President, Korn Ferry Digital
Future of Work
Leadership challenges: The current state of talent
Leadership needs new tools and mindsets to identify future-ready talent to meet today’s leadership challenges.
Leadership challenges: The current state of talent
Work has been undergoing multiple metamorphoses over the last few decades, bringing with it new leadership challenges. The way we work, where we work and the tools we use have all transformed, and they continue to transform, thanks to technological and societal advancements.
Organizations have responded in kind. They’ve adapted their business models, talent management and leadership styles to meet the new demands and new realities of work.
Now, the future of work is shifting once again, triggered by a global pandemic that has upended entire businesses and industries. Professionals today see the benefits and the need for flexible work schedules, hybrid work models and achieving work-life balance. These have all been cornerstones of the pandemic era workplace.
But as more people have become fully vaccinated, companies have begun calling their people back to the office. Few offer options to work remotely, even part of the time. Some organizations may want to snap back to a pre-pandemic normal. However, many professionals are not looking to relive that past.
The disconnect between what talent needs and employers want has led to a mass exodus of employees. In the US, workers are leaving their jobs at a historic rate. Nearly 4 million Americans quit their jobs in April 2021 alone according to the Bureau of Labor Statistics.
Companies can expect this number to increase. Indeed, 82% of 684 professionals surveyed in mid-July 2021 said they plan to leave their jobs within the next six months. In that same survey, 31% said they plan to quit even without another job lined up. The number one reason for this great resignation, according to 36% of professionals, is the COVID-19 pandemic. Its disruptions have spread to employees, who are rethinking what they want out of work.
But talent supply isn’t the only leadership challenge that organizations are facing. They’re also grappling with a significant shift in the demand for skills and capabilities needed to grow in the future.
The massive digital transformation affecting virtually every industry means the talent that helped organizations get where they are today isn’t the talent they’ll need to reach the next level. According to a recent Korn Ferry survey, less than a third (29%) of HR professionals believe their companies have the right people to lead their organizations into the future.
All these changes in the workforce has led to a talent shortage for many companies. If these companies want to thrive in the future, they’ll need to shift the way they view talent, especially the talent in their ranks.
One of the main leadership challenges in the workforce today is when organizations are faced with a talent or skills shortage, companies will look to the external labor market to fill any gaps. But today, there’s a fundamental supply problem, and companies are left with a large number of roles they can’t fill. In the US, the number of job openings hit a record high of 10.1 million in June 2021. The number of people available to fill those roles? Fewer than 7 million.
Also, many of those available workers aren’t qualified for open jobs. That means some roles will remain empty for months, if not years. Ultimately, these vacancies will remain because organizations are stuck in old habits and perceptions about talent management. Although the world of work has changed, many organizations continue to apply outdated practices to new problems.
In part, this is because of a lingering perception that people’s tenures at organizations are becoming shorter — with good reason. As of 2020, the median job tenure for wage and salaried employees is 4.1 years. Many of these “career nomads” spend two or three years at one job before moving on in search of the next new challenge.
As a result, organizations are reluctant to invest more into development because they think their return on investment will be nominal. Only 55% of HR professionals we surveyed said they have the necessary programs and assessments to identify and develop high-potential talent. Even fewer — just 14% — believe they’re selecting the right people for these programs.
Although the number of career nomads continues to rise, there are also loyal professionals who want greater longevity at a company. These employees — referred to as “job stayers” — take a new job because they want to learn new skills, further their careers and increase their earning. They stay at the job not only because of the company’s reputation but because of the opportunities for advancement.
As a result, roles today are defined by skills and capabilities: the jobs to be done and experiences to be had. Organizations that don’t disrupt their own talent management strategies will continue to struggle to find the right talent. These challenges will include filling the current gaps and keeping existing talent engaged.
But for companies to tap into the potential of their workforce, they’ll need to empower and enable their employees. That means they must commit to providing the right rewards, training, coaching, development and on-the-job experiences. Assessments can also help leaders go beyond the surface and determine whether they have high-potential talent already in their workforce, and whether they should be developed into future-ready leaders.
Take, for example, Walmart, the largest private employer in the US. The multinational retailer has recently been on a hiring spree, bringing on twice as many people as before the pandemic and three times as many people as during the pandemic. At the same time, Walmart has reskilled over 2 million associates since 2015 through its Walmart Academy initiative, understanding that developing talent from within also helps build the strong, competitive workforce it needs.
To unleash people’s potential, HR must move away from the traditional focus on people and roles and take a deeper look at skills and capabilities to address leadership challenges. They’ll need to retool their old HR information systems and invest in new talent analytics technologies that can surface individuals’ skills, capabilities and career aspirations. Using these tools, they can match talent with job needs and career opportunities across the organization.
Organizations that invest in their people keep those people engaged in their work, which allows them to deliver value and impact. This investment enables the business to operate successfully in today’s demanding, always changing environment.
The biggest and most successful organizations use their brand, lucrative rewards policies and exciting products to attract incredible talent. But in some ways, this can make it even more challenging for leadership to foster effective teams, segment talent and meet high expectations.
Organizations should rethink how they approach the external labor market to fill hiring gaps. Instead of looking in the same places or sticking with the status quo, companies can branch out to other industries, considering less obvious talent pools to find candidates with transferable skills rather than focusing on their pedigree.
Microsoft and Walmart, for example, both offer “returnship” programs to professionals ready to re-enter the labor force after years- or even decades-long gaps.
Amazon, currently facing shortages in high-demand retail and distribution jobs, has been hiring from other industries hit hardest by the pandemic, like leisure and hospitality. The e-commerce retailer has dedicated over $700 million to train people across its corporate offices, tech hubs, fulfillment centers, retail stores and transportation network. It’s an investment that will help those individuals move into more highly skilled roles, whether within or outside Amazon.
Roles are becoming increasingly cross-functional and organizations can no longer afford to put talent, whether internal or external, in a box.
By following traditional talent management practices, companies are missing a crucial opportunity to harness the potential of their people. To thrive in the future of work and meet leadership challenges head on, business leaders will need to think in terms of ecosystem leadership. Building a healthy system of talent means you’ll have access to the strongest performers inside and outside your organization. This starts with organizations rethinking and transforming their own talent practices.
HR functions need to get in front of these leadership challenges. They must reinvent themselves and their services and become the leaders for the current workforce. When leaders invest 100% in their talent, they show that they care about their employees’ growth and well-being as professionals and as people. This type of engagement and empowerment will increase the chances that employees remain committed, purposeful and focused on delivering results.