In 2011, ManpowerGroup identified the “Human Age,” a new era in which talent overtakes capital as a key economic differentiator. Driven by four major global forces – greater individual choice, the rise of customer sophistication, shifting demographics and the ongoing technological revolution – the Human Age continues to shape the workplace and its impact is increasingly apparent.
The arrival of this age was demarcated by the end of The Great Recession and its protracted, uneven recovery which has altered global markets irrevocably. In this new normal, economies continue to grind in low gear, especially the three main engines of global growth – Europe, United States, and the BRIC nations.
In this fast-changing world of work, what is certain is the uncertainty that lies ahead and that we will see the effects of this acceleration of structural and cyclical forces. Old protectionist markets will need to be reconfigured to compete and reflect new ways of getting work done. Policies focused on job protection are discouraging new hiring and increasing the dichotomy between old, young, temp, perm, Haves and Have Nots. This new age of work will require a new playbook detached from this earlier protectionist outlook. Employers will need the agility and talent to succeed in this reconfigured labor market.
Companies need to reevaluate their workforce management and seek alternative workforce models to drive greater productivity at competitive costs. Individuals also need to develop and demonstrate learnability to skill up in order to stay relevant. Educators and policymakers need to keep pace with the changing demands of modern economies and create a more globalized labor force.
Here’s a brief summarization of two of the four key primary forces which have been and will continue to accelerate the arrival of Human Age:
Most developed economies are moving from population growth and abundance of labor to static or shrinking workforces, along with productivity concerns and pressure on public funds for pensions and healthcare for an aging population. Sixty percent of people now live in countries with stagnant or shrinking work populations.
Across Europe, the working-age population is projected to decline by 10% by 2020, and in Germany alone, the labor force will shrink by six million workers over the next 15 years. China has been similarly challenged: its working-age population peaked in 2010, and by 2050 more than a quarter of its population will be over 65, versus 8% today.
Among developed nations, only the U.S. and France have the population profiles to support economic growth, primarily due to immigration and the growth of minority populations. All eyes are on Germany to see if its open door policy to Europe’s refugees will be the key to address its skills deficit in years to come.
Combined with the skills mismatch, this looming labor scarcity is accelerating a global war for talent which will influence everything from where companies are based to employment and immigration legislation. Demographics already impact the workplace: people are living longer and working older, the labor force is more diverse than ever and migration is reaching levels not seen for decades.
New groups naturally demand equal treatment and opportunities; it is no longer acceptable that women are underrepresented in leadership, get access to fewer opportunities or earn less. Population trends that have been forecast for decades are reaching a tipping point at which they will truly be felt by the employers.
As a consequence of these alternations, Prime Minister Abe is encouraging Japanese employers to bring more women into the labor market. In the U.S., oil and gas and aerospace employers with aging workforces are retaining skills by engineering a prolonged exit for older workers, phased retirements and encore careers to transfer knowledge and develop the next generation.
China is ahead of the curve, addressing the global talent shortage by increasing its investment in higher education. In 2013, China just had 17% of 25-34 year-olds with a tertiary education, whereas by 2030 the OECD predicts it will have 27%. Enticing Chinese graduates to choose Chinese companies over foreign employers is also plugging their brain drain.
Employers will need to move on from circular conversations about diversity and take measures to tap underutilized talent pools. Companies and policymakers need to think differently about making use of their entire workforce including older workers, people with disabilities, migrants, veterans and minorities.
For companies to compete in this fast-changing labor market, HR needs to become more customized to individuals and targeted to specific populations. As individuals take on more career responsibility, employers will be forced to plug into their careers, engage and retain them. The high touch, functional HR model will shift to a high-tech, low touch model. Versus the siloed, password protected, transactional approach of the twentieth century, these new models will be more in line with other social channels that are open, integrated, self-driven and even gamified.
Access to information will change the way an organization drives performance. The old style of workforce management with interviews and annual reviews will move towards real workforce performance management using assessment of online behavior, ongoing feedback, and real-time performance data to drive continuous improvement at an individual level. Continually improving the experience to broaden reach and increase loyalty by building social channels will reduce sourcing costs and drive fresh opportunities to attract and retain great people. Companies unable or slow to transition will be at a competitive disadvantage.
The old culture of paternalism and loyalty that once characterized the employer-employee relationship has given way to a more detached, mutual self-interest driven system which is more transient. Employer-employee trust is at an all-time low. Today, choices, wages and opportunities are dictated by skills, not tenure.
This lack of trust is felt by employers too who worry that employees will leave once their skills have been developed. Some countries have tried to protect the old job for life model, retaining rigid employment legislation that is unaffordable and unsustainable. This is due to the fact that career security – a person’s ability to move on or up independent of their employer – will soon start to replace job security.
As in-demand talent drives the shift towards a more candidate-focused job market, development opportunities, training and clear career paths that improve employee engagement will be crucial. Career ladders will give way to career waves as Millennials prepare to run a work ultramarathon, wanting the flexibility to switch gears at different stages that allow them to pursue goals professionally and personally when it suits them.
More than ever, individuals will pursue careers with multiple employers rather than a job for life. The Haves, with sought-after talent, are in a better bargaining position and will be able to manage their own careers. The Have Nots, those without in-demand skills, will feel increasingly disposable and marginalized. New work models are emerging that will drive productivity gains and change this outdated, uneven employer-employee relationship. New rules of engagement will shift the balance to self-driven individualization. Employers need to work harder to drive engagement and productivity in this changing world of work. They need to shift mindsets and provide more tools, support and opportunities so workers choose them as the workplace to upskill and stay relevant.
External forces and public opinion today exert enormous pressure on corporations. Once it was trade unions that drove policy and salary, but now individual choice supported by social media is demonstrating the collective power of individuals to affect changes like doubling wages from national minimums to $15 per hour even in the low skilled service sector.
The labor market is changing and those jobs that were once intended for students and part-time working mothers are now the full-time ‘careers’ of many. Employers are under increasing social pressure to pay wages that support individuals with families. This tension will threaten job numbers and may lead to increased automation, so employers and policymakers will need to carefully manage that tension in the future.
For employers, greater individual choice means finding new ways to attract, engage and retain the people they need to succeed. Platforms like LinkedIn and Glassdoor.com have entered the online jobs market expanding their core service while providing access to wage comparisons, corporate culture and career paths like never before.
Organizations need to work harder to protect their image online and brand themselves as a desirable place to work. The recent New York Times Amazon article is one of the highest profile, white collar Them and Us exposés that proves the rise of the collective voice and it’s unlikely to be the last.
Consumers today, have more control than ever. Transparency, access and low cost mean people can choose – global or local, corporate or artisan. So business needs to act differently. Individual choice has driven the Makers Movement and growth of a C2C market with the rise of Uber, Airbnb, Craigslist, Quikr and many more to come. The rise of the consumer voice manifests itself in the labor market too where the basic relationship between employers and employees is changing.
Companies and individuals choose to work with organizations that share their values and have a clear social purpose. Eighty-three percent of consumers would switch brands if a different brand of similar quality supported a good cause and social purpose now can be the deciding factor while doing business.
Generation Z especially is both socially savvy and clear on its priorities.
They want to be paid well and want their work to have meaning, to be part of a company that is successful in terms of profit and makes clear the connection between doing well and doing good. Employer brand has never been more important or more exposed. Employers need to shift from a local to global mindset when working. Consulting experienced recruitment professionals such as Manpower can further help employers attract, hire and retain the top talent for their organization.