The question that faces the strategic decision-maker is: ‘What do we have to do today to be ready for an uncertain tomorrow?’”
So said Professor Peter Drucker in 1974. Nearly half a century on, the words of this highly influential management guru remain relevant to every business leader navigating the UK’s tough trading environment.
Amid successive plot twists – from Covid-19 to the cost-of-living crisis and the rapid rise of generative AI – companies must rethink how they build and optimise their workforces for an unknowable future. There is no trusty map to guide their HR, but there are clues as to the required direction of travel. They take the form of five linked megatrends that talent advisory and solutions company Adecco has identified from its extensive research with employers and employees.
1. Economic and political uncertainty
Brexit, Covid-19, the Ukraine war, fuel shortages, five prime ministers in six years, spiralling inflation and an approaching general election. We’ve been living and working through economic and political uncertainty and will continue to do so.
With the UK facing stagflation – that pernicious mix of fast-rising prices and weak GDP growth – into 2024, the tough economic conditions make it hard for employers to predict their staffing needs.
The labour market has been turbulent since the Covid crisis, with a jobs boom in 2021 followed by a slowdown after the disruptive mini-budget of September 2022. While there has been a small increase in candidate availability this year, because of the dual scourges of redundancy and recruitment freezes, talent shortages remain.
“What we’re seeing is not so much a people mismatch as a skills mismatch,” reports Niki Turner-Harding, senior vice president, Adecco UK & Ireland.
Businesses inclined to delay hiring until conditions improve should factor in a finding from Adecco’s 2023 research How Megatrends are impacting the world of work, which found that almost half (46%) of large employers in the UK anticipate increasing headcount by 2025. Competition will only increase.
2. Talent scarcity
More than a third (36%) of large employers are finding it difficult to fill vacancies because candidates have become more hesitant about moving jobs while the economy continues to struggle. And 80% say that the cost-of-living crisis has limited their ability to recruit. Reduced access to EU-based candidates since Brexit is also a significant problem (cited by 23%).
Other factors have played a part in this ongoing situation. They include the UK’s ageing workforce, a steep rise in economic inactivity and the continuing shortage of skills (particularly digital, ‘green’ and interpersonal), with 61% of large recruiters citing this as a serious challenge.
Resolving the situation will require a concerted training and development push, an emphasis on retention and an effort to persuade back to work some of the many over-50s who took long-term sick leave or early retirement during the pandemic.
At the other end of the spectrum, many people aged 18 to 24 are delaying their entry to work, taking gap years or continuing education.
“About 8.7 million people are economically inactive across the UK,” reports Rachael Boyes, head of market insights, Adecco UK & Ireland.
Almost two-thirds (62%) of large employers are trying to persuade older people back into work. Given that 39% aren’t seeing the skills they need from education-leavers, they’re understandably keen to attract any potential returners who can share knowledge with their younger colleagues.
But poor employee wellbeing may scupper plans without urgent action, according to Boyes, who notes that “2.6 million people are not working because of long-term sickness. More than half of them have mental health conditions such as depression and anxiety. This signals the importance of providing employee assistance and wellbeing programmes – or simply reassessing certain leadership styles.”
3. Changing ways of working
A core means of attracting both older and younger people into the workforce, while enhancing wellbeing, is a focus on flexibility. A preference for hybrid working has been noted among UK employees.
The way we work has changed fundamentally since the Covid crisis, accelerated by the digital transformation of business. As part of this, people expect a better work/life balance – and many already have it.
Adecco’s latest Global Workforce of the Future research reveals that a quarter of employees can choose their hours, while 30% wouldn’t take a job if it didn’t allow remote working.
“Where employers can offer a level of flexibility, they open themselves up to higher-skilled workers who might otherwise be constrained by their caring responsibilities or locations,” notes Sandeep Bhandal, the group’s vice-president of marketing, insight and social impact in the UK and Ireland.
In any case, legislation that’s set to take effect in Q2 2024 will make flexibility less of a perk and more of a staple in the UK. Under the Employment Relations (Flexible Working) Act 2023, employees will be legally entitled to make two flexible working requests in each 12-month period. They will also have the right to ask for flexible working arrangements from day one in a new job.
This signifies that the traditional nine-to-five model is no longer the only viable option for workers and businesses. There is already a distinct shift towards project-based work and a thriving gig economy, with freelance contractors considered a key part of the workplace. Adecco’s research also finds that of the UK workers surveyed, nearly a quarter of people (23%) looking to change jobs in the next 12 months said their main reason was to start their own business, with a further 8% wanting to go freelance.
4. Digital transformation
Opening up the recruitment market through different ways of working may partly counter the severe shortage of skills needed to see through the digital transformation of business.
Two-thirds (67%) of large employers are experiencing big shortages of IT skills, particularly in data analysis and the use of AI. But, at a time when 40% of UK jobs could feel some impact from generative AI, according to a recent estimate by KPMG, complementary ‘human’ skills also require significant investment.
Boyes explains: “If people have core skills such as adaptability, creativity and problem-solving, they can transfer from one job to another as organisations and roles change.”
The fact is that many jobs of the future are unknowable. Nearly half (45%) of large employers believe that most roles they’ll be hiring for in 2030 don’t exist today.
This is precipitating a trend towards organising work around skills rather than jobs, according to Boyes, who adds: “We advise our clients to map for skills rather than job titles. If you’re hiring for skills, you’re future-proofing your workforce.”
5. The rise of purpose-led businesses
Investing in employee development is a vital part of retention. People understand that they must future-proof their skills. And, while seeking a larger pay packet remains the biggest motivator for jobseekers (cited by 36% of respondents), the desire to find meaning in work is also ascending the list of priorities.
As Bhandal says: “Employees want to be in a position where they can contribute to positive change through the corporate strength of their organisations.”
Younger workers in particular expect employers to consider people and the planet along with profit when making commercial decisions – and to shape their business strategies around purpose. They also want to derive a sense of personal value from their work.
While 73% of large employers recognise that their organisation’s purpose plays an important role in staff retention, 24% admit that their values largely don’t align with candidates’ expectations. Well over a quarter (29%) rate addressing their employees’ need to feel a sense of purpose as one of the top three items on the HR agenda.
But employers should note that adding a few well-crafted promises to mission statements will not suffice. Authentic messaging, consistent behaviour and ample opportunities for participation will be key.
The Covid crisis made people aware that more flexible and meaningful ways of working are open to them – and there’s no turning back.
Adecco is the world leader in workforce solutions. We help individuals achieve lifelong employability and empower businesses to optimise their talent, with innovative services across permanent, temporary, managed, and outsourced recruitment.
