Exploring Innovative Talent Strategies: Market Trends

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Workforce Trends & Opportunities

Changes in the world of work are accelerating at a pace and scale never seen before. Labor markets are out of balance and companies are operating in a highly uncertain environment where it’s increasingly difficult to sustain a competitive advantage. ManpowerGroup has identified that a new era has emerged from this “new normal”. We call it The Human Age, where talent overtakes capital as the key driver of business success.  In the Human Age, four trends are driving changes in the workforce: shifting demographics, technological revolution, greater individual choice and the rise of client sophistication.  The new age of work will require a new playbook and employers will need the agility and talent to succeed in the reconfigured labor market. Human Age 2.0: Future Forces at Work offers valuable insights on how organizations can best navigate the changing world of work.  A more detailed overview and analysis of considerations and practices in the human age can be read here.

Organizations, particularly the larger industry players and global employers, are increasingly focused on the ‘globalization’ of their respective workforce strategies and programs that have been implemented.  This evolution is driven primarily by remote workforce adoption, shared resources, outsourcing and collaboration sourcing options and the ongoing need access more/better talent with greater cost efficiency.

Markets with Multinational Workforce ProgramsWhile cross-border talent sourcing, hiring, and management is a viable component of this ‘globalization, the management of these initiatives remains centrally driven. Individual organizations may establish hubs based on their primary locations, but as a general rule, some of the most mature labor markets tend to act as the hubs for either global or regional workforce management.

Global Employers are implementing strategic workforce management solutions in areas of higher maturity and spend as they seek to gain more control over quality and cost efficiency of mixed talent pools Key markets driving strategic workforce management solutions are the United States and the United Kingdom, however market focus is often driven by France, Japan, Canada, Mexico, and India.

ConsiderationsAs firms migrate to smaller economies in Asia, Eastern Europe, and less mature LATAM countries to accelerate cost savings and reduce competition for talent, new challenges are emerging:

  • COMPLIANCE: These emerging markets are undergoing substantial changes to their wage limits, policies about foreign worker compensation, and classification of labor categories.  These changes, coupled with increasing privacy regulations restrict who foreign employers can hire, how they can contract workers, which suppliers they should use, how long they can retain workers, and how they can legally report and payroll on those resources.
  • QUALITY: The majority of emerging markets have traditionally seen most contracted labor being driven through informal engagements rather than formal workforce models.  The capability of local suppliers to support a formal and compliant process to onboard talent is not consistent and often requires oversight and/or training.

Exploring Innovative Talent Strategies

Past methods of decentralized planning and hiring at the local market level are no longer best practice as employers establish Global and Regional teams to coordinate budgets, vendors, resources, and programs. This, however, is where leading organizations diverge in their approach. Less advanced strategies focus on the internal analysis of past or projected spend coupled with supply and demand, whereas higher value and more innovative employers leverage both internal and external analysis to develop cohesive workforce plans. There are many market dynamics that have direct impact on both the attraction and retention of talent:

Who you hire should impact how you hireCritical to our workshop discussions is the reality that this increased globalization has many emerging competitors now vying for talent in markets where IBM has historically had an established foothold with only moderate competition for talent outside of the more mature geographies. Not only does this apply added pressure on local sourcing channels and wage levels across the labor categories, but it is also having an external economic impact as well.

SpendThe increased demand for higher skill levels and more contingent labor volume has resulted in substantial regulatory changes globally.  With more of these countries’ workforce being absorbed in the contingent labor models, most Ministries of Labor have established new definitions of labor categories, clarified the rules of engagement for those workers, and increased regulations related to both compensation and benefits.

Although, total costs of labor remain based on actual wages, these legislative changes have significantly increased the cost implications of benefits, severance, and other factors.  While each country (and sometimes city) has unique cost considerations, even at a regional level there are basic trends to consider.

In essence, the increased competition has yielded more regulation which has driven up the cost of labor along with the risk of noncompliance faced with new legislative complexities.  It is this dynamic that fuels the adoption of workforce programs including MSPs and RPO Solutions.

While of these market considerations are critical and can have tremendous impact on hiring performance, it is the availability of talent and access to sought skills that determine which markets, models, or sourcing strategies are even relevant to any particular hiring initiative. The increased competition across the globe, shifting migration patterns and economic constraints, coupled with the prevailing disconnect between education and forecasted job demands have deepened the skills gap in the global workforce. An overview of the global talent shortage can be found in ManpowerGroup’s Annual Talent Shortage Study found here.

These shifting market conditions have made the sourcing and retention of top talent more difficult and more expensive across the globe. Of the 20 largest global employers, 17 are reporting growing concern over the following challenges:

  • AnalysisLonger recruitment cycles for permanent and contingent staff
  • Higher turnover of permanent and contingent staff
  • Lower success rates converting contingent to permanent staff
  • Escalating hiring costs and wages
  • Reduced savings in low cost markets
  • Limited availability of qualified candidates in key roles/markets
  • Misalignment of HR/Workforce Analytics

While much can be said for every industry having specific challenges and each company being unique, the reality is that certain opportunities are emerging in workforce management and employment innovation that transcend company or industry considerations. Some examples of how market dynamics are being considered differently to foster innovative workforce strategies are summarized below:

Summary