The war for talent is the new normal
In the late 1990s, McKinsey & Co. coined the phrase “war for talent” as competition was becoming increasingly global, the workforce was aging, and people were job hopping more often.
The demographic and societal forces that kicked off the war for talent have only become more intense. And today, we also have the fallout from the pandemic alongside technological forces that are reshaping the nature of work.
For executives in many industries—particularly tech—the talent wars have been a reality for years. And now they’re the new normal for everyone.
Read on to learn why, and download our white paper to learn how you can reshape your talent strategy to win.
Demographic and social changes
Baby boomers are retiring earlier than expected and in increasing numbers. In addition, 1 in 4 employees across generations are planning to change jobs as the pandemic subsides. With uncertainty around childcare access and school closures, nearly 3 million women have left the labor force—and it remains to be seen how those numbers will bounce back. College enrollment is also on the decline, so skilled talent is not being as readily replenished.
These trends have led to the lowest labor force participation rate since the 70s. And with a slowing population growth rate, there are simply not enough workers to fill open roles.
The original war for talent was focused on executives and leadership skills (and that focus is still relevant), but today, the breadth of missing skills is greater.
Automation and digital transformation have increased competition for jobs: 69% of companies reported talent shortages last year, the highest number in a decade. Manufacturing plants are having trouble hiring workers, logistics companies need more truck drivers, and restaurants are struggling to attract enough talent to get by, let alone grow. Many companies are increasing wages and offering hiring bonuses in response, but often still struggle to retain or effectively develop that talent. A higher wage will fill some roles today, but it won’t build the skills your company needs for the future or create the engagement that will lead to long-term retention.
In 2016, Millennials became the largest generation in the U.S. labor force. They have higher rates of job mobility, more demands for flexibility, but most importantly, they care about mission and corporate social responsibility. Studies have found that Millennials will make sacrifices for the issues they care about, whether by paying a premium (70%), sharing products (66%), or even taking a lower salary to work for a more responsible company.
Both Millennials and Gen Z have grown up in the midst of a growing climate emergency, widespread racial injustice, and expanding economic inequality. They want change, and they want it from their employers. In May 2021, the Edelman Trust Barometer revealed that employees expect employers to take action on social problems including climate change (81%), automation (79%), and racism (79%).
How to adapt your talent strategy to win the market
In some ways, the strategies to win the war for talent today are similar to what they’ve been for the past two decades. Talent strategy needs to be a top corporate priority, starting with the C-suite, and the HR function should be elevated to the strategic importance it deserves.Read our white paper for 4 strategies to help you win today’s war for talent.