Freelancers and contingent workers form an increasingly important part of an organization’s workforce. According to Staffing Industry Analysts, there were 51.5 million contingent workers in the US in 2021, representing more than a third of the region’s workforce and generating $1.3tn in revenue.

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Integrating contingent labor into strategic talent planning

Contributors:

Dustin Talley
Founder & CEO, Talent Simplified

Mark Jones
Executive Vice President, AMS

Laurie Padua
Managing Director, Talent Advisory Services, AMS

Freelancers and contingent workers form an increasingly important part of an organization’s workforce. According to Staffing Industry Analysts (SIA), there were 51.5 million contingent workers in the US in 2021, representing more than a third (35%) of the region’s workforce and generating $1.3tn in revenue.

This number is almost certain to grow. Companies have weathered an unprecedented level of chaos over recent years, from the impact of the Great Resignation and skills gaps to rising interest rates and heightened production and supply chain costs. At the same time, demand for talent remains high, with 1.9 jobs available for every unemployed person in the US in January, according to data from the Bureau of Labor and Statistics.

The consequence of this state of flux is that companies are increasingly attracted to the flexibility provided by contingent workers. The ability to access experienced, readily available talent at the right variable cost offers employers the agility to meet current talent requirements without the cost of full-time employees. It is also the perfect marriage with more and more workers wanting flexibility in the post pandemic age.

“After the 2008 financial crisis, we saw heavy utilization of contract workers. At that time, it was driven by necessity, but not strategic in most cases. This time around is proving to be different. The organizations that get it right will find ways to use budget wisely in place of headcount. Instead of just filling roles reactively, companies are taking proactive measures like building talent pools and equipping their teams with access to on-demand resources,” says Dustin Talley, CEO and founder of Talent Simplified.

However, if done without proper thought, the growth in contingent hiring also brings challenges for organizations – not least in terms of reputational risk and potential damage to existing employees’ engagement.

Skills not silos

One of the main challenges with contingent hiring is that it is often run in a silo, separate from other talent functions. In the US, contingent hiring is often the remit of the procurement department with permanent recruitment run by human resources. The reality is that these two functions often operate individually and with little interaction, making the integration of contingent hiring into strategic workforce planning difficult.

“The operational reality shows that the idea of total talent management is still theoretical,” says Mark Jones, Executive Vice President at AMS.

“One of the challenges of contingent labor is that it is by default a tactical solution to find people quickly. When you do that, you use a staffing agency. It is ingrained in how supply chains including internally and externally run MSP’s operate. So, this whole concept of brand and loyalty is nice in theory but will only work if talent acquisition leaders genuinely change how resources are procured.” He goes on to add: “It requires an extra layer of thought, joined up planning and thinking which until recently, often is simply put into the nice to have, but not now category.”

Progress may be slow, but the move towards a more innovative approach to contingent hiring is undeniable. The growth in skills-based approaches to hiring – which puts an individual’s skills profile above employment method, experience and location – is furthering this trend.

“A lot of this is about undoing an existing mindset of needing to hire someone versus needing to get something done. As we enter the skills-based economy, work is about getting a project done rather than completing a 40-hour working week,” says Talley.

According to a SIA report released in May, while only 28% of organizations currently have a strategy for contingent workforce planning as part of their corporate strategy, more than half (55%) are exploring it. The same study indicated that 27% of organizations have a talent pool of some description in place to source contingent workers but 46% were considering it.

“Skills-based companies will win in the future. It will be slow, but it will play out. I see mid-sized companies gaining market share as they’re being smarter around talent and tagging the skills so they know what they have. They are the ones competing and winning, as they’re quick to respond to both clients’ needs and their own internal talent requirements,” adds Talley.

“We’re in the first innings of a nine innings game and skills-based hiring is a part of that,” agrees Jones.

“However, the best time to outsource is in an environment like today, where organizations are coming off all-time highs in hiring. There is a reduction in open roles and all our clients are hiring less, which means there is more capacity in the contingent market,” he adds.

Part of the challenge in integrating contingent hiring into a more holistic approach to talent management is the need for change management. Moving away from a historic way of working with staffing agencies to a direct sourcing strategy requires a different approach across the talent acquisition supply chain. This is where strong leadership and a fully thought out workforce planning strategy is needed.

Data-led decision making

Laurie Padua is managing director of Talent Advisory Services at AMS. She believes that companies need to be more strategic about the talent they attract and employ.

“What we do at advisory is think about the skills and capabilities that an organization needs to drive the end goal it’s trying to achieve, rather than just filling job roles. The worker type is almost irrelevant – it’s about focusing on what your organization needs from a talent perspective, then using data to learn more about the skills and capabilities you are trying to attract,” she says.

“For example, can you get the people you need permanently? Where do they need to be located? Do you need to bring in cohorts of individuals with the skills you need and upskill other employees? We take a holistic, thoughtful approach to talent solutions and contingent hiring is certainly part of that conversation, particularly with the agility and scalability it gives businesses when it comes to costs,” adds Padua.

It’s fine for operational processes and technology to vary between contingent and permanent hiring, says Padua, but your overall strategy must align. Communication is key, otherwise companies can end up in a situation where the contingent hiring team is trying to recruit for the same role as the permanent team.

“The reason some organizations are resistant to change is that they don’t know where to start. Our advisory service can provide expertise on the transformational change journey and get them to the starting point,” says Padua.

Ultimately, change management is a difficult process to go through, but corporations should focus on the benefits of direct sourcing within contingent labor.

“Building contingent recruitment into your holistic talent strategy creates cost savings, allows you to access talent faster and without intermediaries and puts control of talent back into your own hands,” says Padua.

AMS’s own figures back up data around direct sourcing of contingent labor. In the US, AMS clients are achieving in excess of 10% cost savings, with improved candidate quality and quicker submission. Some clients are seeing talent pools in excess of 20,000 contractors after 12-24 months adoption, with other areas of the business using these candidates as part of their emerging skills-based hiring strategy.

“Right now, the traditional routes to market are working. However, our thesis is that things are going to continue to change, the labor market will tighten and that these types of strategies will allow companies to leverage their brand loyalty to make cost savings and generate more hiring options than they currently have,” says Jones.

written by the Catalyst Editorial Board

with contribution from:

Dustin Talley

Founder & CEO, Talent Simplified

Mark Jones

Executive Vice President, AMS

Laurie Padua

Managing Director, Talent Advisory Services, AMS

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The coming months are likely to be challenging for all businesses. A global economic slowdown has seen job cuts and hiring pauses forecast – perhaps as a correction to post-pandemic hiring spikes.

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Challenging times?
Employer brand is the hidden secret to commercial success

Contributors:

Vangie Sison
Head of Employer Brand Advisory Americas, AMS

The coming months are likely to be challenging for all businesses. A global economic slowdown has seen job cuts and hiring pauses forecast – perhaps as a correction to post-pandemic hiring spikes.

At the same time, changing workforce demographics has seen some portions of the talent market drop away. In fact, the percentage of people retiring younger than 65 has grown from 44.5% to 46.7% between 2020-21. Globally, women lost 64 million jobs in 2020, according to the International Labor Organization; more than 7.2 million men of prime working age (25-54) are not in work or even looking for work and women’s labor force participation in the US sits at just 58.1% compared with 70.4% for men.

The Great Resignation, the talent crunch, the ever-widening skills gap – whatever you call it, it’s increasingly difficult for organizations to fill roles and build skills, particularly in heavy growth areas like digital and technology.

