How will your organization acquire the high-demand skills — from AI to cybersecurity to customer service and more — that a changing business landscape demands? Keeping people and skills at the center of your talent and business strategies is not only critical to long-term workforce sustainability, but to your company’s growth as well.
Read chapter 1 of this three-part series from Randstad Sourceright’s Talent Advisory experts to understand today’s challenging business and labor markets, and why shifting your focus to skills is so important.
how is the world of work evolving?
The world of work has experienced a profound transformation in recent years, driven by digitalization, automation, shifting demographics and evolving work models. Alongside this, rapid technological advancements, globalization and heightened social awareness contribute to a continuously evolving business landscape. There’s barely time to reflect on the impact of current developments before new changes have been set in motion.
Against this dynamic backdrop of continuous change, we are witnessing a substantial re-evaluation of what talent wants from their work environment. Employee attitudes and motivations around work have changed substantially, resulting in a need for companies to focus on talent retention strategies that align with their people’s new priorities.
Talent scarcity is a considerable challenge too. As we all live longer, the demand for new skills is growing; the need for digital skills could lead to one in 16 workers (100 million) globally seeking new occupations by 2030 and 27% of jobs are in occupations at high-risk of automation.
Organizations are struggling to find the right skill sets, emphasizing the need for reskilling and the importance of creating learning opportunities for current employees. Failure to do so can result in losing valuable talent, or contributing to the global skills gap as employees’ skills lose relevance.
As employees take more control over their careers, companies must intensify efforts to meet their expectations and foster an environment where they feel valued and developed. To this end, it is valuable to hire for learnability (or LQ), taking on people who have a growth mindset and the agility to acquire new skills and knowledge throughout their careers.
The time is ripe to invest resources, effort and funding into developing a systemic approach and a fresh, reimagined talent perspective — in fact, it may be essential to the long-term growth of your business. Strategic workforce investment, empathetic understanding of talent needs, and a culture of continuous improvement are essential to succeed in this new work era. Adapting to this evolving work environment demands flexibility and forward thinking to ensure both organizations and talent thrive amid these transformative changes.
While it might seem counterintuitive, cutting budgets (especially in HR) can be detrimental. History has shown that neglecting these investments leads to system failures when they are needed the most. The real cost arises from missed opportunities. Therefore, organizations must learn from past mistakes and prioritize strengthening their systems and embracing new perspectives. This proactive approach ensures they are well-equipped to seize future opportunities rather than being caught unprepared.
Ultimately, the lens through which we currently look at talent must change. Skills and aspirations must be positioned as the new criteria for understanding the untapped potential. This should become the primary basis for making decisions about recruitment, internal mobility or transitioning employees out. It represents a two-way contract that goes beyond mere legal obligations and encompasses individuals' social and emotional needs. We need to question the purpose of work, both from an organizational perspective and for each individual engaged in the work.
the current landscape: fast, fragmented, fragile
Following a tumultuous few years and in anticipation of further disruption, CEOs recognize that their businesses need to transform in order to remain economically viable.
Even in fragile economic conditions, those at the top of organizations are keen to invest in and prioritize their workforces to drive productivity, innovation, customer satisfaction and revenue growth. Although mass layoffs among high profile tech companies have made headlines, reducing headcount is not widely seen as a commercially sound decision. While CEOs admit they are looking to reduce costs this year, 60% do not plan to reduce headcount and 80% don’t plan to reduce compensation in the fight to retain talent following the Great Resignation.
Keeping employees motivated and engaged remains the top priority for C-suite executives, according to LinkedIn’s 2023 Workplace Learning Report. Opportunities for employees to explore different roles within the organization also rank high. However, there's a disconnect between CEO visions and employee experiences. Only a small percentage of workers report support for career development or transitioning to new roles.
The result? Stifled internal mobility, increased attrition and talent market fragility. Talent scarcity looms large, accentuating the dearth of critical skills. There is a pressing need to bridge this gap between the C-suite's aspirations and the reality of employees’ experiences.
But there is some good news — organizations do have tools at their disposal to retain employees. Flexibility, financially stable employment, job security and providing purposeful work and values are identified as critical factors that impact workers’ decisions to stay put or leave your business, according to the Randstad 2023 Workmonitor Report (see sidebar/box out). So by creating an environment that nurtures progress in these areas, you can positively influence future attrition rates and create a workplace that talent wants to be part of. This approach is not only beneficial for talent retention but is also commercially astute, as it enhances your organization's competitiveness and ensures sustainable growth.
the opportunity for HR: driving greater value
This fundamental shift in mindset is undoubtedly an opportunity for HR — not only to create a talent-centric culture but, in parallel, to drive meaningful value for the business. According to the Randstad Enterprise Talent Trends Report 2023, 80% of C-suite and talent leaders believe the goal of their talent strategy is to impact business performance measurably.
Of course, CHROs have long been at the forefront of value creation, but there’s a need to think more holistically about talent. Elevating performance requires delivering a consumer-like experience that spans the entire talent life cycle – from attraction through to offboarding.
