State of HR: Navigating Uncharted Waters

In this series, professionals debate the state – and future – of their industry. Read all the posts here and write your own (use #MyIndustry in the body of your post).

Today the world of work is in the midst of a structural transition on par with the Industrial Revolution, at an unprecedented pace and scale.  Forces like technology, population decline, and globalization (which have been visible for decades) are now accelerating rapidly and putting pressure on a society that is ill-prepared. When I meet with employers and policymakers around the world, I know many are concerned they are not ready for what lies ahead.

About eight years ago, we began reconfiguring our own business to ensure we achieve competitive advantage in this changing environment. Our goal was to move from being primarily a temporary staffing provider to being a global workforce solutions company. Now, in addition to providing clients the best talent at various skill levels, we help them redesign their workforce strategies in order to attract, develop, utilize, and retain the best people globally. Talent management is not a core competency at most companies today, but it needs to be. If your business strategy is not aligned with your talent strategy you’re probably treading fast-rising water, at best.

Technology and Talent, People and Globalization

We call the emergence and confluence of these large-scale economic and social trends the Human Age — a period in which talent becomes the critical differentiating factor driving the success of any individual, organization, and nation. Rather than being cyclical or temporary, we see these forces having ripple effects throughout global economies and causing long-term structural change.

Take technology. At IBM this year, executives estimate 43 percent of revenue came from products and services that were impossible two years ago; imagine this pace of change multiplied globally, and accelerating. It has a huge impact on labor markets as everyone races to keep their skills up-to-date, even as the goal posts keep shifting. There is a fierce debate over whether technology will eventually create more jobs than it displaces — I believe it will, over time, but not for everyone. In this dynamic and rapidly changing environment, accessing and developing talent will be vital for organizations to ensure they have the skills to succeed.

Talent is key. In major economies around the world today, the workforce is shrinking, meaning competition for talent is going to increase significantly, and companies will have to be better at utilizing and developing the people they’ve already got. In our 2015 Talent Shortage Survey, 38 percent of employers globally reported greater difficulty filling jobs this year than last; that's after decades of high population growth in many of the countries surveyed. If education and training are not dramatically improved to better align skills with employer demand, what will the talent shortage look like when labor pools start to shrink?

Across Europe, the working-age population is projected to decline by 10 percent, or nearly 50 million people by 2030. China is similarly challenged: its working age population peaked in 2010, and by 2050 more than a quarter of its population will be over 65 (it’s about 8 percent today). Across much of the developed world — led by Japan, South Korea and Germany — and even in emerging markets, by 2050 the share of the population that is 65 and older will surpass the share under 15 years old. That’s never happened before in human history. It is one reason we’ve seen many countries rethinking their immigration laws and companies coming up with new programs to coax employees to work longer careers. Much more is needed.

With technology drawing the world closer together, we are also moving into a period where organizations that were once comfortably ensconced in local markets are now very much exposed to global forces. When Lehman Brothers filed for bankruptcy on September 15, 2008, America’s Dow Jones Industrial Average took a hit (-4.4 percent), but so did Great Britain’s FTSE (-3.92 percent), France’s CAC (-3.78 percent), India's Sensex (-5.4 percent), and Taiwan’s TWSE (-4.1 percent). And consider Uber, started in 2009, which now has more than eight million users taking more than 1 million rides per day globally. Whether you are steering a company or a cab, technology and globalization have hit with a vengeance and there is no going back.

Seize the Moment

There are many other trends working their way to the surface, but the big picture is one of rapid change and uncharted waters. This new environment is inherently less stable and more complex than prior periods, and now on a global scale, but that doesn’t mean organizations cannot master it as they did previous eras. The key will be having the talent mindset that brings the market intelligence and corporate agility to navigate more nimbly than before — flexibility, adaptability and speed will be crucial.

Leaders must seize the moment to avoid being left behind, and update their talent strategies now as the global economy is picking up and skies seem to be brightening. Whether you are trying to find world-class talent in developing markets, manage a multi-generational workforce, capitalize on new technology, upskill, downsize, or just hang on to your best and brightest, it will all require a new approach that ranks talent at the top of your company’s mission-critical objectives.