Add in the impact of ‘COVID clarity’, where employees are reevaluating the role work plays in their lives, what level of remote or hybrid working is acceptable to them and the desire for more purposeful work, and the relationship between employer and employee is becoming more complex.

As businesses look to navigate economic slowdowns and talent shortages, it can be easy for organizations to turn to layoffs and reduced investment in internal and external employer branding to save money. But are these truly the right tactics to leave their businesses well placed for future success?

Evidence suggests not and according to Harvard Business School professor Sandra J Sucher and research associate Marilyn Morgan Westner short-term savings can have a long-term negative effect.

“Companies continue to cling to the idea that reducing staff will provide the best, fastest, or easiest solution to financial problems,” they write in this Harvard Business Review article.

“I’ve studied layoffs since 2009… the short-term cost savings provided by a layoff are overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover and lower innovation – all of which hurt profits in the long run,” they continue. 

What we’re seeing is potential candidates and existing employees evaluating organizations not just as companies they work for, but more holistically as brands that they might buy from or interact with. Consequently, it has become more important than ever that these organizations communicate effectively with their target audiences across different platforms and mediums. And that means thinking about your employer brand.

Segment your branding

Research shows that three quarters of candidates will research a company’s reputation before applying for a job, with half refusing to work for a company with a bad reputation, regardless of salary increases. Conversely, 87% of candidates will join an organization purely on culture fit.

“The one thing we’ve consistently heard from clients over the past few years is that there has been a significant shift in how candidates think about where work fits into their lives,” says Vangie Sison, head of employer brand advisory Americas at AMS.

“Do I need to go into an office? Should I look for something that puts more importance on family than work itself? I think it’s just the jarring conclusion of the pandemic. But employers need to think about how to best present their brand story to candidates in this new reality. These are very important topics for the value employers provide to candidates and employees, but it’s not resonating with them,” she adds.

Sison says AMS is seeing lots of organizations refreshing their brand stories and thinking about the value propositions they offer to employees. While the external economic environment may be challenging, there is a huge opportunity for employers to focus on development opportunities in the near future. Part of this is creating an authentic and inclusive culture which creates growth opportunities for all talent.

Achieving this requires businesses to personalize development, reward and growth opportunities to different talent populations.

“One thing that has come out of recent years is the importance of a talent segment proposition. For example, take a pharmaceutical company that wants to hire 100 data scientists. That company might not be a brand technology candidates think of at first. But, by tailoring their value proposition to that talent segment, that pharmaceutical company can show future data scientists that there is a place for them in their company, ultimately making them more competitive in the market,” says Sison.

Secondly, companies need to think about where best to tell these stories. What are the channels your candidates use to consume media and interact with each other?

“Everybody’s media consumption has changed. We’re seeing more people using streaming channels and on-demand media. You need to be aware of where your talent segment is interacting and how you can reach them,” says Sison.

 
Growth of branding

The term employer brand was first defined by management consultant Simon Barrow in a 1996 paper in the Journal of Brand Management. In this podcast with Link Humans, he explains how the term has changed over the years.

“In 1985, tangible assets like plant, machinery, buildings and cash formed 56% of corporate assets. Today, that is just 20% of value. So 80% of value is in intangibles, what used to be called ‘good will’. It’s your ability to attract, engage, retain and motivate great people. That’s critical, and it’s what is driving the importance of employer brand thinking,” says Barrow.

He argues that there are three key components of effective employer brand management. First, is to focus on the employment experience itself. How do you rate each touchpoint employees have with your organization? What can be improved?

Second, is to have a board-level sponsor, so that senior management are bought into – and lead on – employer branding strategy.

Employer brand is not brand management

Thirdly, Barrow argues that a distinction needs to be made between employer branding and brand management. Employer branding fails if the reality of the experience doesn’t match the promise. As Barrow says, “you can’t spin your way to an employer brand”.

Sison agrees that authenticity is the key to an effective employer brand.

“As marketers, we can tell a good story. We can sell it. But, if you don’t deliver from an experience perspective, it’s not credible,” she says.

For Sison, the experience a candidate has with a company starts before they even apply for a job. Precise targeting means you’ll already be offering potential hires the right information in the right channels before they see a job advertisement.

From there, it’s about a consistent experience. If the job application page doesn’t provide the experience they want, they won’t finish the application. If their interview with a hiring manager isn’t consistent with the application, they might not take the job. And if their onboarding experience and subsequent job role doesn’t live up to what was promised, they won’t become brand ambassadors – or they might even leave the job.

“The same messaging needs to continue throughout the candidate and employee journey. We can make a brand as sexy as possible, but if the candidate has a bad experience, they will leave,” warns Sison.

Rebuilding and transforming employer brand at LHC Group.

Positive impact included:

  • New career website
  • Employer brand and recruiter toolkit
  • Brand lift

To find out more, read our LHC success story

Read case study

Healthcare is the largest industry in the US, with almost 14% of the workforce serving this industry. Registered nurses are among the most sought-after talent in the US, and as a result the industry has become creative at finding ways to recruit and train nurses.

Leading healthcare services company LHC Group wanted to redefine itself as the ‘destination of choice’ for healthcare workers, attracting talent who would stay for the long term. It worked with AMS to craft a specialized narrative that spoke directly to the talent they sought in an authentic, relevant way.

AMS helped to hone LHC Group’s brand story by identifying core pillars that supported a new EVP story, alongside a new career website, branding and recruitment toolkit and content marketing strategy. Crucially, AMS helped LHC Group identify the top seven personas of their priority hires, allowing them to target these different segments in personalized ways.

The results include:

  • a 7% increase in social metrics like engagement rates and impressions
  • a 67% increase in Google Ad clicks
  • and lowering cost-per application by 33%

‘‘Thanks to our collaboration with AMS, we have developed a robust EVP strategy that has helped us establish LHC Group as the employer of choice in the healthcare industry,”

Tina Slattery, VP of Talent Acquisition at LHC Group.

written by the Catalyst Editorial Board

with contribution from:

Vangie Sison
Head of Employer Brand Advisory Americas, AMS

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The era of fixed job roles, linear promotions and rigid functions is over. Modern workplaces are agile, flexible and able to pivot to new strategies, ideas and challenges to deal with a volatile, changeable environment.

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The rise of
skills-based hiring

Contributors

Jo-Ann Feely
Global Managing Director, Innovation, AMS

The era of fixed job roles, linear promotions and rigid functions is over. Modern workplaces are agile, flexible and able to pivot to new strategies, ideas and challenges to deal with a volatile, changeable environment.

Driven by this new reality – and accelerated by the impact of the pandemic – many organizations are moving away from recruiting on experience and qualification to skills-based hiring for potential and flexibility.

Of course, talent shortages and technological needs are affecting this move too. According to Dell Technologies, more than 85% of jobs that will exist in the next decade haven’t even been invented yet. In the face of such uncertainty, an individual’s past experience is less relevant than the skills they hold and can acquire in the future.

Skills as the new currency

One advocate of the move towards skills-based hiring is LinkedIn CEO Ryan Roslansky.

“Our data shows that roles are being created and displaced at a truly record pace right now. Whatever your role, whatever your company, whatever your industry, you need to keep up with these really quick and big changes that are going on right now,” argued Roslansky in a podcast with Harvard Business Review.

Traditionally, business leaders and hiring managers have focused on past experience, qualifications, universities or personal networks as a way of assessing talent. Not only does this narrow talent pools and lessen diversity, but it also no longer makes sense when the pace of change is so rapid, says Roslanksy.

