the power behind it. There’s such a big science around this work.

Now I know why you made such a big impression on me—because you had a lifetime of these learnings propelling you. Amazing. Thank you.

At Happiness Squad, we define flourishing cultures as being made up of five ingredients. Imagine an organization where you find meaning in what you do—not just a paycheck. A workplace that energizes you, excites you to show up on Monday. A workplace that helps you learn, grow, and be adaptable—not bureaucratic. Somewhere you enjoy deep, trusting relationships and friendships.

And finally, an organization that conducts work in ways that allow people to be at their cognitive best—versus drowning them in a game of meeting bingo all day long.

That’s how we describe it. And when we find that, we find a much higher level of wellbeing for people. But most importantly, performance skyrockets.

Stacey Dietsch:

 Yeah.

Ashish Kothari:

I'm curious how your experience around these five factors—through your research and time at Liberty—resonates with you. Are there any additional factors you found to be equally important to create flourishing organizations?

Stacey Dietsch:

I love the factors that you mentioned, especially starting with purpose. When somebody has that authentic connection between their values and the "why" behind their work, it’s foundational. When there’s tension there, you can’t really escape it. It’s a baseline that you need to overcome for anything good to happen.

The word I like to reinforce over and over again, and I think it connects to your ideas of both energy and life force, is empowerment. That ownership—the ability to own your work, to be respected for the expertise you bring, to be supported in owning something end to end—I think that’s really fundamental.

That’s when people can be at their cognitive best—because they are trusted to do the work.

Your point about bureaucracy, your point about meaning—those really resonate. When people feel like they are constantly explaining their work to others instead of doing it, delivering it, and ultimately being able to celebrate the impact of it, their energy is truly diminished.

You can see the productivity decline. You can see the performance decline.

And a word that’s near and dear to your heart—this notion of burnout—comes when people feel disempowered and unable to show up as their best.

Ashish Kothari:

Yeah, I love that. And with empowerment, I would include things that are so often getting lost right now—like flexibility and autonomy.

Stacey Dietsch:

Mm, right.

Ashish Kothari:

I read this somewhere and it really spoke to me: we hire adults, but somehow we’ve started treating them like children. Where are you going to work? When are you showing up? What were you doing?

If you treat people like that, they will act that way. And then all of a sudden, it’s not exciting. You just feel like a cog in the wheel. “I’ll give you what I’m supposed to.”

Stacey Dietsch:

Exactly. There was a book I was exposed to through a client, during a leadership development program we were doing. They had read the book, and we invited the author to come and speak.

The author is Liz Wiseman, and the book is Multipliers. Her concept was that we hire—like you said—adults, talented people, and then the construct of the work environment diminishes the talent of the workforce or individual, because of systemic factors and also leadership behaviors.

What I found really interesting is that there are some truly terrible people who purposely diminish the intellect and abilities of their people, but they are few and far between. A lot of us are what she calls “accidental diminishers,” who, through our own strengths taken too far, unintentionally cause this.

For me, my accidental diminisher quality is optimism. I just believe anything is possible, that everything should be easy. But when you are that way, you don’t always take into consideration how much work it's going to take. Do you put in all the right constructs and things?

So that concept of being able to magnify—or exponentially increase—somebody’s cognitive ability versus doing anything that is diminishing, even accidentally, their ability to show up and do their best.

Ashish Kothari:

I'm going to order that book. I read a book a week—sometimes more—and that’s definitely going on my list.

By the way, this also resonates with a conversation I have all the time. I know a leader who’s always complaining—always—that his team is not thinking critically enough, fast enough, aggressive enough. He has to step in to solve the problems.

Stacey Dietsch:

Mm, right.

Ashish Kothari:

It’s a classic example. You might know all the answers, but if you keep giving your team the answers, they’ll get cognitively lazy. And if you keep correcting them, then they’re not going to come to you—because they’ll think, why put in the effort if I’m just going to get the answer from you anyway?

Stacey Dietsch:

 Yeah.

Ashish Kothari:

So you actually amplify the very behavior you don’t want. I loved your phrase—“accidental diminisher.” We’re diminishing people’s value and what they can contribute. It might create short-term gains, but we’re sacrificing long-term growth and, more importantly, draining our own energy.

Stacey Dietsch:

That's right. Exactly. It’s a win-win if we can really unleash the potential of our people.

