The reality of the talent market power shift
Around the world, we have witnessed the talent shortage as many restaurants, hotels, and other service establishments struggle to rebound following the pandemic shut-downs. We know from economics that when supply and demand are out of balance, that we see advantages for one side of the equation. For example, with surging demand and fewer sources of supply in many parts of the world, the price of petrol has been rising rapidly. We have seen the same phenomenon with the supply for key talent in some markets. The balance of power for talent has shifted to the suppliers of talent (employees and prospective employees).
Recently, I received a call from a top HR leader in a distribution company with a perplexing situation. In their business, the work days can vary based on the demand for deliveries on that day. Typically, this may require a bit of overtime for some people, which was traditionally accepted. However, more recently when employees are asked to stay a bit longer to complete the daily deliveries, the response is “No.” This small, but significant change demonstrates the shift in the power that some employees are seizing to either make changes or perhaps make a point with management.
These situations coupled with other complexities related to the demand for talent are creating new challenges for HR leaders who are often faced with decisions related to policies, pay practices, and special allowances in an effort to keep or attract talent. Some managers view this as a simple bidding war for talent and expect HR to put aside job evaluations and pay scales to help them secure the resources that they need. However, more mature leaders and organisations are taking a more holistic approach and taking a lesson from the non-profit sector in some cases.
In this “Talent Supplier” market, how do employers (talent buyers) work to secure the human resources needed in their business? Fortunately, talent is a bit more complex than a typical commodity like petrol. Oftentimes, talent will take opportunities and stay in organisations even when they could make more money at another place. If we consider non-profit organisations or NGOs, they have often been resourceful with securing talent in non-monetary ways. After inquiring with several of these organisations, I summarize their approaches in four key areas:
While most organisations would say that they are mission-driven, some industries and organisations clearly have an advantage with a clear mission that is recognized in society. Non-profit firms are constantly reinforcing their mission and helping their employees feel the sense of purpose and mission that is central to their cause. A key element is linking the specific tasks of each employee to that of the mission. This task identity can help create direct meaning in the day-to-day work effort. How might we create a more mission-driven orientation in the for-profit businesses?
In many non-profit organisations, the work and processes have been designed to allow flexibility in how, where, and when tasks can be accomplished. This is sometimes based on volunteer availability and/or the challenge of attracting and retaining talent. The adjustments that businesses made during the pandemic are providing the opportunity to think differently about how we structure work. How might we create a differentiated employee experience by using flexibility in the way that work is accomplished?
Firms spend significant amounts of money and time to attract and recruit talent into the organisation. Generally, the recruiting stops once someone is hired. However, in many non-profit organisations the recruiting is an annual or even quarterly activity for all employees and volunteers. By re-recruiting our people, we are able to not only remind ourselves of the value proposition of the organisation, but also listen to our employees to understand what is working and what might need to change. How might we incorporate a re-recruiting orientation with management teams?
In some organisations and industries we see a significant demarcation between employees and management, oftentimes this is further accentuated by labour unions. However, in many non-profit organisations, even large ones, we see a different mind-set with the employees who work with the mission in mind. In other words, people have an ownership mindset, regardless of their role in the organisation. An ownership mindset instilled a sense of stewardship for the business or area of the organisation that can be quite powerful in empowering employees. How might we create an owner mindset with our people in other businesses?
These concepts may seem more natural in a non-profit setting than in a profit-driven enterprise; however, there may be lessons in these approaches that may be applicable for any type of business in navigating the power shift in the talent supplier marketplace. Some have suggested that this supply imbalance will favour the firms and managers who are adept at managing human capital and have already created cultures of trust to make a great place to work. Perhaps this is a good opportunity for strategic human capital leadership to emerge as a top management priority!
The challenges associated with the talent power shift can take a unique shape with each industry and business. As many organisations grapple with the need to find scarce talent and rethink the employee value proposition, managers will be pressing to increase compensation as a key attraction and retention tool. Hopefully, we will not escalate talent price wars, but rather see human capital leaders emerge with a stronger, more holistic perspective in anchoring talent to the organisation for competitive advantage.