“If you take the same job role from 2015 to 2022 that existed in the world, roughly 25% of the skills needed for that job will have changed. When the labor market is moving much quicker, we really need something to focus on. I think that alternative, flexible, accessible path is really going to be based on skills,” he adds.

Take a systemic approach

Jo-Ann Feely is global managing director, innovation at AMS. She agrees with Roslansky that organizations are under pressure to find more sustainable ways to deal with talent scarcity.

“I think organizations are being forced to look inwards because they’ve really struggled to fill vacancies in the external market. The speed to digitization, especially post-pandemic, has put a lot of pressure on the skills needed to do roles as almost all organizations became digital ones,” she says.

In order for businesses to move towards skills-based hiring, they need to better understand the skills their current workforce have, alongside the different skills each job role requires.

“There needs to be a systemic approach to understanding skills. To make career mobility effective and skills-based hiring work, you need to understand the primary and secondary skills needed to do each job,” says Feely.

The challenge for business is two-fold. Firstly, they need to have some way of categorizing the skills they require – such as skills taxonomy – which takes time and effort to build and update. Secondly, there needs to be a culture shift in hiring away from instant gratification (i.e. poaching a job-ready employee from a competitor) towards looking to new hires or existing employees with skills adjacent abilities that can be developed through training.

“Skills-based hiring isn’t going to be an organizational, wholesale change. It’s going to take pilots within certain functions or departments, as it’s not an easy thing to effect,” says Feely.

“If you want to identify adjacent skills, you need to understand and map out the skills required for the roles you need. Doing this exercise is time-consuming, but on the positive side it not only increases career mobility, but it also allows for a broader talent pool externally,” she adds.

More inclusive workforces

Increasingly, hiring managers and talent professionals are starting to agree. In the US, major employers like Walmart, Boeing and IBM have signed up to skills-based hiring projects through partnerships with social mobility champions like Rework America Alliance. In Maryland, the local government announced in 2022 that it would no longer require college degrees for 50% of its state jobs.

However, the pace of change is slow. In the previously discussed Harvard Business School podcast, Roslansky described how LinkedIn data saw the potential for food service employees to be retrained as digital customer service workers during the pandemic. According to the data, there is a 70% match between the skills of the two roles. Yet many roles went unfilled and people lost jobs because organizations focused on past experience rather than skills.

“If we had just taken a view on what skills are necessary, who had those skills, how can we help them acquire some skills to become employed, we would’ve found ourselves in a much more efficient labor market. We would have been much more productive,” he said.

When it comes to talent attraction, skills-based hiring is also a better indicator of future success. Studies show that skills-based hiring is five times more predictive of future performance than hiring for education, and 2.5 times more predictive than past work experience.

The rise of skills-based hiring means organizations can better prepare for future challenges, develop internal career mobility and build their employee skill base. It can also lead to a more inclusive, equitable work environment.

“If you take a skills-based approach, you can open a broader talent pool both internally and externally. You can also identify under-represented talent that hasn’t come to the surface before because you’ve always hired a certain profile of person from a certain background or education,” says Feely.

“This approach to hiring broadens the talent pool and makes an organization more inclusive with a more equal playing field. Skills are the new currency. We just need to see organizations embrace it faster,” she adds.

written by the Catalyst Editorial Board

with contribution from:

Jo-Ann Feely
Global Managing Director, Innovation, AMS

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An uncertain economic outlook coupled with talent shortages and a demand for rapid growth means talent acquisition teams are under huge pressure.

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The rise of data driven approach to talent

Contributors

Mike Brown
Managing Director, Digital, Tech & Transformation

Risk and return in a data-driven approach to talent

An uncertain economic outlook coupled with talent shortages and a demand for rapid growth means talent acquisition teams are under huge pressure.

At the same time, organizations are increasingly moving towards skills-based hiring and talent management. These twin factors mean businesses are laser-focused on how they can improve their talent acquisition and retention processes – and unlocking organizational data, managing its usage and building insights is key to this.

To combat this, AMS is launching AMS One, a proprietary RPO operating system that enables better, faster and fairer talent acquisition for AMS’s clients.

Data hierarchies

“There are a series of different points in the recruitment process where information about candidates and jobs needs to be acted upon by sourcers, recruiters and administrators,” says Mike Brown, managing director digital, tech and transformation at AMS.

Brown suggests that these points are linked together in a hierarchy, driven by the potential to create value in the recruitment process and the risk associated with what organizations choose to do with data and technology.

The first step is about replacing manual parts in the recruitment process and reducing administration by using data and technology effectively. Artificial intelligence can automate some administrative tasks like form filling, conversation transcriptions and interview booking, but it is the use of data that can truly drive smart hiring.

“At the moment, there are a lot of manual steps in handling recruitment data. This means that candidates don’t all get treated in the same way, that there is an awful lot of administration and less focus on conversations that really drive whether or not people are interested in taking a role,” adds Brown.

The next steps are about using data to gain information and intelligence on candidates during the recruitment process.

“There are two major ways you can use data,” says Brown. “One is as a feedback loop. You have a bunch of screening conversations – what can you learn from them that you can apply at the beginning of the recruitment process? For example, I’ve screened a lot of candidates for data scientist roles, now I have another data scientist role. What have I learned?

“Second is market analysis technology. Our talent strategy tool takes very large data sets and tells you how difficult it will be to hire a person in a particular location or salary bracket. It gives you an idea from the outset of what is possible and whether you’re pricing the role appropriately,” he says.

Such tools can also help you to compare the relative cost of external hiring versus internal mobility, or contingent workforce with in-house recruits.

The final part of Brown’s hierarchy is generative AI, which has been in the headlines recently, mainly through the rise of ChatGPT. The worldwide narrative on this relatively new transformative technology has been confused.  Hailed both as the panacea of productivity while simultaneously having the power to bring down western democracy as we know it, Brown has a far more measured view. He suggests that there are applications for the hiring process, in the main as an aid to human-based decision making. Generative AI can also help with content creation around role descriptions and adverts.

The global talent management software market is a rapidly growing one. Currently worth $9.05bn, it is projected to grow to more than $20bn by 2030. For HR and talent acquisition professionals, technology allows them to become more accountable for their interventions at a time when driving efficiency and business growth is top of the agenda.

According to a Gartner survey of HR leaders, 44% of HR leaders report driving better business outcomes as their number one strategic priority for HR technology transformation over the next three years. Growth in headcount and skills was second (26%) and cost optimization third (17%).

The impact of such technology could be revolutionary. HR thought leader Josh Bersin says “it has the potential to totally reinvent how much of HR works”, with new platforms, vendors and ways of running companies.

In a recent post, he describes several ways generative AI and data-driven insights have the potential to change talent management, ranging from creating content for job descriptions and candidate profiles through to performance management and leadership development.

“Despite the fears and inflammatory headlines, I want you to remember that this technology will be a massive step forward in business. But I would remind you to consider that [technology] is a tool, not a living person. Just a Microsoft Excel was groundbreaking in the early 80s – and there were fears it would put accountants out of business – so this system will become an essential business tool as well. We all have to learn how to use it,” says Bersin.

Brown agrees that talent technology is something to support human decisions, rather than replace them.

“One thing we have chosen to do with AMS One is to not recommend candidate shortlists based on the technology. We use a simpler approach to filter based on skills. We filter CVs, applications and jobs looking to match skills, but human decisions influence the order in which candidates are ranked,” he says.

