Category All, Best Practices What We Learned from Deloitte’s Future of Work 2022 In November, Deloitte held its annual Future of Work event to share the latest insights and predictions for workforce trends in 2023. December 27, 2022 By Ivo Jurcic The event was hosted by Franz Dagelet, a Deloitte Partner and leader in HR transformation, and welcomed six panelists; Petra Tito, a Partner and CHRO of Deloitte Consulting, Bart Delmulle, the CDO of PostNL, Marion Van Happen, CEO of the Headfirst Group, Mathijs Bouman, a keynote speaker, and economist, Egon Hoppe, the Future of Work Lead and Partner at Deloitte, and Meike Salvado-de Reede, CHRO at Van Oord. Together, the panelists discussed the status quo of the talent market today and discussed how the latest developments in a post-Covid era will shape the workforce. With that note, let’s begin the dissection. The Future is Skills-based The idea that the ideal model for operations is based on filling the right positions is outdated. According to stats from Deloitte, 63% of current work being performed falls outside of the job description and 81% of employees claim work is increasingly performed across functional boundaries. Additionally, only 42% of respondents say their organization’s job descriptions do an “excellent job” of specifying expected duties and tasks. It might be time to reconsider the premise that the best way to organize work is by relying on traditionally defined jobs, i.e. assignments based on specific tasks and responsibilities. Job-based organization entrenches employees in their duties, making it difficult for people to move between different roles and projects that may fall outside of their job description. This certainly can be the case, based on Deloitte’s abovementioned data. As an unfortunate side-effect, employees’ expertise becomes tied to a specific function that may or may not become obsolete or outdated, as technological/market trends move on. Talent-wise, this is a waste. In a skills-based organization, employees are grouped together based on their individual skills and expertise. By doing so, employees and organizations benefit immensely; Employees’ collaboration skills improve and they learn more from their co-workers with every project they take on. Work becomes less repetitive and more interesting as different projects come along. Organizations’ workforce becomes more flexible and adaptive, which makes the organization better suited for outside challenges and disruptions. Additionally, organizations become more efficient with using their most important resource; their workforce. At the moment, it’s no secret that many organizations are struggling to fill empty vacancies. For instance, according to the National Association of Manufacturers, by 2025, U.S. companies will have two million empty job vacancies in manufacturing positions. By the same token, the Manufacturing Institute and Deloitte published a skills gap study and determined that the cost of unfilled positions for U.S. companies will be around $2.5 trillion. The silver lining here is that organizations should aspire to secure all the necessary skills they need for growth, instead of meeting hiring quotas for jobs with robust descriptions. A skills-based organization holds the promise of being a new operating model for work. This perspective comes as somewhat novel, compared to the traditional perfect fit candidate model, which is still the prevalent hiring practice across many industries. Work is rapidly becoming more cross-functional. Take the emergence of dynamic teams as an example. Companies form dynamic teams on a project-to-project basis and pair professionals working across several departments. Dynamic teams are based on the idea of having the right skills at the table to complete a project. After the project is done, dynamic teams disband. We can confidently say this operating model is on the rise. We’re seeing innovative employee Recognition and Reward solutions enable HR to form dynamic teams, reward them, and track culture analytics, despite their fluid nature. As more organizations struggle to find the right candidates for their jobs, enterprises are drafting strategies to form internal labor markets and offer employees career paths based on their skills. Another fascinating part of the lecture focused on labor demand. Despite the Recession, the Demand for Workers has Increased One of the more striking points made in the presentation was the rising demand for skilled workers, despite the threat of the looming recession. Mathijs Bouman, a keynote speaker, provided a graph for the current unemployment rate versus the number of vacancies in the Netherlands. source: Deloitte Unemployment rates have been dropping steadily, with occasional jumps during times of recession, which is expected. We can also see that the number of vacancies has been growing consistently, and is currently at an all-time high. In other words, despite the loss of business, increases in prices, market disruption, and uncertainty, companies are still looking for workers. The demand for skilled labor is surreal. Another piece of data provided by Bouman reveals that all industries and sub-industries in the Netherlands, from ICT to educational institutions, have empty positions that need to be filled. source: Deloitte Of course, the presented data does not imply the situation is the same across all labor markets, but similar challenges definitively exist. Let’s have a closer look at the industry with the most unfilled vacancies: ICT. In November, U.S. tech companies hired 14,400 workers, and tech jobs in all sectors grew by 137,000 positions, according to Tech Jobs Report published by by CompTIA. source: CompTIA What’s fascinating about this graph is that employment in the U.S. tech industry has been growing steadily despite the global Covid pandemic which shattered businesses across the world. From December 2020 to November 2022, during 2 consecutive recessions, the industry is still thriving and looking for skilled labor. The hiring situation is similar in other industries, such as construction, which relies on manual and blue-collar workers. Why is staffing becoming more difficult for companies? First of all, older generations of workers are constantly moving towards retirement. According to the U.S. Bureau of Labor Statistics, the median age of the labor force is 41.7 years. By 2031, the median age of workers is expected to be around 43 years. U.S. workers are getting older. As time moves on, more seasoned professionals will retire, and industries will struggle to fill empty vacancies. The Multigenerational Teams in Manufacturing report found that 5% of the existing workforce is already beyond retirement age, and an additional 20% will reach retirement age within the next 10 years. Second, with the expansion of digital labor markets, skilled professionals will have more employers to choose from, which will prompt organizations to increase their offerings and improve employer branding to attract would-be hires. This development presents organizations with a unique opportunity to attract the skills they need. This brings us back to the emphasis on the skills-based organization of work, opposite to job-based. With that in mind, here are three predictions for the future of the talent market that struck me as particularly