Ashish Kothari:

I’d love to learn a little more about Liberty. How did you think about your core strategy around attracting and developing talent?

Today’s work is hybrid. The world is changing. There’s a new generation with different values. And now with AI, roles are shifting quickly.

So, as you stepped into that organization and built the strategy to attract and develop talent, how did you go about it? What are some of the key principles that are part of that?

Stacey Dietsch:

I was lucky to come in at a time when Liberty had already set the culture aspiration: to be a high-performing, equitable, and inclusive culture.

Those were the three guiding lights—the North Stars—that anchored the talent strategy. We always had to start with: What performance is the business aspiring to?

If we know the performance drivers and metrics, then we ask: What are the skills needed to achieve that performance? And then, how do we equitably—and that’s the key—attract the highest performers with those skills?

When I say equitably, I really mean with rigor. What we really wanted to do throughout all of our talent processes was remove the bias that often creeps in—not intentionally, but because we’re human.

So, how do we build rigor into the systems so that we start with things that are more objective—like skills?

We’re doing a big skills transformation so we can understand: What are the skills that are differentiators in the performance of the work? How do we show what those are? How do we screen for them? How do we understand where someone stacks up against those differentiators and then help them develop toward mastery of those skills?

It really becomes woven into the entire end-to-end cycle: starting with the most critical skills, selecting for them, developing them, and promoting for them as well. It drives equity. It drives clarity. And it helps prioritize investment in our people’s development.

Ashish Kothari:

I love that. So you started with the business and broke down the skills—really assessed where people are—and, when hiring, made sure to remove bias.

What were some of the specific ways you did that, Stacey? What allowed you to do that effectively?

Stacey Dietsch:

It’s a work in progress, for sure. One of the foundational mechanisms for this was resetting the performance and pay process last year. That really showed we were serious about elevating performance and making high performance the expectation for everyone.

To use a McKinsey expression—we were raising the bar. And when you raise the bar, the obligation is to make that transparent and to set people up to successfully meet it. If they don’t, at least you know you’ve done everything to help them.

We focused on clarifying that set of expectations. For example, we started with a set of people leader commitments, which we’re now translating into a full leadership model.

So, what are the people leader commitments that represent how we live into a high-performing, equitable, and inclusive culture? What does good look like against those?

Then we invited a 360 assessment of performance against those skills.

We also wanted to keep the focus on impact and goals. That made it much more objective. You set goals. Did you achieve them or not? What evidence do you have of achievement?

It removed some of the subjectivity and allowed us to clearly acknowledge someone who outperformed their goals versus someone who struggled to deliver on expectations.

Ashish Kothari:

Amazing. I’m curious about this. One of my dear friends—who we’re collaborating with—wrote a book called The Win-Win Workplace. Her name is Dr. Angela Jackson. She teaches at Harvard.

I’m a constant learner, and for the first time, I encountered a term you might be familiar with: STARS—Skilled Through Alternate Routes—as opposed to traditional ones.

I thought it was fascinating because I’d never thought about it that way. I’m curious—how did your processes think about STARS? How are those included in the strategies you all are working on?

Stacey Dietsch:

Yes. The STARS concept is that you become skills-based versus credential-based. It’s less about showing a diploma from a specific school and more about demonstrating that you have skills. It’s a journey to get there. There are still a lot of hiring leaders who want to see that school or that prior experience, so what we’re trying to do is show through assessment.

Oftentimes, this is done by a third party, although we’re trying to build our own assessments internally. Through assessment, people don’t just list they have a skill, but actually demonstrate it. That’s one of the ways we want to shift toward not filtering people out. We’ve already stopped filtering out candidates based on not having a college degree. Instead, we rigorously assess their skill level.

Certain jobs lend themselves to this kind of assessment more quickly—like technology roles or frontline sales roles. We’ve started to implement these assessments as screens into jobs to make sure we’re setting people up for success, being transparent about the work, and ensuring their onboarding and ramp-up time is faster—because we know they already have the skill.

Ashish Kothari:

What I’m also excited about is with AI, the ability to create more scenario-based intakes rather than just resumes. We know there are biases in AI resume screening, but if organizations take a step forward and create role-based, scenario-based cases—like we had at the firm—it allows people to truly demonstrate their skills. Suddenly, you can open the aperture and see that somebody has exactly the skills you need.

