job market and workforce demands

Job Market and Workforce Demands Require Technology

Few things are certain in life, but change is one of them. The ability to adapt to change is the single most important factor in an organization’s long term success. The same can be said for the success of the Human Resources department within any given organization.

Two types of change are particularly important to an HR department: change in the job market (the supply of talent); and change in workforce demands (your unique talent needs).

Change in the Job Market

The Great Recession of the late 2000’s rocked the job market. Hiring decreased sharply in 2008 as employers looked to cut costs. At its height in July 2009, the recession resulted in 6.6 unemployed workers for every job opening–a far cry from the tight job market of today.

unemployed workers per job opening 2002-2016

With hiring at a standstill, employers faced the challenge of doing more with less. This placed the focus of HR squarely on developing existing talent to maximize production and efficiency. Investment in new technology supported this focus by enabling organizations to streamline time-intensive processes–some of them in HR.

The road to recovery from the Great Recession varied by geographic region and industry. However, those organizations that survived were the ones that successfully adapted to the radical change in the job market. The primary changes were to cut costs with decreased hiring and to increase efficiency by adopting new technologies. These changes helped businesses survive, however they would also create new workforce demands.

Change in Workforce Demands

Fast forward to today, and the job market is strong and competitive. According to a 2017 study by Manpower Group, difficulting in hiring has returned to pre-recession levels. Employers are challenged to find, hire, and retain employees in support of organizational growth.

Employers Reporting Talent Shortage

Talent shortage
(Manpower Group 2017)

While grappling with a low supply of talent is difficult on its own, HR professionals must also address changes in workforce demands. Investments in technology continue to create efficiencies, but new technology also requires a workforce with unique skills and aptitudes. Employers rank “lack of hard skills” as the #2 reason for why hiring is difficult today–right behind a simple “lack of applicants.”

Workforce demands have also changed in regard to employee retention. Hiring in the late 2000’s rarely raised a concern of losing new employees; the quit rate was at record-low levels. Today, however, HR must place an emphasis on both hiring for the right fit and continually meeting employee expectations; failing to do either, can easily result in an employee looking and leaving for another opportunity.

employee quits or voluntary turnover since 2002

HR and the Bottom Line

It should be widely known and accepted that effective Human Resources is vital to the overall health of an organization. Unfortunately, there are too many business leaders who still see HR merely as a cost center.  This means that HR professionals often face an uphill battle when making a case for additional investment (time and money) in HR.

However, the most straightforward way to gain buy-in from the C-suite is to identify concrete ways in which HR currently impacts the organization’s bottom line, as well as opportunities for HR to further that impact. A couple  examples of how HR drives profitability can be found by considering employee turnover and and time-to-productivity.

Employee turnover is unavoidable, but organizations that are able to minimize it can save thousands of dollars in (re)hiring and training costs. Additionally, organizations can avoid drops in productivity by retaining experienced employees. HR professionals who seek to adopt new technology, such as employee onboarding software or tools for employee engagement, should focus on the potential ROI that these solutions offer.

When an organization’s growth requires new hiring, the metrics around the time-to-productivity become more important. To the degree that an organization can quickly hire, orient, and train new hires, productivity (and revenue) will ramp up quickly as well. Two questions to consider here are: how can HR find and hire employees that are a good fit for the organization– and, therefore, less of a flight risk; and how can HR seamlessly onboard employees and strike a balance between training quickly and allowing new hires time to become comfortable.

Changing Today for Tomorrow

Change is constant, but the rate of change is not. As employers become more reliant on technology to support people and processes, the iterative nature of technology will require a sustained investment in talent through ongoing training and intelligent recruiting. In other words, hiring and training talent to meet the needs of today will not likely succeed in meeting the needs of tomorrow.

Although it’s impossible to predict the future with complete certainty, human resources professionals can take steps to prepare for changes in the job market and meet the workforce demands of the future. The first step is to develop a talent strategy that aligns with the long term strategy of the organization. The second step is to explore how adopting new technology can drive both strategies forward.

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