Approach Talent Challenges As If They’re Permanent
August 24, 2022
4 minute read – The competition for talent has been raging for the past few years. While it seemed to come to a head after the pandemic, the demographic underpinnings have been at play for decades.
As teams work to meet today’s talent challenges, approaching the situation as if it’s permanent can recast the thinking, bring new solutions to the surface, and potentially better position the financial institution for future success.
While there is potential for a recession, which could bring relief on the talent front, the relief may only be temporary, given long-term demographics trends.
In April, there were 0.5 unemployed workers per job opening, illustrating just how hard it is to find people, let alone the right people. But this is a continuation of a longer-term trend.
The question many institutions are faced with is, Where did all the workers go? Most are aware that the Baby Boomers created a big chunk of the population that are now retiring and some of those retirements were accelerated by the pandemic. Millennials now make up the largest portion of workers, with Generation Z following closely behind.
Additionally, the US population has been slowing for years, setting the stage for the current challenges and reinforcing why they may be with us for the long term. According to the US Census Bureau, the 2021 growth rate was slower than any other year since the founding of the nation. The trend is the result of women having fewer children and decreasing net international migration, combined with increasing mortality due to an aging population.
This leaves us with fewer youngsters and more retirees. Some have theorized that more people have simply decided not to work. According to the Bureau of Labor Statistics, the labor force participation rate for people 16 and older declined from 2010 to June 2022 (that’s the percentage of the population that is working or actively looking for work). But when you break it down by age, it tells a more nuanced story. For ages 25-54, which represents people in their prime working years, the participation rate is about the same. But that age group now makes up about 3% less of the workforce and people 55 and older make up about 4% more. When you factor in that older people participate – or work – at much lower rates, it explains how the overall participation rate has decreased.
The conclusion? The talent challenges may not be going away soon. David Kelly, the Chief Global Strategist of JPMorgan’s asset management division, was quoted in a Business Insider article saying that some firms could go out of business. “It’s very Darwinian – those who can efficiently use labor will succeed and those who cannot adapt to this environment will fail.”
As Baby Boomers poured into the workplace along with women, there was plenty of ready-made talent to choose from that was educated and trained. Talent practices formed around this reality. The question is how to create new practices that will work going forward.
As an exercise to stretch your thinking, try brainstorming around this scenario: It’s 2026 and the talent challenges of 2021 and 2022 are still with us. Knowing this is the case, consider the following questions, how you would answer them differently than today, and how your emphasis on each area would shift:
- How should we update the organization’s purpose and strategy to give appropriate focus to the talent we need?
- How do we need to elevate our strategic people planning so we can get and stay ahead of our talent needs?
- What are potential sources for talent that we’re not taking advantage of?
- How might we change our hiring prerequisites?
- How can on-the-job training be imagined differently?
- Where can technology and automation help?
- How can we fulfill the needs and wants of today’s talent in a more meaningful way?
- What are the effective keys to retaining more of the talent we need?
- What should we be doing today to prepare for this future?
Chances are that you’ve already been working on talent recruitment, development, and retention. The challenges won’t be easy to resolve and will likely require foundational change. Thinking about it as a permanent situation can help your team develop more transformational ideas that could be key to your long-term success.