My research and decades of experience have taught me that the economy impacts workforce strategies more than almost anything else. I’m convinced this year will not be an exception. In this article, I will outline several important economic trends that all HR leaders should note.
While the GDP is Rising, Productivity is Not
Even though employees around the world are working more hours, productivity (output per hour worked) is lagging. I believe this is a result of several factors.
First, while robotics is now often used in manufacturing, digital tools in most roles have not necessarily made work easier. For instance, 27 percent of respondents to a 2018 LinkedIn survey said they spend an entire day a week dealing with emails not directly relevant to their jobs. And the average company now has seven different systems for communications. Most employees are operating in a digital overload.
Those in HR need to invest in work-at-home solutions, adopt flexible work schedules where possible, simplify the IT infrastructure (and HR tools) and do a much better job of employee communications.
Wages are Relatively Stagnant
After factoring in inflation, U.S. wages have barely budged in the last 40 years, and for those in the bottom 90 percent, wages are falling behind. We essentially have two workforces: one that has benefited from digital technology and a larger one that has not.
While software engineers and designers are now in high demand, there are many left behind.
The 62 percent of Americans who did not attend college are seeing twice the unemployment rate and less than half the wages of those who did. Even higher-paid college grads are falling behind. Deloitte research has found that two-thirds of millennials do not believe their standard of living will be as high as that of their parents; 15 percent of millennials have student debt of $15,000 or more.
HR leaders need to ask themselves, “Are we paying people enough?” In today’s economy, where the most valuable jobs are based on creativity, services and collaboration, paying people well is an investment, not an expense. This year I encourage all HR leaders to rethink their entire compensation strategies. As your company makes more money, it’s important for you to encourage business and finance leaders to share the wealth with employees.
Modern Jobs Demand New Skills
Jobs in virtually every industry are now requiring employees who are digitally savvy, who can communicate effectively verbally and in writing, and who can work in teams and across functional areas. LinkedIn’s latest study of skills in San Francisco, the city with the biggest skills gaps, found that oral communication was the most in-demand skill.
HR needs to aggressively support employee career development, technical-skills
development and overall on-the-job learning. U.S. companies only spend about $1,200 per employee per year on training, yet they spend three to five times this amount just to hire a new employee. Employers can clearly afford to spend more on employee development, and we should.
HR has a tremendous amount of responsibility, power and agency to mitigate the impact of these economic trends. Businesses have a responsibility to do the right thing for society, as well as their customers and stakeholders. You, as an HR leader, have a lot more power than you may think.
My presentation at the upcoming HR Technology Conference will cover how the technology market is reacting to these and other economic and workforce trends and what this all means for current and future technology infrastructures. I hope to see you there!