IF INTERESTED #183: Talent Trends Part I

hi,

I have been doing some prep work for my companies’ people strategy, started with consolidating relevant market trends. Once finished I thought this could be a good IF INTERESTED issue. However the headings took more words to describe than I first imagined. So I divided the Talent Trends into two instalments. This one will include talent scarcity and abundance paradox, Efficiency / Productivity and Employee Experience. The second one will aim to cover Skills, HR Tech, People Analytics and of course AI.

The trends below have my prioritisation and my take on them, making the tone significantly subjective. Also I am hesitant to jump on the hype train in some areas, and tried to give a more balanced and realistic view.

Talent Availability vs Scarcity:

There's a persistent debate in the HR and executive circles about the reality of talent scarcity, with many believing it's becoming increasingly acute. Contrarily, job postings from the "Monthly Hacker News Who is Hiring" up until March 2023 indicate a global decline in the software developer market.

* The number of companies posting on the monthly Hacker News “Who is Hiring” post, between Dec 2012 and Mar 2023.

According to LinkedIn the hiring rates significantly dropped YoY as well¹. It is not only developers.

Some companies also realise faster time to fill days and easing up of the tough talent market during COVID times. Obviously triggered by post COVID and war time economic landscape and the tech layoffs.

Back to my initial point, if you ask executives, one of their top challenges still will be “availability of good talent”. This pattern supports the long-held notion of a talent paradox: there's a scarcity of exceptional performers, often referred to as "10x Developers" or “10x People” while there's a surplus of average talent. It's reasonable to extrapolate this pattern to other jobs than developers as well.

The implications of this situation are significant.

1. During COVID times, the “0 interest” era where capital was cheap, startups coming into the scene and the excessive hirings of bigger companies created scarcity of talent, that in turn tilted the power balance towards employees. A lot of employee centred topics like wellbeing, employee experience, humane leadership, empathy,.. came from that power shift. Now with the abundance of average talent the shift is happening towards employers. The trends of wellbeing and human centric workplace initiatives will continue but will lose momentum and will not have access to large budgets or resources.

2. Attracting top-tier or “10x” talent will be tough as usual. There will be a lot of “employer branding” conversations to attract top talent, I doubt they will be effective conversations. Good brands will continue attracting top talent, other will settle down with average talent. Not much will change on that front. There is going to be more pressure on hiring teams, on one end to reduce the number of recruiters but also keep hiring top talent for niche roles. Some hiring units will be up for the challenge if they have a good AI powered applicant tracking system and if they can significantly upgrade their recruiters. I also don’t foresee this happening wide spread. (unless AI comes in and takes over candidate interactions)

3. Startups already are losing their talent to bigger and more stable companies, expected during times of economic turbulence. This might infuse some entrepreneurial spirit to big players, but highly speculative prediction : ).

4. Compensation levels will suffer. The abundance of talent now gives companies the luxury to say “we don’t compensate for high inflation”, and employees will lose money through low budget salary increases. And new hires will lose their power to negotiate.

There might be some AI startup injection to the markets, but those companies will be small and won’t make a difference to the overall talent market. Some fabs and hardware related employment can make a dent, like the EU large incentive to bring semiconductor business back. Time will tell.

Efficiencies, Productivity and Related Leadership Capabilities

Efficiency:

As much as I dislike quoting him, Mark Zuckerberg repeatedly said 2023 is the year of efficiency, a sentiment echoed by other industry leaders like Sundar Pichai, who focused on eradicating corporate inefficiencies caused by bureaucracy and redundant management layers. Elon Musk took a more drastic approach, significantly reducing Twitter workforce by about half, including all consultants. This triggered a ripple effect, leading others, such as SalesForce’s Benioff, to follow suit. He suggested that CEO’s might need to "unleash their inner Elon," and as he began to reduce staffing levels, his company's share price increased. Add on top of that Satya’s no salary increase policy together with layoffs at Microsoft where they were enjoying best times as a company.

This emphasis on efficiency originated from the overly generous hiring and expansion during the COVID-19 pandemic. With the exception of Apple, which pursued a more cautious strategy, most companies increased their workforce significantly.

When companies increase headcount, management layers, people doing internal projects, preparing internal templates, and similar bureaucracy triggers also increase. Organisational drag, a term used to describe the internal resistance or inefficiencies that slow down productivity and prevent an organisation from reaching its full potential, increases. Bureaucratic structures, outdated processes, long unnecessary meetings or unnecessary procedures that hinder rather than help employees suddenly appear at every corner.

CEO’s, especially in tech, will be after simplification, headcount reductions and overall organisation efficiencies.

This will have an impact on more increase of organisation design and utilisation of AI for HR. There will be expectations from leaders to use the opportunity of AI to cut layers and processes. HR can rise to the occasion using scientific tools for efficiency and organisation design, upskill the HR business partners in those areas. I am afraid some companies will be stuck at the level of “let’s measure span of control and try to squeeze more employees per manager”.

Productivity.

Another topic will be productivity of knowledge workers. Remote work triggered the conversation. The famous Microsoft Lab² report highlighted a significant disconnect between managers and employees when it comes to remote work productivity. Only 12% of managers felt confident about their team's productivity in a remote work environment, while employees held the opposite view.

Moreover, Gartner's HR trends for 2023³ revealed concerns about leadership readiness in this new era of hybrid work and human-centered leadership styles, both expected to drive higher performance and efficiency. Current leaders appear unprepared for these changes, and existing leadership development programs are failing to equip them with the necessary skills and knowledge. In short leaders seem to be slightly lost about how to coach their teams to produce high impact work within the current context.

HR / People Functions will be pushed to measure productivity, and the use of tools like Viva insights will be more common or demanded. This is a tough area, organisations easily can move towards task based control, “how many line of code have you written today” is a dangerous path. People functions need to put an ethical and outcome based lens to this topic.

Leadership assessment and development teams might need to be prepared to tackle those topics.

Employee Experience

I've written extensively on the topic of employee experience here at IF INTERESTED. As HR Technology continues to evolve, evaluating the employee experience and actively listening to staff throughout their journey is becoming increasingly straightforward. Already, platforms such as MS Viva and Medallia are offering decent tools for enhancing the employee experience.

The ability to assess and streamline the employee journey will be accessible to many businesses. However, the capability to intervene in moments that matter will likely remain limited for the next couple of years. The umbrella of employee experience is wide-ranging, and many companies will grapple with implementing actionable steps based on the insights from these assessments. Some will find themselves stuck at improving basics, such as enhancing the onboarding experience or ensuring employees receive their laptops on their first day.

Over time, valuable business applications will emerge from these employee experience insights. My forecast suggests this shift will occur around 2025 for forward-thinking companies. Human Capital Management systems, like WorkDay and SuccessFactors, will become more adept in this area, providing leaders with direct insights.

Conclusion

I hope those three main areas gave you some thinking points, they are not new headings, but their tone and importance have changed in the recent quarters.

I aim to publish the second instalment of Talent Trends in the coming days, involving Skill Based Economy, AI, HR Tech Stack, People Analytics and maybe a few more topics.

If Interested.

1. https://business.linkedin.com/talent-solutions/global-talent-trends

2. Microsoft Lab Hybrid Work Report

3. Gartner 2023