Businesses are facing the most diverse work environment that the world has ever seen with five different generations working together, across geographies—each with different skills, experiences and work habits.
More of these workers will be freelancers and long-term contractors.
All of this represents a major opportunity for productivity, talent development and employee engagement.
But according to new wide-scale research from Oxford Economics, most companies are unprepared to capitalize on it.
As revealed in Workforce 2020, an independent, global study by Oxford Economics with support from SAP SE, most companies recognize the importance of managing an increasingly international, diverse and mobile workforce.
However, the majority lack the strategy, culture and solutions to do so.
Oxford Economics surveyed more than 5,400 employees and executives and interviewed 29 executives in 27 countries, finding that two-thirds of businesses have not made significant progress toward building a workforce that will meet their future business objectives.
“To gain advantage in the future, businesses must understand the workforce of tomorrow and its importance to bottom-line success—today,” said Edward Cone, managing editor of Thought Leadership at Oxford Economics. “Our research shows that the C-suite is out of touch with HR on business strategy and priorities, and workers are not getting what they want from their employers in terms of incentives, benefits and training.”
Workforce issues
The study’s findings challenge the prevailing wisdom and highlight the most critical issues facing HR professionals. At the top of the list:
- Compensation matters most
According to Workforce 2020, competitive compensation is the most important attribute of a job to two-thirds of respondents—20 percent higher than the next highest benefit. Retirement plans, flexibility and time-off rank well ahead of amenities such as fitness centers, daycare and subsidized food.
If compensation is what motivates employees, what they are most afraid of is being left behind as a result of insufficient skills and inability to keep up with the latest technologies.
“Becoming obsolete” is the biggest concern for today’s worker, twice as concerning as being laid off.
- Millennials are misunderstood
Although 51 percent of executives say that millennials entering the workforce greatly impacts their workforce strategy, fewer than one-third say they are giving special attention to millennials’ particular wants and needs—primarily because executives do not understand how they think.
Much has been written about how millennials are different in their use of technology and their attitudes toward work than past generations of workers; however, the Workforce 2020 study shows that they are surprisingly similar to their non-millennial coworkers when it comes to workplace priorities:
Millennials and non-millennials alike cite compensation as the most important benefit. Additionally, 41 percent of millennials and 38 percent of non-millennials say higher compensation would increase their loyalty and engagement with the company.
Contrary to popular thinking, millennials are no more likely than non-millennials to leave their jobs in the next six months.
Millennials and non-millennials have similar priorities in areas such as meeting career and income goals and meeting goals for advancement. The two groups have similar views on the importance of corporate values and achieving work/life balance.
“Millennials are a major challenge for companies. As the single largest and most tech-savvy workgroup, they also represent a significant opportunity,” said Mike Ettling, president, HR Line of Business, SAP/SuccessFactors.
“Companies that can excite millennials about work, train them to fill in gaps on experience and adapt to their style of working can build a workforce that can successfully execute on the objectives of today and adapt to drive advantage for the business of tomorrow,” he said.
- The talent gap is widening
Few companies, however, are properly supporting their workers, including millennials.
Less than half of employees surveyed as part of Workforce 2020 say their company provides ample training on the technology they need, and less than one-third say their company makes the latest technology available to them.
The need for skills like analytics and programming/development will grow sizably over the next three years, but employees doubt the opportunity to gain proficiency in these areas.
While executives cite a high level of education or institutional training as the most important employee attribute, only 23 percent say they offer development and training as a benefit. Incentives for pursuing educational opportunities are also uncommon.
- Leadership is lacking
Unfortunately, supporting growth among employees is creating a leadership void.
Lack of adequate leadership is cited by executives as the number two impediment to achieving their goals of building a workforce to meet future business objectives.
Almost half of those surveyed say their plans for growth are being hampered by lack of access to the right leaders within their organizations.
Only 31 percent of executives interviewed say that when a person with key skills leaves they fill the role from within the organization.
Surprisingly, less than half indicate that their leadership team has the skills to effectively manage talent or inspire and empower employees.
- The workforce is changing
As the economy evolves to a state where nearly everything can be delivered as a service, companies are increasingly tapping external expertise and resources they need—and on an as-needed basis—to fill skills and resource gaps and to accommodate rapidly changing business and customer demands.
That means more temporary staff, more consultants and contract workers, and even “crowd-sourced” projects.
In fact, of those companies surveyed as part of Workforce 2020, 83 percent of executives say they will be increasing the use of contingent, intermittent or consultant employees.
- Compensation models, development and technology must change
This changing nature of employment is affecting workforce strategies. Of the companies surveyed:
46 percent say they will require changes in compensation plans
45 percent say they will require increased investment in training
39 percent say they will result in changes to technology policies to support mobility, bring your own device, etc.
Additionally, 41 percent say they will drive new investments in HR technology that can better support their changing strategies and needs.
Investments in HR technology will move beyond traditional core HR systems designed to manage the employee record and drive compliance toward emerging technologies that support recruiting, talent and performance management, learning and enhanced employee engagement.
While more than half (53 percent) of executives say workforce development is a key differentiator for their firm, they do not have the tools and organization to back it up.
Just 38 percent say they have ample data about their workforce to understand their strengths and potential vulnerabilities from a skills perspective, and 39 percent say they use quantifiable metrics and benchmarking as part of their workforce development strategy.
Only 42 percent say they know how to extract meaningful insights from the data available to them.
“When it comes to preparing for the future of work, knowledge is power,” Ettling said. “Tomorrow’s workforce will be more diverse and work differently. Companies must understand this and develop new strategies that support diversity and foster a new level of employee engagement and collaboration—or they will ultimately remain stuck in the past.”