Everyone agrees, in the wake of the COVID19 pandemic, there is much cause for a general feeling of insecurity for employers seeking to ramp up operations and fully reopen. This post is the first segment of a 3-part series exploring the current level of business insecurity and the impact if has on workforce plans. The series will examine the causes and effects of today’s insecurity, the pandemic’s impact on the definition of “agile workforce management”, the fate of tech companies as they struggle to source critical talent and the extent to which organizations may be ceding control over their contingent workforce management operations.
This first post in the series focuses on the causes and effects of the current uncertainty gripping labor markets. As we approach the conclusion of the 1st half of the 2021, many businesses are still unsure of their workforce prospects, even despite the rising percentage of COVID vaccines administered and the reduction of government restrictions on movement. In fact, a record high 48% of small businesses in a current NFIB economic trends survey reported a troubling inability to find available talent with the skills they need to run their operations.
While economic conditions remain volatile, companies continue to experience pressures on revenue, cost, and profit. At the same time, the dynamics of change in some markets are so significant that many companies are not just expanding the products and services they offer. They are also redefining the very businesses they operate – all while maintaining focus on cost and profit.
To a significant extent, technology used to ensure business continuity during lockdown has become a permanent fixture of contemporary operations, even as the pandemic begins receding. Industry watchers agree, we are in a period of technological change that is not likely to be reversed. The outsized role of these technologies – both in terms of how they remake the nature of work and in terms of driving demand for the design, development, and marketing of the tech tools themselves – is generating many new jobs and a different array of occupations across multiple locations. Yet, even traditional roles are evolving as they return, now with a different mix of tasks and heavier use of technology.
McKinsey & Co research provides great evidence of this evolution. In 90 percent of US counties, McKinsey notes the potential displacement rate is presently between 22 and 27 percent. But there are variations, ranging from 18 percent in less-affected locales all the way to 33 percent in some hardest-hit areas. The trends suggest urban areas are faring better than their rural counterparts. The average displacement rate according to McKinsey is highest across low-growth and rural segments, and lowest in the urban core cities. Net job growth is likely to be concentrated in urban areas, while thousands of rural counties could experience a decade of flat or even negative job growth.
Accelerating trends that had already begun to emerge even before the pandemic, it seems areas with more robust and diverse economies, high-growth industries, and better-educated populations are better positioned for employment growth. Similarly, automation technologies continue to increasingly affect some of the largest occupational categories in the US economy, phasing out jobs in office support, food service, production work, and customer service and retail sales. The result is a transition away from lower skilled work opportunities in favor of the STEM occupations involved in producing and marketing these technologies. At the same time, healthcare, creatives and arts management, and business services are also adding jobs.
With all this in mind, what can organizations do to respond to these new, rapidly evolving dynamics? In short, the answer is to focus on actions helping increase business agility. Some logical steps include:
- Digitally transforming your business by perhaps adding online sales/delivery in addition to traditional, on-prem operations
- Leveraging the remote work trend to source talent from new locations
- Upskilling the workforce
- Moving from a “fixed cost” labor expense to a “variable cost” by increasing the percentage of jobs filled by contingent workers
Making these and other changes to adapt to this new work environment may require many companies seek third-party assistance. When seeking a contingent workforce management partner, this means finding providers that enable your operation to continuously adapt and evolve without sacrificing performance or control. The nextSource Progressive Program Model™, for example, offers a guarantee to completely redesign the program if the client does not feel that it meets the client’s changing needs. Reach out to your nextSource representative to get the ball rolling in this direction. And visit the nextSource blog again soon for parts two and three of this series.