Companies hiring in the current landscape may feel like they’re in the middle of the ocean: People appear to be everywhere, yet roles go unfilled. Or in other words, water, water everywhere, but not a drop to drink.
The tight labor market is a reflection of the individual introspection triggered by the pandemic. Workers are reassessing what they want not only in their careers but also in their lives.
“At the end of the day, workers are looking at the time they have, and they're saying, ‘How much do I value that, and what am I willing to do with that?’” explains Stacey Harris, chief research officer and managing partner at Sapient Insights Group. “And they've increased that value, across the board.”
For companies to regain their footing in the post-pandemic landscape, human resource leaders will need to consider the transformed labor market as they determine their strategic priorities for 2022.
Sapient’s “24th Annual 2021/2022 HR Systems Survey Key Findings” included a snapshot of the major trends affecting the work of HR: the “Great Resignation,” labor shortages, addressing the skills gap, and pandemic-driven work environments. The global study included respondents from 2,177 organizations of all sizes spanning 50-plus countries.
“We're seeing [change] in front of us over a two-year period instead of over a five- or ten-year period.”Stacey Harris Chief Research Officer and Managing Partner Sapient Insights Group
“This year’s Annual HR Systems Survey findings are a testament to the critical role that the human resource function and supporting technology plays in creating adaptable organizations that are capable of addressing the greatest labor shortages we’ve seen in over a decade,” Harris says. “HR leaders can use this report to help them assess their own HR systems strategy and plot a path forward in creating an environment that enables the HR strategy and informs business decisions.”
The four major findings are:
1. The Great Resignation Has Global Ramifications
The conversation surrounding the Great Resignation is very U.S.-centric today, Harris says, but the movement will uptick globally in 2022. “Many European and some Asia-Pacific markets have more protected workforce environments,” she says. “They're likely about six months behind the resignation trend because it takes at least that long for people to give their notice and take new roles in those environments. So we do think there might be an uptick in resignations probably in the next year in other regions.”
She noted that the sentiment driving the Great Resignation globally will be slightly different from in the U.S. but still reflect the same value-driven shift.
“What we're seeing more in the Asia and Europe regions is not so much, ‘I want to leave my job;’ it’s more, ‘I just want my job to have more flexibility, and so I'm asking for more opportunities to maybe shift my career in a different direction, or have more development opportunities, or think more broadly about the skills I bring to the organization,’” Harris says.
What does all of this mean for HR leaders? When forming their strategic priorities for 2022, HR leaders need to consider if they’re accurately understanding the motivations driving the Great Resignation.
Consider this: The states that cut off their unemployment benefits didn’t see a significant increase in the number of jobs filled by those who have been unemployed. Potential workers have said they have other reasons for staying on the sidelines, such as lack of child care or the fear of contracting COVID-19. And they’re being selective in the jobs they apply for, often looking for jobs that offer flexibility and autonomy. Or in other words, workers have shifted how they’re valuing their time.
Surprisingly, Sapient Insights survey respondents indicated that achieving short-term financial outcomes is the primary driver in making HR technology business decisions, with employee experience coming in second. It’s understandable in many ways, but in the long run, companies are putting desired business outcomes at risk if they don’t have a workforce that’s skilled, engaged, and productive. A better employee experience is how companies can attract, train (if need be), and retain workers. In other words, human resources leaders might be wise, for now, to prioritize worker experience over short-term financial outcomes.
2. Workforce Optimization and Automation to Address Labor Shortage
At first glance, the U.S. labor shortage seems to be the same as the Great Resignation. But the labor shortage is more focused on the struggle to find resources—meaning the employees—to produce goods or provide services, as opposed to workers resigning en masse. In July 2021, the U.S. had a record high of 10.9 million job openings, a figure higher than the 8.4 million unemployed people.
The labor shortage is a reflection of the consumer shift in response to the pandemic, Harris says.
For instance, even during the height of COVID-19, consumers felt empowered to get what they needed and wanted. Digital services and personalized experiences, such as e-commerce or contactless payments, made the buying journey frictionless and connected. And now amid the labor shortage, consumer demand doesn’t appear to be slowing down.
HR leaders have traditionally relied on hiring additional workers to meet increased customer demand. But with the labor shortage being forecast to persist for several years, HR leaders must include workforce optimization and automation in their strategic priorities for 2022.
Manufacturing, for example, had to rethink workforce management when the onset of the pandemic affected the supply chain. “A lot of companies were trying to figure out, ‘Do I need to move my workforce closer? Do I need to have more distribution centers? Do I need to have a whole different distribution model?’” Harris says. And now the worker shortage coupled with high consumer demand has, in part, impacted the supply chain for several industries.
And to bypass the need to hire new workers—because workers are becoming increasingly expensive, as they value their time more—manufacturing and other industries are looking to automation technology as a way to reduce operational costs. Consider how restaurants have increased mobile ordering or how stores are using robots to clean floors. They’re both examples of automation technology, meaning technology designed to drive efficiency with minimal human intervention.
“In China and the Asia-Pacific market, we’re seeing them automate their manufacturing environments more, because similarly, they're not dealing so much with people leaving, but they are dealing with workers expecting more, and that’s going to cost them more,” Harris says. “So you're just going to see more automation being done in those environments as well. So it's not just a U.S.-centric conversation.”
Automation is the natural progression in growing economies, Harris says, as seen in the evolution from the farm to the industrial age, and now moving from the industrial age to the knowledge worker.
