I had the pleasure of presenting at a client’s global human resources conference recently on the topic of future workforce trends. This group was interested in understanding what their organization should be doing now to prepare for future workforce capability needs and leadership requirements into 2020 and beyond.
After discussing significant demographic shifts and changes in skill availability versus needs, one senior HR director raised her hand and asked, “Is this really so new? Aren’t these the things we’ve always had to overcome in the face of radical change?” From her perspective and years of experience, she’d always faced a talent challenge.
And what was my answer? “Yes and yes.”
I’ve been working in talent management for over 30 years. What we are experiencing now and for the foreseeable future is both a mix of history repeating itself and brand spanking new. Let me explain.
There are three key workforce trends occurring due to the evolution of demographics, the economy, and technology. These trends pull us back into the evergreen challenge of ensuring a “ready workforce,” but with new, and in many cases more acute, battles in the war for talent.
Key Workforce Trend #1: Fewer and less-qualified people to meet global workforce demands.
There has always been a challenge in finding talent as industry needs change and certain skills increase in demand. During the industrial era, immigration to U.S. in the late 1800s and early 1900s filled factories and coal mines.
During the dot-com boom of the 1990s, U.S. organizations fought for H1-B visas and recruited heavily from Asia for technical talent. In addition, when global competition drove a need for cost cutbacks, offshoring became popular for non-core corporate functions, such as accounting, customer care, and technical support.
And now in 2020, we continue to face labor shortages of a different kind, with global ramifications and complications. Between population shrinkage and technological advances, the need for skilled workers is on an increasingly steep incline, with very limited reserves.
According to my own analysis of data published by Boston Consulting Group, 47 percent of leading industrial countries are currently at or on the brink of a critical labor shortage. By 2030—and this is only 10 years away—100 percent will experience acute labor shortages. The U.S. itself will be at a breaking point by 2030. And with new restrictions on immigration, this may happen even sooner than predicted.
Key Workforce Trend #2: Employment growth is becoming concentrated, and therefore, much more competitive.
Fifteen or so years ago, job growth in the U.S. was centered in the Southeast. Prior to that, it was in California’s Silicon Valley. In the next 5–10 years, according to McKinsey Global Institute’s The Future of Work in America research, Texas, Arizona, Nevada and Utah will see at least 15 percent employment acceleration, with the concentrations occurring in the urban cities.
If you are an employer in these areas, higher employment concentration means higher competition for talent and higher salaries to compensate for higher living costs. If you are not an employer in these areas, you may find your geographic location limits your ability to attract employees needed to support your business objectives.
And does concentrated job growth entice employees to move from distressed areas to thriving job markets, to “follow the jobs”? The trends suggest otherwise. Geographic mobility in the U.S. has eroded to historically low levels. One reason may be the high and increasing higher cost of living in job growth areas. This can be an insurmountable hurdle when moving from a rural location or for families that need two incomes.
The distrust in an organization’s ability to provide stable employment may be an additional factor in lowering interest in relocation. In tandem and perhaps as another contributing factor, organizations have moved away from company-sponsored relocation due to cost. Instead, they are leveraging technology enhanced work to build virtual workforce capabilities.
Key Workforce Trend #3: Automation and digitization are shifting the skills and capabilities needed—across the organization, and rapidly.
According to the World Economic Forum, automation will increasingly take over, trending from a current ratio of 71 percent human labor hours/29 percent automated labor hours to an estimated 48 percent human/52 percent automated by 2025. This translates into almost 40 percent of current occupational categories shrinking.
And this is one of the workforce trends that’s happening with tremendous speed! There are many examples, such as the continued advances with self-driving cars. For example, Uber just purchased 600 acres in a rural area outside Pittsburgh for driverless car testing. Another is drone delivery. The last delivery mile is the most expensive for Fed Ex and UPS, so drones flying packages to your door may be the answer!
