Human Capital Trends & 21st Century Implications for Organizations & HR
Edwin Mouriño, Ph.D.
Today and tomorrow’s workplace and workforce will be different. The changes occurring were happening before the Pandemic, but this worldwide phenomenon has definitely impacted and in some cases accelerated the changes. The following trends that include the acceleration of technology, the skills gap challenge, and the demand for people/human skills, are and will continue to change the face of work and the psyche of the workforce with implications for organizations and its leadership. This has only been exacerbated with the Pandemic.
To begin to understand the changes taking place in technology one has to gain a better perspective on how fast technology has evolved. It took the radio 38 years, the TV 13 years, and the internet four years to reach 50 million users. This has been dwarfed by mobile devices. Just as recently as 2019 there were 9 billion mobile devices, which is more than there are people on the planet. In 2020 mobile devices were estimated to reach between 20 and 24 billion. As another point of reference, in his recent book, 2030, Guillen pointed out that there were more cellphones than toilets. We can only imagine what Covid has done to these numbers.
The entrance of mobile devices has created business models that did not exist before. Just think of Uber, which owns no vehicles, or Airbnb the world’s largest accommodation provider and owns no real estate yet both work off of an App on your phone. The acceleration of the technological changes can also be seen by the evolution of our phones, Alexa, smart homes, smart stores like Amazon Groceries, UberEATS, and 3D printing just to name a few. All of these have created multimillion-dollar businesses with thousands of employees or gig workers.
The pandemic only made some of these grow faster than anticipated. Such organizations exploded with deliveries like Amazon. The increase of remote work and schooling only made technology increasingly central to work and life overall. This change has made work from anywhere and anytime central to competition for workers and work life integration (more on this later).
As if this was not enough, there is also the increase of Artificial Intelligence (AI). AI experts from Oxford recently predicted a sample of tasks and jobs that would be taken over by AI in the next ten years. Things like driving a truck, translating languages, and working in retail are and will be affected by AI. These changes have some concerned that AI will displace many workers. While they are partly correct, if history is any indicator, when the PC came onto the scene it displaced 3.5 million jobs but create over 19 million new jobs. Looks like the future will bring a blended workforce with humans an AI.
Skills Gap Challenge
The US faces serious skills shortage. For starters, an estimated 20 million baby boomers were expected to retire in 2020. The Pandemic may have caused a growth in that number. There are an estimated 200,000 construction jobs, 500,000 IT and Computer Science jobs, and 600,000 high end manufacturing jobs shortage, along with 700,000 nursing vacancies. And when it particularly comes to nursing, this was before the pandemic. Even the military is facing challenges. The Air Force is losing pilots either to accidents or turnover moving on to work for airlines. The Army had to lower its standards to attract more soldiers.
Fortunately, some organizations are working to meet the challenge. Organizations like Home Depot, AT&T, and Amazon just to name a few have invested almost $2 million dollars in retraining. This will be increasingly important with the growth in technology, the changing nature of work, new business models, and the globalization expansion.
The People/Human Skills Demand
While we’ve been highlighting the increase in technology and skills gap, it’s the people/human skills that are being cited as an increased need going forward. The World Economic Forum highlighted their top ten skills, they included ones like Critical Thinking, Emotional Intelligence, Negotiations, Creativity, and People Management among others. This was supported by a study on Chief Learning Officer survey that had Communications and Collaboration as their top two.
At the G20 Young Entrepreneurs’ Alliance Summit in 2018, a study highlighted areas by business function that were considered important for roles in these areas. Business areas like Administration, Finance & Accounting, Human Resources, Manufacturing, and IT had Collaboration, Communications and Problem Solving as their most valued Soft Skills. LinkedIn recently shared in 2020, the skills that organizations are hiring for included skills like Communications, Problem Solving, and Leadership in their Top 10 skills. Interestingly, these are skills that Baby Boomers tend to have, if only organizations can create policies and creative and progressive HR practices to keep them around longer than retiring.
All of this has led experts in the field of career development like Anne Fulton, author and Career Futurist to point out that “it’s really important that we think deeply about how we protect jobs for the future and how we bring people along on that journey.” I’d modify this statement to suggest its “how we reinvent jobs” that will enable people for the future workplace. Because going forward, organizations will need to invest in AI and reskilling the workforce. Human skills will rise while administrative skills will decline.
