after a cycle of crisis and recovery, business agility remains critical
If January 2021 feels much more distant than a year ago, I share those sentiments. This has been a truly remarkable and encouraging year in the battle against COVID-19, however it has also been a particularly challenging year for employers who need to attract and retain talent. The big question, then, is what lies ahead in 2022?
To review, let’s consider the noteworthy events that have unfolded in 2021. The global rollout of vaccines gave us the most significant tool for containing deaths and hospitalization from the pandemic. More than that, it allowed people to again interact personally, leading to more offices opening, travel and family reunions. This enabled the global economy to grow at a projected rate 5.9% for the year, a vast turnaround from the 3.1% decline in 2020. Not since 1973 has the global GDP risen at a faster pace.
Along with this huge spike came some truly unusual labor market developments. Following a drastic decline in employment in 2020, we now see an explosion in labor demand, along with record resignations in places like the United States. Talent scarcity is at worrisome levels for many employers, and economies such as Germany and the U.K. face slowdowns due to a lack of workers. Add in manufacturing bottlenecks and supply chain difficulties, and there appears to be a perfect storm of surging demand and constrained capacities.
In addition, the newest strain of COVID-19 has some economists concerned about the impact it can make on the global economy should the number of serious cases spike in the coming months. So how can your organization prepare for even more volatility ahead?
workforce planning faces more uncertainty
While there was a lot to be positive about in 2021, many of these disruptions were unforeseen, and I expect more ambiguity in the coming year. Some of the challenges in the labor market, especially the scarcity of in-demand skills, will continue for the foreseeable future as these issues are structural in nature (shortage of graduates in some fields, mass retirements in others, etc.).
The intensity of the Great Resignation, however, could hardly be predicted since it appears to have taken on a domino effect. Each worker who resigns has the potential to motivate others around them to do the same. More than half of the people surveyed in the second edition of the 2021 Randstad Workmonitor research said they were inspired by the actions of friends and colleagues.
Moreover, acceleration of digital transformation happened at such warp speed that many companies have been caught off guard in the newly transformed global economy. Past assumptions about workforce planning have become outdated, and predicting talent needs in the months and years ahead will become significantly more challenging until the pandemic has come under control around the world. Additionally, the challenges brought on by the global crisis highlighted the inadequacies at many HR organizations, according to the Society for Human Resource Management (SHRM). Rather than being able to strategically plan for talent demand, many companies can only provide headcounts of their workforce.
Because the pandemic significantly shifted demand in a compressed period of time — a greater emphasis on digital and technology roles and a move away from analog skills — most organizations lacked both data insight and updated modeling to effectively respond to this change. Many are now scrambling to bring their talent strategies up to speed. According to a McKinsey survey conducted in May, one-third of businesses are increasing their investments on workforce planning, strategy and change — the most of all HR functions cited.
This is encouraging because, more than any other time in recent memory, companies need agility and foresight. They need advanced competencies in data analytics, skills mapping and learning and development. Beyond that, they need to move closer to the talent — not only physically but also along the supply chain.
For instance, some of our technology clients have readily acknowledged they have failed at recruiting diverse talent because they have historically focused in the Silicon Valley area. To remedy this, these businesses are using data to identify where diverse talent resides and moving jobs to those areas. This tactic not only produces a more diverse slate of qualified candidates but also expands the overall talent pool.
skilling will be a key enabler throughout 2022
Investing in workforce planning tools, processes and people is just one way organizations can better prepare for what’s ahead. Skilling remains crucial to an organization’s success. Digital transformation has left many workers vulnerable, especially the rate at which this has occurred over the past two years. Companies can address their talent scarcity challenges and redeploy valuable workers through an effective and comprehensive skilling strategy.
As a business leader in the HR services business, I’m focused on delivering the best talent to our clients, but I also recognize we are undergoing a highly disruptive period in which demand is far surpassing the supply of talent. Our recent 2021 Global Future In-Demand Skill Report found that the ratio of available cybersecurity specialists to job openings in key markets such as Hong Kong is as low as 2:1. With so many financial services headquarters located there, the demand for these skills is significant. But with so few candidates available, companies have no choice but to consider sourcing from within.
Reskilling is also critical to employee retention and engagement. In Randstad’s Workmonitor research, 80% of workers acknowledge that they need to keep learning and developing their skill to maintain or increase their employability, yet 58% say the fast pace of change in the digital economy makes it difficult to determine which skills they need to focus on. As a result, two-thirds say they want their employer or government to assess their gaps and give them guidance. And one-quarter say the most important consideration driving their career choice is finding an employer that offers opportunities to gain more long-term marketable skills.
Another benefit of a robust skilling strategy is efficient access to talent. Employers can often more quickly shift internal talent to new, adjacent roles with minimal downtime and more on-the-job and innovative training. Supported by virtual and augmented reality technologies, the learning and development market is undergoing tremendous transformation. In fact, e-learning, which offers more micro- and flexible solutions, is expected to grow at a CAGR of 17%, according to one study. This isn’t surprising since a McKinsey survey of business leaders say building skills is the best way to close their company’s skills gap.
flexibility will get you through
Above all other measures you may want to consider, adopting a flexible talent strategy will help you through the challenging times ahead. Whether this means embracing a flexible work-from-home policy aimed at attracting and retaining talent, incorporating more contingent workers in your business or conducting shorter, more frequent scenario planning, the ability to pivot from plan is a must-have in 2022.
As Shane Grant, Danone North America CEO reflected at the recent CNBC Leadership Exchange: “It’s this accordion economy of sort of stop-and-go and the adaptations required.”
And for this reason, HR will again be called on to provide the kind of flexibility that the C-suite expects in the new year. Human capital leaders were the North Star at the outset of the pandemic by mobilizing the workforce, and they will continue to lead when business leaders need guidance on policy, talent and resourcing.
This past year has witnessed a lot of disruption, revelation and transformation. Through it all, we’ve all aged a little more quickly but also grown wiser at the same time. The global workforce has performed remarkably well in light of the pressure and constraints it faced. This is especially true of my colleagues at Randstad Sourceright, who have so superbly endeavored to serve our clients, co-workers and family through unprecedented times. I believe this type of resilience will help all of us weather the volatility expected in 2022 and beyond.
Until then, I wish you all the best during this holiday season and throughout all of the new year.
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