Doing so allows organizations to ensure data interventions are ethical and help to drive better diversity in recruitment. For example, recruiters can include DEI measures when filtering through candidates. However, the final decision on who makes a shortlist rests with a human.

Measuring effectiveness

Measuring the effectiveness of a data-driven approach to talent depends on your individual requirements. Brown suggests four key areas where this type of technology can deliver value.

First is access to a broader pool of candidates. Historically, employers would have posted job adverts to individual boards online and waited for people to send in their CV or application.  New technology allows talent professionals to search multiple job boards at a time and narrow down that search to identify specific skills. This greatly increases the quality of candidates organizations have to choose from.

Secondly, technology can improve time to hire. By removing inefficiencies and administrative steps in the recruitment process, talent professionals can spend more time on people decisions and less on admin. A good measurement might be seeing an increase in time spent in screening conversations as a percentage of the overall process, says Brown.

Thirdly, mapping similar systems across an organization improves scaling. By having everyone on the same system, organizations can respond to rapid hiring needs in particular areas.

Finally, a data-driven approach to talent can improve information security. Audit logs can show who has accessed what information and when, while records can be deleted in accordance with GDPR requirements.

“I think technology in talent acquisition is generating value in many different ways. The emphasis you place on effectiveness is a personal preference,” says Brown.

AMS One

AMS One is the RPO operating system enabling better, faster, fairer hiring for AMS clients.

The platform improves the end-to-end recruitment process with an emphasis on candidate discovery, screening, and shortlist generation using the latest technologies and industry best practices.

AMS One is connected to a client’s entire talent ecosystem, integrating seamlessly with their existing tech stacks to provide a more flexible path in the adoption of new technologies and solutions, transforming their digital and technology operations. To find out more, or request a demo please contact AMS.

written by the Catalyst Editorial Board

with contribution from:

Mike Brown
Managing Director, Digital, Tech & Transformation

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The era of fixed job roles, linear promotions and rigid functions is over. Modern workplaces are agile, flexible and able to pivot to new strategies, ideas and challenges to deal with a volatile, changeable environment.

View the story

Why career mobility will solve talent shortages

Contributors

Matt Poole
Global Head of Service Evolution, AMS

The talent shortages businesses are experiencing are not going away. Not only are we failing to fill the shortfall of talent in key areas like tech – the global shortage of software developers is expected to increase from 1.4 million in 2021 to 4 million by 2025 – but demographic changes are having an equal impact on talent availability.

Despite overall population and labor force growth, the labor force available to US employees has actually shrunk in key recruitment areas. According to data from the Bureau of Labor Statistics, labor force participation in the 16-24 age group (traditional entry level age) and 45-54 age group (traditional leadership group shrank between 2010-19).

At the same time, the highest growth in labor participation was among older employers, with a 58% increase in labor market participation by those aged 65 or older and a 17.2% increase in those aged 55-64. How we work – and how long we work – is affecting the way employers fulfill roles within their organization.

Linear careers or agile mobility?

One impact of this is an increased focus on career mobility, as businesses become more proactive about how they deploy existing talent in new areas. However, this is an area businesses have traditionally been less successful at. A 2019 study by Deloitte found that just 6% of companies felt they were proficient at internal talent mobility, while more than half of employees thought it was easier to find a job outside their existing organization than inside.

Clearly things need to change. But how?

“With demand outstripping supply for talent, organizations are having to think differently about how they tackle talent shortages,” says Matt Poole, global head of service evolution at AMS.

Previously, we would have solved this issue by better recruiting, new channels to market and bringing in different recruitment vendors. What everybody has seen post-pandemic is that this is nowhere near as effective as it used to be,” he adds.

Career mobility programs are becoming more about building new skills in your talent base and deploying them in new areas or projects. As Josh Bersin argues, organizations are moving away from rigid career ladders to agile development.

“A few years ago, few were talking about talent mobility. Many organizations were building complicated career paths and competency frameworks, using heavy-handed succession management processes with months-long, paper-rich talent reviews,” writes Bersin.

“Today, roles are shifting quickly, skills become obsolete faster than ever and organizations need to find people for new roles or projects rapidly. At the same time, employees expect to try new work, learn adjacent skills, work with new managers and teams and take international assignments. The old model of planning career moves out doesn’t work anymore,” adds Bersin.

Creating an agile mobility program is about allowing people to work on various teams and projects. It’s about acknowledging the skills and competencies they have and how they can be applied to different projects, rather than strict job roles.

And while agile mobility can be common within a function – say an IT employee moving around different projects – it is much harder to facilitate across an organization. That same IT employee might have excellent data analysis skills that could be applied to a marketing position, but such cross-functional moves are uncommon. Agile mobility makes this sort of move more likely.

Start with one function

Creating this sort of talent mobility is attractive to businesses. It allows for a more dynamic talent function, it improves employee engagement and retention, it reduces hiring costs and can even improve diversity and equality initiatives by encouraging people to move into roles they might not have previously considered.

As Poole says: “There should be a series of journeys through an organization that allows you to come in at an entry level and still have a route to the top. That route might not be a traditional upward one, but there should still be junctures where as upward movement becomes restricted, parallel opportunities open up allowing people to step out of career paths into adjacent ones.”

However, from an organizational process and structure perspective, agile talent mobility is challenging. How do you understand the skills your people already have? How do you understand the skills and capabilities you need for the future? How do you build these skills into your learning and development programs?

For Poole, the answers will depend on your individual organizational circumstances.

“Lots of people ask us what the right mobility model is, and the answer is there isn’t one. Every organization has a different objective for the mobility process, so you need to calibrate your career mobility program with the goals of your organization. The question is what are you trying to achieve with your talent and how can mobility help,” he says.

50% of employees think it's easier to find a job externally than to move within their organization

It also helps to focus agile mobility programs in an initial pilot function, rather than trying to implement them across the business from the beginning.  Focusing mobility on a pressing strategic objective and figuring out how to implement agile models into a segment of your workforce is a good starting point for wider cultural change, argues Poole.

“We’ve seen agile mobility conversations gain traction with clients when talking about digital hiring, as it’s the nearest problem for them right now. We’re saying identify the skills digital hires might need and identify the existing population that might have those skills. Who are those people who could come in and learn programming skills?

“What we’re not saying is implement the skills marketplace for all 25,000 employees and throw your current mobility program in the bin. Identify the roles potential programmers are in and build a pilot scheme around that,” says Poole.

Modern day recruiting and talent management is changing. Skills gaps and talent shortages are here to stay, so it’s imperative that we find new ways of developing, retaining and engaging talent. The future is about the depth of your organization potential, not your talent pool.

written by the Catalyst Editorial Board

with contribution from:

Matt Poole
Global Head of Service Evolution, AMS

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2023 is set to be the year of the ‘job full recession’ – an economic slowdown where we see declining GDP but little to no growth in unemployment.

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Strategic influencers: Talent acquisition’s time to lead on addressing global skills gaps

Contributors

Nicola Hancock
Regional Managing Director, Americas & Investment Banking, AMS
Jim Sykes
Global Managing Director, Operations, AMS

2023 is set to be the year of the ‘job full recession’ – an economic slowdown where we see declining GDP but little to no growth in unemployment.

In fact, the latest release from the Bureau of Labor Statistics shows that the US economy added more than 500,000 jobs in January (nearly triple the predicted forecast of 185,000), with unemployment at a historic low of 3.4%. This comes off the back of Labor Department numbers showing 10.46 million job vacancies in November 2022, with 1.8 jobs available for every unemployed person in the US.

