Business as Unusual: Applying Total Talent Management Principles in Times of Economic Uncertainty...
Updated: Jan 26, 2021
Applying Total Talent Management Principles in Times of Economic Uncertainty and Rise of the Gig.
As workforce solutions practitioners, it’s safe to say we are working in unprecedented times. Record low unemployment in the U.S. Severe lack of talent supply and mismatched skill needs across critical job categories. Baby Boomers who want to work into their ‘70s and beyond. Millennials who desire “gigs” versus the promise of full-time employment.
Will the U.S. economy continue record growth? Or will the stock market experience a correction (up to 25% projected by some pundits) driven by the presidential election or other external factors leading to a recession and resulting economic and workforce contraction? Never in my experience has there been such a difference of opinion regarding what the future may hold.
It turns out, I’m not alone. The new Conference Board’s CEO Challenge Survey highlights a potential recession and continued stress finding and managing talent as first and third areas of concern for U.S. CEOs.
The recession fears come amid “continued uncertainty around global trade, increasing competition, global political instability, and tightening labor markets — which, in themselves, can be significant restraints on business growth.”
The report also stated that regardless of a company’s location, size, or industry vertical, “finding and keeping talent is the top internal stressor for CEOs and the C-suite in 2020. Demand for highly talented employees now exceeds supply in most mature economies and, as a result, job openings are more difficult to fill, while in some regions, labor costs are accelerating.”
More in-depth research from IBM’s Institute for Business Value underscores this current state. Forty-five percent of organizations surveyed say they can’t find the skills they need. For larger employers, this number balloons to 67%. One-third say they can’t fill roles because of a lack of applicants. Twenty percent say applicants don’t have the necessary skills. Most disturbing, 33% of companies are adjusting education and experience requirements to fill positions with available talent.
In aggregate, this research suggests what I have experienced first-hand. There is a clear disconnect between executive concerns about and expectations of talent supply and strategies and enterprise-wide measurable actions with clear accountability that are sustainable through times of transformational change and market uncertainty.
What we can do is engage and build stronger relationships with executives, become part of building the business strategy (both short- and longer-term), and optimize a sustainable approach for delivering talent against that strategy.
In my view, total talent management is the only approach that ensures companies are agile enough to achieve expedited business growth, while balancing the need for flexible labor categories and risk management practices caused by abrupt changes in global markets.
Why Resist Total Talent Management?
The term ‘Total Talent Management’ (TTM) has been around for years. It is an integrated, holistic, flexible talent model that helps businesses determine the worker who possesses the skills best suited to perform work, regardless of worker classification, before acquiring them. Every kind of worker — full-time (permanent), independent contractors, contingent, statement of work (SOW), and even machines, should all be considered as mission-critical and part of any agile talent approach. It also means creating a unique candidate experience that not only attracts the varied work styles now demanded by workers but creates a culture that enables companies to retain its talent.
But many companies are not set up to view their workforce (extended or otherwise) holistically. There are internal barriers like conflicting executive priorities, inconsistent operating processes, and multiple tracking systems. Even more alarming? According to Staffing Industry Analysts (SIA), a sobering 46% of surveyed senior leadership do not believe they need a “combined view” of all labor categories. Given executives’ concern about the lack of talent affecting business performance, this perspective seems short-sighted at best.
As companies look for creative ways to gain a competitive advantage, utilizing its entire workforce is key — now and in the future. What should be gone are the days of managing talent in silos — it’s ineffective, costly, and doesn’t allow organizations to get a clear picture of worker capability needed to fulfill business needs. So, why are so many companies resisting a total talent management approach?
How Hard Can It Be?
While the notion of total talent management seems elementary, it is far more challenging to put into practice.
Most organizations are functionally decentralized, which doesn’t allow for a complete labor picture to present itself. If a company doesn’t know how many independent contractors, contingents, consultants, or full-time employees they have, how can it manage that labor effectively, never mind assess performance and true business value?
Some organizations choose to practice front-end sourcing, determining who will deliver the work first (i.e., employee vs. non-employee) rather than looking at the work that needs to be delivered and then assessing which category of talent is best positioned to do the work. This further compartmentalizes labor categories and doesn’t allow for the flexibility and agility needed for success.
Despite the concern around talent and skill shortages, per the Conference Board, CEOs do not see external partnerships as a collaboration opportunity for gaining talent and accelerating skill acquisition.
We Need to Look Ourselves in the Mirror
As practitioners — be it in services or software — we continue to “develop products” with the implied intent of simplifying the process of managing multiple labor categories across potentially multiple owners (i.e., HR/ Talent Acquisition and Procurement). (And let’s be honest — we are looking for competitive advantage and revenue ourselves.)