Making sure your employees are engaged and equipped with skills for the future is absolutely vital. While skills shortages are not a new concept, they become a real issue if there’s a misalignment between the skills your company needs and those employees prioritize for growth. To overcome this, shifting towards a more people-focused organizational structure that not only emphasizes skills over qualifications and experience — but also encompasses individuals’ motivations and aspirations — is a must. If you use skills as a basis for finding the right talent, you'll open up a wider (and more equitable) pool of potential, tapping into hidden talent that might have otherwise slipped under the radar.
Breaking down silos within the talent function is absolutely key when it comes to creating a more connected talent experience. Looking at the whole of the talent life cycle enables you to get a full picture of your organization's talent landscape and can bridge any gaps between the skills employees have and the skills they need.
But none of this can happen unless you have a solid foundation. Without a well-structured framework, your ability to source talent effectively, whether from external or internal sources, will be compromised. Finding and prioritizing the right talent is pivotal in this new world.
thinking holistically about talent
The talent life cycle revolves around several critical stages: strategy, attraction, acquisition, management and transitions. The infrastructure supporting these stages includes four elements: people, processes, technology and data.
By exploring how this infrastructure manifests itself in the overall experience, organizations can gain an understanding of what is working and what needs attention, to ultimately create a more resilient and effective workforce.
Hiring is one of the most critical jobs for the HR function, yet many organizations struggle with the challenges it presents, particularly amid a fluctuating market.
In 2021, the talent acquisition landscape was ablaze with action. It felt as if everyone was jumping ship, and the market was buzzing with new opportunities. Fast forward to today, and the scene has shifted somewhat. Macroeconomic uncertainty has prompted many organizations to hit the brakes on their hiring efforts — but braking too hard could result in problems down the line.
While scaling back your recruitment and mobilization investment might seem like a logical, cost-saving measure, it's a bit like dismantling a ship’s engine in the middle of a calm sea. The market will undoubtedly bounce back, and when it does, you might find yourself stranded with insufficient resources. It's like building a sandcastle just as the tide comes in — destined to crumble. History has taught us a valuable lesson: failing to invest now results in a dysfunctional system when it's needed most, incurring significant costs and missed opportunities.
To be able to flex as and when the market changes, a scalable model is essential.
Remember the days when hiring and mobilizing weren't fast enough, when systems felt clunky? It's time to fix those issues. The best time to repair the roof is when the sun is shining. Make sure your processes are streamlined, your systems are robust and your talent strategy is underpinned by a powerful digital core. So, when volumes return, you are better prepared to meet the needs of the business.
In his bestselling book “Irresistible,” HR thought leader Josh Bersin calls for us to reimagine how we hire in order to take advantage of the transition and longevity dividend. He says: “We can’t just fill job slots because jobs keep changing; we have to hire for potential, agility, values and passion. This means removing bias, getting rid of old hiring models, and changing the way we think about performance."
We know that talent strategy is not just about filling roles; it's about building a future-ready workforce. It's about rethinking talent as part of a broader strategy, and ensuring your ship is steady even in rough waters. Our 2023 Talent Trends research found that 82% of C-suite and talent leaders believe that the role of talent has been significantly elevated and/or expanded and are expected to think about hiring, mobility, development, career pathways and skilling — a multi-dimensional role that underscores its importance. The crucial factor, however, lies in ensuring seamless alignment across all these dimensions.
It's time to think long term. For example, are you looking at your internal talent as a goldmine? Companies that excel in internal mobility have stronger retention of existing talent, with employees staying almost twice as long. Are you prepared for the skills you'll need in the future? Today, the skills individuals need to do their jobs are changing, even if they’re not changing jobs. As well as looking outward, building a strong internal foundation is critical.
the long-term imperative: focus on what matters most to talent
Unlike the traditional corporate top-down approaches that worked in the past, building an agile and sustainable workforce starts with putting individual employees’ needs, wants and motivators at the center. So understanding what your talent desires and finding effective ways to provide it to them becomes absolutely key.
Recent McKinsey research has shed light on the significant competitive advantage of companies focusing on both talent and business success, dubbed People and Performance Winners (P+P).
While focusing solely on financial returns is one path to achievement, adopting the P+P model, which emphasizes both people and performance, brings longer-term benefits of resilience and talent retention. During the pandemic, P+P winners grew revenues twice as fast as performance-driven companies. These firms are also 1.5 times more likely than their high-performing counterparts to consistently achieve top-tier financial results year after year, with around half the earnings volatility.
Embracing a talent-centric approach has some significant benefits, such as lower attrition rates and a boost in productivity. When you focus on solutions that revolve around the talents of everyone in the organization, from the most senior leaders down to each individual team member, you unlock the full potential of your workforce. This leads to higher engagement levels, increased productivity, and more meaningful contributions that align with your organization's goals, strategy and ultimate success.
While your business strategy defines the destination, it's the talent strategy that provides the roadmap to get you there. It's about being adaptable, forward-thinking and understanding that talent is at the heart of it all. So, as you navigate the turbulent waters, remember: it's not just about getting the right people on board; it's about steering everyone in the right direction, no matter the tides. In the end, it's not just about weathering the storm — it's about thriving in it — ultimately shifting from talent scarcity to talent abundance.
In the next chapter, we'll delve into what it takes to embark on the transformation from talent scarcity to talent abundance, a crucial shift to create true value in your organization.
We'll explore how prioritizing skills and aspirations can help unleash human potential, ultimately unlocking true workforce agility and helping your business thrive amid uncertainty.