Stacey Dietsch:

Exactly, and you’re already seeing that happen in two ways. One way is interacting in an interview with an agentic AI recruiter that is purely digital. The other way, which often feels better for the interviewee, is when AI listens to the conversation and prompts the interviewer with the right next question. That keeps the human element but helps the interviewer ask the right follow-ups to get at the most important skills.

Ashish Kothari:

Yes. Help the human interviewer be more human, as my friend Rasmus would say.

Stacey Dietsch:

 Exactly.

Ashish Kothari:

Because you’re right—we all have biases. The issue is that we’re blind to them. It’s not that people try to be biased—we all are. So having intelligence that shows us our blind spots and probes further can be powerful. It depends on how we use it.

So, stepping back, with your incredible experience, I’d love your perspective. We are all about building cultures where people flourish. From your experiences, what are some nuggets? What are some hallmarks of companies that build great cultures—where people belong, grow, and want to stay?

Stacey Dietsch:

First and foremost, it comes back to empowerment—making sure people are free to do the work they were hired for and don’t have to justify every step, but can truly demonstrate impact.

I think organizations that invest in leadership development set themselves up for success. All of the research on why people join and leave organizations points to the experience they have with their leader. We are often great at onboarding leaders and developing high-potential leaders, but we forget about the leaders who run the day-to-day operations of most employees.

Organizations that unlock the most potential and productivity are the ones that acknowledge the importance of those roles and invest in them—giving leaders tools for their current job and showing them a path for their own development.

One great indicator is pushing succession planning low into the organization. That way, everyone sees that part of their job is developing themselves and others.

Ashish Kothari:

I love that.

Stacey Dietsch:

If you want the next step in your career, you should be thinking about who’s ready to take your role. It’s not just on the leader—it’s on you. That responsibility of coaching and developing someone else is a great indicator that you’re committed and have the skill to move to the next level.

Building practices around succession at all levels shows an organization is committed to the growth of its people. Another critical factor is the connection between the top team and employees. Leaders need to communicate, connect, and acknowledge that they understand the day-to-day work of people who touch the customer, client, or product.

That takes effort, because “feeling valued by senior leaders” often shows up as a low score in employee engagement surveys. If employees don’t feel valued, it’s hard for them to flourish. The more leaders acknowledge impact at every level, the more employees feel valued and committed back to the organization.

Ashish Kothari:

I love those three, especially the middle one. If you ask employees who decide who gets promoted, most will say it’s someone above—someone who nominates or anoints. But pushing that responsibility down—even to first-time managers—so they’re asked, “How are you developing your next layer?” I really like that.

And I think this is a huge strategic advantage. But what should be common sense, Stacey, is not common practice.

Stacey Dietsch:

Correct.

Ashish Kothari:

Across all my experience, there’s training when people first come in, and there’s a lot of leadership coaching at senior levels. But the middle—the part of the organization actually getting the bulk of the work done—is often the most overburdened and under-skilled. Nobody invests in them, either to execute better or to manage people better.

They’re the most burnt out, often sandwiched between top and bottom. Many disengage because they feel they can’t handle pressure from both sides. They just show up disengaged. I see it over and over: brilliant strategies and smart leaders at the top, excited new employees joining—but in the middle, the strategies die. Nothing happens.

Stacey Dietsch:

This is the population I see the most potential to help through AI. For a couple of reasons. First, AI can help them be better leaders and managers day-to-day by taking repetitive tasks and simplifying them—through something like GPT support.

The other exciting potential is around learning and development. Organizations often have to trade off where they spend L&D dollars, which makes sense for critical roles. But this leaves a huge swath of the organization under-supported.

AI could change that. If employees take their growth plan seriously and aspire to a role, AI can crosswalk their current skills against role requirements and suggest a curated learning plan.

This can take advantage of resources big companies already have, or free learning resources accessible to smaller organizations—like LinkedIn Learning. AI could curate a personalized learning journey at little to no cost.

When employees put that in their growth plan, their leaders see their aspirations and commitment. They improve performance while also seeing movement. The movement doesn’t have to be an immediate promotion—skills-based pay-for-progression models can link credentials or certifications to additional pay. That can motivate people while setting them up for bigger opportunities in their careers.

Ashish Kothari:

That’s music to my ears, Stacey. As you know, one of the things we’re really excited about is building out flourishing with AI. I think there’s real potential to personalize and democratize flourishing.

