What do you need to prioritise to build a resilient business that will thrive in a post-COVID-19 world? Digital transformation? Your supply chain? Absolutely. But, we’d argue, above all else, it’s your people.
Back in January, before anyone really understood how COVID would impact the world, we conducted our annual CEO Outlook survey. Back then, ‘talent risk’ was the threat that UK CEOs were least concerned about. In July, we carried out a pulse survey to see how the pandemic had changed priorities. Excluding the pandemic, UK CEOs now rank talent risk as the second biggest threat to growth over the next three years (behind supply chain). Across the global sample, it’s considered the biggest risk.
The pandemic has focused CEOs on the need to build resilience – financial, operational and commercial. To thrive in the new reality, organisations need the agility to respond to future threats – if that’s further lockdowns, climate change or the impact of Brexit – and changing customer demands. A key part of that will be having the right talent.
In addition to the CEO Outlook, we recently conducted a pulse survey with nearly 1,300 HR executives across the globe. The respondents believe that the majority of organisations will see their workforces change ‘shape’ dramatically over the next two years. Some of the jobs that exist today won’t in the fairly near future. And new jobs, demanding new skills, will take their place. Organisations are having to reconsider the composition of their workforce and the skills they need to prosper in an uncertain future.
So, what will the workforce look like? We expect to see an acceleration in the move from a role-based to a skill-based approach. Pigeonholing employees into specific roles won’t provide the necessary agility. Employers will instead need talent with transferable skills – employees who can adapt and embrace change at the drop of a hat. There’ll be a greater emphasis on emotional intelligence and design thinking.
A key area of focus will be on developing digital skills. Four-fifths (80%) of UK CEOs say the pandemic has accelerated the creation of a seamless digital customer experience. A similar proportion (78%) say it has accelerated digitisation of operations and the creation of a next-generation operating model. It’s clear that the workforce of tomorrow is going to have to be comfortable building, using and selling digital.
In many cases, that’s going to require reskilling or upskilling existing employees. The results of our HR pulse survey suggest that more than a third (35%) of employees will need to be reskilled in the next two years. Nearly three-quarters (72%) of HR execs ranked upskilling and reskilling the workforce as one of the most important paths to shape the workforce.
Reskilling the workforce is going to be a challenge – only a third (33%) of HR execs thought upskilling and reskilling the workforce would be easy to implement. Creating a workforce fit for the new reality is going to mean placing a greater emphasis on continuous learning and how virtual and digital learning can lead the way. To what extent can virtual collaboration tools be used to replace classroom-based sessions? How organisations create the environment for employees to locate and consume the right learning at the right time so they are ‘learning in the flow of work’ will be critical.
There are, of course, other ways of tackling talent risk and reshaping the workforce. One of those is to hire in the required talent.
There’ll be no shortage of applicants to any job vacancies. But there’ll be a competitive market for talent with the right digital skills. That could be eased for some organisations thanks to a levelling of the playing field for talent. 78% of CEOs believe that remote working has widened their available talent pool. If employees can work from home, your reach is no longer limited to a commutable area.
That said, there are other risks to talent on the horizon. Deal or no deal, Brexit will undoubtedly have an impact. To get the skills they need in quickly, while managing budgets, organisations will make greater use of a contingent workforce and managed services.
Of course, one solution to talent risk is greater automation of roles. 54% of UK CEOs say COVID-19 has accelerated the creation of a new workforce model, with human workers augmented by automation and artificial intelligence.
Automation and artificial intelligence (AI) are here to stay. Digital investments are no longer about trialling innovations for the future. They’re about having a real impact now. We are seeing a hybrid model appear – with AI augmenting human capabilities. Automation can take on the routine elements of a job and also help analyse data to provide deeper insights. This can have a huge impact in HR itself, with AI handling payroll and expenses processes, for example, and also informing workforce planning decisions by analysing internal and external data.
Managing talent risk is also about employee wellbeing and helping staff build individual resilience. The respondents to our HR survey ranked “taking steps to safeguard the experience and wellbeing of employees” as top of their list of priority initiatives.
Second on their list of priorities was, “helping leaders develop new management and leadership skills to support remote working”. The steps organisations take to engage staff and support their wellbeing need to reflect the new reality of the workforce. After all, the pandemic is changing how and where we work.
A fifth (20%) of adults in Great Britain are working exclusively from home, according to recent ONS data. And looking at the results of our CEO Outlook survey that’s having a big impact. Almost three-quarters (72%) of the UK CEOs say they will be downsizing their office space, when asked to consider the impact the pandemic has had on the world of work. And a similar proportion (74%) say that remote working has caused them to make significant changes to policies, to nurture their culture.
But people management in the new reality isn’t just about remote working. The ONS data shows that 62% of adults are now travelling into work. Companies need to think through how they engage and support the individual resilience of a hybrid workforce – one that works more flexible hours from more flexible locations.
Communication is, of course, key. 58% of UK CEOs say that their communications with employees have improved during the crisis. And it’s important that that continues. That means regular, transparent communications from leadership. It means line managers regularly catching up with employees working remotely to check their wellbeing. In uncertain times, people want to be kept informed.
Organisations have increasingly looked to how digital tools can be used to improve communications – and aid collaboration where people haven’t been able to gather in person. 78% of UK CEOs said they will continue to build on their current use of digital collaboration and communication tools. Thriving in the new reality is going to mean finding new and innovative ways to collaborate – in the virtual and physical worlds.
With people working flexible hours and out of the office, the pandemic may have finally ended the age of presenteeism. While they are remodelling their businesses, organisations are reshaping their culture and what the employee value proposition needs to look like in the new reality.
Disruption isn’t over. Employees will continue to need and value greater flexibility around working hours and location. And there should be a strong emphasis on mental health and emotional wellbeing.
Having a clear corporate purpose will also prove important. Employees are more engaged when they understand how what they’re doing supports society and the greater good. 84% of UK CEOs say that “purpose provides a clear framework for making quick and effective COVID-19 related decisions”. And 82% say they’ve had to re-evaluate their purpose as a result of COVID-19 to better address the needs of the stakeholders – employees, customers, investors and partners.
Our UK CEO Outlook findings show that UK CEOs recognise the importance of managing talent risk in the context of growth over the next three years. When asked what investments they would prioritise to meet their strategic objectives, UK CEOs were split almost 50:50 between buying new technology and developing workforce skills. In the US, by way of contrast, investment plans were weighted heavily in favour of tech.
Whatever choices you’re facing around your workforce and talent management, clearly managing in the here and now is the priority in the COVID-19 world. However, in parallel, being able to make changes and investments that last beyond COVID-19 is critical in addressing talent risk as a threat to long-term growth. Tackling talent risk effectively will in large part be about balancing immediate with longer-term needs.