“People are our most important asset.” You’ve heard that a million times. And, it’s true, even if you are a gold mining company. How long can you survive if that vital resource is inadvertently allowed to become detached, devalued, and departed? Answer: Not very long. Preventing that outcome requires monitoring critical workforce trends, and responding accordingly.
When a trend is occurring, it isn’t always clear before you can look back through a rearview mirror. Here are six workforce trends with implications for your business, and some practical responses.
Trend # 1: Multi-generation workforce
The first trend, or more accurately stated, reality, for most employers is the presence of a five-generation workforce. Members of each generation typically have different perspectives on work both because of their age, and the formative experiences of their early adulthood.
For example, “builders,” the oldest generation in the workforce, are in their 70s and beyond. When they remain in the workforce, builders are typically your most conservative and loyal employees. Often that’s because of their need to work beyond a traditional retirement age, whether for financial or emotional reasons.
Although retiring in droves, baby boomers remain a strong workplace fixture for many employers. Boomers tend to be hard workers. But as fortunate beneficiaries of post-World War II economic prosperity, many also exhibit something of an entitlement mentality.
Gen Xers and particularly Gen Yers came of age during leaner times and the personal information technology explosion. That turned them into “digital natives,” with a work style to match. The youngest cohort joining the workforce, Gen Z, is only now just beginning to make its mark.
Distinct generational characteristics are often overstated, but nevertheless result in an age-based demographic diversity that must be taken into account to run a business optimally.
Trend # 2: Talent shortage
Thanks to the economy’s continuing strong rebound from the 2008-2009 financial crisis, the unemployment rate has been hitting historic lows. But the challenge of this trend for employers hasn’t simply been finding warm bodies to fill vacancies or new job openings. Rather, it’s finding people with the right skills, particularly for technology-intensive positions.
With qualified candidates in high demand, many employers are finding themselves in bidding wars to fill open slots, openings often created by the defection of an employee to a higher bidder, or employees who believe they’ll have greater opportunity for advancement elsewhere.
Trend # 3: Reliance on contingent workers
Despite the challenge of finding and keeping good talent, employers have been relying heavily on contingent workers in recent years. Nearly six million workers fit that label in the most recent Bureau of Labor Statistics, totaling nearly 5% of the workforce. The dynamic business climate has spurred many employers to seek greater workforce management flexibility available through tapping “gig” workers in many positions. However, the practice is accompanied by different management, collaboration and regulatory challenges compared to salaried workers.
Trend # 4: Rise of remote working
The strong desire of many employees to be able to work from their homes has contributed to a near doubling of those who are given some degree of workplace flexibility over the past decade. The latest IWG Workplace Survey reveals that 83% of employers either have begun allowing some employees to work remotely, or plan to adopt that policy. Surveyed employers see it as a means to expand their talent pool.
Trend # 5: Regulatory uncertainty
Even during the most recent period when federal labor laws and regulations are trending in a more business-friendly direction, employers still confront significant compliance challenges. Also, limited regulatory relief at the federal level isn’t necessarily accompanied by that trend at the state and local levels. When the regulatory environment is in a state of flux, employers have to take extra care to avoid running afoul of employment laws and incurring substantial penalties. And the prospect of any kind of regulatory change makes workforce-related planning difficult.
Trend # 6: Digital disruption in the workforce
As information technology grows ever more sophisticated, employees are forced to become computer technicians to hold down jobs that previously required a different set of skills. In addition, the growing application of artificial intelligence (AI) to workforce analytics is a double-edged sword. On one edge, employees and work teams can be hired and developed in ways intended to more precisely match employers’ evolving human capital requirements. On the other, such sweeping changes place new demands on workers and managers alike.
Responding to workforce trends
What are the most critical responses to the challenges posed by these trends to keep your business on an upward trajectory? The first is to take the pulse of your workforce to assess the employee engagement level.
A disengaged employee is not only unproductive as an individual, but probably a drag on the productivity of others. Also, in workplaces where physical hazards are present, an unengaged employee is more likely to cause injury to that worker and others, than an engaged one.
While it may be intuitive, studies document the linkage between employee engagement and business outcomes, including earnings per share growth rates.
Survey data from the SMB Group suggests a disconnect between employer perceptions of their employees’ engagement levels, and what their employees report. Specifically, 82% of employers in one poll agree or strongly believe that their employees are highly engaged in their work. In contrast, only 34% of employees reported being engaged.
Next, equipped with your initial engagement assessment as a benchmark, begin to execute a strategy to improve that metric and create a “people-centric” culture, no matter how high engagement levels might already be. There’s always room for improvement, and even relatively small engagement upticks can have outsized results.
Here are five key indicators of how people-centric your business is:
- Are company goals clearly communicated?
- Is teamwork and collaboration rewarded?
- Can your people speak their minds without fear of retribution?
- Do employees have opportunities to learn and grow?
- Are people treated fairly and with respect?
- As with gauging employee engagement levels, you can benchmark your employees’ ratings of how your company performs against these ideals, work assiduously on the trouble spots, conduct a follow-up survey in a year or so and assess your progress.
Improving results requires ensuring that managers are on board with these people-centric values, are coached on how to bring about positive change, and rewarded when they succeed.
Keep in mind that independent contractors are people too. Increasing their capabilities and productivity can be as impactful as doing so for employees. However, if jobs and functions are outsourced to another business (for example, a payroll processing or IT support service provider) instead of an independent freelancer, making progress requires more of a vendor management approach.
When it comes to the rise of remote working, fourth on the list of top workforce trends, if you can’t beat ’em, join ’em. Business travel, not optional for many jobs, also amounts to a form of remote working. Whether employees are operating out of a home office, hotel room or airport lounge, their ability to work collaboratively with colleagues is no less important than when they’re laboring under the same roof as everyone else.
Fortunately, technology makes it easier than ever. The exploding power of mobile devices enables work (collaborative and otherwise) formerly possible only with traditional PCs and laptops. Nearly half of employers responding to a SMB Group survey reported reduced usage of laptop and desktop devices due to smart phone uptake.
Favored technology tools
When employees are given the tools to work smarter, not harder, wherever they are, you can stay on top of the workforce trends that are driving today’s economy. The following technology features and applications, according to one poll of business leaders, boost productivity, job satisfaction, and improve decision-making:
- Analytics reporting and dashboarding
- Integration with key applications already in use
- Native mobile applications
- Contextual in-application help
- AI and machine learning to identify trends and anomalies
- Natural language interfaces (voice-activated)
These capabilities, commonly found in ERP systems, can be leveraged by a broad spectrum of business challenges and functions, not the least of which is human capital management itself. Consider the following HR functions: attendance and leave management, payroll, compensation, benefits and talent acquisition. The race is on to integrate them.
The latest SMB Group “Connecting the Dots Between Business and Technology” study shows mid-sized businesses forging ahead aggressively in this direction, with small businesses lagging somewhat. But even among small businesses, a majority has already made the move to unified HR systems, or is planning to do so.
When the technology used to administer those HR functions is integrated, you’re better equipped to streamline workflows, make better decisions, improve compliance, and stay on top of workforce trends. That strategy, along with the management imperatives noted above, allow you not only to keep on top of trends but harness them to your advantage in today’s dynamic and hyper-competitive business environment.
Interested in learning more about the trends impacting the modern workplace? Watch our webinar series Crucial Conversations: Demystifying Digital Transformation.