For the first time, we can give people the skills they need, make it self-paced learning, and help them choose their path. Even in flourishing, with our human capital loss model, we’re creating something that allows every team leader to assess their team’s state of flourishing each month and jointly come up with options. What can we do in the context of performance?

For so many small and medium businesses, it’s about identifying what skills are needed, where people are, and then suggesting pathways in low-cost ways.

Here’s an example. We’re building an AI-forward organization at Happiness Squad. What does that mean? Everyone here needs to be proficient in AI at a base level. They should constantly think about how to 10x their effectiveness by integrating AI into their work.

So I went into ChatGPT and said, “Here’s what we’re doing. Here’s my team. Help me create a curated plan.” It designed an eight-to-twelve-week learning journey we could go on together. We’ll start with AI basics, then prompt engineering, then building custom GPTs, and then agentic AIs.

It literally created a progression with both learning and practice. And it all uses free, open courses we can learn from while supporting each other. It costs us nothing—only time.

Stacey Dietsch:

 Yes.

Ashish Kothari:

I think that’s possible today, and I’m really excited about it. It can be a game changer.

Stacey Dietsch:

Yes, I agree. I heard an inspiring story from a colleague who did something similar for himself. He set his growth plan, asked for a learning journey, and then asked for tests. He said, “You suggested these learnings. Test me. Make sure I understand it. Make sure I can play back what I’ve learned.”

I loved that. Real learning happens when you play it back—when you practice how you would articulate it, practice how you’d put it into the flow of your work. And AI can help us do that too.

Ashish Kothari:

Absolutely. In fact, it reminds me of a moment a few months ago. Ashwin was preparing for his ninth-grade finals. I went up and saw him using ChatGPT. I said, “Hey, you should be studying for your test. Why are you using ChatGPT?”

He said, “I uploaded my sheet with all the concepts I need to know, and I’m having it generate tests so I can keep testing myself.”

Stacey Dietsch:

That’s so cool.

Ashish Kothari:

Right? And for whatever he wasn’t getting, it just generated the next test. That’s how he was learning. I thought, “Okay, that’s pretty cool.”

So we’ve talked about opportunities where AI can be transformative—from human capital development to helping people learn and grow into better versions of themselves, both in skills and as leaders. But I’m curious—what are some of the risks you see that AI represents for human capital?

Stacey Dietsch:

 For me, the biggest risk is leaping in and treating it only as a cost-savings mechanism. I’ve already seen leaders say, “If I can 10x productivity, that means I need 10x fewer people.” That’s not the formula we want.

It also misses the point about investment. This isn’t a flip-the-switch experience. You need to invest—in skills, tools, and technologies—to shift toward automation in the flow of work. Leaders need to understand that before making headcount decisions.

It reminds me of the outsourcing and offshoring conversations decades ago, when companies were thrilled to cut headcount but didn’t realize how much investment it takes to document processes, train partners, and manage them to deliver on objectives.

People need to understand it takes time to realize cost savings from AI.

The other risk is that people forget to think on their own. I love when people frame AI as assistive intelligence—an “and,” not an “or.” Everyone—from interns to CEOs—should have AI assistants to help them do their jobs better, but not to replace them.

Yes, jobs will be lost, and jobs will be created. But every job will change. If used responsibly, people can evolve their workflows at a pace that helps them get the most out of it.

Ashish Kothari:

I sit with this a lot, Stacey, and I see three possible pathways for organizations and leaders with AI.

The first is the one most companies are taking—Microsoft, Google, banks, and others—which is the cost-saving path. As you said, even there, people underestimate the work involved in training AI. And no AI will ever fully replace the collective insights of a group.

Stacey Dietsch:

 Yes.

Ashish Kothari:

Even if you do it right, there’s also a responsibility to employees. If people see widespread job losses, it will delay AI adoption. Workers will think, “Next it’s my job,” and resist. Companies can’t roll out AI completely in every function, because people are watching.

What breaks my heart is that very few organizations are exploring the two other pathways.

The second is growth. Businesses exist to serve a higher purpose. As economist Alex Edmans says, “If you follow the road of purpose, you reach the land of profit.” Too many have that backwards.

In a pre-AI world, we had limited resources. But if AI gives us 30–40% more capacity, why not ask: How many more markets can we serve? How many more regions? What new products can we create? AI can be used to grow the pie, not just split it differently.

The third is workplace transformation. With that 30% capacity, we could shift to a four-day workweek, or at least give people time back. Research shows companies that try a four-day week don’t want to return—people are more creative, they stay longer, they’re more innovative.

