People are the lifeblood of any business, and optimising talent will be integral to recovering from the latest set of global disruptions. Between July and September 2022, unemployment increased from 3.9% to 4.9% in the OECD, 0.4% lower than pre-pandemic levels. By comparison, the US and the G7 unemployment rates are 3.6% and 4%, respectively. With inflation at a 30-year high, conditions are set for a candidate-driven market. Particularly in highly skilled roles, there is no longer a large pool of candidates to choose from.
As employers brace for economic headwinds in the aftermath of a global pandemic, many are adjusting their workforce strategies to adapt to a rapidly changing market. As such, there are three workforce strategies that companies may need to adopt to weather upcoming uncertainty.
First, organisations will need to develop an inflation strategy. Leaders must understand the health of their program and address problem areas in retention and sourcing. Access to real-time data on critical hiring and retention KPIs allows businesses to compare themselves with country-specific benchmarks and forecast future talent needs. This birds-eye view of the workforce is the first step in ensuring that hiring strategies always reflect market and labour changes.
Businesses should also compare this data to their forecast and understand possible future changes. For instance, companies can flex their extended workforce to account for gaps, but only if they can identify those gaps ahead of time. If they can forecast sourcing needs, CHROs can prioritize rate increases for strategic roles.
Workforce optimisation can help organisations pursue the correct initiatives to better position their program for success and offset inflation concerns. To weather inflation, a well-defined cost and talent strategy allows businesses to take action in the right areas. Access to real-time talent intelligence data will empower organisations to stay competitive as they work to attract and retain top talent.
Increasing talent quality while driving cost efficiency
A second strategy to prepare for oncoming uncertainty is to increase talent quality while driving cost savings. CHROs can consider temporarily suspending length-of-stay policies to keep high-quality workers in place at locked-in rates, as well as finding new openings within their business for existing high-performers. Similarly, companies can strategize rate increases by leveraging talent and market data to target rate increase costs toward the roles most strategic to business objectives.
It is also important to monitor low-income workers and consider rate increases for employees who will be hit hardest by inflation. Companies can also look to retain existing talent with upskill opportunities rather than incurring sourcing and future inflationary costs.
While inflation is 9.6% in the UK, the cost of hiring talent has increased 14%. Under these market conditions, assuring talent quality is paramount. With visibility of the right data at the right time, decision-makers may find they need to do less hiring in the first place. They can use market data to target rate increase costs on the vacancies that best align with business objectives.
Contingent workforce optimisation
The third key strategy to stay resilient amidst market uncertainty is leveraging an extended workforce as a strategic advantage to deliver flexibility and cost savings. Extending active high-quality workers reduces the need for sourcing and keeps rates locked in at the initial negotiation rather than sourcing at a current rate defined by inflation. The contingent workforce also powers organizational agility, enabling companies to ramp up quickly as new projects arise or demand for products and services fluctuates.
Rapidly building a clear, comprehensive, responsive and accurate picture will be vital to getting the most out of a contingent workforce. “Firms should be looking at the demographics of the workforce that they’re managing today, how people are self-identifying, their age or their life stage,” says Raleen Gagnon, VP and GM of Total Talent Intelligence at Magnit. “It changes the types of scheduling flexibility that you might want to offer and the structure of what a hybrid work environment might need to be. Look at who among your competitors is hiring similar skills. Are they doing something more innovative?”
Employee patterns reflect this shift to a contingent workforce. Since the pandemic, more people are choosing to be part of the contingent workforce as it offers them flexibility, better life balance and higher pay. CHROs and hiring managers will need to take stock of their retention and sourcing practices to mitigate rising costs. Bringing in or expanding the contingent workforce will provide scope for businesses to optimise their operations and ensure they can respond flexibly to a shifting market. And in order to maximize responsiveness, organizations will need access to real-time talent and market data that provides visibility into a rapidly changing labour market.
According to Sam Smith, president, EMEA and global client delivery at Magnit, the flexibility offered by this new breed of workforce is already proving critical to top firms.
“Global FTSE 100 organisations are purposely moving to a more flexible model. 70% or more of their headcount may still be full-time employees, but their flexibility is driven by the other, contingent part of their workforce … and that’s pretty significant,” says Smith. The nation is on recession watch, and this shift is more pertinent than ever. Employers can’t afford to miss the mark on their human capital strategies. This data can also help business leaders assess where specific workers are best placed within their organisations. Smith explains: “You need to understand whether a role is better suited to a permanent employee, whether you should consider a contingent worker or a consultant or if this is a prime opportunity for automation. Managing a contingent workforce well comes from data-driven decision making, reporting and analytics that then deliver better outcomes.”
As workforce structures become increasingly complex, properly-managed data on contingent workers is critical when meeting legal obligations for a globally dispersed workforce. Regulations vary for independent labour across markets, and data is central to compliance, helping business leaders to understand whom to deploy and when.
There is an increasingly complex talent pool to navigate, where real-time market rate and hiring intelligence and solid, data-driven contingent labour programmes are a must. Businesses have a wealth of information at their fingertips. But they need the human expertise to validate this data and make use of it. Access to timely and relevant insights on their own workforce and the broader marketplace is key in an ever-changing economic landscape.
To learn more about data-driven workforce strategies, visit magnitglobal.com