“It's just that it's happening, I think, at a much faster pace than what we've seen in historical perspectives,” she says. “We're seeing it in front of us over a two-year period instead of over a five- or ten-year period. In the rush to automate, organizations should be careful that they aren’t missing critical opportunities for innovation and market adjustments that only human employees would identify in a lengthier evolution to automation.”
3. Close the Skills Gap With Value-Driven Metrics
The skills gap is the difference between the skills required for a job and the skills possessed by an employee. But now the “gap” feels as vast as a canyon—all due to the accelerating pace of change stemming from the pandemic.
Public health guidelines to physically distance pushed companies to find new ways to operate: Many had some of their employees work remotely or limited the number of employees on-site; many explored new business models in response to changed consumer behavior; and entire industries transformed by quickly adopting digital and other emerging technologies.
But some organizations were able to pivot more quickly than others. The difference in their agility was enabled by a holistic view of their employees’ skills.
In the Sapient survey, 90% of survey respondents say their company had a handle on core employee data, such as employee addresses or contact information. But the same 90% say they were missing employee data at a holistic level, which includes having an understanding of employees’ skills.
“They were doing a lot of manual tracking of employee skill sets, a lot of manual tracking of employee job descriptions and job roles, and a lot of manual review of who's a critical role and who's not a critical role,” Harris says. “It wasn't like they didn't have it. They had it in places. But it wasn't easy to get to or combine.”
Closing the skills gap needs to be a people-centric conversation, a challenge particularly for operational-level leaders and executives. Prior to the pandemic, many saw the world through a lens of profit, margin, and hard numbers.
“At the end of the day, workers are looking at the time they have, and they're saying, ‘How much do I value that, and what am I willing to do with that?’”Stacey Harris Chief Research Officer and Managing Partner Sapient Insights Group
“And what I think the new conversation is going to be is, What are the value-driven metrics that they're going to have to start looking at?” Harris says. “It's not just engagement metrics, but it's also looking at employee wellness. It's not just hard skills, but I also have to look at soft skills now. It's not just how long an employee has been working with us, but what is their career trajectory.”
Harris continues: “Those are less direct metrics that we have not previously had at the executive level and the operational level. Those have often been a very HR-specific conversation. And my sense is that that's where the executives and the senior leaders are going to be in the next two to three years.”
Companies in the Sapient Insights survey data have named HR analytics among their top five technology investments. And diving deeper into the data, Harris says companies are seeking HR analytics, such as engagement metrics, workforce planning, and sentiment analysis, to understand their workforce. Historically, investment in HR analytics had focused on cleaning up the data, understanding demographics, or having insights into where to cut operational costs.
For HR leaders making skills management and talent management a strategic imperative for 2022, Harris recommends not getting discouraged if the planning isn’t perfect.
“I think we've got this image in our mind right now to have everybody's skills mapped out, have a career matrix, or have internal mobility all working perfectly," she says. “And what we're finding in our data is that a little movement is better than no movement.”
4. Have the Technology and Tools to Support Pandemic-Driven Workplace Changes
The pandemic accelerated transformation of work, but as the dust settles, are the pandemic-driven changes to the workplace here to stay?
“I think we're going to see a focus on the conversations about where work has to happen and what type of work is most important,” Harris says, adding that according to Sapient Insights research, roughly 25% of companies surveyed were going to do hybrid remote and in-person work, and the rest would go back to full-time in the office. The figure is a sharp contrast to pre-pandemic times when 5% of working time was spent at home. “I think those are the two things that are going to be the biggest and broadest conversations probably next year.”
As company leaders discuss the tools and technologies to support their post-pandemic work model, the conversation needs to include how they’re aligning the work with how workers value their own time.
Take, for instance, flexibility. Employers had to be flexible in how work got done during the pandemic, and in response, employees want that flexibility to be the new normal.
“HR tends to take an all-or-nothing approach to workplace flexibility, but I think HR has to really shift that thinking,” Harris says. For example, in a healthcare environment like nursing, it may seem like there’s no opportunity for flexibility. But hospitals are working on ways to make the nursing profession feel like a more sustainable career, such as allowing nurses to complete paperwork at home with a VPN or offering more flexibility in their shift scheduling. The same goes for roles typically filled with hourly employees. Giving workers more control over their scheduling is mutually beneficial: It meets the needs of employees and the demands of the business.
“So I think the conversation is about thinking more broadly about, ‘What can I offer as flexibility,’ versus, ‘What are the limitations of what I can offer my workforce,’” Harris says.
Another consideration is how HR workflows and processes reinforce the value that workers place on their time. For example, HR systems have enabled employees and their managers to be engaged and empowered at work with self-service tools. However, those same tools take managers away from where they want to spend their time.
“We're hearing multiple examples where managers are saying, ‘It's too much now. What is HR doing? Why do I have to approve all the compensation, review all the interviews, manage all of the skill sets, and approve everybody's time?’” Harris says. “The self-service component of the conversation forgot that we were trying to create an outcome where people had not only more flexibility, but they also had more time.”
Harris continues: “Every HR professional should be questioning their workflows and then their work processes with the eye towards, ‘Is this achieving the outcome, and what am I doing with the data, and what am I doing with what I'm asking them to do?’ So the idea of automation in our HR tools and process has to really flow with the idea of what do we absolutely need people to see, when do we need them to see it, and how do we create an environment where they're getting more out of the time they're investing.”