Even without four days, instead of overloading people, leaders could let them spend more time on what matters. If 70% of my time is spent preparing for a performance dialogue and 30% on the dialogue itself, AI could flip that. I’d spend 30% preparing and 70% having richer conversations—about roles, strengths, aspirations, and co-creating a plan.

That’s how we create more human workplaces where leaders really know their people and help them grow.

And I don’t see enough organizations exploring that. Both options two and three represent

Stacey Dietsch:

Yes, yes.

Ashish Kothari:

I think they exist.

Stacey Dietsch:

I agree with you. I do feel like option two—how can we do more with less, or more with the same—is kind of the new version of that mindset. I think it will get traction. People may recognize, once they eliminate some low-hanging fruit and drive cost savings, that they can repackage this winning model and apply it elsewhere.

Ashish Kothari:

 Yes.

Stacey Dietsch:

Much more quickly. I wonder how much that will translate into a shift in the expectations of how people spend their time. That’s a really interesting challenge. If I could shift one thing in work, it would be reducing meetings and letting people focus on the work—the impact—not the justification of the work.

That would be a neat way to flip mechanisms of the day-to-day work experience through AI. Even if people are asked to do the same amount of work, the time is spent on more meaningful tasks. I feel like a hybrid of the three models is possible. It will have to be one hundred percent deliberate, which I think talking about it the way you just did is a great first step.

Ashish Kothari:

Yeah. So let’s take a bird’s-eye view at the future of talent. Be a futurist for me. As we think about the next five to ten years, how do you see it evolving? What mindsets and capabilities will matter the most?

Stacey Dietsch:

We’ve talked about one of the biggest shifts already—the deep integration of AI into everyone’s job. Another buzzword of the past is becoming more important for the future: agility. Change agility, openness, and growth mindset.

Those concepts are already fundamentally important. And as you and I know, learning agility is a big differentiator.

Ashish Kothari:

Adaptability. Just adaptability and resilience to be able to move forward with this.

Stacey Dietsch:

Exactly. That’s going to be so critical because we’ll need to be open to new ways of working. The more we can create simplified infrastructure, the better.

At McKinsey, we talked about the paradoxes of agility: having a stable backbone from which you can anchor new ways of working. At Liberty, and in other places, one example of this is simplified job architecture.

That means less complex hierarchies, with a cadence for updating job expectations anchored on skills. This allows people to flex into the demands of the job at that moment. To me, the only clear future is one where we must be agile, adaptable, and eager to learn new skills. Those are the people who will flourish.

Ashish Kothari:

Yeah. The only constant is that the pace of change will keep accelerating exponentially.

Stacey Dietsch:

Yes, I know. Hard to imagine, but true.

Ashish Kothari:

I used to say I couldn’t imagine what the world was like before the internet. Now I can’t imagine what it was like before GPT. Everything we do—I think, “Oh my God, how were we doing all that before?”

So, keeping an eye on time, I want to end with a question grounded in personal leadership. Today, so many leaders are struggling to balance work, life, and everything else. Targets rise every year, conditions get harder.

From your time at the firm, and now as a mom and senior executive leading change—what are some personal practices that help you stay grounded in flourishing, while navigating uncertainty for your organizations, your family, and yourself?

Stacey Dietsch:

It’s always a work in progress. Some days are better than others. But the practices I go back to for recharging are, first and foremost, family time. I love when we’re all together—family dinners, or being in nature together.

I also love alone time in nature—going on walks, being by the water. That’s so important. I’m a big believer in exercise. My husband got me hooked on the endorphin rush from working out. It helps me start the day—the more movement, the more energy and readiness.

Ashish Kothari:

 Absolutely.

Stacey Dietsch:

Another thing I do, especially when things feel hard, is journaling. I like to get worries out of my head and onto paper. It helps the swirl stop, and allows me to focus on moving ahead with purpose and without distraction.

Ashish Kothari:

What a beautiful set of practices—and what an amazing conversation. Stacey, thank you for your wisdom, your expertise, and most importantly, your friendship.

Stacey Dietsch:

Oh, I was going to say the same. Thank you. This was so special. Thank you for what you’re doing to help the work world—and the world at large—find flourishing. It’s very special, and I’m so glad to be in your orbit.

Ashish Kothari:

Thank you, my friend. Be well.

Stacey Dietsch:

Thank you. You too.