Post the end of Great Recession, the polarization of labor market has turned wider than ever. Most developed economies have seen stagnant wages for more than a decade. However, these averages can be misleading. The Haves, those with in-demand IT skills -.NET, SAP, Vendavo and Ruby on Rails – or mechanical, electrical and civil engineering skills – have continued to see wages increase. The Have Nots, with low or outdated skills, see wages stand still or are experiencing a decline.
So what about the Rest of Us? Most of the workforce is not highly skilled, high earning IT elite, but the vast majority, the Rest of Us, are essential consumers and critical for productivity and growth. Low wage growth depresses consumer spending and overall economic growth. The time is ripe for disruption and new thinking in the labor market.
Manpower Group identified this new era in which talent overtakes capital as a key economic differentiator as the Human Age. In this new age of work, global labor markets are less elastic than they once were; they recover more slowly and produce growing inequality. Systems for aligning labor supply and demand no longer function as before. The result is widespread skills shortage despite high unemployment. The labor market is hampered by lack of talent liquidity and limited investment, while traditional work models compete with new, more flexible alternatives.
In continuation of our previous report, we provide a brief overlook at the two of these four forces accelerating the arrival of Human Age and its impact on the employers and candidates of today:
With the use of Big Data, companies now know their customers like never before. From the employee’s perspective, mass individualization provides personalized experiences supported by data and technology. The U.S. retailer Target made a stir by figuring out when customers were pregnant and mailing them coupons for baby products.
But, big data also creates cyber risks. Data privacy, digital security and cybercrime will continue to hit the headlines. A major vulnerability for these companies is a lack of current employee data. As many as 80% of businesses lack a reliable picture of who is working on their premises, raising serious concerns for risk and legal departments.
Companies expect digital detail on employees revealing everything from criminal records and drug histories to emergency contacts and timesheets at the click of a button. This increasing demand for real-time insight into people practices will radically reshape the workforce solutions industry. This upcoming information age will create new responsibilities and a need for the approaching generation to learn new, in-demand skills.
As this wave of data and new tools hits, the HR function will become increasingly complex and companies will rely more on outside partners and individuals to enhance their capabilities, create more flexibility and increase the time to value.
New models of collaboration and co-opetition – with mash-ups like Samsung making chips for Apple’s iPhones – will foster better supply chain analysis and create interdependence among organizations while allowing them to leverage each other’s strengths and be more agile.
HR needs to learn from this co-opetition to identify rapid and scalable integration of new capabilities. Ultimately, data and aggregation should enable companies to make better decisions around hiring, development and workforce management strategies. It also needs to help leaders understand performance, spot opportunities and anticipate risks. The difficulty is knowing how to read the tea leaves and draw useful insights from the numbers.
Technology has created shorter business-cycles and competition that is increasingly becoming global. Given the constant change, it is harder for individuals to keep their skills up to date or for educators to predict what hiring managers will need three years from now. While the debate over whether technological change leads to “job replacement or displacement” continues, what is certain is that we have not yet seen the full impact of technology on low and mid-skilled jobs.
With the development of better artificial intelligence, we will soon see the impact on white collar roles too, in higher-skilled roles like auditing and accounting. Up to 47% of U.S. jobs in 2010 were highly likely to become computerized in the next 10-20 years. If history is a guide, the new industries and opportunities created should ultimately surpass those that go, but the transition will be difficult with winners and losers in the labor market.
In our hyper-networked, data-heavy environment, technology has dramatically lowered the barriers to market entry and is shifting power from producers to consumers. The rise of the so-called Gig Economy, the trading of individual tasks (gigs) leveraging technology platforms, is now a daily phenomenon.
Technology is also challenging the value of brands and creating new ways of building trust, especially with the growth of the Sharing Economy. People previously looked to larger, better-known companies to guarantee high-quality service, but with the advent of the Ratings Economy the Etsy artist, Airbnb landlord, TaskRabbit designer or other ‘unbrands’ can be deemed just as or more reliable.
This lessens the need for traditional mass marketing and favors companies that develop closer, more personal relationships with consumers. In some cases, individual influencers with huge followings on YouTube and Instagram are seen as more trustworthy, credible and relatable to consumers.
This evolution of trust has opened the door to millions of small-scale producers and kicked off a Makers’ Movement that has multinationals quaking in their Goliath boots. As consumers seek a more personal, peer-to-peer transaction for products and services we will see even more Human Cloud-style solutions permeating markets.
Still, with so many of these low overhead options emerging, margins will continue to be squeezed by small-scale firms leveraging online platforms across a range of established industries, including staffing. These reconfigurations are evidence that new ways of getting work done are emerging and that consumers and workers demand it. The actual number of jobs impacted may not be substantial, yet employee expectations and demand will be shaped by these changes.
The digitization of daily life through wearable or implantable technology, intelligent sensors and the Internet of Everything will impact home, work and business models. Smartphones ‘clock-in’ employees, sensors in vehicles record routes and deliveries, and dashboard cameras record every movement.
Corporate customers make up 1% of wearable device sales today but will account for 17% by 2020. This rise in wearables like Fitbit and Jawbone will enable employers to capture data on employees’ health, as part of wellness programs intended to promote well-being and productivity.
In HR, this increasing connectedness will enable companies to know their people and products better, coordinate large, spread out workforces, map their talent pipelines and make predictions more accurately. Standardized processes, like on-boarding or benefits management, will be both automated and individualized. Employers need to create internal online communities to communicate with employees and draw together geographically spread out employee populations. Ultimately, workforce platforms which bring together numerous technologies and systems will help HR better engage and manage the workforce.
Technological disruption will continue to bring rapid change and create new ways to get work done. The uberization of work provides opportunities for people to supplement their income and get specific tasks or projects done in real-time. This ability to harness talent locally, virtual or real, brings awareness as well as new sources of competitive advantage.
Individuals are able to monetize their time and skills online via Upwork and Freelancer.com, serving an on-demand Talent Now global market. Again, as the reality of this new work ‘opportunity’ is beginning to dawn, individuals feel the paradox of choice: flexibility and monetizing downtime is a positive alongside the unpredictability of income and the lack of employment stability. As the labor market continues its reconfiguration, people’s emotional need for security will not disappear and we will be increasingly asking who is taking care of these individuals, who is providing the security in terms of taxation and social security, and who will pay for it?
The proliferation of technology and access to data has kicked off a corporate gold rush in search of greater insights and improved efficiency. Organizations are increasingly applying supply chain sophistication to talent acquisition and retention, while clients, regulators, and consumers are demanding greater insights into information and how it is handled. Before the gains can be realized, companies must learn to use these new tools without drowning in data. Now, that it is possible to measure everything, the difficulty is sifting the nuggets from the noise.
In this world of certain uncertainty, organizations must adapt to a faster-paced environment and position themselves to capitalize more on a transient competitive advantage. This will require a different approach to workplace solutions, to ensure companies have the right talent at the right time. As industries rapidly evolve, jobs will be created and displaced resulting in an ever more complex labor market in terms of both supply and demand. To stand out in this Human Age companies to consult reputable recruitment specialists to as effective platforms for organizing how people and businesses interact, buy and work. Contact our workforce management experts to understand the nuances of this new age of work and its relevance for your organization.