War for Talent – we have been speaking about the war for talent for almost a decade now. This is not a new phenomenon; however, it manifests itself very differently for different organizations and industries. The problem is that it is usually most acute in companies/industries growing fast or which have the highest potential to grow and for skills difficult to come by.
Over the last year there was a temporary lull in this as countries and companies struggled to deal with the ‘black swan’ event (COVID 19 pandemic). We saw the entire spectrum of reactions – some companies/countries have adopted a ‘defensive’ strategy to conserve/contain the damage and on the other hand some saw this as an opportunity to reinvent / ‘rewire’ themselves for the bounce back after the storm has passed. The last few months has seen some of these strategies being played out, but the jury is still out on which strategy will win in the post pandemic ‘new’ world.
The perceived risk of the pandemic on the global economy seems to be receding and business confidence seems to be on the rise. The Fortune/Deloitte CEO Survey 2021 supports this view, they surveyed 110 CEOs across 15 industries – 77% of CEOs expect ‘Very Strong’ to ‘Strong’ growth in this year. Although they are split 53:47 on whether they feel that the effects of COVID 19 will be over by the end of this year. This implies that most of them feel that they have largely understood how to navigate their businesses through the pandemic, as long as the pandemic is largely in control.
However, there is one challenge which can spoil the party!
When asked as to – What is the biggest challenge they see currently? The below word cloud gives their answer:
Source: Fortune/Deloitte CEO Survey 2021
No guessing as to what is concerning the CEO today. Most CEOs today feel that lack of talent or the right talent at the right time – is the biggest business challenge they face today. It also seems that now this concern for right talent is even more acute and it is more tightly coupled with the future success of the organization. It’s really become a front and center issue for most companies. This is certainly not how it was before the pandemic. So either this wasn’t such an important issue earlier or the pandemic has given the CEOs time to reflect and conclude that this will be the most important war to win for their businesses! This will not only propel their organizations to the next level but will also ensure that this momentum is sustained.
This raises some questions in my mind –
- Has the WFT now become an existential threat to companies, or can it be the biggest spoiler for them?
- It has surely become a top of the mind recall for CEOs but are they investing enough to deal with this in the long term?
- Have the CHROs failed to live up to this challenge and give confidence to their CEOs?
- Is talent just a CHRO’s agenda or a key competitive advantage for the organization?
- Is this a temporary phenomenon or is this here to stay?
- Is this the same ‘war’ that we have been fighting for years or is this different this time round?
Well, the jury is out on most of these questions but on the last one – it’s increasingly becoming clear that this time it is different. For one it is a global phenomenon and secondly is it big – many are calling it the ‘Turnover Tsunami’. The number of employees leaving their jobs/ looking for new jobs has just accelerated at a pace that has left all worried. This has been exacerbated by the gradual opening of the economy, as the virus abates in some countries and the business get more confident to deal with it. The war is getting intense as the companies want to have the right talent in time to leverage the opportunities expected to come from the post-pandemic boom. This has caused a sudden a flood of jobs coming into the market which has further added fuel to the fire. It looks as if it will get much worse before it becomes better.
What is causing this ‘Turnover Tsunami’?
In my view this phenomenon is being caused by a variety of reasons
The Engagement Epidemic
In North America many employee turnover/ engagement reports/studies are clearly stating that – more than half of employees surveyed in North America are planning to look for a new job in 2021.
One study done by the Achievers Workforce Institute found that in North America – 46% of respondents feel less connected to their company and 42% say company culture has diminished since the start of the pandemic. Just 21% percent said they are still engaged at work. The situation is far worst in growing economies like India – where the engagement levels have fallen substantially, and attrition rates have jumped 5-10% in the AMJ (April-May-June) quarter. Many companies are reporting attritions of upwards of 25% (annualized).
The employees give variety of reasons for wanting to move on, the prominent ones are disengagement, reduced sense of belonging and burnout. There are also the usual reasons for exits like wanting a promotion or more salary, etc. but the disengagement levels being seen are unprecedented, much higher than pre-pandemic times. Some are calling this the ‘Great Resignation’ after the ‘Great Depression’.
