How the Changing Labor Market Is Impacting Digital Transformation
The future of work is changing. Are you ready to change with it?
The days of working for one company for decades are long gone. The average American will change jobs 12 times throughout their lives, and that number is likely only going to increase in the coming years. More than one-third of the U.S. labor force changed jobs in 2020, and yet more are actively seeking new work as I write this. The Great Resignation is a bit of a misnomer. It has less to do with people quitting and everything to do with the radical transformation of work. It's not a temporary fad but a profound and permanent shift in the labor market.
Entering the era of remote work
Workers in the knowledge and tech sectors have more freedom of choice than ever before. And with the prevalence of remote work, those seeking employment no longer have to limit themselves to jobs available in their physical location. They can work wherever and for whomever they want.
There are now over 15.5 million digital nomads worldwide, and a study by UpWork estimates that up to 36.2 million Americans will be working remotely by 2025. The era of digital nomads and remote workers has arrived. People are not afraid to leverage their newfound freedom to leave the jobs they don't like and go after the ones they do (regardless of how much or how little time they've been there).
Countries like Brazil have even started creating special visas exclusively for digital nomads to enable long-term stays for those working remotely. And this is just the beginning. If we deny reality and try to leverage the same strategies we used before, we will not be successful in retaining top talent and creating healthy, thriving businesses.
Creating a team
So what do all of these shifts mean for the future of workplaces? As many have remarked, it is more challenging than ever to maintain a stable team. Remote work has had a significant effect on workplace relationships and employee retention. When our interactions with co-workers are limited to Zoom meetings and phone calls, our work relationships become utilitarian. What do we need to accomplish in this meeting, or what do we need from each other — rather than conviviality?
Workplaces are, first and foremost, environments in which you relate to other people. Many work environments are now shifting to largely remote. So the relationship-building is done entirely through a screen. It is much harder to establish the strong bonds once present in workplace relationships. The problem is, if we don't create strong bonds with our co-workers, we also don't create a strong bond with the company we work for. It becomes much easier for employees to jump ship when a better offer presents itself. This is because there are no relationships to sever or co-workers to abandon. They are not leaving beloved co-workers behind — they are simply looking out for themselves.
We cannot expect business to continue as usual in response to this changing landscape. We need to shift alongside it, establishing new mechanisms to foster company loyalty and better systems to support remote workers.
The path(s) forward
There is more than one way to thrive in the new labor market, but none include a return to old practices. Remote work is not going anywhere (nor am I advocating it should). People will continue to change jobs with increasing frequency. The path forward will require a flexible attitude, a strong commitment to purpose and a willingness to adapt.
Some companies may choose to embrace these changes and adapt their models to capitalize on short-term employee tenures. They may leverage experts to create temporary teams for specific projects with a pre-determined timeline. And thus freeing themselves from the reliance on employees to stay at the company for years at a time. The lines between employees and freelance contractors are already blurring. We have the option of taking advantage of this new ground to collaborate with top experts for shorter periods.
If temporary teams are not appealing to your company, then monitoring attrition should become an area of focus as it represents the pulse of your company. To minimize attrition, you will need to be proactive. Create programs that give employees a reason to stay by fostering a strong sense of company culture. This will likely include robust career-building services, mentorship programs and employee events to cultivate a sense of community.
The change has, obviously, affected the outsourcing industry, both on the demand side and on the talent supply side. A third path is to rely on other companies to provide you with the talent you need — and we can already see a much greater demand for nearshoring services. But at the same time, you need to choose carefully in order not to face the same attrition problem, just under another entity.
Finally, there is no room for a flimsy or half-baked purpose in the new labor market. Leaders must walk the talk to demonstrate their defined purpose. People will not stick around to follow a leader who does not follow through on their word when countless offers are banging down their doors. It's not uncommon for people to receive multiple offers at the same time in this market. Some are already working multiple jobs simultaneously, which shows just how much choice (and power) candidates have in deciding where they want to work.
Prepare to change
Some may say that this overheated market for talent, particularly in tech, may cool down with the next recession. However, I'd say it won't. The gap between talent needed and talent available will continue to grow in the foreseeable future. This is a result of the fact that more and more companies understand that tech underlies any business and is actually the best way to fight a recession.
Companies cannot afford to be little more than abstractions of people scattered around the world. We need to adapt to create sustainable businesses that attract top talent, whether short- or long-term.
Regardless of which path forward your company chooses to take, it is time to accept that the changes we are seeing today will continue long after there ceases to be think-pieces about the Great Resignation. The future of work is changing. Are you ready to change with it?
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