21st Century Workforce Challenges

Recognize the Labor Trends Which Affect Your Organization

The workforce challenges ahead for corporate executives and other organizational leaders can have a profound impact on the growth and success of your organization. WSRC can help you understand these trends and what they mean for your organization.

Employees of all ages are seeing their place in the labor market differently than ever before. Loyalty to the company or organization is decreasing as employees refocus their commitment to their profession. Families and personal time are increasing as priorities. Benefits are more portable and unemployment is at historic lows.

Young people – in demand because of a scarce labor supply – have the economic security of their parents’ generation to fall back on. Security in a specific job is no longer a key value and self-actualization is becoming a strong competitor to job security.

Your employees want to feel included as an integral part of your enterprise. If they don’t think they play an important role, they won’t be productive or effective…and they could actually be detrimental to the efforts to build the organization’s goodwill.

Not only are baby boomers reaching retirement age, but they’re also in a good position to meet senior year finances without requiring full time work.

Pension, 401k, and Social Security resources are often sufficient to provide adequate funds, particularly when boomers’ income needs and living expenses are reduced. Many of their hard-earned skills are in demand, allowing them a fallback position as consultants and/or as part time employees, working at their choice.

In many cases, organizations do not realize the magnitude of the impact of losing senior members of the management teams. At risk is not just the loss of individuals, but of the banks of irreplaceable industry-specific “domain knowledge” possessed by these long-time employees.

Employees’ domain knowledge grows as their tenure with the company grows. They increasingly acquire skills and knowledge, such as:

Technical expertise;

Understanding of the company and its culture – what’s where now, and the historical perspective on what has worked, and not worked, in the past;

Understanding of the processes – protocols, procedures, and resources; and

Understanding customers and the markets.

Employees are the backbone of any operation, affecting the growth and success of your organization. Yet, the availability of labor and knowledge skills in the next 20 years will become one of the biggest challenges to the pursuit of a successful organization.

We know the shortage is coming because every person who will be in the workforce for the next twenty years is already born and can be counted. The patterns of labor trends can be identified from a variety of sources such as school enrollment, census data, labor statistics and corporate reports. The technology and level of skills needed to perform the work are predictable.

Recruiting pressures and costs will increase as a result of a workforce shortage.

Even in an economic downturn, unemployment has remained low. In the next 20 years, the U.S. labor force will deteriorate by 2.1%. Skilled labor will become critically short as a result of the “baby bust” generation (age 20-35).

The numbers are even worse in most of the industrial nations. Industry globally will be competing for the same skilled workers. There will not be enough people of working ages to keep up with the demand, and many businesses will have to fold.

Competition for labor is becoming a truly global phenomenon – across industry segments and across nations – primarily as a result of the Internet, the changing technology in all organizations, and the global impact of World War II on birth rates.

Importing workers will not offset the effects of a labor shortage around the world. As the business environment becomes more global, and more technologically dependent, large and small companies are increasingly competing for the same resources and the same customers.

Strategic errors will have less tolerance for forgiveness with instant benchmarking on the Internet. Profit margins and competitive positions will depend more and more on data supporting quick decisions and accurate predictions.

In order to be competitive, response time to changing needs will be required in months with accuracy, rather than years.

Quality employees will be able to reject work environments where they do not feel nurtured and fulfilled. When combined with improved databases, Internet benchmarking and highly competitive labor costs, the cost of labor will have a very small window for error. No organization can afford to be on the wrong track for long.

On average, the loss of one professional employee can cost as much as $75,000 in direct costs with additional losses in productivity and revenue generation. For non-exempt employees, the costs also can be substantial. Within certain hot industries, the costs can be even higher.

When all of the other costs are squeezed from the company’s overhead, the one huge cost of turnover will become the difference between more and less profitable companies. More and more, staff turnover becomes the critical competitive difference among otherwise equal companies.

The length of service for current employees is getting shorter while the average age of active employees is rapidly escalating. Turnover costs will include the dollars spent on recruiting, administration, assimilation and training, plus the lost opportunity and productivity cost of having knowledgeable people walk out the door.

Please contact us for a free consultation to discuss how your organization can address these 21st century workforce challenges.