Commenting on the report, Federal Reserve chair Jerome Powell suggested the US was now moving “beyond” maximum employment, with unemployment rates needing to rise for inflation to return to the Federal Reserve’s 2% target.

So how can we have an economic slowdown when jobs growth remains so robust?

“Things are complex. While the overall economy is a concern and there is a lot of talk about inflation, if you look at it from a pure jobs and talent perspective, things remain very competitive,” says Nicky Hancock, President and Regional Managing Director, Americas and Investment Banking, AMS.

“At the end of last year, there was a slowdown in certain industries, with significant layoffs in tech companies and the banking and finance sector. The context is that slowdowns are normal in quarter four, but we haven’t seen that recently due to the impact of the pandemic.
“Secondly, some sectors like technology have seen exceptionally high recruitment over the past few years to backfill attrition and deal with growth. It’s likely that we’re seeing some normalization of hiring as organizations look at headcount,” adds Hancock.

An opportunity to recruit hidden talent

This ‘normalization’ provides an opportunity to businesses outside the tech sector, who are desperately seeking talent with technology and digital skills. The growing technology skills gaps means millions of jobs in America are projected to go unfilled by 2030 – and businesses are competing hard for people who do have those skills.

However, the scramble for talent is so fierce that many organizations are significantly hiking salaries for new hires. A typical job switcher saw their earnings jump 9.7% year-on-year, compared with a 1.7% salary decrease in real terms for those that stayed in roles, according to a report by Pew Research Center. This presents a ‘ticking time bomb’ for organizations, says Jim Sykes, Global Managing Director, Operations and Sourcing, AMS.

“Companies have been hiring massively post-COVID, bringing on talent at a premium. The disparity in pay between tenured employees and new ones is a risk to organizations, particularly when young people are far more likely to talk about pay and conditions than other generations. This could drive attrition as people forget loyalty and move for money during a cost-of-living crisis,” warns Sykes.

Talent acquisition as strategic influencers

Focusing on pay hikes and hiring from competitors is a short-term solution to a long-term issue, believes Sykes. Instead, organizations need to be making strategic changes to how they hire and retain talent.

This starts with talent acquisition professionals moving from being pure recruiters to strategic skills advisers. When a manager has a requirement for a role, talent acquisition shouldn’t simply look to fill the role – they should also consult, collaborate and influence the hiring manager on the requirements and skills needed for the position.

Doing so will allow companies to tap into skills-adjacent talent, broadening the scope and potential of new hires. A good example comes from a recent HBR podcast with LinkedIn CEO Ryan Roslansky. In it, he posits the need for companies to move away from qualifications and education when assessing talent, to skills and behaviors.

“For far too long we’ve used degrees, or previous companies or networks as we didn’t have anything better to assess talent. But with the labor market moving so quickly, we really need to figure out something to focus on. And I think that alternative, flexible, accessible path is really going to be based on skills,” said Roslansky.

Roslansky cites an example from the pandemic, where hospitality workers were laid off during lockdowns. At the same time, LinkedIn saw a huge rise in demand for digital customer service roles. When examining the skills needed for these roles, LinkedIn found that the average food service worker had 70% of the skills needed to be an entry level customer service agent.

However, rather than mapping the skills between the two groups and retraining people, most of the hospitality workers remained unemployed and many of the customer service roles went unfilled, as organizations focused on past experience instead of skills.

“Organizations need access to market insights to understand what skills are available in the marketplace. We need to understand that if we’re not looking for a like-for-like replacement, what are some of those hidden talents and markets we can map across?,” says Sykes.

However, market pressures brought about by the pandemic and an uncertain future means many businesses have simply reverted to type when it comes to hiring – ramping up recruitment, handing out high salaries and driving up attrition – rather than addressing strategic challenges.

“We haven’t changed the fact that demand for certain skills outstrips supply. What we’ve done is solve the problem by stealing talent from each other. But this won’t address the root problem – which is that our companies are growing faster than we can produce talent,” says Sykes. 
“The only way to solve this is to break the cycle. Organizations need to look at talent strategically, invest in reskilling internal talent and hire from other fields based on skills and potential. Otherwise, you’ll soon run out of talent,” he adds.

Be fast to market – Talent is in high demand, so the speed at which you move is critical
Tap into hidden talent pools – Look for skills and abilities rather than past experience and profiles
Excellent candidate experience – The candidate is king. Engage, support and encourage candidates at all stages
Streamline processes – Technology needs to be aligned with and supportive of talent acquisition strategies. Too often, talent processes become complex over time and technology no longer fits its purpose. Strip this out and invest in new areas.
Be a strategic adviser – Talent acquisition professionals need to take on a more strategic advisory role to leaders. Understand the market, influence recruiters and shape strategy.

Tech skilling

With demand for tech talent far higher than supply, it’s no longer viable for organizations to simply continue buying in talent. Instead, forward thinking businesses are reevaluating how to upskill, reskill and train employees to meet the digital demands of a technology first future.

With 87% of executives saying they are experiencing skills gaps in their workforce and millions of jobs set to go unfilled by 2030 due to tech skill shortages, it is incumbent upon businesses to look at new strategies to develop the talent they’ll need for the future.

Our latest tech skilling digital whitepaper outlines new initiatives to plug future tech talent shortages. Download the paper here.

written by the Catalyst Editorial Board

with contribution from:

Nicola Hancock
Regional Managing Director, Americas & Investment Banking, AMS
Jim Sykes
Global Managing Director, Operations, AMS

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Recruitment process outsourcing (RPO) is an established market globally. Every day, thousands of the world’s best-known organizations trust RPO partners to source and recruit candidates, in the process trusting them with their brand and Employment Value Proposition

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Now is time for the rise of Contingent Process Outsourcing

Contributors

Mark Jones
Executive Vice President/Managing Director, Contingent Workforce Services, Americas, AMS

Recruitment process outsourcing (RPO) is an established market globally. Every day, thousands of the world’s best-known organizations trust RPO partners to source and recruit candidates, in the process trusting them with their brand and Employment Value Proposition (EVP).

In the US, RPO providers are closely integrated into organizations, working with talent acquisition to attract the very best people. When it comes to contingent labor however, things are very different.

In the majority of cases across the US, contingent workers have historically been treated more as commodities – a service that is procured via organizations supply chain function and recruited via staffing agencies who have little to no affinity with an organization’s brand.

Talent attraction

Historically, contingent labor has been about ‘can you find me someone, how much will it cost and when can they start?’ It is a very different conversation for full-time employees, who are seen as a segment to invest in and develop. Contingent and full-time hiring are kept as two separate operations, recruited and managed in separate ways.

The challenge is that finding talent in the current climate is difficult, and, in my opinion this is not going to change any time soon.  In addition, organizational demand for contingent labor is also growing as are the expectations of the US workforce to be able to operate via a contingent channel. Companies have grown their contingent worker population by over 50% since pre-pandemic (Brightfield). According to a US Government accountability report, 40% of the US workforce is made up of contingent/freelance workers which will rise to 50% by 2050. The pandemic has only increased the trend that was already being established towards flexibility in working models and approach.

True freelance workers enjoy the ability to work at different times, in different opportunities, often for more than one client at a time. Secondly, if you look through history, you see that contingent workforce hiring goes up in a downturn and vice-versa. As economic conditions tighten, organizations want more flexibility on their workforce base to allow strategic goals to be achieved whilst minimising fixed costs.