Unfortunately, we’ve driven undue complexity, confusion, and inefficiency into the entire workforce acquisition and management equation. Add in turf wars and lack of communication between category owners (and in some cases a perceived difference in value between full-time and contingent workers) and we’ve lost sight of the anchor business strategy.
Talent practitioners need to be the catalyst that drives business results. This includes Business Leaders, Operations, HR, Talent Acquisition, Legal, Finance, and Procurement creating a joint governance body that agrees to a set of operating principles, defines the talent strategy to realize the company business strategy, ratifies investments, and mitigates risks. The notion of a collaborative governance body may seem self-evident. Unfortunately, in my experience, this is rarely put into practice.
I’m still amazed at the divide that still exists at many companies between full-time category and contingent category owners. There is disagreement on strategy, tools, processes, investments (or YOY savings), and the perceived “value” of one category over another – all culminating in their inability to move their talent strategy forward.
I’ve had a number of clients in recent years where Procurement is driving a total talent management approach (inclusive of full-time employees in their category strategy), however, HR/Talent Acquisition leaders — those responsible for hiring full-time employees — don’t want to entertain the total talent conversation. This is 2020. The time is now to think differently about engaging workers from all categories, help business leaders understand why they need a total talent management approach, help them drive business results, and provide greater value as practitioners to the organization.
This fundamental shift starts with launching a talent governance structure that is accountable for building a sustainable talent strategy that drives business performance.
What’s more, this transformation is only getting more complex with the rise of the gig economy.
I Got a Gig!
A McKinsey survey states that as many as 40% of workers in the U.S. market will soon be hired on an as-needed basis. Yet, the overall visibility into the “motivation, skills, productivity, costs, etc. of non-employed workers is (only) about two-thirds (of full-time) employees.” Companies often fail to appreciate the importance of managing all labor, regardless of how or where they work.
This is especially true for freelancers and gig workers. These workers are changing the way companies work. According to the Bureau of Labor Statistics, freelancers contributed $1.28 trillion to the American economy in 2018 alone. If the gig economy keeps growing at its current rate, by 2027, more than 50% of the U.S. workforce will participate in it. Workers are rapidly choosing this as a work style and increasingly finding multiple ways of monetizing their skills. These workers (including software developers, lab researchers, on-demand doctors, etc. — not just Uber drivers) are demanding challenging work that expands their skillset, provides work/life flexibility and offers innovative technology tools to support their way of working.
According to Edison Research, for 44% of gig workers, their work in the gig economy is their primary source of income. For clients in desperate need of hard to find, emerging, specialized skill sets, over 75% of these surveyed workers would not quit their gigs for a full-time job.
This is great news for forward-looking companies searching for hard to find new and emerging skills and who embrace new ways of working. This especially resonates with millennials. The gig economy makes it easier for companies to find the right talent exactly when they need it. In 2020 and beyond, it’s all about the gig.
I Have All this Data… and I Still Have Limited Insight
Many organizations do not have the ability to strategically manage their contingent workforce and, per Josh Bersin’s HR Tech 2020 report, only 16% of companies have a strategy for managing gig work. With multiple systems of record and job taxonomies, leaders simply do not know how many temps, contractors, consultants, or part-time workers are deployed throughout their company, or the work being performed. They also lack the appropriate talent governance structure and standards to manage these workers and are failing to overcome the siloed category management status quo.
Companies must be bold and embrace a holistic, total talent management approach that offers talent trends and insights in order to maximize value and drive business strategy. In most cases, external trend data is far easier to access, rationalize, and consume than internal, proprietary talent data.
While there is no single talent platform that can effectively manage data across all labor categories, in my experience, a number of progressive companies are engaging data scientists (many of them gig workers) to mine data across multiple platforms to reconcile talent data and identify opportunities that deliver insights (including fulfillment, financial, and engagement metrics), promote workforce transparency, and drive business performance.
Without the benefit of a single platform, AI-powered data mining is a core tenet of an effective total talent management strategy.
AI Has Already Shaped How We Approach Work. What Now?
According to the IBM Institute for Business Value, more than 120 million workers in the world’s 12 largest economies may need to be re-trained / re-skilled as a result of intelligent / AI-enabled automation. Edelman employee research states 57% of employees surveyed are concerned about losing their job due to automation or other innovations. In the same survey, 59% believe they will not have the skills or necessary training to maintain a good-paying job. Further, the time it takes to close a capability gap through traditional training has increased more than 10x from a median of three to 36 days over the past four years. Yet, the half-life for learned skills is estimated to be five years and even less for technical expertise.
