Strategic workforce planning: why it’s now more critical than ever
Pubished 12th September 2019
We have a labour market that is at capacity; we’re near full employment with 32.8 million in work, self-employment is at a record high and unemployment is at an all-time low at just 3.8%... this is a real problem. The reality of our labour market (an aging one at that) is that it’s not fit to support the growing demands of an economy in flux.
Did you miss? Is technology improving the resourcing process?
Since the market crash in 2008, traditional businesses have depended on digital change programmes to find competitive advantage, increase productivity and reduce cost… just to remain profitable. And with all of that technological change that have streamlined business, the labour market is still at capacity…
With leaving the European Union (EU) close to set in stone, the country is on the precipice of the largest structural change and period of instability since World War 2. The businesses that will survive this change, even thrive in it, will be the ones that can do things better, cheaper and are able to find talent to enable their business quicker. But we are fast running out of the specialist talent able to deliver on programmes of work. What is worse, for the sixth consecutive quarter we have become an exporter of EU talent, our shrinking talent pool is almost dried up.
How then will businesses navigate this treacherous talent landscape? Contingent labour of course, and yet with impending IR35 legislation changes; an economy that has stalled; a plethora of pressures impeding clients ability to access top talent, there is a real concern that businesses are not reviewing their contingent talent strategies, may not even have a strategy or considered that they may even be facing a shortage in supply.
Let’s look at the factors at play.
Shifting demographic cohorts
As millennials and gen z employees begin to filter into the workforce and baby boomers gradually retire, combined with rapid technological advances, organisations have begun to shift their approach to completing work. The traditional 9 – 5 working hours no longer resonate with current employees, with 70% of millennials desiring flexible working options. However, surprisingly only 11% of jobs are advertised with flexible working options, falling drastically short of the demand for flexibility.
Adoption of new technological advancements has also allowed employees to work remotely, collaborating from multiple locations at times that suit their lifestyle. In some cases, work can now even be completed from anywhere across the globe!
Additionally, the concept of a job for life has gone. Millennial work tenure is decreasing, with fewer than 50% of respondents expecting to stay in the same career long term according to a survey by ZipRecruiter. From a behavioural perspective, the necessity for instant gratification among young workers make long-term careers unattractive.
These changes are contributing to an increasing shift to flexible and outcome-based employment contracts in industries where they simply didn’t exist only a few years ago. In fact, by the end of 2020, the gig economy is set to make up 43% of the US workforce alone! As such, the non-perm workforce will only continue to become more critical, as this section of the labour market continues to expand.
According to the Employers Skills Survey, there are, unsurprisingly, multiple sectors in the UK that are suffering from a severe lack of talent, whilst 80% of CEOs state they are worried they won’t be able to find and hire employees with the key skills they need to succeed.
There is a growing pool of over 1.4 million contractors in the UK labour force but in order to attract these in-demand contingent workers, businesses need to ensure they have a watertight contingent talent strategy in place. Attracting contingent workers is entirely different to permanent employees after all, a contractor’s behaviours and motivators are unique. For example, according to an independent survey, 70% of contractors in the last year moved to an entirely different industry when seeking work, with learning now taking priority.
The growth in contingent workers is mirrored by demand as organisations become reliant on contingent workers to deliver on critical change programmes. In fact, two in five organisations expect to increase their use of contingent workers by 2020. According to a further survey, 42% of respondents state their organisation is primarily made up of salaried employees, with expectations to dramatically increase their usage of freelance and contract workers in the next few years.
Leaders must think strategically about how they will fit these future employees into their pipeline, or risk losing scarce talent to competitors.
Why is strategic workforce planning so critical in today’s challenging environment?
Strategic workforce planning will provide increased flexibility to grow and shrink at will and create greater cost efficiencies through optimised talent planning and on-boarding.
There are cultural benefits too, while contingent workers provide greater elasticity within the workforce, there is not the same cultural impact when contracts expire. This flexible approach also enables organisations to gather fresh perspectives, ideas and the latest skills.
Contingent workers are hired for their niche skills that are sometimes not readily available on the market in a permanent capacity. This allows businesses to ensure vacant positions are filled quicker. In the tech sector alone, unfilled vacancies are predicted cost businesses over £15b a year. Furthermore, businesses that opt to utilise contractors can improve their bottom line, as the business pays for specialist skills when necessary.
The workforce is ever-changing and evolving. In order for businesses to remain competitive, organisations require a level of dynamism and workforce planning. Businesses must ensure they take into account the preferences of the new age of talent entering the labour force. Whilst talent shortages remain, organisations also need to have a solid contingent talent strategy in place, utilising a variety of innovative sourcing methods such as hiring outside of the employers industry. It’s simple, the businesses that will thrive, will be the ones that can do things better, cheaper and are able to find talent to enable their business quicker.