Many are also calling this the ‘revenge of the workforce’, the workforce is collectively unhappy about the short-term view taken on employees by organizations or managers, the tendency of some managers using this crisis as an opportunity to extract more from their teams, managers/leaders not being empathetic to them when they were dealing with crisis during pandemic, use and throw attitude of some managers, etc. they feel they have been taken for granted as attrition dipped during the pandemic and employees did not have many options. They have had enough and are now looking to explore greener pastures. Is it ‘civil war’ yet?
The ‘Over-heated Cauldron’
Talent Acquisition folks are struggling to hire as joining rate have dropped significantly and each hiring is a battle that they must fight. For them it seems like fighting multiple battles with the prospective hires, handling the pressure from business leaders, impossible demands from the candidates, flood of open positions, etc. It’s an impossible situation, it sounds like they are fighting multiple battles at the same time but still losing the war!
The market is clearly overheated with organization offering everything to attract good talent with the right skills and competencies. Organizations are offering crazy salary jumps, flexibility to work from anywhere, innovative benefits, etc. This is having a ripple effect across the rest of the organization, the already disengaged employees are now comparing what they are been paid against these new hires and that is further alienating them. Therefore, the organizations are facing a double whammy of finding it difficult to find/attract good talent and on the other hand losing a lot of good employees to the market. It’s already an overheated cauldron and it’s still on the fire!
No wonder the CEOs are worried and think this is the greatest challenge they and the organizations face today!!
Work or Life- why not both?
The pandemic has given employees the opportunity to think about various aspects of their work and personal life. They have realized that life can be unpredictable and that they would like to have more flexibility like anytime/anywhere working, they also feel the need for better financial protection for them and their families to deal with such unforeseen events, this is forcing them to look at these options within their own companies or even at organizations that are willing to offer this to them. Employee have realized the importance of ‘wellness’, they want to focus on their wellness both physical and of the mind. They also prefer jobs/organizations that will invest in them and support them to enhance their skills, etc. Employees no longer give work or career the entire focus, they want to look at their life in entirety. They are not willing to compromise and will move on from organizations that are not able to full fill their expectations. In short, they are looking at organizations that prioritize their employees and will do everything in their power to keep them happy and motivated. Is this transient? Is it a fad that will are out with time? Your guess is as good as mine, but organizations will have to take this seriously and quickly adapt themselves to this scenario. It makes business sense too!!
Providing flexibility and caring for you employees improves trust and motivates the employees to focus on giving their best – many companies have seen a 10-15% jump in productivity with flexible working.
Promise of the future
Many employees have used the pandemic to upgrade their skills, used time to plan for their own ventures, connected with like-minded individuals with whom they can partner, invested for future etc. Many of these individuals are high potential people who have the confidence to do for themselves what they had been doing for their companies. The key drivers for this being – creating something of their own, getting more control of their lives, using their talent to flourish, etc.
The funding for new ventures has also become relatively easier for professionals with a proven track record. The current environment of multiple job opportunities in the market is also giving them the safety-net of coming back to a corporate job in case the venture fails.
How long will this mayhem last?
Most experts believe that the kind of salaries companies are paying, the number of people changing jobs, the disruption this is causing is not sustainable and will stabilize over some time. However, they also point out that while the current situation will not last forever, companies that are able to manage this better will have the fuel to zoom ahead of the others.
Some also say that there are some fundamental changes afoot, in the way companies attract, engage and motivate their employees. One such inference that many are drawing is that this looks like a beginning of the shift in power away from the companies toward the workforce. This shift, when it plays out fully, will completely change the way companies look at attracting, engaging, and retaining talent. Organizations will have the challenge to make themselves more aspirational, hyper customize their employee experiences and become responsive, nimble and very employee centric to match the expectations of their employees. This is not something that organizations can plan for in the next few years, it will have to be done TODAY – we are already part of this CHANGE. The time to act is NOW!!
In conclusion: I feel that organizations will have to put in their best brains and technology to get this right – throwing money at the problem may further aggravate it. Secondly, this an organization problem and can’t be outsourced to just HR or any external consultant, everyone will have to put their might behind it, REMEMBER it is at the top of the CEO’s agenda.
Disclaimer: I do not claim at all the views expressed by me in this article are original. They are based on my own inferences drawn from secondary research and interactions with few HR/non-HR professionals across multiple organizations. However, I would like to admit that many of these people belonged to the industry that I am a part of viz. Information Technology. Therefore, my views may have a little bias towards this industry which anyways is facing the maximum brunt of this war. I will be delighted to hear views from my friends across industries and other countries.