Edelman also suggests that organizations that outperform their profitability, revenue, and innovation metrics agree that experiences such as workforce learning have a direct effect on the customer experience. Seventy-two percent of these high performing companies invest in programs to improve worker skills.
Yet, within IBM’s research, half of the executives surveyed say their organizations are not pursuing any skills development strategies today, and, according to Bersin, only 41% of CEOs believe their biggest challenge is developing the skills needed for the future.
Given the current hardship in finding the right skills with such limited supply, there is a clear disconnect with leaders. Traditional training alone will not work. The focus needs to be promoting AI as an enabler for increasing human capital value versus displacing it. This includes assessing real-time data from multiple sources for managing projects, tracking skill needs for workers with available collaboration tools, training, and development opportunities as well as matching worker skills and experiences with future work opportunities. As the Conference Board suggests, AI promotes expanding the talent pool and the speed needed for increased skill acquisition and mobility. This, too, must be factored into a total talent management approach that is inclusive of all labor.
Building Internal Skills and Agile Teams Is a Key Differentiator
As practitioners, we’ve got to take a position developing creative solutions for the skilled labor shortage and not continue to complain about the lack of talent or supply. Up/Re-skilling workers must be part of any total talent management solution. If supply doesn’t exist and there is a piece of your workforce that’s at risk to become outdated or redundant, why not invest in them?
A rapidly emerging trend to address the skills gap is to create a series of agile, cross-functional teams of complementary skilled workers that move from gig to gig within a company. Think of it as an internal gig economy comprised of full-time employees who choose to work on projects or gigs and not a specific job. Companies benefit by deploying high performing teams for product design, implementation, and risk mitigation among many opportunities. They also develop an experienced, versatile internal talent pool and position this approach to talent as a brand differentiator. Workers benefit by gaining new skills and experiences with each assignment increasing their value to the company.
Josh Bersin’s HR Trends 2020 concurs stating this aspect of total talent “gives the business more ability and lets the company find internal skills without the high cost of recruiting talent with specialized skills and knowledge.” The challenge will be a new way of leading in 2020 and beyond. No longer will “functional ownership” of resources apply. These workers will truly move from gig to gig, forcing leaders to break away from the traditional, top-down resource management styles into an agile method of managing their businesses and resources.
This is important considering that — according to Deloitte’s Human Capital Trends — an astonishing 65% of workers said it was easier to find a job outside their companies than inside. Considering a true gig work style for employees within a company is, in my view, an important emerging component of a successful total talent management strategy.
Business and talent leaders are struggling to balance the demands associated with recruiting highly specialized skillsets while finding ways to motivate, engage, and upskill workers through innovative tools that promote a learning culture tied to business results. Yet, even in 2020, as IBM research underscores, only 41% of organizations have the people skills and resources required to execute their business strategy. Further, only 38% of CHRO’s say their organizations should retrain or reskill workers impacted by AI technology.
The principles of total talent management are critical for aligning current and future business strategy with talent strategy, enabling fluid talent acquisition and management across all labor categories, and establishing sustainable engagement models that drive organizational performance in this time of Business as Unusual. The hard part is recognizing that the time for holistic change is now.
To recap, here are what I firmly believe are the key drivers for achieving a successful total talent management approach in 2020 and beyond.
Establish a cross-functional, collaborative, joint talent governance structure comprised of HR, Talent Acquisition, Finance, Legal, Procurement, IT, and Business executives that creates a set of operating principles, defines the talent strategy, ratifies investments, mitigates risk, and drives performance.
Create a sustainable talent strategy that embraces the value of all labor categories, inclusive of full-time, contingent, gig, and machines, to drive business results.
Embrace the gig workstyle. Build relationships with and engage gig platforms that deploy workers with highly specialized skills that are not available within your company. Launch a complementary internal “gig marketplace” that delivers on projects with speed, promotes skill development, and builds a key brand differentiator.
Assess opportunities to close technology and data gaps resulting from disparate systems and job taxonomies. Promote business performance and data transparency through shared insights using experts who can mine data across multiple platforms using AI-enabled tools. These resources should report into the formal governance structure, ensuring an agnostic approach in the best interests of the company — not a specific business function or labor category.
Assess up/reskilling programs for existing workers as a strategic alternative to finding new external talent.
Identify partner organizations (i.e., AI tools, up/reskilling programs, gig platforms, etc.) who have created capability and can deliver data, insights, and programs that accelerate the rate of change and strategy adoption.