The New Workforce facing CEO’s:
The Association for Corporate Growth recently published their Middle Market Growth magazine headlined with the banner “Race to Reinvention”. Can you relate? The articles were thought-provoking and centered on the future of work. The magazine’s articles, along with the current business environment, raised questions many CEOs, perhaps like you, are facing.
- Does my workforce feel engaged, and do they enjoy their work? How do I know?
- Does my staff really have to be in an office for the company to succeed?
- Who am I truly concerned with losing that has an impact on our revenue, competitive edge, and/or customer relationships?
- What key role(s) am I concerned about or struggling to fill to accomplish our long-term goals?
The Path Forward:
There are steps CEO’s, with their HR Executive, can take to mitigate the impact of the “great resignation”, where employees work, and proactively address talent management year-round—not just when it becomes a crisis.
This starts with taking a data-driven approach. Understanding which employees are most at-risk of leaving and what your value proposition is to your future workforce is essential. The answers aren’t always straightforward. Using workforce data, analytics, and a structured process can help uncover underlying trends that are impacting employee engagement, productivity, resignation rates, etc. so organizations can implement a more strategic approach to talent retention and management.
State of Play – the Labor Market:
Every business owner/CEO knows we face a tight labor market. From the Bureau of Labor Statistics August report, the unemployment rate declined by 0.2 percentage point to 5.2 percent. The number of unemployed persons edged down to 8.4 million, following a large decrease in July. Both measures are down considerably from their highs at the end of the February-April 2020 recession. However, they remain above their levels prior to the coronavirus (COVID-19) pandemic (3.5 percent and 5.7 million respectively, in February 2020).
Fueling some of the unemployment numbers is what has been popularly coined “the great resignation” of our labor force. According to the U.S. Department of Labor, during the months of April, May, and June 2021, a total of 11.5 million workers quit their jobs.
Employees want more control on where and how they work. McKinsey and Pew studies point to 52% and 54% of employees want flexible or work from home arrangements. A McKinsey survey also found 30% of employees would likely switch jobs if they had to work full time on-site. What we often forget is how many worked from home before the pandemic. Research from Gartner showed 30% of workforce worked from home at least part time prior to the pandemic.
The Businesses Outlook – post COVID:
An Association for Corporate Growth (ACG) survey of 100 middle market company leaders found that 45% expect financial performance to be significantly up from pre-pandemic levels, and another 45% to be at, or close to, pre pandemic levels. Achieving their ambitious growth goals will require companies to have the right employees in place
Looking to the future, 78% of ACG survey respondents see a hybrid work model.
The ongoing challenge is keeping and recruiting top talent. Louis Aurelio, Managing Director and CAO at Kinderhook Industries, LLC points out that a strong leadership team is critical for helping companies find the right mix of in-office and remote work.
The Dilemma – how to manage the new workforce expectations:
Many believe wage compression from years of 2% wage increases are the current reason for people changing jobs. According to Prudential’s “Pulse of the American Worker Survey: Post Pandemic Work Life, 24% of respondents will look for new jobs, with the top reasons being compensation (50%), work-life balance (38%) lack of growth opportunities (34%).
Yet, wages for job switchers, or people who started a new job over the course of the year, are up just 5.8% from 12 months ago, according to the human resources management and payroll processing firm ADP. Historically, job switchers would see increases in the 10% range or better. “They should also worry about people leaving not just for money”, says Bradford Frank, a Korn Ferry senior client partner in the firm’s Global Technology practice. Frank says the data is a clear indication that people are leaving for roles that feature better working conditions and companies that align more with their personal interests. “This reinforces the idea that people want to work for companies that have purpose and offer flexibility,” says Frank.
Many organizations express concern about maintaining their culture if they do not return to the office. Yet, the ACG survey found 44% of respondents said working remotely has had no impact on company culture, and 34% see a positive effect. Gartner found employees were more productive working remotely, going above expectations. Plus, employees with flexible work options are more likely to bring their authentic selves to work improving engagement and performance.
The Return to Work:
A strong consideration needs to be how employees will see the return to work. If the organization requires workers to be in the office, what will that look like? For instance – bringing workers back into the office but telling them the new COVID protocols have closed the kitchen; that only two people can meet in the conference room at a time; and there should be minimal discussions at one’s desk, then you are asking them to come back to the office to work alone. They would be happier at home!
The key is to focus on the work arrangements best for your company. Bringing workers into the office 1, 2 or 3 times a week should be accompanied with a regular routine or event that is unique to the office. Whether that is a regular team discussion, social hour, continuous learning events, etc., it provides a greater purpose to be together. (And justifies the commute)
Rather than have the individual, or the CEO, decide when to be in the office, let the work team decide. Letting the team decide the rhythm of at home and in-office work allows for schedules that become more productive rather deploying a one-size-fits-all approach.
Beyond Returning to Work:
Looking back at the CEO questions, one can see that retuning to the office or not is only part of the post-COVID workforce challenges facing CEOs. Having market data, knowing your workforce engagement level, and attracting and retaining key talent are also needed for organization success.
Kevin Shane is a Partner at Newport, LLC, and Chairs the Human Capital Practice for the Mid-Atlantic Region. Schedule time with Kevin at firstname.lastname@example.org