Organisations are investing in their people in order to fill the gaps and advance for the future.
By Simon Kent
The Conference Board’s European Labor Market Outlook report for the second half of 2023 was entitled “A Hot Labor Market in a Chilling Economy.” It’s from the non-profit think tank that encapsulates the current almost paradoxical scenario facing EMEA’s employers. Pandemic and subsequent fallout triggered frenetic hiring activity with talent exiting and entering roles left, right, and centre for diverse personal and economic reasons. Turbulence still exists in the market, even with the calming of the wider economy. As a result, The Conference Board pegged the continent-wide unemployment rate stable at a record low of 6.24%.
This tight but active labour market comes at a time when digital and “green” transformation is a high priority for businesses. Specific skills are at a premium among employers keen to address these issues, and yet this demand comes at a time when there is a limited talent pool from which to fish. The result? Skill shortages and talent mismatches.
Romain Muhammad, CEO, founder, and researcher of consultancy Diversify World, says these shortages combined with the current economic landscape and evolving hiring trends present a particular challenge to HR.
“The economic context in the EMEA region is diverse, with factors like fluctuating oil prices in the Middle East, Brexit-related uncertainties in Europe, and the rapid pace of technological advancements altering job requirements across industries,” he says. He quotes the McKinsey Global Institute identifying as much as 14% of the global workforce possibly needing to switch occupational categories by 2030, primarily due to the advent of automation and AI. “This shift necessitates a proactive response from HR departments to address the emerging skills gap,” he says.
As a result, Muhammed says, HR leaders are concentrating their efforts on several key areas. These include company culture, development opportunities, and benefits—in fact, a Glassdoor survey finds 76% of job seekers say they consider an employer’s brand before applying.
“Companies are investing more in employee engagement and satisfaction, recognising the value of keeping skilled workers,” adds Muhammed. “Flexible working arrangements, competitive compensation, and a focus on work-life balance are becoming standard.” Muhammed underlines this point by quoting a Deloitte survey which stated that 94% of employees would stay longer at a company that invested in their career development.
Other research has found parts of the workforce looking to employers to address these skill shortages. Gemma Collins, performance and development director at change, tech, and data talent company Grayce, cites research from her company which suggests that, especially around “hard” skills, young people believe employers need to invest to ensure they have the required competencies. Overall, almost two-thirds of young people agreed their employer should pay them to attend training courses which would bridge existing skills gaps. The same survey found 60% confirming that skills development is critical to their well-being in the workplace.
Training and investment in existing talent needs to be part and parcel of company culture if a business wants to attract and retain the people they need. Ryan Jackson, founder of Culture First Recruitment, says skill shortages across EMEA means it’s more important than ever that companies act. “When you’re competing with other organisations that are advertising similar roles, compensation packages, and benefits, you need to offer something that differentiates you from competitors,” he says.
Jackson goes on to say that people actively seeking new positions in today’s market give more consideration to the culture of an organisation than they do financial reward. He argues that a company’s goal should be to build a tribe of connected individuals with shared values and to give them a sense of belonging. Opportunities to develop skills and knowledge are attractive and an essential part of creating this belonging—along with career and growth opportunities.
“When there’s a skills shortage, companies should nurture and develop their existing team, rather than outsourcing and bringing in new people,” says Jackson. “In the long run, this will attract new talent as developments unfold and the business continues to grow as a result. These all contribute to people’s personal success, which goes hand in hand with overcoming challenges companies face in EMEA with a limited talent pool available.”
Indicators in the market show that the amount of employees changing jobs is finally leveling off. “UK job vacancies, which plummeted during the pandemic and then soared during The Great Resignation, have fallen back to a more normal level,” confirms Fujitsu’s Head of Digital HR, Europe Services Amanda Chinnery. “Combined with cost-of-living pressures, this has resulted in a significant drop in employee turnover. In response, HR must look at existing employees to address skills gaps, reskilling and upskilling current employees rather than relying on external hires. Creating frameworks and opportunities to support this internal development of people’s career growth will be a key feature among HR units in the year ahead.”
But this is part of a bigger challenge which HR and the wider leadership of companies need to address. Candidates and workers are undoubtedly more demanding now than in the past. There is a sense that the relationship between employer and employee has now shifted in the employee’s favour, and HR is on the frontline for responding the new order. “Employees expect more from leadership than ever before more transparency, more commitment to work-life balance, and more willingness to incorporate their sentiments and preferences into the workplace,” says Richa Gupta, CHRO at global recruitment services provider G-P.
Gupta describes how employees are now more focussed on their own development rather than their immediate sense of achievement or the rewards they might gain.
She says the mindset has shifted in several ways, including:
- my paycheque to my purpose;
- my boss to my coach; and
- my annual performance review to ongoing development conversations.
“It is not an employer’s market anymore. It’s an employee’s market and workers aren’t afraid to search elsewhere to find a workplace, or leader, that fits their needs. In response, there will continue to be not only a transformation of leadership styles, but in the overall organisation of leadership strategy. Successful leaders will need to prioritise qualities and strategies that promote a flexible and open-minded workforce where credibility, reliability, and trust are paramount.”
The challenge is significant, but failure to rise to this will have serious implications for a business’ ability to secure the skills it needs for the future.