But, isn’t technology displacing workers good news for the labor shortage? Not exactly. Technology drives the need for a more highly skilled workforce, specifically technical skills and analytic skills. This has a heavy impact on rural areas that traditionally make up a more labor-intense workforce. It also drives the need to shift these individuals into more technical work or redeployment. This can be a costly solution for companies. But ultimately doable—with proactive planning.
Next, let’s consider how digitization will shift fundamental skills over the next two to five years, and what organizations can do to ease the impact of this shift.
Repetitive, manual tasks, both for blue-collar (e.g., machine operators, line workers) and white-collar (e.g., radiologists, computer specialists) workers will decline. However, the need for more complex, technical skills will gain prominence. Some companies are accomplishing this effectively through worker upskilling, phased implementation of new technology, redeployment of employees, and planful change management, with little to no workforce downsizing.
For leaders, the shift in skills will be just as critical. They will now be challenged to manage increasingly complex organizational systems and processes, drive continual learning, and build resiliency, creativity, and initiative for themselves and their teams. In other words, agility on steroids! The prior skills do not go away, but others move to the forefront as critical in effectively leading in an increasingly integrated, connected, and digitized workplace.
The World Economic Forum predicts that in less than two years 54 percent of the workforce will need to be reskilled. And reskilling can take anywhere from one month to one year, depending on the complexity of the job and the skills needed. This can significantly impact a business’ abilities to execute strategic objectives quickly and effectively, causing many to agree that talent planning will become even more critical than financial planning for companies.
How you can act on workforce trends into 2020 and beyond
So, what can be done?
I began this article by sharing the story of an audience member questioning whether facing the current talent shortage was actually new, after all? Organizations have always struggled to ensure talent meets the demands of performance. This is true. And what is new, is the urgency and complexity inherent in meeting these demands in today’s economic and demographic environment.
Here are a few “thought starters” to help you act on the three key workforce trends:
- Reevaluate your leadership curriculum. Are you building the right skills both now and in the future? Are you selecting against future skill requirements and proactively building your leadership bench?
- Are your leaders fostering a climate of creativity, agility, and initiative in the workforce? Do they have the skills to do so? Are you assessing leaders across your company to identify capability gaps in relation to future needs?
- How well are you leveraging your current talent? Are you recruiting from and building skills within your own company by unleashing hidden talent that may be overlooked due to bias or lack of visibility?
- Reconsider how your organization and your business processes are designed. Can they be redesigned and engineered to better match the talent available, and automate for talent that is not available?
- Are you thinking “outside the employment box”? Are you leveraging new staffing models? This could include using a contingent, on-demand, or virtual workforce, while keeping critical talent through effective talent retention strategies.
- Do you consider nontraditional recruitment practices? This includes practices such as collaborating with educational institutions to design curriculum that supports needed job capabilities or seeking out under-represented or marginalized candidates by considering different recruitment sources.
- Most importantly, are you actively educating internal stakeholders on the implications of the digitization and demographic shifts specific to your company? How often do you have open discussions on how this will impact (and potentially impair) business operations, business strategy, and profits? How influential are you in encouraging the adoption of proactive workforce planning?
Fewer and less-qualified people can undermine any business. Recent workforce trends are a “perfect storm” of changing demographics, lack of employee mobility, geographic concentration of job growth, lack of qualified labor, rapid digitization, and increasing business complexity. And all of these creates a compelling need for HR professionals to help their company ensure the right talent is available and ready to fill the demand.
That fact has not changed.
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Shirley M. Mayton, PhD, SPHR, SHRM-SCP is a DDI Senior Consultant with a passion for unleashing the potential of others. She has worked with executives in multiple industries and business sectors to create organizational initiatives that enhance leadership capabilities across all levels. When not helping organizations become more successful, Shirley enjoys spending time outdoors hiking, biking, camping, and stargazing. She is also a NAUI Certified Scuba Diver whose favorite dive-spot is just about anywhere in the Caribbean.