Many once-powerful employer brands will be unable to attract top talent in the next decade. This is according to a report on how the downturn will change the future of work, published today by PricewaterhouseCoopers (PwC).
Pay and promotion freezes, changes to pension schemes, cuts in recruitment and slashed training budgets, combined with poor communication, have eroded the bonds of trust between some employers and their employees. In contrast, other organisations have excelled at doing more with less to reward, engage and develop their employees in an unstable employment landscape where many individuals view their career prospects as stagnant or diminishing.
Speaking at the launch of the report, Mark Carter, HR Services Partner, PwC Ireland said:
“As the longer term impact of people decisions taken during the downturn begin to be felt, the winners and losers of the war for talent are starting to reveal themselves. Organisations which continued to focus on investment and employee engagement are emerging as clear leaders. Those who continued to offer their employees new opportunities and invested in their people pipeline have a competitive advantage.
Other companies appear to have panicked and made decisions based on short term considerations that will have long term repercussions for their people pipeline and their future business success. For example, the suspension of recruiting new blood or implementing a redundancy programme which has resulted in key people leaving. Consequently, some employer brands will be damaged as a result of their people management decisions.”
Launching the report Dr. Paul Mooney, President, National College of Ireland and an expert in effective organisation and people management, said:
“This report is essential reading for anyone who is interested in the success and future competitiveness of Ireland Inc. The report identifies critical issues around three main areas: performance management and productivity; transparency and social responsibility; and how and where people will work in the future and the technology that will facilitate this.
The message for employers is simple: adapt or die. Organisations that have not evolved alongside the new generation of workers will swiftly find themselves left behind. The successful companies of tomorrow are planning their people strategies today.”
The PwC report – Managing Tomorrow’s People: How the Downturn Will Change the Future of Work – uses scenario planning to map how the crisis will impact the widely accepted shortage of talent predicted for tomorrow’s world. The success or failure of reward and people strategies will have a decisive impact on which organisations become the successful brands and top employers of the next decade. This study, which is the third in the “Managing Tomorrow’s People” series, looks back from 2020 and tells the story of how three fictitious organisations emerged from the current crisis - specifically in terms of their people strategies. The conclusion from all three scenarios is that, as economies start to stabilise, organisations need to assess whether their people plans - which include the ways people are recruited, rewarded, retained, incentivised, trained and retired - are fit for the future.
With the rapidly changing and increasingly complex nature of the workplace in mind, the report envisages a changed employment landscape where employers use alternative methods to engage specialist talent, issue business passports for highly-mobile executives and how workers with technical skills behave like individual companies outsourcing their administration and billing needs to international trade guilds. It also considers proposals for how employee and executive reward can be reformed.
Mary O’Hara, HR Services Partner, PwC Ireland commented:
“One of Ireland’s key attractions for foreign direct investors has been the strength of our workforce. Looking outward, Irish businesses see expansion into new markets to make up for the lack of domestic demand as one of their biggest opportunities but this also gives rise to significant workforce mobility challenges. This report highlights that the workforce of tomorrow will have different attitudes and expectations and it is important that Irish based employers create the right conditions to motivate, develop, reward and retain key talent, whether they need them to work at home or abroad”.
Mark Carter continued:
“With survival in mind, many employers have understandably focused on expenditure cuts. People costs, being one of the largest business expenses, have been at the top of the cost cutting agenda. But short term cost savings may lead to long term damage from reduced people investment which will undermine the ability to compete when the business climate improves. For example, reducing graduate intake numbers will impact the talent pipeline in a business and limit the number of options for leadership succession planning in the long term. Cutting training and development spend now may leave an organisation without the right skills to compete in the future, leading to much higher costs of hiring people in, rather than being able to turn to home grown talent. When it comes to targeted cost cutting having the right people data and metrics is therefore critical. Few organisations tackle people metrics in a rigorous or structured way and many struggle with knowing what to measure and how to interpret the data.
Mary O’Hara, added:
“Preparing for the future world of work means engaging with different groups of employees, making changes to remain sustainable and competitive, and accepting the role of people measurement has never been more critical. Health and wellbeing, global mobility and technology issues will continue to rise up the corporate agenda. The downturn also presents a shift in performance related pay, which is changing the notion of reward and retirement arrangements for Governments, business leaders and individuals”.
Mark Carter, concluded:
“As employees increasingly choose employers that fit their own priorities, ideals and lifestyles, businesses need to consider where they fit in terms of the financial and personal benefits they offer and whether or not this is how they want to be positioned in future. For employees, the future is likely to be a world where many different ways of working are on offer.
For employers the challenge will be greater as the competition for talent around the world will intensify. Employee expectations will increase and organisations will face these challenges against an even more competitive global market. So decisions taken by organisations today are creating the future legacy and shaping how organisations will look in 2020”.
Further detail on each case study and PwC’s views on how businesses prepare their workforce for the future world of work is available in the report.