This is compounded by the demographics of the US labor market being relatively stagnant. We have restrictions on immigration, an ageing population, a workforce that through illness haven’t been able to return to work post-pandemic, and another segment who don’t want to go back to the way things were. Organizations are fishing in the same pond for talent and coming up short, as we’re not putting any fresh water into the pond.

One way to change the status quo is change the way we fish for talent. Can we use the power of an organization’s brand to better attract contingent workers? Can we do some of the things we do from an RPO perspective to help contingent talent? And, in doing so, can we narrow the train tracks between contingent and full-time labor?

I believe that because there is an increasing demand for non-permanent, flexible working, the US is going to see increased investment in contingent labor and it is going to force the twin tracks of traditional recruitment closer to contingent hiring – with some even merging together in the quest for achieving total talent. The gap between how and why we recruit contingent labor and full-time employees will narrow. However, from an employment and compliance perspective, it’s important to keep some elements of how workers are engaged and managed separate and defined.

As I reflect on the major changes and challenges that have impacted the world we all live in, and look at how the contingent market is changing, the phrase I kept coming back to in articulating this evolution of the market is ‘contingent process outsourcing’ which includes direct sourcing of contract labor.

As I have already said, RPO is already very well-established. Organizations outsource all or part of their recruitment to companies who are entrusted to find talent, manage branding and deal with back-end administration like onboarding and payroll.

Contingent process outsourcing can act in a very similar way. How you attract people and manage them can be the same and the process outsourcing element can be the same. The only difference is that the process is designed for a specific population of workers who have a specific way of being onboarded and employed. They are not ever going to be your full-time employees, but that doesn’t mean you can’t attract them and operate in the same fashion as those who are.  In fact, this is only beneficial for you if you like to try before you buy and regularly convert contingent labor to full-time employees. Virtually every organization has an EVP for their full-time workforce, but very few have a Contingent Value Proposition (CVP) and I see this as a significant missed opportunity when 50% of US workers will operate this way by 2050!

Contingent Process Outsourcing is different from what staffing agencies offer. Staffing agencies play an invaluable role in sourcing workers and there will always be needed for a robust staffing industry. However, the US market is big enough for organizations to introduce the concept of contingent direct sourcing for a certain element of their contingent needs. These workers are attracted to an organizations brand and our managed and treated as such with an eye to long term relationships.

Why choose process outsourcing?

The benefits for employers are clear. Organizations will have people who want to work for them irrespective of how they work for them – contractor, freelancer, full-time etc. All talent will believe in the mission and values of the business, rather than simply being a transitional asset.

Another benefit is cost. On average, our contingent direct sourcing saves companies 10% versus using a traditional staffing agency. However, while cost savings are always nice to have, the biggest driver currently is simply finding the best talent and attracting it to your brand in a very competitive market. With unemployment in the US at a 60-year low, finding the right talent however they are engaged and managed is the biggest reason organizations are turning to contingent direct sourcing.

Why? Firstly, because it drives quality. Contingent direct sourcing creates and nurtures talent that wants to work for an organization and has an affinity for it. Companies have some ownership of that talent pool, with the outsourcer nurturing contingent talent and building a pool of talent that will return to work for the organization again and again.

Of course, this concept of contingent direct sourcing is already established and has become more popular over the last 18-24 months. However, I believe there is a huge opportunity to develop this further especially given the significant and likely permanent shifts in the labor market.

Future of contingent hiring

Adoption of direct sourcing programs has been sporadic and challenging because it means different things to different organizations. A lot of organizations have dipped their toe in the water, but they’re not all leveraging this new way of hiring in the US market to its full extent. That’s a challenge as the only way you create significant savings in contingent labor is through volume.

This will change. Contingent Process Outsourcing leveraging direct sourcing is another way of engaging and attracting talent by harnessing an organization’s brand. With contingent hiring on the rise and flexibility key for both employer and workers – think about the need for skilled technology workers in our talent pools.  We’ll see more organizations looking at how they can better leverage contingent workers as a strategic advantage rather than just as a commodity.

written by the Catalyst Editorial Board

with contribution from:

Mark Jones
Executive Vice President/Managing Director, Contingent Workforce Services, Americas, AMS

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Social mobility is very much on the agenda in the UK. The first round of the government’s Levelling Up funding saw £1.7bn distributed among 105 UK towns and cities, with further plans in place to invest regionally, in skills training and in some of the UK’s most deprived areas.

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The UK needs to talk about why social mobility and social value matter

Contributors

Matthew Rodger Chief Growth and Commercial Officer, AMS
Mel Barnett Managing Director, PSR, AMS
Anna Crowe Client Operations Director, AMS

Social mobility is very much on the agenda in the UK. The first round of the government’s Levelling Up funding saw £1.7bn distributed among 105 UK towns and cities, with further plans in place to invest regionally, in skills training and in some of the UK’s most deprived areas.

 It’s not before time. Research from the Institute of Fiscal Studies suggested that “on a wide variety of measures, regional disparities in the UK are greater than in most comparable countries.” At the same time, research from the Office for National Statistics shows that only London and Northern Ireland have seen economic growth since the start of the pandemic.

With social mobility levels in the UK languishing behind our neighbours, it’s obvious that businesses have a part to play in spreading opportunities more evenly across society – not just because it’s the right thing to do, but because it makes commercial sense.

But there is still a long way to go. Research by the Social Mobility Foundation found that working class professionals earn an average of £6,718 less than their middle class peers – a pay gap of 13%. This means underprivileged professionals essentially work 13% of the year for nothing – almost one day in every seven.

“This class pay gap is not just an indictment of professional employers. It is morally unjust and economically illiterate,” said Social Mobility Foundation chair Alan Milburn on the release of the research.

Britain’s professions are a cornerstone of the modern economy. In 2021, services industries contributed £1.7bn in gross value added to the economy, 80% of the total figure. Britain’s success in the global economy relies on the very best people, regardless of their background, being attracted, not deterred, from working in the professions,” he added.

In addition to factors relating directly to social mobility and inequality, the way in which businesses interact with the environment, and how their leaders communicate on issues is becoming ever-more important. It’s no surprise that ESG (environment, social and governance) and the need to focus on sustainability are top of mind for many c-suite leaders as we move into the post-pandemic era.

Take Larry Fink, CEO of asset management giant Blackrock, who used his annual letter to CEOs to discuss how “stakeholder capitalism is all about delivering long-term, durable returns for shareholders” and that “it is more important than ever that your company and its management be guided by its purpose”.  

Or how about the media frenzy around Patagonia founder Yvon Chouinard’s decision to give away all future profits to combating climate change, proclaiming “as of now, earth is our only shareholder”?

However, it’s not only the private sector who are making an increased commitment to responsible business. Increasingly, public sector organisations are paving the way and selecting suppliers based on ethics, social responsibility and how much social value they provide to the wider community that they serve.

What is social value?

Put simply, social value refers to the meaningful impact an organisation has on society. When it comes to public sector procurement, it looks at how the partnership can have a positive and lasting effect on the social, economic and environmental wellbeing of a community.

The UK’s Social Value Act should be applauded for what it sets out to do. Pre-pandemic, the launch of the government’s Public Services (Social Value) Act 2012 encouraged public sector bodies to consider social value alongside cost and quality in any tender process. This was reinforced in 2018-19, with the introduction of the common values procurement framework, which recommends that social value should make up a minimum 10% weighting of any tender.

The pandemic and ongoing economic recovery has thrown social value into even sharper focus, with greater importance being placed on the impact organisations have on local communities and social responsibility.