This has an increased importance in these times. In his book, Conscious Capitalism, co-author and founder of Whole Foods, John Mackey shared that increasingly people craving meaning and purpose in life, but few find this at work. Workers expectations are changing but most organizations have not evolved or kept pace with these changing expectations of their workforce. In addition, in their book Making Work Human, Mosley and Irvine point out that “more organizations are building cultures of belonging, purpose, meaning, happiness, and energy.” It looks like the human factor is play an increased importance even when the presence of technology is continuing to dominate.
What to do
There are some things that organizations and its leaders can do. The following are just the tip of the iceberg for considerations.
Create a healthy Organizational Culture
Ensure your leadership is creating, modeling, and enabling an organizational culture that is human centric and focused. Some of the organizational values that are seen in organizations across the globe and industries include respect, integrity, service, people, teamwork, diversity, honesty, and community among others. Yet there are numerous stories of organizations like Enron, Wells Fargo, and others that had these same values but violated them through their either unethical or illegal actions.
Culture is a reflection of leadership, so leadership carries the burden along with the larger paycheck. Organizations with healthy organizational culture like Southwest and others have shown the bottom-line impact of a human centric focus on their organizations and success. Spend the time and effort to ensure you have a healthy worker focused organizational culture.
Address what the workforce is looking for and motivate them, and just in case it is not money, it actually ranks 8thwhen surveyed on what they were looking for in their next employer. This includes supporting what motivate workers. People as mentioned before are looking for a purpose, which is the desire to do things in service or something bigger than themselves. They want autonomy, which is the desire to direct their own lives. And last, they are pursuing mastery, which is the desire to continually improve at something that matters. So, make it a point to ensure this is addressed. Make sure your leaders are modeling and creating a motivating and engaging work environment.
This topic has received a large amount of print and research in the last 20 years. Yet it is estimated that 85% of the workforce is disengaged costing organizations an estimated $7 trillion in loss productivity. This is found in increased absenteeism, turnover, employee accidents, and others. Stress another an important factor and is the 5th cause of death mainly found in the work setting; costing organizations an estimated $500 billion. Organizations need to not only recognize the importance of these areas but to address them through behaviors and practices.
Capitalize on Diversity, Equity, and Inclusion (DEI)
For the first time ever, we have four generations in the workplace. The two that have received the most attention have been the Baby Boomers and Millennials. Now we have Generation Z entering the workplace. Traditionally in the past, in more cases than not, boomers have been pushed out in early retirement.
The problem with this approach is that for three reasons this is short term thinking. First, the boomers bring a world of experience that organizations can value from. They have the people skills needed for the future of organizations as cited before. Secondly, boomers are living longer, remaining healthier, and willing to work longer but perhaps not in the traditional way as in the past. In essence now, they have forced a creation of a “Legacy Career” which adds to the traditional career phases from the past. They are more open to work in a part time, consulting, and even contracting capacity if given the chance. Last, there are not enough millennials coming into the workplace. Organizations need the boomers as part of their workforce.
The other consideration for DEI, is that the younger workforce is more diverse with more women coming into the workforce and entering more senior leadership positions (not enough yet, but more-finally). The millennials consist of more Latinos, African Americans, and Asians, than of the traditional White demographic category. Taking advantage of this changing demographic makes increasing sense for organizations for two reasons. First, it means more diverse perspectives on how to improve organizational operations and secondly, this diversity means an increasing diverse consumer base. Organizations that capitalize on this change will be around, those that do not, will fall behind or disappear.
Develop your Workforce
Organizations and its leadership need to ensure they are providing ongoing training and development, not only in technical skills, but as mentioned earlier in the people/human skills. This means development not only in the traditional training, such as online and workshops, but in their respective work. This addresses the area of mastery as highlighted earlier in the motivation category.
It turns out that saying thank you, or just recognizing an employee for a job well done goes a long way. A study done by the Boston Consulting Group, found that when employees were asked what they are looking for in their next employer, as highlighted earlier, salary ranked 8th. What they were really looking for was a good relationship with their superior, good work-life balance, and number one was appreciation for their work. Imagine that, just a thank you can go a long way. Make sure your leaders model these behaviors.
