Looming talent crisis

Busi­ness­es are fac­ing the most diverse work envi­ron­ment ever seen with five gen­er­a­tions work­ing togeth­er, across geo­gra­phies – each with dif­fer­ent skills, expe­ri­ences and work habits.

More of these work­ers will be free­lancers and long-term con­trac­tors. All of this rep­re­sents a major oppor­tu­ni­ty for pro­duc­tiv­i­ty, tal­ent devel­op­ment and employ­ee engage­ment, but accord­ing to new wide-scale research from Oxford Eco­nom­ics, most com­pa­nies are unpre­pared to cap­i­talise on it.

As revealed in Work­force 2020, an inde­pen­dent, glob­al study by Oxford Eco­nom­ics with sup­port from SAP, most com­pa­nies recog­nise the impor­tance of man­ag­ing an increas­ing­ly inter­na­tion­al, diverse and mobile work­force.

How­ev­er, the major­i­ty lack the strat­e­gy, cul­ture and solu­tions to do so. Oxford Eco­nom­ics sur­veyed more than 5,400 employ­ees and exec­u­tives in 27 coun­tries, find­ing that two thirds of busi­ness­es have not made sig­nif­i­cant progress towards build­ing a work­force that will meet their future busi­ness objec­tives.

The study’s find­ings chal­lenge the pre­vail­ing wis­dom and high­light the most crit­i­cal issues fac­ing HR pro­fes­sion­als. At the top of the list:

1. COMPENSATION MATTERS MOST

Accord­ing to Work­force 2020, com­pet­i­tive com­pen­sa­tion is the most impor­tant attribute of a job to two thirds of respon­dents – 20 per cent high­er than the next high­est ben­e­fit. Retire­ment plans, flex­i­bil­i­ty and time-off rank well ahead of ameni­ties, such as fit­ness cen­tres, day­care and sub­sidised food.
If com­pen­sa­tion moti­vates employ­ees, what they are most afraid of is being left behind as a result of insuf­fi­cient skills and inabil­i­ty to keep up with the lat­est tech­nolo­gies. “Becom­ing obso­lete” is the biggest con­cern for today’s work­er, twice as con­cern­ing as being laid off.

2. MILLENNIALS ARE MISUNDERSTOOD

Although 51 per cent of exec­u­tives say that Mil­len­ni­als enter­ing the work­force great­ly impacts their work­force strat­e­gy, few­er than one third say they are giv­ing spe­cial atten­tion to Mil­len­ni­als’ par­tic­u­lar wants and needs. Much has been writ­ten about how Mil­len­ni­als are dif­fer­ent in their use of tech­nol­o­gy and atti­tudes towards work, but just how dif­fer­ent are they when it comes to work­place pri­or­i­ties?
Mil­len­ni­als and non-Mil­len­ni­als alike cite com­pen­sa­tion as the most impor­tant ben­e­fit. Addi­tion­al­ly, 41 per cent of Mil­len­ni­als and 38 per cent of non-Mil­len­ni­als say high­er com­pen­sa­tion would increase loy­al­ty and engage­ment.
Mil­len­ni­als and non-Mil­len­ni­als have sim­i­lar pri­or­i­ties around goals for career, income and advance­ment. The two groups have sim­i­lar views on the impor­tance of cor­po­rate val­ues and achiev­ing work-life bal­ance.

Com­pet­i­tive com­pen­sa­tion is the most impor­tant attribute of a job

Mil­len­ni­als rep­re­sent a sig­nif­i­cant oppor­tu­ni­ty for com­pa­nies. As the sin­gle largest and most tech-savvy work­group, com­pa­nies that can excite Mil­len­ni­als about work, train them to fill in gaps on expe­ri­ence and adapt to their style of work­ing can build a work­force pre­pared for the busi­ness of tomor­row.

3. THE TALENT GAP IS WIDENING

Few com­pa­nies are prop­er­ly sup­port­ing their work­ers’ devel­op­ment needs. Less than half of employ­ees sur­veyed say their com­pa­ny pro­vides ample train­ing on the tech­nol­o­gy they need. Demand for skills such as ana­lyt­ics and programming/development will grow siz­ably over the next three years, but employ­ees doubt the oppor­tu­ni­ty to gain pro­fi­cien­cy in these areas. Exec­u­tives cite a high lev­el of edu­ca­tion or insti­tu­tion­al train­ing as the most impor­tant employ­ee attribute, yet only 23 per cent say they offer devel­op­ment and train­ing as a ben­e­fit.

4. LEADERSHIP IS LACKING

There is clear exec­u­tive con­cern in the lack of ade­quate lead­er­ship to help build the work­force to meet future busi­ness objec­tives. Almost half of those sur­veyed say their plans for growth are being ham­pered by lack of access to the right lead­ers with­in their organ­i­sa­tions.
Only 31 per cent of exec­u­tives inter­viewed say that when a per­son with key skills leaves they fill the role from with­in the organ­i­sa­tion. Sur­pris­ing­ly, less than half indi­cate that their lead­er­ship team has the skills to man­age tal­ent or inspire and empow­er employ­ees effec­tive­ly.

5. THE WORKFORCE IS CHANGING

As the econ­o­my evolves to a state where near­ly every­thing can be deliv­ered as a ser­vice, com­pa­nies are increas­ing­ly tap­ping exter­nal exper­tise and resources they need, on an as-need­ed basis, to fill skills and resource gaps, and to accom­mo­date rapid­ly chang­ing busi­ness and cus­tomer demands. That means more tem­po­rary staff, more con­sul­tants and con­tract work­ers, and even “crowd-sourced” projects. In fact, 83 per cent of exec­u­tives say they will be increas­ing the use of con­tin­gent, inter­mit­tent or con­sul­tant employ­ees.

6. COMPENSATION MODELS, DEVELOPMENT AND TECHNOLOGY MUST CHANGE

This chang­ing nature of employ­ment is affect­ing work­force strate­gies: 46 per cent say they will require changes in com­pen­sa­tion plans; 45 per cent say they will require increased invest­ment in train­ing; and 39 per cent say they will result in changes to tech­nol­o­gy poli­cies to sup­port mobil­i­ty.

Addi­tion­al­ly, 41 per cent say they will dri­ve new invest­ments in HR tech­nol­o­gy mov­ing beyond tra­di­tion­al core HR sys­tems designed to man­age the employ­ee record and dri­ve com­pli­ance toward tech­nolo­gies that sup­port recruit­ing, tal­ent and per­for­mance man­age­ment, learn­ing and enhanced employ­ee engage­ment.

While 53 per cent of exec­u­tives say work­force devel­op­ment is a key dif­fer­en­tia­tor for their firm, they do not have the tools and organ­i­sa­tion to back it up. Just 38 per cent say they have ample data about their work­force to under­stand strengths and poten­tial vul­ner­a­bil­i­ties from a skills per­spec­tive. Only 42 per cent say they know how to extract mean­ing­ful insights from the data avail­able to them.
When it comes to prepar­ing for the future of work, knowl­edge is pow­er. Tomorrow’s work­force will be more diverse and work dif­fer­ent­ly. Com­pa­nies must under­stand this and devel­op new strate­gies that sup­port diver­si­ty, and fos­ter a new lev­el of employ­ee engage­ment and col­lab­o­ra­tion – or they will ulti­mate­ly remain stuck in the past.

1. COMPENSATION MATTERS MOST

2. MILLENNIALS ARE MISUNDERSTOOD

3. THE TALENT GAP IS WIDENING

4. LEADERSHIP IS LACKING