“When it comes to social mobility and sustainability, if we can support our customers’ goals in these areas, it’s a win/win. In the public sector, social value is a crucial factor, so being able to demonstrate our work in this area is incredibly important and we have a real responsibility to do the right thing,” says Anna Crowe, client operations director at AMS and the company’s social value lead.

AMS’s public sector resourcing (PSR) service provides more than 19,000 skilled workers across the UK government at any one time, meeting contingent resourcing demands on large projects including Brexit and the pandemic. And while PSR has no commercial obligation to respond to the impact of social value, Crowe argues that doing so is the right thing to do.

To this end, PSR formed its own social value strategy to align with the challenges facing the public sector and began working collaboratively with its clients.

“The Social Value Model was built to address five key themes that include Equal Opportunity, Tackling Economic Inequality and Fighting Climate Change each with subsequent policy outcomes. On the PSR framework we have projects and programmes aligned to each of these areas to drive positive change, as well as repurposing initiatives already in place at AMS to make them applicable to our public sector customers,” says Crowe.

For example, Crowe’s team identified that they didn’t have detailed information around the DEI demographics of the contingent workforce they supplied through PSR. So, they created a pulse survey to capture that information and reported back to their customers, giving them full visibility over their entire workforce, not just permanent employees.

A future objective is to create technology that can provide ongoing reporting on a live basis, allowing customers to check the efficacy of targeted interventions on an individual basis, providing greater depth on DEI impact.

AMS has also introduced a new service line in PSR, called recruit, train, deploy. This will bring in trainees from under-represented or those from lower socio-economic backgrounds, upskill them and then place them in a client’s business, providing both commercial and social value. Partnerships with inclusive recruiters like Recruit for Spouses, Auticon and Bridge of Hope will help to provide opportunities to individuals who might not think public sector roles are for them.

“The commercial value comes from upskilling these people,” says Crowe. “Clients get individuals more cost effectively who can be trained into new roles. Given where the market is and the high day-rate of skilled workers, bringing these individuals in from different backgrounds, training them and putting them into the public sector is both cost-effective and has a significant impact on social mobility.”

Matthew Rodger, chief commercial officer and ExCo sponsor for social mobility advocacy at AMS, agrees: “Driving social mobility is central to AMS and something we openly focus on and actively celebrate. This year, for the first time, we entered the Social Mobility Employer Index, the leading authority on employer led social mobility and we are honoured to be a top 75 employer in the Index. It is also promising that 15% of all entrants were from the public sector which shows a clear commitment to social mobility. We still have so much more to do in this space and partnering with our public sector stakeholders allows us to further engage and amplify our efforts,” adds Rodger.

An important driver for social mobility is the ability to collect and analyse data on the socio-economic background of potential hires. AMS now collects data from all new hires on type of school attended, parental occupation and eligibility for free school meals.

Tech skilling

Another area which is top of mind for government and business leaders globally is the dearth of relevant skills, particularly in the tech and digital space. AMS, in partnership with its public sector stakeholders, will be hosting a roundtable specifically on tech skilling and social mobility which will address the myth that tech talent hiring is only possible through traditional routes to market.

“As the hiring demands for tech skills in the UK continues to rise, organisations are finding it challenging to access the talent they need to innovate and progress. The UK government recognises the importance of the tech sector and tech skills for improving the UK economy, but also acknowledges there is a significant shortage of available candidates in the market,” says Mel Barnett, managing director, PSR.

“It is no surprise we see digital skills alongside levelling up at the heart of the UK Digital Strategy launched earlier this year. With this market reality and with the government’s digital strategy clearly outlined, it is evident that traditional routes to talent are not going to deliver the candidates hiring managers need. As such, a fresh approach is needed by organisations hoping to build digital-ready workforces that can carry their businesses into the future and we hope roundtables like the one we will be holding in January will allow us to openly discuss what is urgently needed to help individuals and businesses to succeed,” she adds.

written by the Catalyst Editorial Board

with contributions from:

Matthew Rodger
Chief Growth and Commercial Officer, AMS
Mel Barnett
Managing Director, PSR, AMS
Anna Crowe
Client Operations Director, AMS

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When you think about the future of the workforce in Germany, you have to think about demographics. For over 30 years Germany’s population has stayed at 80-84 million, what has changed significantly is the age of the workforce.

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The future of the workforce in Germany

Lead author
Brett O’Connor Client Director, EMEA, AMS

Contributors
Ute Neher Head of Executive Engagement, Indeed.com
Heike Lipinski Client Director, AMS

When you think about the future of the workforce in Germany, you have to think about demographics. For over 30 years Germany’s population has stayed at 80-84 million, what has changed significantly is the age of the workforce.

When East and West Germany reunified in 1990, around 1.2 million Germans were born each year. Now, it’s nearer to 900,000. Around 10% of the population is aged 15-24, which has fallen from 16-17% in the mid-80s. This means that it is increasingly difficult for companies – both big and small – to fill job roles with the talent required.

In fact, there are currently 1.7 million unfilled jobs in Germany, with critical labour shortages across all industries. With such an ageing population, if the country doesn’t bring in skilled people in their 20s and 30s soon, they’re going to face huge talent shortages for years to come. By 2030, Germany could have 5 million fewer workers than it does today to which automation cannot compensate.

Laptop displaying a graph from 'Bloomberg' magazine

The need for new talent

The most pragmatic solution that is going to address the challenges is increasing net migration, which before COVID-19 was just over 300,000 people per year. This is a similar amount of people that migrate to Canada and Australia each year, yet with smaller populations there is a vastly greater demographic and economic impact than in comparison to Germany.

The current German federal government is determined to bring in more immigration, to which the challenge is the attractiveness of Germany to global talent. Changes have been proposed to visa regulations and opening dual citizenship for people from outside the EU. However, a key challenge is mastery of the German language. It is not a global language, therefore English-speaking business cultures have the edge in attracting global talent be it Canada, Ireland, Switzerland, the US, or Singapore – all vastly easier countries to integrate into when compared with Germany.

To combat this, some German companies have adopted English as the first language – especially in IT departments. This is particularly prevalent in fintech and start-ups, which are more international in nature. For example, N26 the market leading German mobile bank has adopted English and French as its internal language, which helps them to bring in international talent from the US, South Asia, and other regions.

However, this doesn’t work in all industries. One of the benefits, yet also a challenge, is that Germany has one of the world’s most highly advanced and unique vocational training systems. Germany not only makes products – engineering, pharmaceutical, biotechnology – but it also designs and produces the capital equipment that makes those products giving it a unique place in the global supply chain market.

Changing how those organisations operate is not easy. One multi-national engineering company AMS partnered with, had an executive board who wanted to bring in more English-speaking talent. However, they found that their engineering leadership teams weren’t comfortable speaking in English. More importantly, their customers weren’t comfortable speaking in English.

When you’re setting up a high-technology manufacturing facility in Germany, it is not practical to do this just in English. A reliance on support from the local community and the vocational education system – would be a very challenging transformation. Tesla has adopted a dual running system of German and English-speaking shifts, which may point the way to future ways of working for some production and assembly roles.

There are 1.7 million unfilled jobs in Germany

The population aged 15-24 has fallen from 17% in the 80s to 10% now

By 2035, Germany is estimated to have 7 million fewer workers than today

What talent wants is changing

The second challenge for these types of organisations is that the changing demographics of Germany mean that 40% of apprenticeships went unfilled in 2021. Whereas these organisations might have had a significant number of applicants per role previously, they’re now lucky to get half of those – or even no applicants in some cases. This means that they can no longer rely on their employer brand to attract applicants.

