Businesses are facing the most diverse work environment ever seen with five generations working together, across geographies – each with different skills, experiences and work habits.
More of these workers will be freelancers and long-term contractors. All of this represents a major opportunity for productivity, talent development and employee engagement, but according to new wide-scale research from Oxford Economics, most companies are unprepared to capitalise on it.
As revealed in Workforce 2020, an independent, global study by Oxford Economics with support from SAP, most companies recognise the importance of managing an increasingly international, diverse and mobile workforce.
However, the majority lack the strategy, culture and solutions to do so. Oxford Economics surveyed more than 5,400 employees and executives in 27 countries, finding that two thirds of businesses have not made significant progress towards building a workforce that will meet their future business objectives.
The study’s findings challenge the prevailing wisdom and highlight the most critical issues facing HR professionals. At the top of the list:
1. COMPENSATION MATTERS MOST
According to Workforce 2020, competitive compensation is the most important attribute of a job to two thirds of respondents – 20 per cent higher than the next highest benefit. Retirement plans, flexibility and time-off rank well ahead of amenities, such as fitness centres, daycare and subsidised food.
If compensation motivates employees, what they are most afraid of is being left behind as a result of insufficient skills and inability to keep up with the latest technologies. “Becoming obsolete” is the biggest concern for today’s worker, twice as concerning as being laid off.
2. MILLENNIALS ARE MISUNDERSTOOD
Although 51 per cent of executives say that Millennials entering the workforce greatly impacts their workforce strategy, fewer than one third say they are giving special attention to Millennials’ particular wants and needs. Much has been written about how Millennials are different in their use of technology and attitudes towards work, but just how different are they when it comes to workplace priorities?
Millennials and non-Millennials alike cite compensation as the most important benefit. Additionally, 41 per cent of Millennials and 38 per cent of non-Millennials say higher compensation would increase loyalty and engagement.
Millennials and non-Millennials have similar priorities around goals for career, income and advancement. The two groups have similar views on the importance of corporate values and achieving work-life balance.
Competitive compensation is the most important attribute of a job
Millennials represent a significant opportunity for companies. As the single largest and most tech-savvy workgroup, companies that can excite Millennials about work, train them to fill in gaps on experience and adapt to their style of working can build a workforce prepared for the business of tomorrow.
3. THE TALENT GAP IS WIDENING
Few companies are properly supporting their workers’ development needs. Less than half of employees surveyed say their company provides ample training on the technology they need. Demand for skills such as analytics and programming/development will grow sizably over the next three years, but employees doubt the opportunity to gain proficiency in these areas. Executives cite a high level of education or institutional training as the most important employee attribute, yet only 23 per cent say they offer development and training as a benefit.
4. LEADERSHIP IS LACKING
There is clear executive concern in the lack of adequate leadership to help build the workforce to meet future business objectives. Almost half of those surveyed say their plans for growth are being hampered by lack of access to the right leaders within their organisations.
Only 31 per cent of executives interviewed say that when a person with key skills leaves they fill the role from within the organisation. Surprisingly, less than half indicate that their leadership team has the skills to manage talent or inspire and empower employees effectively.
5. THE WORKFORCE IS CHANGING
As the economy evolves to a state where nearly everything can be delivered as a service, companies are increasingly tapping external expertise and resources they need, on an as-needed basis, to fill skills and resource gaps, and to accommodate rapidly changing business and customer demands. That means more temporary staff, more consultants and contract workers, and even “crowd-sourced” projects. In fact, 83 per cent of executives say they will be increasing the use of contingent, intermittent or consultant employees.
6. COMPENSATION MODELS, DEVELOPMENT AND TECHNOLOGY MUST CHANGE
This changing nature of employment is affecting workforce strategies: 46 per cent say they will require changes in compensation plans; 45 per cent say they will require increased investment in training; and 39 per cent say they will result in changes to technology policies to support mobility.
Additionally, 41 per cent say they will drive new investments in HR technology moving beyond traditional core HR systems designed to manage the employee record and drive compliance toward technologies that support recruiting, talent and performance management, learning and enhanced employee engagement.
While 53 per cent of executives say workforce development is a key differentiator for their firm, they do not have the tools and organisation to back it up. Just 38 per cent say they have ample data about their workforce to understand strengths and potential vulnerabilities from a skills perspective. Only 42 per cent say they know how to extract meaningful insights from the data available to them.
When it comes to preparing for the future of work, knowledge is power. Tomorrow’s workforce will be more diverse and work differently. Companies must understand this and develop new strategies that support diversity, and foster a new level of employee engagement and collaboration – or they will ultimately remain stuck in the past.