Currently, unemployment is at a near twenty-year low. There are more jobs available than workers looking for them. The big question – is this a short-term or a long -term issue? If your organization is experiencing this now, how are you addressing it? What is your strategy for addressing it in the future?
There is some indication that we could be at the beginning of a major economic upheaval that might impact the work environment for several decades. Bain and Company Macro Trends Group provides a comprehensive overview of two major forces that will impact the work environment over the next ten to twenty years. The two forces are demographics and technology, and their collision has the potential to trigger economic disruption more severe than we have experienced during the last sixty years. These forces are already posing challenges, risks and opportunities for organizations and Human Resources practitioners. Over the next decade, Human Resources and the organizations they support will need to develop effective strategies and programs to counteract the collision of demographics and technology.
Demographically, the era of an adequate labor supply is ending. According to the Bureau of Labor Statistics, the largest labor force growth took place during the 1970s when the labor force grew by 2.6%. Since then, each ten-year period has resulted in a declining labor force growth rate. Over the past ten years the labor force has grown only 0.7%, and during the next ten years it is projected to grow by only 0.4%.
The shrinking labor pool might be good news for workers. The short supply of labor, coupled with a high demand for workers, will most likely increase their market value over the short-term. The longer-term pressing challenge for organizations will be attracting and retaining staff that have the skills required to fill critical organizational roles. Highly skilled staff are already scarce and will continue to be scarce; therefore, it will become an added challenge to attract and retain them. The organization and HR will need to enhance existing incentives with competitive compensation and benefit packages, flexible work arrangements, remote work options, more attractive organizational cultures, and a higher purpose for work.
During this period, new automation technologies will continue to augment and impact many job-focused organizations. Some jobs will evolve into role-focused positions, continually changing to do what needs to be accomplished. Other jobs will be augmented with technology, providing incumbents the opportunity to devote more time to critical non-transactional tasks.
As labor becomes scarcer, organizations will need to invest in labor-saving technologies. New technologies and innovation will generate productivity growth as automation replaces and enhances human labor. Over the next decade, the rapid spread of automation will collide with the slowing labor force growth. While higher productivity through automation is generally positive, it can be highly disruptive and will impact employment. During this period new job categories and resulting career tracks will be added to support automation advances and alleviate some of the job losses.
It will be incumbent on Human Resources to anticipate the impact of automation on the workforce and implement a comprehensive program to upskill and reskill employees. The program will need to focus on reskilling employees in declining jobs, upskilling the workforce to adapt to future implementation to technology, and attracting and retaining new talent to fill critical future roles. To increase their allure, employers need to enhance existing incentives with monetary benefits, an attractive culture, flexible work arrangements and a higher sense of purpose in their work.
During this disruptive period Human Resources organizations must understand the broad forces at work – demographics and automation – to be prepared to guide and assist Leadership in adjusting to the disruption. How can HR begin to anticipate disruptive change? They must ask the question: Are the initiatives to improve efficiency and productivity making the organization resistant to change? Any action that improves efficiency, productivity, and resilience to change is a prudent move.
Getting there will be the challenge, there is no magic formula for managing a significant macroeconomic upheaval. There are many steps organizations can take to position themselves to ride out the change. The first and most important step is to build resilience into the organization. Organizations that can absorb shocks and change course quickly and smoothly will have a chance of thriving throughout the turbulent 2020s and beyond. Human Resources needs to be prepared to provide leadership during this transformation.