Like other countries, Germany has a model that is seeing an increase in digitisation, automation and changing attitudes to what people want in life and work. The modern workforce is not so keen to commit to working their way up in one company for 20 years – especially when the work is often specialised.

Take two famous companies – Roche pharmaceuticals and Deutsche Bank. Roche is a family owned business and has been for 125 years. The current CEO started as a trainee, and so will the next CEO. Deutsche Bank’s CEO also started as a trainee. This mindset of lateral movements through an organisation is changing for many companies.

A need to do things differently

To sum up – the practices that have made Germany successful in the past are not going to be successful in the future. Germany has a world leading education system, scientific and academic employment market that other countries would strive for. There is however more work that needs to be done to accelerate immigration, integrate people into the community and workforce and make the country even more attractive because the best global talent has a choice.

The changing demographics across a range of sectors means that organisations will continue to have a limit on application numbers, so they need to work on brand, engagement, community and think very carefully about accommodating migrants into the workforce. It is less likely they will find the perfect candidate from a robust shortlist of choice, so companies need to be open to accommodating people from different backgrounds, life experiences and of different ages.

The last twenty years has seen the nature of work change. People want more balance in their lives, from remote working to reskilling and having different careers. Organisations need to allow people to bring more of their culture and themselves to work.

Finally, it is also about changing the mindset of how we operate. Organisations should consider a total transformation of their recruitment, engagement, induction, and work practices that are in place. Whilst, recognising that people now have significant choice in their careers.

“With the prospect of huge retirement and labour shortages in the upcoming years, organisations need to transform their attraction, retention, sourcing and recruitment strategies. They will need strong partners and new perspectives to master the challenge and to navigate the future of work. We still have untapped talent creating big opportunities for employers across the region who are ready to change their mindset, build on DE&I and transform their workforce”, comments Ute Neher, Head of Executive Engagement at Indeed.com.

This isn’t a new topic for Germany, it has been widely discussed for decades. However, Germany should be confident about its potential to succeed in the future of work – but it needs to face these challenges head on.

If you find yourself facing these challenges please contact us here.

written by the Catalyst Editorial Board

Lead author:
Brett O’Connor
Client Director, EMEA, AMS

with contributions from:
Ute Neher
Head of Executive Engagement, Indeed.com
Heike Lipinski
Client Director, AMS

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The war for talent is raging.In September, a record 4.4 million Americans quit their jobs, according to the US Labor Department. That was after 4.3 million people left their jobs the month before, with more than 10.4 million jobs going unfilled at the end of the month.

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How America’s talent wars are reshaping business

Contributors
Nicola Hancock
Regional Managing Director, Americas & Investment Banking, AMS
Ron Thomas
Managing Director, Strategy Focused Group

The war for talent is raging. In September, a record 4.4 million Americans quit their jobs, according to the US Labor Department. That was after 4.3 million people left their jobs the month before, with more than 10.4 million jobs going unfilled at the end of the month.

Things haven’t gotten much better in 2022. According to the Bureau of Labor Statistics, more than 11.3 million job openings were still on the market at the end of May. As organizations compete to fill roles, wages have increased, with average hourly earnings up 0.3% month-on-month in June and 5.1% on the year.

Some of America’s biggest institutions are facing the squeeze. Speaking on a Fortune panel at the World Economic Forum in Davos, Bank of America CEO, Brian Moynihan, admitted that the war for talent is on.

“Our attrition rate came down throughout the decade and dropped in half during the pandemic, but has come back up to where it was in 2019. Part of this is a natural recovery in attrition rates, but a real part of it is in the tightness of the labor market. A lot of people left the labor market and are not going to come back, even with a strong bid for their services,” he said.

“That’s the reality we’re going to be facing. We’re chasing that dynamic of not enough people working. In the US, the immigration issue is also heavily impacting this. Our population growth rate has fallen in half over the last decade and we just don’t have enough people now. It’s going to be a big bid for a while,” added Moynihan.

To combat this, Bank of America bumped its minimum wage to $22 a hour, equivalent to nearly $45,000 a year for full-time employees. It also expanded its stock awards program to employees who make up to $100,000 annually – nearly 97% of total employees – who previously received a one-off cash bonus. The move could cost the bank up to $1 billion.

Beyond salary

Other businesses are following suit, with those working in service industries just as likely to see a wage increase as those in offices. However, the labor market squeeze means that continuous pay bumps are not sustainable. Instead, organizations are looking for new strategies to recruit, upskill and engage their employees.

“While salary plays a role in attracting talent, it shouldn’t be the dominant piece of the puzzle,” says Ron Thomas, Managing Director at consulting firm Strategy Focused Group.

“Can you sell your brand and purpose? Can you tell the story of how you build a career in the organization? What success stories do you have? People today are looking to connect and be a part of something bigger,” he adds.

“Organizations recognize that they have to think differently about their talent strategies,” agrees Nicola Hancock, Regional Manager Director, Americas & Investment Banking at AMS. “There aren’t enough people out there to simply think about constantly buying in more talent. Instead, they have to think more holistically and start developing their own talent and retrain existing employees.”

Attracting talent
Bank of America raised
minumum wage to $22 per hour,
expanded stock awards programme,
all at a potential cost of $1bn.

Internal mobility

For Hancock, this starts with organizations being less reactive in sourcing talent and more strategic. Such is the competition for hires, that even the biggest businesses are having to rethink how they attract the people they need.

“Everybody is looking at their employee value proposition, even those organizations that haven’t had to traditionally rely on that. Just look at the big corporate players, across all sectors, they’re all leaders in their respective industries who have been able to rely on their logos to attract and retain talent. Now, they’re recognizing that they’re having to work a lot harder,” she says.

One way to do this is to focus on building talent from within. However, internal hiring isn’t the same as internal mobility, warns Hancock. Instead, businesses need to think about how they can be agile in moving talent around the business depending on strategic needs.

“Internal mobility is cheaper and creates better engagement. Internal candidates get to productivity quicker, understand culture and know who to collaborate with to succeed,” says Thomas.

There are other ways American organizations are looking beyond salary. Some are increasing employee flexibility – whether location, remote work or compressed work weeks. They’re re-examining the benefits they offer in a post-pandemic era, moving away from office perks to offerings around mental health and wellbeing, and they’re particularly looking at career development, training and reskilling programs.

Reskilling programs

Back in 2019, JPMorgan announced a $350 million investment in skills development and social mobility. The investment created training programs upskilling the bank’s workforce for changes in technology and business, while also forecasting future workplace skills to build opportunities for internal employee development. It also made it compulsory for incoming asset management and investment banking analysts to take coding classes.

This allowed the bank to refocus its skillset – JPMorgan sees itself as a technology group, not just a bank, with technologists now accounting for a fifth of the organization’s 250,000 plus workforce. However, such large-scale reskilling programs are the exception, not the norm, says Hancock.

“The skills gap has always been there and it has gotten worse during the pandemic. This means that organizations need to fundamentally rethink how they approach talent acquisition. With digitalization, the skills organizations need change much more quickly than previously and the idea of a job for life doesn’t really exist anymore,” she says.

“Fundamentally, businesses need to be more agile and think about talent acquisition differently. Those that do will gain a competitive advantage, as it’s no longer affordable to keep buying in talent as it becomes even more of a premium,” adds Hancock.

written by the Catalyst Editorial Board

with contributions from:

Nicola Hancock
Regional Managing Director, Americas & Investment Banking, AMS
Ron Thomas
Managing Director, Strategy Focused Group

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