Develop Effective Leaders
Organizations are aware of the importance of this area, just based on the amount of dollars spent on it which has been estimated at $46 billion. CEOs support the importance of this when almost 80% of CEO believe the ability to develop leaders is one of the most important factors for success.
Unfortunately, there still seems to be a disconnect. In their book, The Mind of a Leader, Hougaard, Carter, & Sorenson point out that 77% of leaders believe they engage their workforce, while 88% of their workforce say no, they do not. Only 36% of employees are happy at work. It is estimated that only 8% of leaders are effective listeners and communications, an important people skill needed going forward as highlighted earlier. Last and one that summarizes how things need to change. It has been found that 65% of employees would forgo a pay raise to see their boss fired.
This seems to add to the notion that organizations not only need to invest in leadership development, but also to ensure their leaders are held accountable and rewarded for the expected positive behaviors. These behaviors will create an engaging and vibrant human centric environment and lead to a positive organizational culture. Organizational culture, one identified as the differentiator from a successful organization to others that are primarily focused on the bottom line.
And now the Pandemic
Yes, the Pandemic has created or accelerated changes that were already evolving, just now faster due to the changing times. People are now increasingly working remote and this means different challenges and opportunities. This means addressing all of the above virtually and remotely. This means taking work life balance to a true work life integration and addressing the stress that comes with this change. This has also increased remote work opportunities which means workers do not have to remain with a company that does not address their need from a humanistic perspective, because they can move on to another organization without ever leaving their home.
Technology is advancing at an accelerating pace. And this means challenges and opportunities for all. The skills gap creates a tremendous competitive environment for organizations, with other organizations and in the gig economy. And last, the people/human skills demand is real. This basically highlights that irrespective of what happens with technology, people and leadership skills will be fundamental and increasingly important for organizational success.
Organizations that adapt to these changes and enable a human centric approach going forward will thrive and those that do not will fall behind or disappear. Let us not forget that at one time Sears was the present Amazon and/or Walmart (I realize these are not exactly the best examples of human centric organizations). And at one time, Circuit City was cited in the book Good to Great, and yet that success and greatness at the time did not guarantee their success or existence.
HUMAN Resources (HR) has a key role to play HR has an opportunity to play a strategic partnership role with their respective organizational leadership to help create a human capital plan that prioritizes strategies based on their need in order to edge out the competition. Just like organizations are having to evolve and adapt based on the current societal changes taking place, the same has been happening to HR.
This is particularly important for organizations and the HR professionals everywhere but especially in the state of Florida, as the state continues to grow and has now surpassed New York as the third largest state. With more people comes more organizations. One consideration is to re-emphasize the human in human resources.
Holistic – Organizations need to take not only a proactive approach to these changes, but also take a holistic approach to them. HR is in a position to demonstrate its value by showing how the different components such as succession planning, knowledge management sharing, leadership development, diversity awareness, recruitment and retention strategy and employee development can make a difference. Underestimate – Never underestimate the impact that these trends will have on organizations and its leadership. HR managers need to position themselves to be on the forefront of these changes and informing the organizational leadership about what is coming and then propose strategies to address them. Managing – Prioritizing the management strategy and developing a comprehensive human capital action plan will be key to the success of any organization going forward. It cannot or should not just be about a quarterly financial focus. Analytics – Quantifiable results is the language that organizational leadership understands and HR is in a key position to tell the story. HR needs to show through numbers and anecdotal stories what the current and future state of the organization will be based on present trends. Never – The power of taking care of employees should never be underestimated. Research has continued to demonstrate that an engaged workforce leads to a satisfied customer base, which in turn leads to an overall more positive bottom line impact. In summary, as was said in the movie The Wizard of Oz, we’re not in Kansas anymore. Today and tomorrow’s organizations are dealing with more complex, broader, global, different expectations from its employees then it did in the 20th Century. HR is in a unique opportunity to demonstrate its value by engaging in a strategic and proactive partnership with its organization’s leadership team to position the organization for success.
I close this with something Albert Einstein has been credited with saying, “the significant problems we have cannot be solved at the same level of thinking with which we created them.”
The end, really the beginning…