interesting. Future of Work Predictions Here are the top three predictions that captured our attention on this year’s Future of Work event. Use of Tech to Make Work Easier Technological solutions will have a stronger impact on shaping the workplace and will continue to make work easier for employees. This statement holds true for technical-skill industries and their counterparts that rely on manual labor. Regarding the former, Gartner projects that worldwide IT spending will grow by 5.1% in 2023, which translates to a total of $4.6 trillion. For context, the global IT spending was $3.9 trillion, a 3.4% increase from 2019. The trend of investing in various IT tech is likely to continue, as organizations as looking for more ways to increase productivity with the workforce they have. Automation tech makes work safer, more pleasant, and more comfortable, which ultimately improves employee satisfaction and, by virtue, worker retention. An example from our courtyard would be the increased adoption of Recognition & Rewards platforms. In one report, Gartner predicted that by 2025, as many as 50% of large enterprises will have an R&R system in place to recognize their employees and positively impact their company culture. The same report listed Semos Cloud as a point solution provider back-to-back with other industry leaders. Besides reducing the number of man-hours required via automation tools, technology will remove physical barriers between employees, enabling more workers to partake in roles traditionally filled by other segments of the workforce. Take manual, blue-collar labor, for instance. Work that includes heavy lifting or carrying was usually reserved for men because of their physical attributes. As a result, similar jobs in industries like construction are overwhelmingly dominated by men. With new solutions, such as exoskeleton technologies, the barriers to men-dominated intense labor will be removed and more potential employees across other genders will be able to participate. source: iccc.org In terms of staffing, industries that are struggling to fill vacancies for blue-collar workers will gain a larger pool of job candidates and, ideally, hire more workers to sustain growth. This statement echoes back to the loss of revenue business data shared above. Of course, organizations will need to increase their internal education efforts to properly onboard their employees on how to get the most out of the new technology, but this setback can be solved. Senior employees can step back from physically demanding work and take on educational roles. A company veteran with over 30 years of experience in a field of work has valuable knowledge to pass on to their younger co-workers. Technology that reduces manual effort and makes jobs easier and ultimately helps more employees reach their pension age in better health. And that is nothing short of a societal benefit. CHRO Should be a Board Member Chief Human Resource Officers play a central role in overseeing HR management and labor force alignment. In enterprises, the Board of Directors typically consists of the SEO, senior managers, financial officers, and other leaders, but rarely HR leaders and CHROs. Why is that the case? The growth strategy of an organization is inherently tied to its workforce. It stands to reason that without more workers, organizations can’t fill vacancies of retired employees nor can they take on more demanding projects. As Bouwman points out, in the most competitive and tight labor market, the matters of the workforce should become C-level priorities, with internal or external CHROs becoming permanent members of the board. There are many ways how the board can benefit from CHROs expertise: CHROs have a unique perspective on employee experience and understand how it impacts workforce engagement, productivity, and employee wellbeing. More importantly, CHROs are instrumental in making strategic decisions that improve EX and solve problems connected to poor EX, such as quiet quitting, disengagement, and poor workforce morale. CHROs are experts in talent management and employee development. When the Board is creating long-term plans for the organization, CHROs can ensure that enough focus is given to people development and retention. CHROs have superior knowledge of HR laws and regulations; they ensure the board stays informed and clear of any legal workforce risks. CHROs are invaluable assets for culture shaping and making a thriving company culture a strategic goal for the organization. This perspective is unique to CHROs and absolutely necessary for a company that wants to create a culture where people want to show up for work. There’s No Such Thing as a Perfect Candidate One remnant of the old hiring era (which many companies are still struggling to let go of) is the find the perfect candidate mentality. The methods HR used not so long ago included a series of interviews, hiring assignments, score-based psychological evaluations, personality tests, etc. Organizations no longer have the luxury of hiring the perfect candidate or waiting for them to show up. The truth is, ideal job candidates are stretched between several would-be employers; even if they’re hired, their longevity in the organization is by no means guaranteed. Instead, organizations should aspire to find appropriate candidates who are genuinely motivated to work there. Appropriate candidates can attain hard skills that are valuable to the organization with in-company schools and training centers as long as they possess the soft skills necessary to learn and succeed in their positions. Companies that develop their internal labor markets become more resilient to turnover and workforce challenges, as long as they have the right employee-learning capabilities. On an additional note, employee learning technology can help organizations bring upskilling and skill evaluation to the next level. Learning and development solutions help HR bring out the full potential of a workforce. When employees consider career changes and different positions, HR can offer them another place in the company to keep them from leaving. Therefore, the idea of hiring the perfect candidate flies in the face of reality. Instead, find a 70% fit for the role and create an opportunity to train them and give them the skills to support the organization and succeed at their position. Conclusion The changes happening in the labor market are tectonic. Talented professionals are becoming scarce. Instead of focusing on finding the right talent, organizations will have to adopt a proactive approach to talent development and training, so that motivated individuals can learn the skills they need to ascend to the ranks of the organization. The future of work is focused on eliminating barriers between workers and possible roles and placing the workforce at the center of company growth. We genuinely hope to see CHROs take a seat in boardrooms as central members of the board. After this year’s Future of Work, every HR professional should reflect on the following: Do your everyday tasks fall outside of your role’s core description? What are your experiences with dynamic teams and cross-department collaboration? Are you focused more on defining your role or pursuing a specific skill set? It’s going to be a thrill seeing these predictions unfurl in 2023.