Human Capital Intel - 10/1/2024
Not a normal employer's labor market | 6 million worker deficit | Career roadmap motivation | NLRB challenges
Welcome to the latest edition of Human Capital Intelligence. As always, we would love to hear from you at ken@stibler.me with news ideas, feedback and anything else you find interesting.
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By Ken Stibler; Powered by Reyvism Analytics
What’s Working:
“Employers labor market” doesn't carry the benefits of past slowdowns
Despite a shift towards an "employer's market" with job applications outpacing job openings, companies are facing unexpected challenges in talent management. Workday's Global Workforce Report reveals that while hiring managers are flooded with applications, they're simultaneously struggling to retain high-performing employees. This paradox is driven by both employers and talent raising their standards, with 72% of leaders increasing qualifications and experience requirements for new hires.
The labor market's cooling is evident in recent jobs reports, with July showing a sharp downturn in hiring and August indicating a weakening trend. However, this slowdown isn't translating into the traditional benefits for employers. LHH's "Outplacement & Career Mobility 2024 Trends Report" finds that over 70% of HR leaders are planning or considering layoffs in 2024, suggesting continued volatility in the job market.
Interestingly, despite a declining economic environment many firms are pivoting towards redeployment as an alternative to layoffs. More than 80% of HR leaders are considering reassigning workers, with the proportion of those having redeployment initiatives in place increasing by 25 percentage points since 2023. This shift reflects a recognition of the need to retain and reskill talent, particularly in light of the rising impact of AI on the workforce.
The financial implications of layoffs are often underestimated by employers, including costs related to severance packages, legal fees, loss of productivity, and reputational damage. In response, 53% of organizations are increasing their investment in internal mobility. Companies like BAE Systems have successfully implemented redeployment strategies, finding it more cost-effective to retrain existing employees than to manage redundancies and external recruitment.
However, the effectiveness of redeployment strategies depends on careful consideration of employees' skills and the nature of available positions. While redeployment can drive value by retaining strong performers and addressing hard-to-fill roles, it requires thoughtful implementation to ensure a good fit between employees' capabilities and new role requirements. As the job market continues to evolve, companies that can successfully navigate these complexities may find themselves better positioned to maintain a stable, skilled workforce in an increasingly uncertain economic environment.
Labor market set for 6 million worker deficit
US employers are bracing for an unprecedented labor shortage, with projections indicating a deficit of 6 million workers by 2032. This looming crisis, dubbed "The Rising Storm" by labor market data firm Lightcast, is driven by a confluence of factors including the retirement of Baby Boomers, declining birth rates, and shifting workforce demographics. The situation is exacerbated by a misalignment between available workers and in-demand jobs, particularly in male-dominated skilled trades and healthcare sectors.
The shortage is compounded by declining labor force participation rates among prime-age men, partly attributed to increased substance abuse and incarceration. Simultaneously, while women are achieving higher education levels and filling critical roles in sectors like healthcare, they remain underrepresented in traditionally male-dominated fields facing acute labor shortages. This gender imbalance further strains the labor market's ability to meet industry demands.
To navigate these challenges, employers are urged to adopt more flexible hiring practices and prioritize upskilling initiatives. However, many businesses, particularly mid-sized and large companies, report difficulties in providing effective skill development opportunities. The report suggests that immigration may play a crucial role in addressing the shortage, as foreign-born workers have been the primary source of labor force growth since 2019.
Quote of the Week:
The good news for Gen Z workers is that those who don’t land great entry-level gigs may become more resilient by creating work on their own with free courses or small projects. If companies don’t want to train them, they’ll train themselves. Rejection can go both ways.
— Diane Brady, senior editorial director of the Fortune CEO Initiative
Reading List:
Rising complexity makes a career roadmap a performance booster
As ambiguity hounds leaders and employees alike, a well-defined career roadmap is emerging as a crucial tool for employee retention and performance enhancement. Elissa Sangster, CEO of the Forté Foundation, highlights that the absence of a documented career plan can make employees vulnerable to poaching by rival firms. This underscores the importance of transparent career development strategies in maintaining a loyal and high-performing workforce.
Read more in Fortune.
Legal challenges mount for National Labor Relations Board
The National Labor Relations Board (NLRB) is facing increasing legal scrutiny as companies challenge its constitutional authority and enforcement powers. In a recent case involving Starbucks, a panel of judges from the 3rd U.S. Circuit Court of Appeals grappled with defining the limits of the NLRB's remedial powers, particularly regarding its ability to order reimbursement for expenses stemming from unlawful terminations. This case is part of a growing trend threatening the NLRB's in-house proceedings and enforcement capabilities, with major corporations like Amazon, SpaceX, and Trader Joe's raising similar concerns.
Read more in Reuters.
Organization-wide contributions become included in employee performance evaluation
Corporate performance management systems are increasingly grappling with the challenge of balancing short-term financial targets against long-term organizational health. A recent report by McKinsey highlights the importance of incorporating "soft" measures such as leadership, innovation, and employee motivation into performance metrics. However, quantifying these elements poses significant challenges, often resulting in inconsistent application or underweighting compared to traditional performance indicators.
Read more in Mckinsey.
Data Point:
13%
Percentage of US retirees set to return to work in 2025.
In Other News:
Tech Jobs Have Dried Up—and Aren’t Coming Back Soon: Employment for software engineers has cooled as resources shift toward developing artificial intelligence. (Wall Street Journal)
The Untapped Potential of Business and Nonprofit Collaboration. (Giving USA)
Office Romances Aren’t New—Why Are They Still So Complicated? (Wall Street Journal)
AI Boosts Small Business Productivity, But Employee Training Lags Behind. (Business.com)
AI has become a key tool for Gen Z side hustles. (Tech Brew)
Generation Z employees are more willing to bend the rules to ‘get the job done,’ survey says. (HR Dive)
Are remote workers really working all day? Here's what they're doing instead. (USA Today)
HR leaders should make sure their AI investments fit their business problems—and not the other way around. (HR Brew)
Employers often feel like they have to keep an eye on their workers, especially those working remotely. There are bad ways to do it and not-as-bad ways. (Wall Street Journal)